Your task is to critically analyse the contribution that strategic choice and determinist theories (Resource Dependency Theory; Institutional Theory; Population Ecology) make to our understanding of organisational action.
Discussion about Both Theories
The theories of organizational action study the impact of social relationship between different individuals within the organization along with their activities on a company as a whole. Also, these theories examine effects of external and internal business environment like cultural, legal and political on the organization. There are two types of organizational theories i.e. strategic choice and deterministic theory. Further, deterministic theory can be categorized in theories i.e. resource dependency theory, population ecology theory and institutional theory. Both of the theories make a significant contribution to the understanding of organization design and action. The major objective of this essay is to critically analyze both strategic choice and deterministic theories. It includes the discussion about both theories and related arguments are presented. Moreover, there is the discussion about the strengths of both strategic choice and deterministic theories of organizational action. In the below essay, the research question is answered by stating the argument that both of the theories are compelling in context of organizational design and action.
According to Elsaid, Okasha, & Abdelghaly (2013) organizational structure is a framework which outlines how some activities are instructed for attaining the organizational objectives. These activities are such as roles, rules and responsibilities of organizational people. It describes the approach of business and response to the marketplace. There are some management scholars who have proposed two general theories of organizational structure i.e. strategic choice and deterministic. These theories are differentiated in the level of adaptability that they assume in influencing the marketplace.
Among these theories, one of the most significant theories is strategic choice theory that explains the role which managers and leaders have in affecting a company via developing different alternatives in an active process. This theory offers a strategic choice which focused the individuals’ agency and groups to make the choices. In this context Shafritz, Ott & Jang (2015) stated that these choices created the part of the learning process of a workplace which adapted to both the internal and external environment. In addition to organizational settings, this concept can be studied with relation to the responses of people to routine conflicts.
Apart from this, another theory is deterministic theory that states that the marketplace has an effective control on the businesses which are operating in it. This theory asserts that companies are pressurized to adapt or respond to the market changes. The concept of determinism can be understood by looking at three theories i.e. population ecology, resource dependency and institutional theory. All the theories indicate that organizations are controlled by different aspects such as by other company’s resources as per resource dependency concept, rules, norms and regulations as per institutional theory and external environment as per population ecology theory.
Looking at the explanation of both the theories, the fact should be noted that both theories create a compelling impact on the organizational behaviour of an organization. In one hand strategic choice refers to the role that leaders play in influencing the employees and making dynamic choices in an organization. Whereas deterministic theory of organizational structure refers to the structure that has comparatively less control on the functions in an organization and marketplace controls the business. It should be noted that it depends upon the organization that which structure that they have to choose for their business. It cannot be said that one theory is more compelling than other is as all the organizations have diverse working environment and business structures as well. Like, talking about a retail organization, it can be said that the companies present in this industry would prefer strategic choice theory as it lays a consolidated control over the functions and diverse choices in the environment as well.
Option 2: Both are Compelling
However, in the case of deterministic theory, it would best fit to the social organizations like NGOs as it expresses less control over the actions and let the market define the work and actions that the organization have to implement. Like, the resource dependency theory let the organization work according to the resources available with them but resources do not govern the actions in other organization present in diverse industries. In the case of determinism theory, the companies have to adopt changes present in the environment without opposing. Thus, it can be said that it depend upon the organization and their capacity to adopt change that governs that effectiveness of the theories on the management. Both the theory hold equal validity in the environment, it is the discretion of the business structure of the companies to implement the theories in their business. The external environment of organizations govern the business choices of the company, however some companies have more choices in the business to make while others have less. But, on the basis of this differentiation it cannot be regarded as one is more compelling than other. Both the theories have equal capacity to affect the decisions in an organization.
Highlight Strengths of Strategic Choice Theory
Strategic Choice approach focuses on the decisions that are to be made on the basis of particular situations in the market. According to the theory of strategic choice, an organization and its leader gets variety of options in the market to choose. This approach helps in defining various choices that an organization can make to in order to receive better outcomes from the market. Previously, it was assumed that the organizations were ought to be designed according to the operational environment and factors present in the external environment. However, with the change in scenarios the fact came into existence that companies get various choices in the environment to move ahead in the market. With the help of this type of theory, an organization can easily differentiate its business function in the environment with the help of strategic choices that they make in the environment. This type of theory emphasize on different alternatives present in the environment and to choose the best one suited for the management. The companies using this type of theory do not face the problem of similarity, as the growth of the company is entirely dependent on the choices that they make in the environment. Every organization do not get to face same type of situations in environment to which their power to control and act also differs.
Thus, it can be said that the biggest strength of using this type of approach is that it provides diverse choices to organization to make with the help of which they can easily attain differentiation and competitive advantage in the market. This type of theory offers variety of strategies with the help of which an organization can effectively increase the level of control on the organizational structure. Considering the theory with the help of an example, it should be noted that like in the case of a manufacturing organization where the management get diverse choices to make in an environment. The industry throws various changes in the environment but it does not overpower the actions of the company as they have various choices to balance the company. With the help of various choices present in the environment, the manufacturing organization can effectively make changes in the organization and lead the target market as well. The strategic choice theory successfully helps the companies resolving disputes and innovating the business functions as well. With the increasing control on the actions of the company the management gains the advantage to initiate effective organizational environment and implement change management process as well. Also, with the changing environment strategic choice theory gives options to the environment to effectively implement changes in the organizational structure according to the diverse conditions as well. This type of theory helps businesses in making decisions in environment that requires more control on the employees in the market.
Highlight Strengths of Strategic Choice Theory
Strengths of Deterministic Theories
As mentioned above, deterministic theory of organizational structure plays a vital role in developing organizational structure and design. In this, marketplace has significant role in controlling the businesses. Under this approach, the companies and businesses are forced to react to the market trends and changes. Considering this point, it can be stated that one of the biggest strengths of deterministic theory is that it assists the businesses to analyze the changing patterns of customers and challenges which they may face in the industry. This approach assists the organization to develop its structure according to marketplace, overall sector and social environment. They need to design their goals and objectives so that they can attain survival and produce profits to stay competitive.
Among deterministic theories, one of the most significant theories is resource dependence theory that assists the organization to gain the resources from other firms. This theory enhances the availability of resources for an organization when it needs. For example, ACME is the organization that operates its business in IT sector. It is offering its products to media company XYZ multimedia. By the use of this theory, ACME is able to produce great revenues and profits. Thus, the company has alternative to avail its resources from other firm. For efficient use of its resources, these firms can enter into different modes like acquisitions, merger, takeover, joint venture and collaborations. Other strength of deterministic theory is that it helps the businesses to analyze the competitive pressure in perspective industry. They come to know about available competing brands in marketplace. It offers the opportunities to the business to comply with implied laws and regulations effectively. In the absence of compliance of laws and regulations, firms may fail to survive in competitive scenario. For instance, transportation companies are the best instances to get the insights about this theory. These firms adopt this deterministic theory which allows it to maintain the ships’ safety and run the business operations. Population ecology theory of determinism states that companies are determined by their outside atmosphere. It entails that companies which are best fit to environment, they survive for a longer time. The major strength of this theoretical concept is that it showcases how the businesses are guarded by their environment. This approach directs the researchers to address different environmental issues. This encourages the companies to address the atmosphere and it takes a great understanding of environment determinism. By using population ecology theory, organizations will be able to understand the impact of environment on organizations. Moreover, resource dependence theory of determinism is very influential and strong concept that develops power links between businesses. It identifies the companies as the strong social actors. Additionally, deterministic theory directs the managers and leaders to work according to the changes in market and external environment. It increases the flexibility level of an organization as they need to become adaptive to environmental changes.
Thus, it can be stated that the biggest strength of this theoretical perspective is that it provides the businesses an opportunity to understand the change from multi-entity viewpoint. It offers equal opportunities to all the businesses present in the industry and market. The approach has various strengths which can support the organizations and their businesses to grow in the competitive business environment. The companies can develop their organizational structure by practicing this theory of organizational design and action.
In the limelight of above discussion, it can be concluded that both of the organizational theories i.e. strategic choice and deterministic theory are compelling in different environments and situations. There are various organizations which adopt the combined approach of organizational action and design. They take the components from both the strategic choice and deterministic theories. The above essay includes the discussion about different theories of organizational action. The arguments indicate that both theories have different strengths and points which can help the organizations to survive in marketplace.
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