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Deterministic Approach: Resource Dependency Theory, Institutional Theory, and Population Ecology Theory

Question:

Discuss about the Organisational Management Practice Theory.

Organisational action can be defined as the action or the decision that the organisations make in order to perform some activity of business or organization. There are various factors that affect the organization’s decision and its actions towards any of the situation. Different theories have been formed by the theorist gat supports the management of the companies to make organizational actions (Burrell and Morgan, 2017). The first theory that is talked about in this essay is related to strategic choice. The strategic choice theory suggests that the organizations and the leaders of the organization have a significant role to play in controlling the dynamic environment of the business. Previously, the organisations were thought to be structured as per the operational requirements of the external environment and this theory is called as the deterministic theory. Both of these theories have different concepts and thus affect the organizational actions in the outside environment of business. This essay provides the information about the roles and contribution of these theories in the organizational actions. It initiates with the discussion of deterministic theory that involves resource dependency based theory, institutional theory and population ecology theory (Miner, 2015). The essay continues with the discussion of contrasting theory that is strategic choice theory which is found to be the best approach to be conducted.

Different organization has different design and structure and that structure is supported by some kind of belief and theory which affect the decision and the actions of the organizations. Different theories contribute differently in the organization. Determinist theory is one of the theories which are based as the external and the operational requirements of the organization. This theory was followed by the organizations in earlier times. As per this theory, the market place is the controlling factors of the businesses and the organization has to response to the changes that occurred in the market. Thus, the organizations have to continuously look for the changes and the expectations of the market and make the changes in the organizational action as per the changes outside (Shafritz, Ott and Jang, 2015). The goals of the companies should be aligned with the market requirements and not with the organizational requirements. As the external environment of the business has many elements thus the organization is dependent on those elements of the external environment.one of those elements is resources (Sergiovanni and Corbally, 1986). The theory that has been developed for the dependency of organizations on the resources is called resource dependency theory. Jeffery Pfeffer was the America theorist who has developed this theory of RDT. The purpose of this theory is to present a guide that provides the information about management of the organizations which are externally constrained. As per this theory, all the organizations are dependent on the resources that can be obtained by the external environment of the organizations in which other organizations are also included (Peters, 2011). As all the organizations works in the similar environment thus it has been assumed that the resources that are required by the organizations are controlled by other organizations operating in the same environment. This suggests that organizations actions are directly linked with the resource power they had in the environment. in this situation, the power of the resources with the organizations are assumed to be dependent on the environmental factors which proves the interdependency of organizational action in the resources that are not controlled by the organisation itself but is the pat of external environment (Clegg, 2013). Another theory called institutional theory came into existence that was based on resilient aspects of social structures. This theory suggests that the organizations do not focus on their own decision and practices but analyse the actions of other peers in order to respond to the environment. This is the theory that is related to imitation. As per this theory, the organizations have to follow the rules and the beliefs that are persisting in the environment because institutional isomorphism earns organisational legitimacy and it was believed that organization can survive only when it conforms to the rules in the environment (Feldman and Orlikowski, 2011). Companies that operate in different international environment face pressure from the different institutions and thus this theory of institutionalization is found to be unsuccessful in making efficient organizational actions. It is already discussed that environment is the factors that affect the organisational sections (Watson, 2013). The change in the environment forces the organizations to make the relevant changes in order to survive. The theory called population ecology theory suggests that organizations have some inertial restriction that restricts the organisations to make the relevant changes as per the environment. The higher the inertial pressure faced by the organizations, the lower the organization develops the capability of adapting the changes occurred (essels and Terjesen,2010). The structural inertia in the organizations can be affected by the factors that are external or internal. The internal factors that affect the actions include the policies f the company, improper information about the environment by the argument, political struggle etc. On the other hand, the external pressures are legal and financial changes in the external environment or the industry, external constraint or barriers etc.

Strategic Choice Theory

The above discussion suggests that deterministic theories are related purely with the environment of the company. The external environment of the companies has great impact on the organisations actions. It has been analysed that the theories that has been discussed above were not appropriate for all the organizations (Davis and Adam Cobb, 2010). As the last theory of population ecology suggests that the organisations have to adopt the changes in the environment but have to face many issues at the same time. So, a new theory of strategic choice has been evolved to suppress the challenges face by the companies (Drees and Heugens, 2013).

Strategic choice theory focuses on the role of the management in the organisations. This theory suggests that the leaders and the managers have the control over the organisational actions and they can make the decisions of the organisations as per the structure of the organisation. This theory pays attention to the internal body of management of the organisation rather than the uncertain environmental factors (Salimath and Jones III, 2011). This theory considers the whole process that needs to be followed by the organisation in order to take decision over the organisational actions.

The processes have four elements. The first element is shaping. It is the step where the management of the organisation used to identify the issues and shape the issue into an objective on which the decision needs to be made or the actions needs to be taken(Hill, Jones and Schilling, 2014). The next step is about designing. It is the step where the management or the leaders of the company needs to design various alternatives and strategies to resolve the issue. For designing the strategies, the organizations need to consider all the factors that can affect the formation of the strategies and also have its impact on the organisational actions. The next step is to compare. It is the step in which all the alternative strategies are being compared. The analysis of benefits and disadvantages of the consequences of strategic implementation has been done so that the best option can be selected. The last step is to choose the best alternative strategy for the issue. It I has been analysed that it is the theory that supports a kind of logic and merely not depends the environmental changes (Talke, Salomo and Rost, 2010). It analyse the changes and its intensity and after that the strategies are been made that can be implemented in the organisation to attain the gaols of the company rather than to attain the gaols of the market. Strategic choice refers to the process in which the power holders of the organisation have the right to take the decisions over the strategic choice of actions that needs to be practiced by the company. The strategic options can be made by evaluating the relationship of the external and the internal environment of the organisations. The ability of the leaders to make the strategic choice in the organisation depends on how far that strategy can helps the company to achieve its gaols and maintain the consistency (Nielsen and Nielsen, 2011). The development of the strategies choice theory is because of the dependency of the organizations action on the environment. The strategic choice theory is the evolution of the environmental theory that is deterministic theories. The theory of strategic choice initiates when the forces of external environment of the company affect the organisation actions. Change in the external environment of the company results in making adjustments and bringing alterations in the business strategies of the company (Wheelen and Hunger, 2017). When the organisations make the adjustments, the leaders started developing many feasible options. Out of these options, the leaders have to select one of them which are most feasible and thus it is considered as one of the best approach to take.

Conclusion

Considering the strategic choice theory leads to the conclusion that deterministic approach was inadequate to be considered for organizational actions. This is because it fails to provide the power and options to the leaders of the organisation that are actually running the company’s functions. It has been analysed that there were many drawbacks of deterministic theory of organisation because it was not focusing on the initial contextual factors of the organisation which also plays a great role in taking the organisational decisions. Difference organisations have different situations and different beliefs. Thus, along with the outside environmental factors, it is also required to consider those internal factors to ate the decision over the actions that needs  to be taken by the company in response to the changes of the industry or in order to survive in the industry. Providing all the controlling power to the market is not the correct approach to take the organization decisions. This is because following the similar rules and regulation of the industry and making the decision accordingly is impossible for all the organizations. The internal differences and the approaches for functions has their impact of the organisational decision and considering all the factors is the correct approach to take any of the organisational actions.

Conclusion:

It has been concluded from the above discussion that strategic theory is one of the best approaches that can be implemented in the organisation to make the organisational decision and actions. It has more contribution in the organisational actions because it involves the contextual factors from internal as well as external environment of the company. It has been summarized from the discussion that there are two theories that can affect the organisation actions. The first one is the deterministic approach or theory that includes population ecology theory, institutional theory and resource dependent theory. All these theory considers the environmental factors of the external environment of the company or the organisations. As the organisation starts getting affected by the environmental contextual factors, they developed the capabilities of adopting the changes. This evolves the theory of strategic choice. This is the theory that focuses on the leaders of the organisation and provides powers of controlling the organisational actions to them. in case of deterministic theory, all the power of taking decision were with the market and the organisational have to make the changes according to the market demands. With the change in t perspective of the company and the dynamic nature of the market, the organisations adopted the approach of strategic choice hat allow the organisation to take the more feasible option after developing many alternative strategies. This also involves the concept of contingency that was not including in the theory of deterministic. When the comparison is done, it has been analysed that strategic choice is the most relevant theory as it allow the organisation to attain their goals as per their situation and internal competencies than the goals of the market. The adjustments that have been made are also in terms of the internal competencies along with the external impact of the organisations.

References:

Burrell, G. and Morgan, G., 2017. Sociological paradigms and organisational analysis: Elements of the sociology of corporate life. Routledge.

Clegg, S., 2013. The Theory of Power and Organization (RLE: Organizations). Routledge.

Davis, G.F. and Adam Cobb, J., 2010. Chapter 2 Resource dependence theory: Past and future. In Stanford's organization theory renaissance, 1970–2000 (pp. 21-42). Emerald Group Publishing Limited.

Drees, J.M. and Heugens, P.P., 2013. Synthesizing and extending resource dependence theory: A meta-analysis. Journal of Management, 39(6), pp.1666-1698.

Feldman, M.S. and Orlikowski, W.J., 2011. Theorizing practice and practicing theory. Organization science, 22(5), pp.1240-1253.

Hessels, J. and Terjesen, S., 2010. Resource dependency and institutional theory perspectives on direct and indirect export choices. Small Business Economics, 34(2), pp.203-220.

Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.

Miner, J.B., 2015. Organizational behavior 1: Essential theories of motivation and leadership. Routledge.

Nielsen, B.B. and Nielsen, S., 2011. The role of top management team international orientation in international strategic decision-making: The choice of foreign entry mode. Journal of World Business, 46(2), pp.185-193

Peters, B.G., 2011. Institutional theory in political science: the new institutionalism. Bloomsbury Publishing USA.

Salimath, M.S. and Jones III, R., 2011. Population ecology theory: Implications for sustainability. Management Decision, 49(6), pp.874-910.

Sergiovanni, T.J. and Corbally, J.E. eds., 1986. Leadership and organizational culture: New perspectives on administrative theory and practice. University of Illinois Press.

Shafritz, J.M., Ott, J.S. and Jang, Y.S., 2015. Classics of organization theory. Cengage Learning.

Talke, K., Salomo, S. and Rost, K., 2010. How top management team diversity affects innovativeness and performance via the strategic choice to focus on innovation fields. Research Policy, 39(7), pp.907-918.

Watson, T., 2013. Management, organisation and employment strategy: new directions in theory and practice. Routledge.

Wheelen, T.L. and Hunger, J.D., 2017. Strategic management and business policy. pearson

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