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Introduction to Organizational Theories

Discuss how the strategic choice and organizational theories such as resource dependency theories, institutional theory and population ecology theory assist in organizational action and design.

Organizational theories include the concepts which can be used for analyzing the organizations. Under these theories, organization is described as a social unit of individuals which are structured and managed to fulfill a need or to practice the mutual objectives. The scope of organizational theory is regarded as a split body of information by covering several challenging concepts to understand and describe the organizational structure and its business activities. There are various scholars who entitle that arguments among these organizational concepts are the extent of rivalry of their opinions, thoughts and ideas. Moreover, some management researchers undertake that these theoretical concepts are generated from logical research findings and applied to overcome the issues faced by real world firms. This essay is focused on how the strategic choice and organizational theories such as resource dependency theories, institutional theory and population ecology theory assist in organizational action and design.

The essay discusses about how all the theories can be reunited in a single concept by critically evaluating the effective opinions and ideas about the responsibilities of leaders and managers so that they can generate positive results for the company. After the evaluation of agency and determinist theories, it can be said that it is very difficult to merge these theoretical concepts into a single theory. Firstly, this paper covers the primary dimensions of organizational design. Furthermore, it includes the classical arguments about the three organizational concepts. At the end, all the three theories i.e. resource dependence theory, population ecology theory and institutional theory are critically analyzed.

An organization is the group of people with the mutual objective like a business and government. It is an entity that includes various people like association, institution which has a mutual objective and this goal is connected to external environment and its factors (Schiele, Ellis, Eßig, Henke & Kull, 2015). In general, the organization can be described as the association of individuals, who work together to achieve collective targets by allocating the human resources and their roles. According to the open system concept, an organization is a structure which transforms efforts from business atmosphere by the activities with management and production technology. According to Tian & Tran (2012) an organization is developed by the individuals with the goal of achieving impacts that an individual cannot achieve solely. In their article, the authors referred organizational system as a framework and structure of communication and coordination among different divisions of a firm (Tran & Tian, 2012). In this context, Simon & March (2009) stated that organization is a formal system of roles and responsibilities that monitors and controls how its workforce is to coordinate and use the resources to accomplish its common objectives. This can be organized and converted by using the organizational designing process (Simon & March, 2009). The modern companies use different organizational structures such as line, matrix and centralization.

Dimensions of Organizational Design


In order to develop the actions of an organization, the management of a company considers three basic dimensions like formalization, complexity and centralization. One of the most important dimensions of design is formalization which is focused on the process to develop a formal organizational structure and includes effective management of that structure (Greenberg, 2014). Another dimension of company design is centralization, under which company makes the decisions by emphasizing on single matter of company. In this, the senior level of management makes all the decisions in organization. Moreover, complexity refers to the process to differentiate the company on the basis of levels like spatial, horizontal and vertical.

An organizational structure defines an approach of business and its response to the marketplace. There are two general theories of organizational structure i.e. strategic and deterministic. These theories can be differentiated on the basis of adaptability extent that they undertake to manipulate the market (D’Adderio & Pollock, 2014). This paper includes the deterministic theories only which describe that the organizational strategies can be decided by its external factors. This section includes the discussion about some organizational concepts that can be pursued for organizational design and research. In this essay, there are three types of organizational theories which serve to know about the organizational actions. The theories which are considered here are Population ecology theory, Institutional theory and resource-based theory.

Among these theories, one of the foremost deterministic theories is resource dependence theory which explains that how the organizations communicate with environmental factors and how they collect and allocate its resources so that they can be used in the interest of organization. The firms should coordinate with its external atmosphere for getting assets and resources which are needed for the survival and growth of organization (Malatesta & Smith, 2014). This organizational theory is proposed by Jefferey and Gerald that focuses on the power-pursuing characteristics and behavior of a company. This theoretical concept of organizational design emphasizes on the connection between resource holders and organization. This theory recommends that leaders in a workplace should have a good understanding and knowledge about significant and required resources of its production and logistics system. Additionally, they should have the knowledge about the resource scarcity (Nienhüser, 2008). This understanding assists the managers to develop different tactics and strategies according to the resource requirement and they can reduce the resource dependencies.

In this relation, Cobb & Davis (2009) stated that there may be different kinds of resources to an organization like raw material, financial resources, human resources, finished goods, intangible resource etc. If a company makes efforts to maintain its resources, then others will depend on this. Too much resource dependency among organizations will create uncertainty in the business environment. In that case, the leaders require strategizing the business processes and operations so that they can mitigate the related risks (Davis & Cobb, 2009). The implementation of resource dependency theory can be understood by the example of ACME system. It is an IT security firm for media firm, XYZ multimedia co. This example states that IT Security Company is dependent on Media Company as it is the only way of generating revenues and profits. In this way, the companies may face some risks while implementing this organizational theory. In order to overcome these associated risks, the security firm needs to find more companies so that it can reduce the level of dependency on a single firm. To use the resources, the leaders can utilize various approaches like mergers, acquisitions, joint ventures etc. In this way, it can be stated that this theory provides the base to identify the effect of organizational behavior power.

Organizational Structures


Second organizational design theory is institutional theory that offers important guidelines to assess the workplace environment and relationships with the emphasis on rules, norms, values and expectations. In this context, Mahalingam & Levitt (2007) stated that these norms and values help the company to develop organizational behavior in a workplace. In order to attain survival ability, the organizations should comply with different laws, rules and regulations of organizational environment. Institutional theory is a process of the entities moving to similarities like isomorphism (Mahalingam & Levitt, 2007).

This theoretical concept can be explained by defining three processes i.e. coercive, mimetic and normative. It can be analyze from a firm that political and legal factors are the outcome of coercive pressures and normative pressures are the result of cultural expectations. Furthermore, operating the business as successful entities can lead to mimetic forces. Institutional theory suggests the company’s success may have implicit. The firms may face failure when it does not follow the imposed values and regulations. For instance, there are various shipping firms which implement this type of theory so that they can manage the ship safety and promote the compliance of Safety management code and standards.

Apart from above two theories, todays’ companies can practice Population Ecology theory which was given by Aldrich and Pfeffer in 1976. This is an open system theory that includes company’s environment. It is an important theoretical approach that gives the answer to the question that why some of the organizations endure while others fail. Population Ecology theory studies the changes in the firms’ different groups. This theory emphasizes on the population changes rather than changes in the individuals adopting complex contingencies (DeAngelis, 2018). For instance, gas and oil producers can be considered as a population. It evaluates the effect of the behavior of population on the outcomes of a firm. This theory decreases the importance of groups and individuals as it targets large population.


In the long term, structural dormancy can grow with the development of companies which can be a barrier. It can resist the alterations in the organization and its workplace. In an organization, there might be several reasons of this structural inactivity such as restricted information, financial constraints and restricted investment. This organizational design theory includes three situations of a corporation (Rockwood, 2015). These situations are like variation, selection and retention. This theory can be understood by looking at the example of General Motors because this company has made the changes in its organizational structure and adopted political factors to impact the public policy in an effective way which ensures its existence and growth. However, population ecology theory can be problematic sometimes as it is not able to respond the practical events.

Organizational Theories for Organizational Design and Research

Thus, a company can implement the above theories for the development of organization design and action. All the three theories define the relationship between working environment and organizational design. From the above analysis, it can be said that there are both similarities and differences among above three organizational theories. Resource dependency theory focuses in an individual company. It emphasizes on the effect of agents indicating the principles to give response to the changes in an organization. The operations and working of agents is very important for the organizations and contingencies changes (Hauser, 2014). So, it is very important to develop best suitable strategies for business entities by assessing the entire environment. Apart from this, population ecology and institutional concepts focus on the higher level position which consists of the organizational population by emphasizing on the factors from environment like legal and political factors. There are various similarities between institutional and population ecology theories as both concepts suggest that the corporations are determined by atmosphere selection. Institutional theory describes that macro-environmental factors are the primary forces which can develop the structure of organization. Likewise, population ecology is responsible for the importance of validity for the firms to stay competitive (Miner, 2015).

There are various authors who claimed that there are no different between institutional and population ecology theories. There are various differences in both perspectives. Institutional theory is responsible for the group influence on what is considered authentic while population ecology concept assumes that legality is the obvious result of size of population. Moreover, resource dependency theory researches the relationships of different companies with different dependencies (Melé & Cantón, 2014). This theory focuses on utilizing the power of agents to make sure that there is an increment in the resources from its surroundings. Population concept provides the best fit organizational structure which can be chosen by its environment to protect the resources and competencies.


Thus, the above essay finds out that resource competency theory can be considered as most compelling concept for determinism and strategic choice. The primary reason of choosing this is that this concept defines the organization effectively. It considers all the important resources of company like financial resources, human capital, goodwill, intellectual property, physical resource etc. whereas other two concepts include environment and population only (Suddaby, 2015). Resource dependency theory may lead the management to manage the firm by adopting different methods like merger, joint ventures etc.

Conclusion

Thus, the above essay concludes that there are three major theories which can be used by an organization to develop its structure and actions. These theories can be practiced to describe the relationship between external and internal environment of organization. After evaluating all the theories critically, it is found that resource dependency theory is the best theory which can be used by the organization to survive in long run. It is not easy to reconcile all the above theories in a single theory. Generally, the firms implement the theories in different situations that establish the relationship between environment and organization. In a workplace environment, the leaders should choose the most suitable theory according to the situations.

References

D’Adderio, L. & Pollock, N., 2014. Performing modularity: Competing rules, performative struggles and the effect of organizational theories on the organization. Organization Studies, 35(12): 1813-1843.

Davis, G.F. & Cobb, J. A. 2009. Resource Dependence Theory: Past and Future. < https://webuser.bus.umich.edu/gfdavis/Papers/davis_cobb_09_RSO.pdf> viewed on 8 June 8, 2018.

DeAngelis, D.L., 2018. Individual-based models and approaches in ecology: populations, communities and ecosystems. CRC Press.

Greenberg, J., 2014. Behavior in Organizations: Global Edition. Pearson Higher Ed.

Hauser, L., 2014. Work motivation in organizational behavior. Economics, Management and Financial Markets, 9(4): 239.

Mahalingam, A. & Levitt, R.E. 2007. Institutional Theory as a Framework for Analyzing Conflicts on Global Projects. Journal Of Construction Engineering And Management. 133 (7): 517-528.

Malatesta, D. & Smith, C.R., 2014. Lessons from resource dependence theory for contemporary public and nonprofit management. Public Administration Review, 74(1): 14-25.

Melé, D., & Cantón, C. G. 2014. The Idea of the Human Person in Management and Organizational Theories. In Human Foundations of Management (pp. 30-49). Palgrave Macmillan, London.

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

Nienhüser, W. 2008. Resource dependence theory-How well does it explain behavior of organizations?. management revue, pp.9-32.

Rockwood, L.L., 2015. Introduction to population ecology. John Wiley & Sons.

Schiele, H., Ellis, S.C., Eßig, M., Henke, J.W. & Kull, T.J., 2015. Managing supplier satisfaction: Social capital and resource dependence frameworks. Australasian Marketing Journal (AMJ), 23(2): 132-138.

Simon, H. & March, J., 2009. Organizations. Blackwell, Cambridge.

Suddaby, R., 2015. Can institutional theory be critical?. Journal of Management Inquiry, 24(1): 93-95.

Tran, Q.  & Tian, Y. 2012. Organizational Structure: Influencing Factors and Impact on a Firm. American Journal of Industrial and Business Management, 3: 229-23

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