Organizational Theory

1. 5
Chapter
Relationships Between
Organizations
Organization Theory and Design
Eleventh Edition
Richard L. Daft
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3. Contents

5. Organizational Ecosystems
Interorganizational relationships –
resource transactions, flows, and linkages
that occur among two organizations
Organizational ecosystem – a system
formed by the interaction of a community
of organizations and their environment
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Apple, for instance, travels in several major industries,
including consumer electronics, Internet services, mobile
phones, personal computers, and entertainment.

7. Is Competition Dead?
Samsung’s mission has long been clear: knock off Sony as the world’s top electronics maker. Within the past several
years, the Korean underdog surpassed giant Sony in market capitalization, revenue, and profits. The two companies
continue to battle, along with a few other top electronics makers, for the No. 1 spot in global television sales.
So what possible reason could Samsung have for letting Sony use some of its key technologies for flat-panel
televisions before Samsung’s own products used them? Sony’s televisions using those technologies ended up
outselling Samsung’s LCD sets by more than three to one in the year they were released. Not such a smart move on
Samsung’s part, you would think, but you might be wrong. By working closely with Sony, Samsung engineers and
managers knew they were getting a crash course in how to make better LCD televisions. Previously the company had
used the technology primarily for computer monitors and cellphones. Samsung engineer Jang Insik and his Sony
counterpart Hiroshi Murayama talk by phone several times a day. “If we can learn from Sony,” says Jang, “it will help
us in advancing our technology.”
As competition in electronics has intensified, Sony and Samsung have come to realize that they depend on each
other in areas of technology and developing new products. The partnership between the two companies began in
2003, when both first started making LCD panels. Samsung had the better technology, but Sony had a far superior
understanding of how to turn that technology into top-selling products. Sony closely guards its know-how, but
Samsung was able to get a close-up look because of the partnership. Samsung televisions that came out the
following year used some of the same features that made Sony’s designs so popular. The two firms continue to try to
out-do one another, but they continue to share information too, because managers at both companies know it’s the
best route to growing stronger

8. Is Competition Dead?
• Changing technology and new regulations
present organizations with international
competition
• Organizations are involved in complex
networks; the number of corporate alliances
are increasing
• Traditional competition no longer exists
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13. The Changing Role of Competition
✓ In ecosystems, managers move beyond traditional responsibilities
✓ Managers must think about horizontal processes
✓ The old role of management relied on operation roles and
boundaries
✓ Collaborative roles are becoming more important for success
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14. A Framework for Interorganizational Relationships
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15. Resource Dependence
• Resource-dependence theory argues that organizations try to minimize
their dependence on other organizations for the supply of important
resources and try to influence the environment to make resources
available.
• Locking in resources through long-term supplier relationships is a common
resource-dependence theory
• Supply chain management refers to managing the sequence of suppliers
and purchasers
• Large independent companies can have power over small suppliers
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16. A Basic Supply Chain Model
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18. Collaborative Networks
✓Emerging alternative to resource dependency
✓Companies join together to become more competitive and to
share scarce resources
✓Alliances require managers who are good at building networks
✓Companies can share risk and cooperation is a prerequisite for
greater innovation, problem solving, and performance
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21. Population Ecology
• Organizational diversity and adaptation within a population of
organizations
• Population is a set of organizations engaged in similar activities
• The theory notes that large, established organizations often
become dinosaurs
– They have difficulty adapting
– The changing environment determines survival or failure
• Heavy investments can limit organizational adaptation
• Model looks at organizational form
• Organizational niche can help aid in the survival of an
organization
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23. Elements in the Population-Ecology
Model of Organizations
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24. Strategies for Survival
Organizations struggle for existence
(competition)
• Generalist strategies – wide niche or domain,
broad range of products or services to a broad
market
• Specialist strategies – narrow range of goods
or services that serve a narrow market
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25. Institutionalism
• Institutional perspective:
– Manage survival
– Balance expectations of environment
• Institutional Environment
– Norms and values of stakeholders
– Adopt structures and processes to please
outsiders
• Legitimacy - an organization’s actions are
desirable, proper, and appropriate
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26. Institutional View and
Organizational Design
Technical Structure
• Day-to-day work
• Technology
• Operating
requirements
Governed by norms
and rationality of
efficiency
Institutional Structure
• Visible to the public
Governed by
expectations of the
public
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27. Design Essentials
✓ There has been an evolution in interorganizational
relationships
✓ Organizations operate within an ecosystem
✓ Four perspectives have been developed to explain relationships
among organizations
✓ Collaboration is an emerging alternative to resource
dependence
✓ New organizations fill niches left open by established
companies
✓ The institutional perspective notes that interorganizational
relationships are shaped by legitimacy as well as
products/services
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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