The document discusses the major environmental conditions that shape public organizations, including: 1) general values and institutions of the political economy such as constitutional provisions, due process, and separation of powers; 2) values and performance criteria for government organizations like competence, efficiency, and accountability; and 3) institutions, entities, and actors with political authority and influence such as chief executives, legislatures, courts, other governmental agencies, and different levels of government. It also reviews theories on how organizations adapt their structures based on environmental conditions.

1. Understanding and Managing
Public Organizations
Chapter 4
Analyzing the Environment of
Public Organizations

2. General Environmental Conditions
• Technological conditions
• Legal conditions
• Political conditions
• Economic conditions
• Demographic conditions
• Ecological conditions cultural conditions

3. General Environmental Conditions
• Technological conditions: the general level of knowledge and capability in science, engineering,
medicine, and other substantive areas; general capacities for communication, transportation, information
processing, medical services, military weaponry, environmental analysis, production and manufacturing
processes, and agricultural production.
• Legal conditions: laws, regulations, legal procedures, court decisions; characteristics of legal
institutions and values, such as provisions for individual rights and jury trials as well as the general
institutionalizations and stability of legal processes.
• Political conditions: characteristics of the political processes and institutions in a society, such as the
general form of government (socialism, communism, capitalism, and so on; degree of centralization,
fragmentation, or federalism) and the degree of political stability (Carroll, Delacroix, and Goodstein,
1988). More direct and specific conditions include electoral outcomes, political party alignments and
success, and policy initiatives within regimes.
• Economic conditions: levels of prosperity, inflation, interest rates, and tax rates; characteristics of
labor, capital, and economic markets within and between nations.
• Demographic conditions: characteristics of the population such as age, gender, race, religion, and
ethnic categories.
• Ecological conditions: characteristics of the physical environment, including climate, geographical
characteristics, pollution, natural resources, and the nature and density of organizational populations.
• Cultural conditions: predominant values, attitudes, beliefs, social customs, and socialization
processes concerning such things as sex roles, family structure, work orientation, and religious and
political practices.

4. Research on Environmental Variations
• Notable contributions to this line of research include
Selznick, Lawrence, and Lorsch; Burns and Stalker;
and James Thompson

5. Research on Environmental Variations
• Phillip Selznick
• TVA and the Grass Roots (1966)
• Environmental influences play a crucial role in the
institutionalization of processes.
• Values, goals, and rules become firmly established not
so much because of efficiency but because of
environmental influences.

6. Phillip Selznick (1966)
• Co-optation is “the process of absorbing new elements into the
leadership or policy-determining structure of an organization as a
means of averting threats to its stability or existence.”
• Basically, it can mean either shared power and authority or sharing
of responsibility and participation without actual redistribution of
power. It usually happens when an organization is “out of synch”
with its environment (lack of legitimacy, lack of mobilizing power).
• Often the goal of co-optation is “the sharing of public symbols or
administrative burdens of authority and public responsibility, but
without an actual transfer of power.” The organization needs to
make sure the co-optation doesn't get out of hand. The organization
needs participation, but too much participation may threaten
leadership (hence the inherent dilemma and tensions).

7. Significance of Co-optation
• Co-optation is significant to organizational analysis
because it represents a change or broadening of
leadership. It also tells us that every adaptive structure
evolves to meet its basic needs for survival and develops
methods of self-defense.
• One can explain organizational behavior by examining
the function or structure of the organization in relation to
these needs. The organization strives for security and
stability of formal and informal relations.

8. Lawrence and Lorsch (1967)
• They define differentiation as “the state of
segmentation of the organizational systems into
subsystems, each of which tends to develop
particular attributes in relation to the requirements
posed by its relevant external environment.”
• They define integration as “the process of achieving
unity of effort among the various subsystems in the
accomplishment of the organization's task.“

9. Lawrence and Lorsch
• Organizations must balance differentiation and integration to be
successful. Those companies who manage to achieve high sub-
unit differentiation and yet still maintain high integration between
sub-units seem to be best equipped to adapt to environmental
changes.
• Groups that are organized to perform simpler, more certain tasks
(such as production groups) usually have more formal structures
than groups focusing on more uncertain tasks (for example,
research and development).

10. Burns and Stalker
• Through their theory of mechanistic and organic systems, Tom Burns and
G. M. Stalker have provided a way to understand which organization forms
fit to specific circumstances of change or stability.
• In their highly influential work “The Management of Innovation” (1961) they
provide the characteristics of mechanistic versus organic systems.
• Stable conditions suggest the use of a mechanistic form with traditional
patterns of hierarchy, reliance on formal rules and regulations, vertical
communication, and structured decision making.
• More dynamic conditions—situations with a rapidly changing
environment—require an organic form that is less rigid, is more
participative, and relies on workers to redefine their positions and
relationships.

11. Mechanistic Versus Organic
• Tasks are separated.
• Tasks are narrowly
defined.
• Has a hierarchy with
centralized top-down
control.
• Rules are pervasive.
• Communication is
vertical.
• Employees contribute to
shared tasks.
• Teamwork redefines tasks.
• Is flatter with less hierarchy.
• There are fewer rules.
• Knowledge and control of
tasks are located anywhere
in the organization.
• Communication is
horizontal.

12. Why Is This Important?
• Essential organization goals or tasks require certain
organizational environments.
• The impact of these organizational forms on
individuals is different.
• Managers find the mechanistic form provides a
greater sense of security when dealing with their
environment than the organic form.
• Either form may be appropriate in particular
situations.

13. Contingency Theory
• An organization’s structure must be adapted to
contingencies.
• In simple, homogenous, and stable environments,
organizations can successfully adopt mechanistic and
centralized structures.
• In more complex environments, successful organizations
must be organic and less decentralized.

14. Contingency Theory
• Capacity
• Domain consensus and choice
• Turbulence and interconnectedness
• Stability, dynamism, change rates

15. Descriptive and Analytic Dimensions of
Organizational Environments
• Capacity
• Homogeneity-heterogeneity
• Stability-instability
• Domain consensus-dissensus
• Turbulence

16. Recent Trends in Research on
Organizational Environments
• Population ecology—a deterministic viewpoint.
Populations vary because of their environments.
• Resource-dependence: Organizations depend on their
environment for critical resources. Organizations
exchange to gain resources, which in turn alters the
power-dependence dynamic.
• Transaction costs: Make-buy decisions can be examined
in terms of the cost of the exchange. All governance forms
have unique competencies.
• Studies of institutionalization
o Isomorphism
o Coercive isomorphism
o Normative isomorphism

17. Descriptive and Analytical Dimensions of
Organizational Environments
Aldrich (1979)
• Capacity: the extent to which the environment affords a rich or lean
supply of necessary resources
• Homogeneity-heterogeneity: the degree to which important
components of the environment are similar or dissimilar
• Stability-instability: the degree and rapidity of change in the
important components or processes in the environment
• Concentration-dispersion: the degree to which important
components of the environment are separated or close together,
geographically or in terms of communication or logistics
• Domain consensus-dissensus: the degree to which the
organization’s domain (its operating locations, major functions and
activities, and clients and customers served) is generally accepted
or disputed and contested
• Turbulence: the degree to which changes in one part or aspect of
the environment in turn create changes in another; the tendency of
changes to reverberate and spread

18. Major Environmental Components for Public Organizations
General Values and Institutions of the Political Economy
Political and economic traditions
Constitutional provisions and their legislative and judicial development
Due process
Equal protection of the laws
Democratic elections and representation (republican form)
Federal system
Separation of powers
Free-enterprise system (economic markets relatively free of government controls)
Values and performance criteria for government organizations
Competence
Efficiency
Effectiveness
Timeliness
Reliability
Reasonableness
Responsiveness
Accountability, legality, responsiveness to rule of law and governmental authorities,
responsiveness to public demands
Adherence to ethical standards
Fairness, equal treatment, impartiality
Openness to external scrutiny and criticism

19. Major Environmental Components for Public Organizations
Institutions, Entities, and Actors with Political Authority and Influence
Chief executives
Executive staff and staff offices
Legislatures
Legislative committees
Individual legislators
Legislative staff
Courts
Other government agencies
Oversight and management agencies (GAO, OMB, OPM, GSA)
Competitors
Allies
Agencies or governmental units with joint programs
Other levels of government
“Higher” and “lower” levels
Intergovernmental agreements and districts
Interest groups
Client groups
Constituency groups
Professional associations
Policy subsystems
Issue networks
Inter-organizational policy networks
Implementation structure
News media
General public opinion
Individual citizens with requests for services, complaints, and other contacts

20. Major Environmental Components for
Public Organizations
• General values and institutions of the political economy
• Values and performance criteria for government
organizations
• Institutions, entities, and actors with political authority
and influence

21. General Values and Institutions of the
Political Economy
• Political and economic traditions
• Constitutional provisions and their legislative and judicial
development
– Due process
– Equal protection of the laws
– Federal system
– Separation of powers

22. Values and Performance Criteria for
Government Organizations
• Competence
– Efficiency
– Effectiveness
– Timeliness
– Reliability
– Reasonableness
• Responsiveness
– Accountability, legality, responsiveness to rule of law and
governmental authorities
– Adherence to ethical standards
– Fairness, equal treatment, impartiality
– Openness to external scrutiny and criticism

23. Institutions, Entities, and Actors with
Political Authority and Influence
• Chief executives
– Executive staff and offices
• Legislatures
– Legislative committees
– Individual legislators
– Legislative staff
• Courts

24. Institutions, Entities, and Actors with
Political Authority and Influence
• Other governmental agencies
– Oversight and management agencies
– Competitors
– Allies
– Agencies or governmental units with joint programs
• Other levels of government
– “Higher” and “lower” levels
– Intergovernmental agreements and districts