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Hatch with Cunliffe: Organization Theory, 3rd edition, Chapter 3

CHAPTER 3

Chapter 3 Objectives

To define and analyse an organizations environment;


To examine three theories of organization-environment relationships: resource
dependence, population ecology, and institutional theory;
To consider the relationship between perceived environmental conditions,
uncertainty, and information;
To understand how organizations might enact their environment.

Teaching Notes

The chapter on environment establishes the context for studying organizations. A number
of ideas and theories are introduced that are covered in more detail in later chapters, for
example Burns & Stalker and Lawrence & Lorsch (Chapter 4), resource dependency
theory (Chapter 8) and institutional theory (Chapter 4).

One can begin by asking students what the differences are between modernist, symbolic,
and postmodernist views of the environment based on ideas discussed in this and the
previous chapter:

Modernism the environment is an external, objective reality, waiting to be


discovered.
It has sectors, characteristics.
There is a boundary between an organization and its environment.
Organizations can adapt or try to manage the environment.

Symbolic environments are socially constructed in the interactions of members.


Features of the environment are created and enacted by
organizational members.
They become objectified, seemingly real, and in turn influence
behaviour.

Postmodernism the environment is fragmented, boundaryless and image-driven.


A simulacra.

Oxford University Press, 2012. All rights reserved.


Hatch with Cunliffe: Organization Theory, 3rd edition, Chapter 3

Key Points:

One key issue is defining the boundary between the organization and its environment.
This varies across the three perspectives and also can depend on the purpose of the
analysis. Modernists focus on the need to define the organization and its environment,
and to manage the boundary by protecting the organization from environmental factors
and influencing the environment in the interest of the organization. The boundaries are
particularly noticeable in the identification of stakeholders, sectors, networks note the
symbolic boundaries (circles) in Figures 3.2 through 3.6. Symbolic-interpretivists see a
more fluid boundary (if any), because organizational members construct and organizations
are constructed by their environment. Postmodernists are concerned with blurring
boundaries, and some call for greater environmental and social responsibility.
Modernism buffering, boundary spanning.
Identify stakeholders (people, groups, organizations), and their
interests.
Interorganizational network analysis can help identify stakeholders
and their relationships.
Identify the general environment and its sectors, as well as
characteristics of the international environment (if applicable), as a
basis for managing environmental demands.
To be effective, the internal structure of an organization needs to
match the demands of the environment (Burns & Stalker, Lawrence &
Lorsch).
Resource dependency theory helps managers identify network
influences, especially those the organization is dependent upon, and
then minimise and proactively manage those dependencies.
Population ecology involves comparing the resources used by a
group of competitor organizations to analyse why some organizations
survive over others.

Symbolic-Interpretivism Debate whether structure or agency is more important.


Institutional theorists (structure) identify the need to study the
influence of social, political, and cultural demands on an
organizations legitimacy, and how it becomes an institution (neo-
institutionalism), as well as the influences discussed above.
Weick drew attention to the concept of enacted environment:
managers interpret and construct an environment (identify features
they think are important), assume those to be real, and act on those
features.
Ambiguity theory suggests maximising possible courses of action by
embracing ambiguity rather than trying to simplify ones environment.

Oxford University Press, 2012. All rights reserved.


Hatch with Cunliffe: Organization Theory, 3rd edition, Chapter 3

Postmodernism We live in a post-industrial (post-modern) world characterised by


instantaneity, fragmentation, boundarylessness (interweaving and
copying cultures and histories), images (I really need a Hummer), and
power-laden, oppressive relations.
Some postmodernists suggest we need more ethical, equitable, and
socially-responsible organizations.

Discussion Questions

1. How do organizations like FedEx or UPS manage resource dependencies?


2. What are some of the enacted features of your organizations environment and the
ways in which these features are enacted?
3. What are the implications of postmodern concepts of the environment? (Ken Gergens
1991 book The Saturated Self, Basic Books has some helpful insights here)
4. What issues might postmodernists have with globalization?

Suggested Class Activities

1. Ask students to work in groups to identify the general environment of a regional


newspaper organization. (Refer to Figure 3.4)

2. Tell class members that they are about to start a business in the geographic location
of the University. (The instructor may want to choose the business or have students
brainstorm and vote on a business). Ask them to:

a. Identify potential stakeholders.


b. Determine conditions and trends in the general environment.
c. What links may emerge between perceived environmental conditions,
uncertainty, and information?

3. Ask students to carry out a resource dependency analysis of an organization (their


choice or yours).

4. Ask students to bring a newspaper/magazine/journal article addressing an issue


relating to an organization and its environment to class. Discuss these in class relating
them to material in Chapter 3 (e.g., environmental sectors, contingency theories, resource
dependency theory etc).

Oxford University Press, 2012. All rights reserved.


Hatch with Cunliffe: Organization Theory, 3rd edition, Chapter 3

Chapter 3 Web Links

1. Stakeholders:
www.tutor2u.net/business/accounts/stakeholder_theory.htm

2. Population Ecology (article):


http://www.gsb.stanford.edu/news/research/ob_ecology.shtml

3. Examples of how companies such as FedEx and IBM perceive their relationship
with the environment and social responsibility:
http://www.fedex.com/us/about/
http://www.ibm.com/ibm/environment/
http://www.ibm.com/ibm/responsibility/

Oxford University Press, 2012. All rights reserved.