The Environment

Chapter 13

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13.1

Chapter Overview

• The Myth of the Closed System

• Environmental Forces Influencing Organizations

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13.2

• The Forms of Environmental Forces

• Managing Environmental Dependence

The Myth of the Closed System

It is impossible for organizations to remain

isolated or insulated from environmental

influences and interactions

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13.3

The Reality of an Open System

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13.4

Government

regulations

Changes in

labor Changes

in

supplie

rs

Social trends

Open Systems Theory

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13.5

The Organization

Inputs (labor,

materials...)

Transformation Process

(value added)

Outputs (products, morale...)

Cyclical

The Boundary-Spanning Role

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Interactions among organizations and elements in the environment take place

in domains called boundaries

Boundary spanners span the boundary between an organization and forces in the

organization’s environment

13.6

Resource Dependence Theory

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Firms enter into relationships in search

of much-needed resources that are

lacking in their operations

13.7

Conditions that Facilitate Resource

Dependence

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13.8

1. The possession of a resource by one firm

2. The importance of the resource to the focal organization

3. The inability of the focal organization to obtain the resource elsewhere

4. The visibility of the behavior or activity being controlled

5. The social actor’s discretion in allocating the resource

6. The focal organization’s ability to take the desired action

7. The focal organization’s lack of control over the resource

8. The ability of the social actor to make its preferences known

Loose Coupling

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Not all changes in the environment are directly or automatically reflected

in commensurate changes in the organization

13.9

Environmental Forces Influencing

Organizations

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1. Other Organizations

2. The Regulatory Environment

3. The Social Environment

13.10

Other Organizations

Suppliers:

Consumers:

Competitors:

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13.11

organizations that provide inputs including capital, raw materials, and labor

organizations that purchase the organization’s outputs

other organizations that produce the same outputs

The Regulatory Environment

Laws and court rulings that legislate

the behavior of organizations,

including what the outputs look like and how transformation

processes may create those outputs

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13.12

The Social Environment

Corporate Social Responsibility: Actions an organization chooses to take (or avoid) and how these actions meet the society’s expectations related to moral and ethical standards

Social Sensitivity: Actions taken by the organization to develop a plan to minimize the negative impact of its actions on the surrounding environment

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13.13

Forms of Environmental ForcesArises when members of the organization lack information

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13.14

Uncertainty:

Instability: The rate of change in the environment

Complexity: The number of environmental cues that an organization must monitor because they are critical to its functioning

Beneficence: The generosity, leniency, and helpfulness of the environment with regard to resources

Environmental Scanning: collecting information about the environment and its possible actions

Forecasting: predicting the future actions of the environment, often using statistical models

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13.19

Managing Environmental Dependence: Anticipation

Managing Environmental Dependence: Negotiating

Lobbying: having agents plead the organization’s case with regulatory bodies

Interlocking Directorates: having influential suppliers and consumers on Board of Directors to provide policy input

Public Relations: activities which attempt to build up the image of the organization in the environment

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13.20

Contracts: obtaining legally enforceable promises from consumers or suppliers

Buffers: stockpiling resources

Joint ventures: two or more unrelated organizations pooling their resources or collaborating

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13.21

Managing Environmental Dependence: Control