Organizations Evolving_Book Review
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Organizations Evolving
Book Review
Organizational Structure & Design
Kolkata 4th December, 2013
Miguel Grabiel 1117/13Rakesh Malloju 0184/49Amit Phadke 0033/49
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Contents
• Organizations• Evolutionary Processes• Organizational Emergence• Organizational Boundaries• Emergence of a Community of Practice• Organizational Transformation• Emergence of New Populations• Cognitive Strategies• 4 Types of Organizations Evolving• Community Evolution
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Organizations
Their achievements depend on the knowledge and resources available to them which vary over time and context.
Base and infrastructure of modern society, since they pursue activities too broad in scope to be accomplished by individuals.
Capacity to do harm (e.g. by-products) as well as good. Foundations and disbandings have a +/- impact on workers. Small size and shorter time-scale than its founders and managers.
Goal-oriented: behaviors and deliberate design of activity systems, focus agenda.
Boundary-maintaining: members and non-members, therefore efforts to enforce memberships (symbols such as dress style and special vocabulary).
And socially constructed systems of human activity (Aldrich, 1979): specialization of functions, routines (interpersonal and interaction with machines), control structures for evaluation and compensation.
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Evolutionary Processes
Variation
•Change from current routines, competencies and organizational forms.•Intentional: when people actively try to generate alternatives and look for solutions to problems (e.g. Problemistic search, innovation incentives)•Blind: occurs independently of environmental or selection pressures (e.g. mistakes, luck, and idle curiosity).
Selection
•Differential elimination of certain types of variations.•External: Environmental forces affect organizational routines and competencies (e.g. market, competitive and regulation pressures).•Internal: Forces internal to an org. that affect its r&c (e.g. pressures toward internal stability and homogeneity, past selection criteria no longer relevant, escalation of commitment)
Retention
•Selected variations are preserved, duplicated or reproduced.•Within Organizations: Specialization and standardization of roles limiting discretion.•Between organizations: Institutionalization of practices in cultural beliefs and values.
Struggle
•Contest to obtain scarce resources because their supply is limited.•Struggle within organizations, since members pursue individual incentives as well as organizational goals.
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Organizational EmergenceAdult Population• Conception
Nascent Entrepreneur• Gestation
Fledging New Firm• Infancy
Established New Firm• Adolescence
The Stages of Nascent Entrepreneurship – Adapted from Reynolds (1994)
I. Think about business opportunities.
II. Entrepreneurial Activities (e.g. business plan, workforce- and finance-seeking).
Not linear, step-by-step process.
Resource requirements for initial efforts are low.
Fierce selection pressure. Outcomes of the
founding process are highly uncertain.
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Nascent Entrepreneur
Social Network
• Diversity in network composition
• Strong and long-duration ties may avoid opportunism and uncertainty
• Brokers as channel to resources and opportunities (e.g. high-status people).
Knowledge
• To Apply under extreme time pressures (Improvisation).
• Sources: Previous work experience (constraint?), Experts and Imitation.
• Codify or Share valuable knowledge?
• Knowledge needs validation from external sources.
Resources
•Contained personnel when formed.•Own funds preserves autonomy.•Informal (Family, Friends, Business Angels) and Formal (Banks, Venture Capitalists) sources of capital.
REPRODUCER OR
INNOVATOR?
The majority of organizations start as small reproducer.
If too innovative, will not survive.
Competence-enhancing innovations of start-ups are absorbed by incumbents
Many organizing attempts fail (Intentions misguided or impossibility to mobilize resources).
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Organizational Boundaries
Development of
Organizational Boundaries
Different Selection Pressures
Routines and
Competencies kept alive
Transform
population’s
knowledge
Contribution to
population
dynamics
How do hiring decisions shape new organizations?
New recruits bring own skillsets and preferences which tend to be retained
Members keep performing routine and differentiated tasks unless a change is
forced
Caution: Organization’s ability to respond creatively to changing environmental conditions may be hampered by too much internal homogeneity and organizational inertia.
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Emergence of a Community of Practice
Patterned social
interaction between members
Sustains organizatio
ns knowledge
Facilitates reproductio
n
Community ofPractice Integration Differentiatio
nAmbiguity
Consensus Organization-wide
Only within clusters
Fluctuating across issues
Consistency
High Low Fluctuating
Sources of change
External events or managerial directives
Inter group conflict
Individuals and groups
Focus Narratives, Rituals
Behavior, routine
Cognition, Behavior
Organizational Culture: 3 Threads of interpretations
Founders and
members of new
organizations create
communities of
practice
Organizational boundaries
become more salient as contrast
between org activities and environment
deepens
Organizational
coherence can be
increased by sharing knowledge
through community of practice
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Organizational Transformation
Activities
• Changes in an organization’s activity system that have a major effect on organizational knowledge
Boundaries
• Expansion or contraction involving members or other organizations
Goals
• Major Changes in domain claimed of in breadth of products and services
Transformation involves a major change in an organization over time and represents a substantial variation, planned or
unplanned, that has been selected and retained
Organization that cannot change
will constantly be at risk, if its
environment is evolving and it
cannot keep pace
If a substantial number of organizations are unable to
make the transformation and new organizations don’t replace them, the
population will not sustain
If most organizations are constrained from
undergoing transformation then
population will persist through founding of new
organizations
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Emergence of New Populations
Acceptance of new kind of venture as a taken for granted part of environmentWhen an activity becomes so familiar & well known that people take it for granted consumers point of view, cognitive legitimacy means people are committed users of a product or service
Cognitive Legitimac
y
Socio Political
Legitimacy
Acceptance by key stake holders the general public, key opinion leaders and government officials as appropriate & right
Moral acceptance referring to conformity with cultural norms and values, Regularity acceptance, referring to conformity with government rules and
regulations
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Cognitive Strategies
Organizational
Create Knowledge base through Experimentation
Link new ventures to Past via social behaviors
Build on local networks of trust
Avoid entanglement of government agencies
Within Population
Encourage convergence around a dominant design
Collaborate for standard setting bodies
Foster perceptions of Reliability by mobilizingTo take collective action
Present a united front toPolitical and government officials
Between populations
Promote alliance & third party activities
Create cross population groups and associations
Negotiation and Compromise with other industries
Co-opt govt. agencies as allies against competing populations
Communitycreate linkages with established educational cirricula
Cooperate with independent certifying institutions
Organizing collective Marketing and lobbying efforts
PAC’s and hiring ofFormer government officials
LearningCognitive Legitimac
y
Moral Legitimac
y
Regulatory
Legitimacy
Cognitive strategies Socio-political Strategies
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Reproducing Populations
DisbandingRate
• Disbanding rate is “ Death Rate” of organizations in populations
• Its importance lies in “ identifying favored forms and which criteria would work”
Entrepreneurial knowledge &
intentionsEntrepreneurial
access to resources
Factors affecting Emerging & Disbanding Rate
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Intra-Population Conditions
Density Dependent model
N- Population Density (No. of organizations at any
given time)r- intrinsic rate of growth in
population (Hypothetical rate at which it would grow
in the absence of constraints from competitors )
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Factors affecting population reproduction
• They decrease current organizations likelihood of disbanding by freeing up resources
• Likely to affect founding rate negativelyPrior Disbanding
• Likely to increase subsequent disbanding drawing overly optimistic & poorly prepared organizations
• Organizations founded during higher density experience high disbanding rate
Prior Founding
• Resources become more competitive• A “U” shaped affect on disbanding • Measuring density (regional/city/national level)
depends on industry (newspaper vs. breweries or banks vs. insurance)
Density Dependence
• Organizational form that gains a selective advantage by concentrating on a narrow niche
• Gaining a selective advantage by spreading itself over a broad niche
• Organizational forms that gain advantage by reproducing rapidly when carrying capacity is under exploited
• Gaining a selective advantage by making effective use of resources when it approaches its carrying capacity
R vs. K strategists Generalists vs. Specialists
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G3G2
G1
Four Types of Organizations Evolving
K- SpecialistThey survive with small & stable market share
K-GeneralistEarly followers are likely to be k- generalists through subsidiaries etc
4 Types
G1+G2+G3
S1 S3
S2 S4
Un concentrated
Market
concentrated Market
Resource Partitioning
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Community Evolution
Commensalism
Full Competition
Partial Competition
Predatory Competition
Neutrality
Partial Mutualism
Full Mutualism
Full Competition
Partial CompetitionPredatory
Competition
Neutrality
Partial Mutualism
Full Mutualism
Growth in each population detracts growth in other
Inter-population relations are asymmetric with only one having negative affect on other
One population expands at the expense of others ex: Television over radio
Two populations in the same community have no affect on each other ex: Savings bank vs financial services
Inter-population relations are asymmetric with only one benefitting ex:
Two populations are in overlapping niches benefitting from presence of each other
Symbiosis Two populations are in different niches and benefit from presence of each other Ex: Venture capitalists & Technology Firms
DominanceAs commensalistic and symbiotic relations develop within emerging communities, a hierarchy of influence & power emerges Ex: Lender to borrower , wholesaling to retailing , supplier to customer (B2B)
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Formation of Organizational Communities
• Catalysts to generate new communities • Shifts in societal norms and values/ changes in laws and regulations• Technological innovation (World wide web is an example)
Role of Entrepreneurs Funding Sources Favored form organizations entry
Steady Stream of organizational founding for the growth population
Radio, retail stores, educational institutions
Symbiotic role of venture capitalists
Semiconductor, biotechnology firms, technology firms
Changing favored mixResource partitioning
effectMature populations with K-specialists, K-generalistsNew & entering first time; Old and diversifying into new market
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THANK YOU!