Learning Objectives
At the end of this chapter, readers should be able to:
- 1.Identify and describe the different types of macro-level organizational theories.
- 2.Evaluate the role of macro-level theories in the development and implementation of organizational-level interventions.
- 3.Describe the different types of organizational-level interventions and assess the goals of these interventions in the context of OD.
11.1 Introduction
11.1.1 Organizational Theories
The development and implementation of change interventions represent another pivotal stage in the OD (organizational development) process. While many OD models have been developed over time to explain how organizational changes occur and the keys aspects of the organizational change management process (these are covered in ► Chap. 4), an understanding of organizational theories are of utmost importance to guide the overall development and implementation of organizational-level interventions in particular.
With roots in management and sociology, organizational theories have been used to explain phenomena in many fields of study. Organizational theories describe, explain, and predict the complex interaction between organizations and their external environments. Thus, these theories have the potential to ground investigations and the development and implementation of planned organizational interventions. Indeed, organizational interventions are based heavily on planned organizational responses to organizational environments; hence, the use of organizational theories becomes relevant.
Organizational theories: Organizational theories explain the interaction between organizations and their external environments.
Even under optimal internal organizational conditions, the development and implementation of OD interventions can be affected by changes in organizations’ external environments, such as fluctuations in funding, new technology, new legislation, or other environmental shifts. Internal organizational conditions are increasingly reflected in implementation frameworks, but nuanced explanations of how organizations’ external environments influence implementation success are needed within OD research. Organizational theories provide OD practitioners engaged in the development and implementation of organizational-level interventions with a host of existing, highly relevant, and heretofore largely untapped explanations of the complex interaction between organizations and their environment [1].
There are many different types of organizational theories, both classical and contemporary. The most popular organizational theories include:
- Resource dependence theory (political economy approach/exchange perspective
- Ecological theory (population ecology perspective/natural selection model)
- Institutional theory
- Contingency theory
In this chapter, these organizational theories are explored in detail.
11.2 Different Types of Organizational Theories
11.2.1 Resource Dependence Theory
11.2.1.1 Key Tenets
The resource dependence theory (RDT) is also known as the political economy approach and the exchange perspective. Since its emergence in 1978 thanks to Pfeffer and Salancik, RDT has become one of the most influential theories in organizational theory and strategic management.
Resource dependency: Resource dependency is an organizational theory which recognizes that the structure and operation of organizations are linked to the nature of power relations that exist between two or more organizations.
RDT recognizes the influence of external factors on organizational behaviour and, although constrained by their context, managers can act to reduce environmental uncertainty and dependence [2]. The key underlying tenet of this theory is power. Power describes the ability of the organization to control vital resources [3].
Power: Power is the key concept underlying the resource dependency organizational theory.
According to this perspective, the structure and operation of organizations are linked to the nature of power relations that exist between two or more organizations.
The theory asserts that organizations are driven by two key objectives in order to increase their power [4]:
- 1.The need to acquire control over resources which minimizes the dependence on other organizations.
- 2.The need to acquire control over resources which maximizes the dependence of other organizations on themselves.
This theory assumes that an organization can act to minimize its dependence on other organizations, and/or it may also act to maximize other organizations’ dependence on it. In doing so, power increases. Organizations can minimize their dependence on other organizations by acquiring valuable resources essential to organizational survival and reducing uncertainty as far as possible in resource acquisition. An organization can maximize the dependence of other organizations on itself by controlling scarce and valuable resources. This model recognizes that the environment can indeed pose a challenge to organizations attempting to increase their power in this manner.
Within the last ten years or so, it has been proposed that organizations can take several actions to minimize environmental dependencies, including mergers, acquisitions, joint venture/partnership arrangements, strategic alliances, and other interorganizational arrangements [5]. In this regard, the RDT provides a sound rationale for many organizational change interventions that are strategic in nature. RDT recognizes that a partnership orientation, as opposed to an adversarial orientation, may be warranted in this instance. As environments change, organizations must alter appropriate organizational features to realign their fit to environmental demands.
Example
For example, when global companies such as Hewlett-Packard (HP) and Microsoft develop long-standing strategic alliances, the resource dependence theory provides a theoretical justification for such planned organizational change interventions. The HP and Microsoft global strategic alliance is one of the longest standing alliances of its kind in the industry, with more than 25 years of combined marketplace leadership focused on helping customers and channel partners around the world improve productivity through the use of innovative technologies. Branded the HP and Microsoft Frontline Partnership, the companies share technology, engineering, and marketing resources to create and promote solutions based on industry-standard computing platforms that help solve some of the most challenging IT problems. HP and Microsoft have jointly engineered solutions that deploy smoothly and seamlessly and deliver competitive advantage [6].
11.2.2 Ecological Theory
11.2.2.1 Key Tenets
The ecological theory is also known as the population ecology perspective and the natural selection model. Although population ecology theory is most often used in the biological sciences, many of its principles lend well to organizational analysis.
Population ecology: Population ecology is an organizational theory which examines the environment in which organizations compete and how a process like natural...