Chapter Five

Interorganizational Relationships

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Organizational Ecosystems
Interorganizational relationships
resource transactions, flows, and
linkages that occur among two
organizations
Organizational ecosystems a
system formed by the interaction of a
community of organizations and their
environment
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Is Competition Dead?
Changing technology and new regulations
present organizations with international
competition
Organizations are involved in complex
networks, the number of corporate
alliances are increasing
Traditional competition no longer exists

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Organizational Ecosystem

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The Changing Role of Competition

In ecosystems, managers move beyond
traditional responsibilities
Managers must think about horizontal
processes
The old role of management relied on
operation roles and boundaries
This is a broad leadership challenge
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A Framework for
Interorganizational Relationships

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Resource Dependence
Locking in resources through long-term
supplier relationships is a common
resource-dependence theory
Supply chain management refers to
managing the sequence of suppliers and
purchasers
Large independent companies can have
power over small suppliers
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Supply Chain for a Retail

Organization

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Collaborative Networks
Collaboration allow risks to be shared
Cooperation is a prerequisite for greater
innovation
Interorganizational linkages provide a kind
of safety net that encourages long-term
investment and risk
Organizations are moving from
adversaries to partners
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Changing Characteristics of
Interorganizational Relationships
Traditional Orientation

New Orientation: Partnership

Low dependence

High dependence

Suspicion

Trust, addition of value

Monitoring

Loose performance measures

Price, efficacy, own profits

Equity, fair dealing

Limited information and

feedback

Electronic linkages

Legal resolution of conflict

Mechanisms for coordination

Minimal involvement

Involvement in partners
production and design

Short-term contracts

Long-term contracts

Limited relationships

Business assistance beyond

contract

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Organizational Diversity and

Adaption within a Population
True transformation is a rare and unlikely
event
In biology, evolution and selection are used
to refer to behavioral processes
Evolution explains why certain life forms
appear and survive
Organizations best fitted to the immediate
environment
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Population Ecology
Organization Form and Niche
Form is an organizations specific technology,
structure, products, goals and personnel
Each organization attempts to find a niche

Process of Ecological Change

New organizations are always appearing in the
population

Strategies for Survival

Competitive struggle for resources struggle for
existence
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Elements in the Population-Ecology

Model of Organizations

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Institutionalism
Institutional perspective:
Manage survival
Balance expectations of environment

Institutional Environment
Norms and values of stakeholders
Adopt structures and processes to please
outsiders

Legitimacy - an organizations actions are

desirable, proper and appropriate
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Institutional View and

Organizational Design
Technical Structure
Day-to-day work
Technology
Operating
requirements
Governed by norms
and rationality of
efficiency

Institutional Structure
Visible to the public
Governed by
expectations of the
public

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Institutional Similarity
Emergence of common structure and approach
among like organizations
Mimetic Forces the pressure to copy or model
other organizations
Coercive Forces pressures for organization to
adopt structures, techniques or behaviors similar
to other organizations.
Normative Forces pressure to adopt
standards and techniques of professional
community
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Design Essentials
There has been an evolution in interorganizational
relationships
Organizations operate within a ecosystem
Four perspectives have been developed to explain
relationships among organizations
Collaboration is an emerging alternative to resource
dependence
New organizations fill niches left open by established
companies
The institutional perspective notes that interorganizational
relationships are shaped by legitimacy as well as
products/services
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