Overview of the Theories
There has been a series of debates surrounding the application of organizational theories for the past one decade revolving the issue of strategic choice versus determinism. The strategic choice or free will theorists postulate that managers are autonomous agents that operate in proactive and potentially innovative ways to manipulate the fate of their organizations (Whittington, 2014). On the other hand, the determinists, on the other hand, are of the view that managers are limited by the prevailing environmental and structural situations and thus cannot manipulate the course of their organizations. Scholars classified as environmental determinists entail population ecologists. Also, contingency theorists belong to the class of environmental determinists. The proponents of strategic choice with the inclusion of voluntarists entail strategic theorists and network theorists.
The paper views determinism and strategic choice as extremes of a sole continuum as a misconception that diverts attention from other crucial fascinating issues. The power, the choices and the capability of managers to make changes in their organizations depends entirely on the expectations by determinists and voluntarists. The most vital issue with regards to strategic choice versus the determinism is the nexus between them and how their associations and resultant reactions unveil over time. This essay acknowledges such associations and tensions that manifest between the two views and finds an alternative strategy to reconcile them. Reconciling such extreme theories is possible through identifying limits by the determinists and free will by prioritizing factors related to industry, time and organization.
Both theories of determinism and strategic choice have been evaluated at the level of organization and industry. Based on some strategic choice and resource-based theorists, they assess strategic choice at the organization level. However, others evaluate the same at the level of clustered organizations. Scholars analyzing the phenomena at institutional level assert that the dominant coalition within the organization facilitates decision making on time and the strategy for restructuring effort and performance with regards to restructuring is a function of management as opposed to the environment (Geddes, 2018). On the contrary, resource-based theorists are of the view that managers over time, acquire specialized knowledge and unique skills capable of yielding distinctive abilities and performance levels regarded as superior. In the level of industry, the network theorists assert that cluster of organizations interacts to develop their collective environment, regulations, and choices available in the context of their environment by mobilizing action and resources.
Identical to the methodology of strategic choice, the determinists adopt the two-level analysis that is the organization and the industry. The contingency theorists evaluate the issue at an organizational level and assert that the environment-structure fit is crucial for organizational effectiveness (Hilbig & Morten, 2014). In support of their premise, they are of the view that the environment dictates the kind of structure that organizations adopt and implement for them to be excellent performers. Taking into consideration, the positional school considers the deterministic opinion and demonstrates that firms’ performance is limited by legal, technological and competitive aspects that dominate the industry. For instance, the Purdue studies conducted in the beer industry are a prototype of this school. At the industry level, determinists assert that environmental resources are constrained, and it is thus the responsibility of organizations to adapt their operations to tap on the benefits of the evolving base. Though inertial structures characterize organizations, it makes it challenging to adjust without hardships.
Why Strategic Choice is Superior to the Deterministic Theories
Moreover, the environment chooses those organizations that it believes will thrive in the long-run. The industrial economists, in this context, posit that the structure of the industry with regards to the size and number of firms dictates the inherent revenues and profitability be accrued in such sectors. Thus, at the core of this discussion is the discretion the manager has to impact outcomes in an organization.
The primary motive and direction of this essay are to establish the foundations of applicability of theories with regards to determinism and strategic choice (Gopalakrishnan, 1998). To establish the favorability of strategic choice over determinism will require analyzing the strengths of strategic choice and the underlying weaknesses in the deterministic theory. A more concise way would be to establish a strawman that explains the drawbacks of that view and postulate arguments in favor of the other view. In this context, determinism is the strawman where significant drawbacks with regards to it get exposed, on the other hand, the strengths of strategic choice as the viable option to get expounded. Based on the evidence adduced it is apparent that leaders play a crucial role than environment in impacting meaningful outcomes in their organizations. Also, organizations have been found to be learning entities. Slack on the other hand has been attributed to yielding a change in an organization. Emerging organizational structures have been found to evolve to adapt to environmental variations due to managerial focus.
The determinists argue that leaders have limited power at their discretion and this makes managers have limited roles in their respective organizations. Though population ecologists limit the role leadership has on emerging organizations, the contingency theorists postulate managers as symbols whose actions are constrained by systems that are social and economical in the environment. Thus, the influence of leaders on performance is limited to a great extent. Many citations back the general notion that compared to elements such as general economic conditions and organizational effects, the impact managerial decision making has on organization results as a function of limitations (Bradley, 2018). Though such a study was imperative, its implications with regards to managerial performance are misquoted. Later on, there was a reanalyzation of data that revealed different views and outcomes. It was found that even though managers impacted on sales and net earnings little, they had a substantial impact on profit margins. Such empirical evidence backs the analogy that leaders have considerable impact in delivering outcomes in their respective organizations.
Moreover, other studies have revealed that managerial experience and formulation of decisions by divisional managers are strongly linked to the growth and expansion of the division. Managers use their wealth of knowledge and experience in meaningful ways to effect substantial outcomes in their organizations. Also, managers who tend to be successful start to believe in their abilities to impact results within the organization and such a reinforcement motivates them to become more proactive which has the effect of providing greater initiative.
The determinists postulate that the environment controls and limits organizations. Proponents of strategic choice imply that managers can have a say in choosing the environment they wish to operate in making them influence the decision-making process to match their view of the world. In one of the empirical studies conducted evaluating the nexus between environment and performance it came clean that despite different managers perception of the environment from the objective evaluation, it did not substantially affect the performance of the organization. Managers have the power to maintain organizational performance despite them having different subjective opinions that do not match the traits of the objective environment. Other studies have gone further to assert that the effectiveness of strategic decision framework was a direct function of collecting and utilizing information rationally by the managers as opposed to engaging in the political conduct. Thus, the environment had little or no role in impacting the effectiveness of decisions made.
The view of the population ecologists is that large organizations are inertial and thus not in a position to adapt fast enough to the changes in the environment. However, such arguments fail to comprehend that large organizations possess capacities that enable them to learn and adapt to their respective environments. Observations in the past have demonstrated the constant efforts by large organizations in establishing search patterns necessary for scanning the environment for meaningful information. The success of such search patterns enables organizations to learn to integrate patterns in their repertoire of operations. On the contrary, the failure of search patterns pushes the organization to adapt them and seek new solutions. Thus, organizations have the power to reap from the benefits of feedback mechanisms in establishing their decision-making process.
The determinists fail to explain how organizations restructure when there are many adversaries and how such organizations adapt their activities to enable them to survive. There are assertions that managers engage in primary substantive as well as symbolic activities at the onset of the reorientation phase. In one of the studies that comprised of twenty-five minicomputers producers, it emerged that the appointment of a new manager increased the probability of revolutionary transformation in the framework, strategy, and distribution of power in the organization. With a new manager, there came a unique experience for the organization and a different comprehension of effective organization action to be taken along with anticipation for a change. It is such anticipation that is responsible for channeling in organizational transformation.
The population theories assert that an optimal amount of slack exists in the environment. They also assume the magnitude of coupling that can either end up being tight or loose is a function of environment. Thus, organizations end up having minimal control over how they utilize slack to help them adjust to uncertainties in the environment. It has been demonstrated that when organizations have slack resources in excess, then they end up being loosely attached to the environment. Organizational slack has been categorized broadly as a cushion of potential resources that can enhance innovative strategic conduct and a catalyze an organization from unforeseen environmental risks. Theorists of the strategic choice postulate that the slack in one-time frame empowers powerholders to institute the recommended structural changes enabling such firms to improve their performance in the future. Slack enables organizations to adopt and effect technological innovations that can influence their rank in the environment. To generate slack depends on the coordination of managerial operations and is a product of teamwork by executive management.
The determinists fail to give a proper explanation as to the cause of the emergence of various structural types. As per the population ecologists, structures appear as an origin of random disparities. The contingency theorists utilize the environment as the salient point behind the process of structuring. The strategic theorists, on the other hand, are better positioned to give convincing logic behind the existence of unique structures in organizations. They postulate that structuring as a process of personal attention, that entails reconstructing the perceived environment. Therefore, the organization becomes a communication web where actors regularly process information. The structure then gets inferred from uncertainties as per the behavior of such actors as they are scrutinized over time.
Conclusion
Even though strategic choice seems to have particular strengths, there are scenarios where the environment has been found to weaken the managerial effect. Strategic choice is limited to small firms compared to large firms. The time frame priority is one of the elements that impact the degree of choice at the manager’s disposal. Categorically, empirical studies are of two kinds. The longitudinal study is one that is conducted over a long duration while a cross-sectional study is performed over a shorter time frame. The strategic choice theory explains the managerial implications and organizational operations in the short-run. It is apparent that in the short run the degree to which the environment can change is constrained. The existence of stable environmental conditions translates to managers having a substantial impact on organizational results, for instance, the growth of sales, profitability and improved market shares which comes through their efforts. The population ecology experiments are longitudinal and as such assume a long-term perspective viewing evolution of organizations as time goes by. Such studies come handy in expounding outcomes such organization growth with regards to the population. In the long-term, the effect of managerial decisions is streamlined by the activities in the environment. The fluctuations in the environment are probably to lead organizations encountering substantial variations in performance in the long run. It is the downturns connected to significant achievement that lead to environment singling out organizations.
A good example is when the executive management of AT&T decided to have the company split into three small enterprises. Such a split saw the prices of stock rise dramatically implying that managerial decisions can usher in positive outcomes in the short run. On the contrary, in the medium term, AT&T predicaments in business still prevail, and the management finds itself constrained.
References
Bradley, J., 2018. Deterministic Vs. Strategic Organizational Structure. [Online]
Available at: https://smallbusiness.chron.com/deterministic-vs-strategic-organizational-structure-65533.html
[Accessed 19 October 2018].
Geddes, B., 2018. Uses and limitations of rational choice. In: In Latin America in Comparative Perspective. s.l.:Routledge, pp. 81-108.
Gopalakrishnan, S., 1998. Strategic choice versus environmental determinism: A debate revisited. International Journal of Organizational Analysis, 6(2), pp. 146-164.
Hilbig, B. E. & Morten, M., 2014. Generalized Outcome-based Strategy Classification: Comparing deterministic and probabilistic choice models. Psychonomic bulletin & review, 21(6), pp. 1431-1443.
Whittington, R., 2014. Corporate Strategies in Recession and Recovery(Routledge Revivals):Social Structure and Strategic Choice. s.l.:Rouledge.
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