Summary of the theories
Discuss About The Strategic Deterministic Organizational Models.
The field of organizational theory has experienced stiff paradigm wars, with many theoretical models competing to explain the factors that shape organizational action. An organizational action is a field of knowledge that tries to explain how firms operate and why they operate the way they do. In this essay, two theoretical perspectives- deterministic and strategic choice have been analyzed. The essay has proven that strategic choice is a better model for explaining the factors that shape organizational actions as it considers agency in its analysis. The essay has two sections. The first section presents a summary of the models, while the second part has given a highly critical analysis of the deterministic and strategic choice models.
The strategic choice theory developed by John Child examines the role that organizational leaders or leading teams play in influencing a firm through decision making in a dynamic political process. Battilana & Casciaro (2012), explain that the strategic choice approach focuses on choices and decisions to be made in a particular scenario, irrespective of the substance and timescale. The importance of this approach is that it highlights the subtle choices and judgments involved in determining how to deal with uncertainties surrounding a specific decision, it is incremental and expressed through a commitment package which ensures a strategic agreement between the decisions to be made now and those that are to be made at a later date and it is interactive, in that it is established as a framework for communication between individuals of different skills and backgrounds (Bitektine & Haack, 2015). Therefore, it can deal with three kinds of uncertainties in an organization- uncertainties relating to the guiding values, working environment and related choices.
Conversely, deterministic theory of organizational action asserts that the environment more or less controls itself. Welch, Piekkari, Plakoyiannaki & Paavilainen-Mantymaki (2011), insist that in a deterministic model, organizations are forced to respond to the variations on the marketplace and therefore must continuously watch out for any unexpected variations and changes in customer patterns. The deterministic theories include population ecology, resource dependence, and institutional approaches:
The institutional theory was established by Dimaggio and Powell in 1983. The primary proposition of the theory is that firms tend to mimic each other in three primary ways- normative, coercive and mimetic. In mimesis, firms in developed fields tend to copy each other as a bulwark against uncertainty (Scaraboto & Fischer, 2012). In coercive mimicry, enterprises have structures which are similar because they are exposed to similar external environmental pressures. On the other hand, in normative mimicry, isomorphic procedures emanate from professionalization of a field characterized by common standards, training, and practices which lead to homogeneity.
Critical Analysis
Also, population ecology theory is based on natural selection. Aldrich and Pfeffer argued that an organization changes due to the nature of resource distribution in its environment (Bogaert, Boone, Negro & Van-Witteloostuijn, 2016). Therefore, according to this theory, the environment dictates the forms of organizational actions and structure, which requires an accurate sense of adaptation (Bogaert et al., 2016). A keen evaluation of this theory depicts that organizational actions must be congruent to the current environmental variables. An action or strategy which is not favored by the environment may therefore fail.
Resource dependence is another deterministic model. It argues that an enterprise’s survival is dictated by acquiring and monitoring resources (Drees & Heugens, 2013). Indeed, a notable overlap exists between this theory and population ecology. However, there are some points of deviation especially relating to strategic choice. Population ecology depicts that strategic choice is only possible under specific conditions. Besides, a majority of firms are usually unable to make choices because of inter-organizational dependencies and challenges in information processing (Pugliese, Minichilli & Zattoni, 2014). Resource dependence proposes that a firm’s resources aid in determining organizational actions. Some resources that may help an organization in executing its strategic actions include employees, physical assets, and finances.
An organizational action is “a field of study which explains why organizations act the way they do” (Geh., 2011, p. 27). Actions are the central determinants of an organization’s strategy. Therefore, adopting an accurate theory is critical in evaluating a successful organizational action. With this regards, it is important to critically evaluate the paradigm wars between different organizational theories to identify the most appropriate approach:
Institutional theory concentrates on the environmental factors – internal and external, such as norms, requirements, and rules that a firm must conform to receive support and legitimacy. This theory relies heavily on societal constructs in defining the structure, actions, and processes of an enterprise (Jewer & McKay, 2012). Conformity is the most common basic principle of this theory. Under conformity, there are certain rational myths that a firm must conform to like societal expectations. The theory specifically bridges the gap between organizational action and societal views (Jewer & McKay, 2012). Therefore, the management should be more willing to incorporate the opinions, views, rules, and expectations of the society in its daily organizational operations.
Institutional theory has some limitations. The first disadvantage is that it places a lot of constraints on the management to adhere to rules, norms or requirements (Pacheco, York, Dean & Sarasvathy, 2010). High constraint levels may prove to be deleterious to the firm as it can inhibit creativity, veracity, and diversity within a specific field. Therefore, managers who conform to this theory may be unable to demonstrate creativity in their strategy formulation processes, leading to redundancy.
Another limitation is that the management may have the minimal freedom to make decisions which may alter the structural processes within the firm. This is because, the theory advocates for conformity (Doerfel, Chewning & Lai, 2013). The employees may, therefore, develop resistance to any decisions made by the management which go against the institutional norms. This may make an organization unable to respond to the emerging environmental variations creatively.
Resource dependence theory typically studies how the external organizational resources affect the behavior of organizations. Firms depend on resources derived from the environment for their actions and to fulfill their strategic goals (Brettel & Voss, 2013). Therefore the resource that one organization needs may be held by another organization, creating independence between them. For example, if organization A holds specific resources used by organization B, then organization A has power over organization B. Hence, these resources act as critical capabilities of a firm, making it necessary for an organization to consider them in executing strategic actions.
A primary weakness of the resource dependence theory is that it does not consider the environmental changes that may influence a firm’s competitiveness. Studies have demonstrated that organizational resources may only be fixed in the short-run, whereas in the long-run, it may necessitate the management to modify the set of resources (Brettel & Voss, 2013). Therefore, it cannot be concluded that the managers have no control over the environmental resources. The theory of dynamic capabilities can be used to improve on this weakness.
Dynamic capabilities entail the ability of an organization to reconfigure and build internal and external powers to address rapid environmental changes (Brettel & Voss, 2013). The theory of resource dependence can only be relevant if it considers that the rare resources of an organization are not enough to maintain their competitive edge if it cannot permanently recombine them (Doerfel, Chewning & Lai, 013). Therefore, this theory cannot be relied on in executing an organizational action.
Furthermore, although the resource dependence paradigm examines organizational behavior about resources, it does not explain the role of the managers in the organization. The managers occupy essential positions and can influence different strategies made by the firm which may in return improve organizational performance (Doerfel et al., 2013). The performance of the firm may also depend on how effectively the management uses the available resources to help the firm attain its objectives. With this regards, this model may be viewed as inadequate.
The postulates of population ecology theory have elicited mixed reactions among different scholars. This theory accurately highlights the role of environment in dictating the survival of firms. According to Bogaert et al. (2016), the selection of different organizational forms and structures in the level of populations of organizations happens due to structural inertia, which acts as an explanation for lack of change. The notion that firms develop some structural inertia that deters them from conducting radical changes as proposed by this theory has been exposed to criticisms. The theory explains that when the inertial pressure is high, then it lowers the adaptive flexibility of the firm. Some limitations of this theory have been described in the following paragraphs:
The first weakness is by structural change. This theory proposes that managers are seen as mere agents who cannot impose any structural change to the organization (Bogaert et al., 2016). However, according to the human nature, human beings are proactive. Therefore, when a manager evaluates a specific strategy and realizes that it is failing, then the organizational structure may be changed to be more congruent to the strategy. Besides, longitudinal studies have proven that changing structural orientations is possible with desirable results for firms which implement it. Therefore, this theory can be disputed in favor of a strategic choice approach, whereby the management can formulate rules, regulations and structural changes to suit the changes in the environment.
The theory also assumes that the need for a radical change is usually present. This cannot be necessarily true. Research has demystified this claim and proven that action windows are not typically extensive (Pacheco et al., 2010). With regards to this, reference can be made to Gersick’s theory of punctuated equilibrium where he punctuated it as a build-up of an extended period of changes that are discontinued for a short duration of radical change. This only depicts that firms are not obliged to make central transformations but be alert and attain the change promptly.
Also, there is a wrong perception elicited by the theory that the environment cannot be modified. Honestly, structural inertia may not apply equally to all enterprises (Pacheco et al., 2010). Some large companies may have adequate resources and the capability to alter their environmental conditions. For example, this was demonstrated at the time of financial crisis in the US, when the government decided to offer financial support to companies which were sensible to the US economy. Furthermore, companies regardless of their size have the freedom to select the set of customers, competitors, and suppliers to deal with. This gives them the ability to alter and redefine their operational and competitive environment.
The last criticism is that agents have the power to administer change. Ideally, individuals and enterprises may suffer from cognitive limitations (Pacheco et al., 2010). However, an organization’s collective ability to generate knowledge may exceed individual incapacities. Furthermore, managers may also use the power granted to them in the organizational hierarchy to administer change, which may encompass recruiting competent staff and altering the organization’s operational structure. Therefore, a notion that management acts as agents without the capacity to monitor the environment may not hold water.
To better address the limitations of the resource dependence, population ecology, and institutionalization theories, the strategic choice theory can be used. According to the explanations given by Junqueira, Dutra, Zanquetto Filho & Gonzaga (2016), the strategic choice model was established in the 1970s to correct the weaknesses of the deterministic models which overemphasized on environmental determinism at the expense of agency choice. Before Child did his research in 1972, most researchers on strategic choice delved much on determinism and did not recognize the element of agency in decision making (Barkema, Chen, George, Luo & Tsui, 2015). According to this theory, managers are powerful and able to make effective strategic choices which may influence the organizational performance standards and operational contexts. Therefore, the deterministic theories cannot be regarded as adequate when they do not recognize the roles of management in the organization.
The strategic choice is the best theory which can be used to explain the organizational action. This is because it recognizes the relationship between the organization, the environment and the dominant coalition (Managers) (Mahapatra, Das & Narasimhan, 2012). Managers hold high hierarchies in the organization and therefore, are responsible for making strategic decisions that may influence the way the organization operates and interacts with the environment. They should therefore not be despised.
In conclusion, the strategic choice model is a more compelling theory in shaping organizational actions. This is because it goes beyond the deterministic factors to recognize the role of agency in decision making. Population ecology, resource dependence, and institutional theories are deterministic and relate to the environmental variables that shape organizational actions but do not recognize the role of the dominant coalition, hence making them inadequate. This essay has, therefore, given a highly critical analysis which demonstrates how strategic choice theory thoroughly demonstrates the factors that shape organizational actions and performance.
References
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