1. The Environment Chapter 13 Lawrence Erlbaum Associates, Publisher, Copyright 2002 13.1

2. Chapter Overview The Myth of the Closed System Environmental Forces Influencing Organizations Lawrence Erlbaum Associates, Publisher, Copyright 2002 13.2 The Forms of Environmental Forces Managing Environmental Dependence

3. The Myth of the Closed System It is impossible for organizations to remain isolated or insulated from environmental influences and interactions Lawrence Erlbaum Associates, Publisher, Copyright 2002 13.3

4. The Reality of an Open System Lawrence Erlbaum Associates, Publisher, Copyright 2002 13.4 Government regulations Changes in labor Changes in suppliers Social trends

5. Open Systems Theory Lawrence Erlbaum Associates, Publisher, Copyright 2002 13.5 The Organization Inputs (labor, materials...) Transformation Process (value added) Outputs (products, morale...) Cyclical

6. The Boundary-Spanning Role Lawrence Erlbaum Associates, Publisher, Copyright 2002 Interactions among organizations and elements in the environment take place in domains called boundaries Boundary spanners span the boundary between an organization and forces in the organization’s environment 13.6

7. Resource Dependence Theory Lawrence Erlbaum Associates, Publisher, Copyright 2002 Firms enter into relationships in search of much-needed resources that are lacking in their operations 13.7

8. Conditions that Facilitate Resource Dependence Lawrence Erlbaum Associates, Publisher, Copyright 2002 13.8 1. The possession of a resource by one firm 2. The importance of the resource to the focal organization 3. The inability of the focal organization to obtain the resource elsewhere 4. The visibility of the behavior or activity being controlled 5. The social actor’s discretion in allocating the resource 6. The focal organization’s ability to take the desired action 7. The focal organization’s lack of control over the resource 8. The ability of the social actor to make its preferences known

9. Loose Coupling Lawrence Erlbaum Associates, Publisher, Copyright 2002 Not all changes in the environment are directly or automatically reflected in commensurate changes in the organization 13.9

10. Environmental Forces Influencing Organizations Lawrence Erlbaum Associates, Publisher, Copyright 2002 1. Other Organizations 2. The Regulatory Environment 3. The Social Environment 13.10

11. Other Organizations Suppliers: Consumers: Competitors: Lawrence Erlbaum Associates, Publisher, Copyright 2002 13.11 organizations that provide inputs including capital, raw materials, and labor organizations that purchase the organization’s outputs other organizations that produce the same outputs

12. The Regulatory Environment Laws and court rulings that legislate the behavior of organizations, including what the outputs look like and how transformation processes may create those outputs Lawrence Erlbaum Associates, Publisher, Copyright 2002 13.12

13. The Social Environment Corporate Social Responsibility: Actions an organization chooses to take (or avoid) and how these actions meet the society’s expectations related to moral and ethical standards Social Sensitivity: Actions taken by the organization to develop a plan to minimize the negative impact of its actions on the surrounding environment Lawrence Erlbaum Associates, Publisher, Copyright 2002 13.13

14. Forms of Environmental Forces Arises when members of the organization lack information Lawrence Erlbaum Associates, Publisher, Copyright 2002 13.14 Uncertainty: Instability: The rate of change in the environment Complexity: The number of environmental cues that an organization must monitor because they are critical to its functioning Beneficence: The generosity, leniency, and helpfulness of the environment with regard to resources

15. Environmental Scanning: collecting information about the environment and its possible actions Forecasting: predicting the future actions of the environment, often using statistical models Lawrence Erlbaum Associates, Publisher, Copyright 2002 13.19 Managing Environmental Dependence: Anticipation

16. Managing Environmental Dependence: Negotiating Lobbying: having agents plead the organization’s case with regulatory bodies Interlocking Directorates: having influential suppliers and consumers on Board of Directors to provide policy input Public Relations: activities which attempt to build up the image of the organization in the environment Lawrence Erlbaum Associates, Publisher, Copyright 2002 13.20

17. Contracts: obtaining legally enforceable promises from consumers or suppliers Buffers: stockpiling resources Joint ventures: two or more unrelated organizations pooling their resources or collaborating Lawrence Erlbaum Associates, Publisher, Copyright 2002 13.21 Managing Environmental Dependence: Control