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Chapter Five
Interorganizational Relationships
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A Framework of Interorganizational
Relationships*
*Thanks to Anand Narasimhan for suggesting this framework.
ResourceDependence
CollaborativeNetwork
Institutionalism
PopulationEcology
Organization Type
OrganizationRelationship
Dissimilar Similar
Cooperative
Competitive
Dissimilar
Similar
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Organization Strategies for Controlling the External
Environment Establishing
Interorganizational Linkages:
Ownership Contracts, joint
ventures Cooptation, interlocking
directorates Executive recruitment Advertising, public
relations
Controlling the Environmental Domain:
Change of domain Political activity,
regulation* Trade associations* Illegitimate activities*
* Cooperative / Similar Orgs
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Changing Characteristics of Interorganizational Relationships
Traditional Orientation:Adversarial
New Orientation:Partnership
Suspicion, competition, arm’s length
Price, efficiency, own profits
Limited information and feedback
Legal resolution of conflict
Minimal involvement and up-front investment, separate resources
Short-term contracts
Contract limiting the relationship
Trust, addition of value to both sides, high commitment
Equity, fair dealing, both profit
Electronic linkages to share key information, problem feedback and discussion
Mechanisms for close coordination, people on-site Involvement in partner’s product design and production, shared resources
Long-term contracts
Business assistance beyond the contract
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Collaborative Network: Dissimilar Organizations Value Chain
Networks Organizations +
Suppliers + Distributors
Trust = Social Capital
Embeddedness
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Collaborative Networks:Similar Organizations Industry clusters or
Constellations Defend against forces
that drain industry profits
Factor networks: joint bargaining for inputs
Producer networks: consolidate & allocate capacity
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Collaborative Networks:Similar Organizations Innovation networks:
upgrade products vs. substitutes
Scale Agglomeration: force entry scale higher
Mutual Forbearance: reduce rivalry by agreement
Social Action & Legitimation: polices actions and image http://www.fscus.org/
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Elements in the Population Ecology Model of Organizations
Variation
Large numberof variationsappear in thepopulation oforganizations
Selection
Someorganizationsfind a nicheand survive
Retention
Survivingorganizationsprosper andbecomeinstitutionalizedin theenvironment
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Niche Width Theory Hannan & Freeman
(1977, 1989) Specialist/Generalist Narrow, deep
resource exploitation vs. broad exploitation with some contingent capability
Do-nut shop or steak house vs. full menu restaurant
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Niche Width Strategies Specialist
- single-unit - multiunit
Generalist - single-unit - multiunit
Polymorph - multiunit
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Specialist Strategies Single-unit Seeks exact fit with
customer Deep exploitation of market Examples: Harold’s Auto
Service, O-Sho
Multiunit Honed efficiency of routines Scale economies Identical subunits Examples: AAMCO, Benihana
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Generalist Strategies Single-unit Single approach to average
customer at center of market Broad exploitation with some
embedded contingent slack Examples: L.L.Bean, Joe’s
Eats Multiunit Center of market but efficient
delivery emphasized Scale economies Identical subunits Examples: Wal-Mart, Denny’s
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What’s a Polymorph? Biological term:
single species with locally adapted sub-species
Example: birds of same species specialized to variations in available food along vertical gradients in habitat
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What’s a Polymorph? Organizational term:
multiunit structure (chains, franchises) with locally adapted outlets or units
Example: Best Western hotel chain - smaller units stress local character
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Three Mechanisms for Institutional Adaptation
Example: Accounting standards, consultant training
Pollution controls, school
regulations
Reengineering, benchmarking
MoralLegalCulturally
supportSocialbasis:
Professionalism—certification, accreditation
Political law,rules, sanctions
InnovationvisibilityEvents:
Duty,obligation
DependenceUncertaintyReasons tobecome similar:
NormativeCoerciveMimetic
Source: Adapted from W. Richard Scott,Institutions and Organizations (Thousand Oaks,Calif.: Sage, 1995).
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Institutionalization: Mimetic Forces The imitation of
organizational structures, techniques or behaviors from other organizations
This modeling is done without any clear proof that performance will be improved
Generally takes place under conditions of high uncertainty
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Institutionalization: Coercive Forces External pressures
exerted upon organizations to adopt structures, techniques, or behaviors similar to other organizations
Government, regulatory agencies and/or powerful firms
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Institutionalization: Normative Forces Pressures to
achieve professional standards
Preferred techniques versus required regulations (coercive)
Legitimacy seeking