Topic 4 Interorganizational Relationships, Oeii (grupo 1)

Interorganizational Relationships

Bibliography

• Daft et al. (2020). Chapter 6.

BBLORPHY OEII (Grupo 1). Prof. José Luis Roldán Salgueiro

Organizational Ecosystems

• Interorganizational relationships are the relatively enduring resource transactions, flows, and linkages that occur among two or more organizations.
• An alternative view conceives of organizations as participants in business ecosystems.
• Organizational ecosystems are systems formed by the interaction of a community of organizations and their environment.
• An ecosystem cuts across traditional industry lines.
• In an ecosystem, conflict and cooperation frequently exist at the same time.

OEII (Grupo 1). Prof. José Luis Roldán Salgueiro

Systems Manufacturing and Consumer Computing

The largest companies (those with more than 10,000 employees) are, not surprisingly, the hubs of the digital universe: they tend to have the most strategic partnerships (black lines) and investments (red lines) .*

E-COMMERCE AND MEDIA DATA NETWORKING ISS GROUP EBAY SONY INFOSPACE.COM BLOOMBERG AMAZON .COM SEMICONDUCTORS EPIPHANY MICROSOFT INTER WOVEN SOFTWARE COMPA Q COMPUTER YA HO O COMPUTER ASSOCIATES VIGNETTE CADENCE DESIGH SYSTEMS OWEST WHO RNER SYSTEMS PANGEA WEBMETHODS COMME MEANING TIME WARNER BREEZECOM WALT DISNEY ARM HOLDINGS SOFTWARE TECHNOLOGIES CISCO SYSTEMS SCIENCE APPLICATIONS INTERNATIONAL LEVEL 3 COMM UH ICAT IOH S SUN MICROSYSTEMS NOKIA INSTITUTE COMCAST TRINTECH CIOUP NEW ERA OF HERWORKS SYMBIAN AT&T BROADCOM JUMIP ER HETWORKS VITRIA TECHNOLOGY ITYC BUY.COM BERTELSMANN AIBA TECHNOLOGIES INNIN MILI PARADYNE DATACHANNEL HLAME WHILE TREND MICRO LAWSON SOFTWARE USALYCOS INTERACTIVE NETWORKS ACCENTURE MCI WORLDCOM LUC ENT TECH NO LO GIES TEXAS INSTRUMENTS RED HAT SOFTWARE CHECKFREE APPLIED MATERIALS INKTOMI BABYCENTER MICROTUNE NE XA BIT NETWORKS CHARLES SCHWAB LEXRA *Smaller companies that have no relationships with the hubs are not featured.

Organizational Ecosystems Example

PIVOTAL SOFTWARE GEMPLUS TIVO COMM. SERVICES AND EQUIP. (INCL. WIRELESS) SYSTEMS INTEGRATION AND WEB SERVICES INTEL IBM POOL AR-TECHNOLOGIES R. AMET DELL COMPUTER SIEBEL SYSTEMS AMERICA ONU NE XEROX BIOTECH ROYAL PHILIPS ELECTRON CS

Organizational Ecosystems: Is Competition Dead?

• Traditional competition, which assumes a distinct company competing for survival and supremacy with other stand-alone businesses, is increasingly displaced.
• A new form of competition is intensifying.
• Today's competition involves clusters of businesses competing with other clusters.
• In an organizational ecosystem, conflict and cooperation frequently exist at the same time.
• Is competition dead? Companies today may use their strength to win conflicts and negotiations, but ultimately continuing any genuine partnership demands a minimal level of cooperation.

Organizational Ecosystems: The Changing Role of Management

• 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.
• In this new world, managers think about horizontal processes in addition to vertical structures
• Useful for managers in developing horizontal management across organizations.

D + OEII (Grupo 1). Prof. José Luis Roldán Salgueiro

A Framework for Interorganizational Relationships

ORGANIZATION TYPE Dissimilar Similar Competitive Resource Dependence Population Ecology ORGANIZATION RELATIONSHIP Cooperative Collaborative Network Institutionalism SOUTH-WESTERN CENGAGE Learning OEII (Grupo 1). Prof. José Luis Roldán Salgueiro

Resource Dependence Theory

• Resource dependence theory argues that managers in organizations try to minimize their dependence on other organizations for the supply of important resources and try to influence the environment to make resources available.
• The degree of resource dependence is based on two factors:
1. The importance of the resource to the firm, and
2. The amount of power over resources allocation and use.

dreamstin OEII (Grupo 1). Prof. José Luis Roldán Salgueiro

Resource Dependence Strategies

• Resource strategies
• Adapt to or alter the interdependent relationships.
• Use interlocking directorship.
• Joint trade associations.
• Political actions.
• Power strategies
• Large and relatively independent companies have more options, while small suppliers with few options.

OEII (Grupo 1). Prof. José Luis Roldán Salgueiro

Collaborative Networks

• The collaborative-network perspective is an emerging alternative to resource-dependence theory.
• Companies join together to become more competitive and to share scarce resources.
• Why collaboration?
• Collaboration allow risks to be shared.
• Cooperation is a prerequisite for greater innovation.
• Partnership is a major avenue for entering global markets.
• Interorganizational linkages provide a kind of safety net that encourages long-term investment and risk.

OEII (Grupo 1). Prof. José Luis Roldán Salgueiro

Collaborative Networks: From Adversaries to Partners

• From adversaries to partners
• Partnership is based on interdependence and trust.
• The new model is characterized by lots of shared information, including electronic linkages.
• Dependence on another company is seen to reduce rather than increase risk.

OEII (Grupo 1). Prof. José Luis Roldán Salgueiro

Changing Characteristics of Interorganizational Relationships

SÍ CE Traditional Orientation: Adversarial Low dependence Suspicion, competition, arm's length Detailed performance measures, closely monitored Price, efficacy, 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 New Orientation: Partnership High dependence Trust, addition of value to both sides, high commitment Loose performance measures, problems discussed 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

Population Ecology

• A population is a set of organizations engaged in similar activities with similar patterns of resource utilization and outcomes.
• The population ecology perspective focuses on organizational diversity and adaptation within a population of organizations.
• The changing environment determines which organizations survive or fail.
• Technology continues to change the environment.

OEII (Grupo 1). Prof. José Luis Roldán Salgueiro

Population Ecology Research Questions

• Within a population, the question asked by ecology researchers is about the large number and variation of organizations in society.
• Why are new organizational forms that create such diversity constantly appearing?
• Innovation and change in a population of organizations take place through the birth of new forms and kinds of organizations more than by the reform and change of existing organizations

Tallest at arch of back Forehead has two humps Forehead curves smoothly Ears cover shoulder Tallest at shoulder Back dips Ears do not cover shoulder 3 Two lobes of flesh on tip of trunk Looser, more wrinkled skin Single lobe of flesh on tip of trunk Four or five toes Four toes Five toes Asian Elephant (Elephas Maximus) Three toes African Elephant (Loxodonta Africana) SOUTH-WESTERN CENGAGE Learning OEII (Grupo 1). Prof. José Luis Roldán Salgueiro

Population Ecology: Adapting to Change

X X Why do established organizations have such a hard time adapting to a rapidly changing environment? The limitations come from

• heavy investment in plant,
• equipment and specialized personnel,
• limited information,
• established viewpoints of decision-makers,
• the organization's own successful history that justifies current procedures and
• the difficulty of changing corporate culture.

New organizational forms are emerging all the time. The population-ecology model is developed from theories of natural selection in biology. The terms evolution and selection are used to refer to the underlying behavioural processes SOUTH-WESTERN CENGAGE Learning- OEII (Grupo 1). Prof. José Luis Roldán Salgueiro

Population Ecology: Organization Form and Niche

• Organization form and niche
• Organizational form
• It is an organization's specific technology, structure, products, goals and personnel.
• Each organization attempts to find a niche.
• Niche
• A domain of unique environmental resources and needs sufficient to support the organization
• Process of ecological change
• New organizations are always appearing in the population.
• Variation - selection - retention.

OEII (Grupo 1). Prof. José Luis Roldán Salgueiro

Elements in the Population-Ecology Model of Organizations

Variation Selection Retention Large number of variations appear in the population of organizations Some organizations find a niche and survive A few organizations grow large and become institutionalized in the environment OEII (Grupo 1). Prof. José Luis Roldán Salgueiro

Population Ecology: Strategies for Survival

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• Organizations and populations of organizations are engaged in a competitive struggle over resources, and each organizational form is fighting to survive.
• The struggle is most intense among new organizations.
• Generalist and specialist strategies distinguish organizational forms in the struggle for survival.
• Organizations with a wide niche or domain, that is, those that offer a broad range of products or services or that serve a broad market, are generalists.
• Organizations that provide a narrower range of goods or services or that serve a narrower market are specialists.

OEII (Grupo 1). Prof. José Luis Roldán Salgueiro

Institutionalism

• The institutional perspective describes how organizations survival and succeed through congruence between an organization and the expectations from its environment.
• Institutional environment
• Norms and values of stakeholders.
• Adopt structures and processes to please outsiders.
• Legitimacy - an organization's actions are desirable, proper and appropriate.

OEII (Grupo 1). Prof. José Luis Roldán Salgueiro