Chapter 5: Interorganizational Relationships
Interorganizational relationships are the relatively enduring resource transactions flow, and linkages that occur among
two or more organizations. A company may be forced into Interorganizational relationships depending on its needs and
the instability and complexity of the environment.
Organizational ecosystems are a system formed by the interaction of a community of organizational and their
environment. An ecosystem cuts across traditional industry lines.
Is Competition Dead?
In an organizational ecosystem, conflict and cooperation frequently exist at the same time. . Mutual dependencies
and partnerships have become a fact of life in business ecosystems.
The Changing Role of Management
If a top manager only looks down to enforce order and uniformity, the company is missing opportunities for new
and evolving external relationships. In the new world, managers think about horizontal processes rather than
vertical structures. Moreover, horizontal relationships now include linkages with suppliers and customers, who
become part of the team.
Relationships among organizations can be characterized by whether the organizations are dissimilar or similar and
whether relationships are competitive or cooperative. The fire perspective is called resource dependence theory. It
describes rational ways organizations deal with each other to reduce dependence on the environment. The second
perspective is about collaborative networks, wherein organizations allow themselves to become depended on other
organizations to increase value and productivity for both. The third perspective is population ecology, which
examines how new organizations fill niches left open by established organizations, and how a rich variety of new
organizations form benefits societies. The final approach is called institutionalism and explains why and how
organizations legitimate themselves in the larger environment.
EXHIBIT 5.2 FOR “A FRAMEWORK OF INTERORGANIZATIONAL RELATIONSHIS”
This theory argues that 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. Organizations succeed by striving
for independence and autonomy. When threatened by greater dependence, organizations will assert control over
external resources to minimize that dependence. Resource dependence theory argues that organizations to not want to
become vulnerable to other organizations because of negative effects on performance.
The amount of dependent on a resource is based on two factors. First is the importance of the resource to the
organization, and second is how much discretion or monopoly power those who control a resource have over its
allocations and use.
- One strategy is to adapt to or alter the interdependent relationships. This could mean purchasing ownership in
suppliers, developing long-term contracts or joint ventures to lock necessary resources, or building relationships
in other ways.