Ch.5 - Interorganizational Relationships

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Business Administration
BUS 304
Liz Wiebe

Chapter 5 Interorganizational Relationships Organizational Ecosystems 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 environmentAn ecosystem cuts across traditional industry linesIs Competition Dead In an organizational ecosystem conflict and cooperation frequently exist at the same timeMutual dependencies and partnerships have become a fact of life in business ecosystemsThe 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 teamInterorganizational Framework 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 52 FOR A FRAMEWORK OF INTERORGANIZATIONAL RELATIONSHIS Resource Dependence 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 autonomyWhen 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 Resource StrategiesOne strategy is to adapt to or alter the interdependent relationships This could mean purchasing ownership in suppliers developing longterm contracts or joint ventures to lock necessary resources or building relationships in other ways
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