Change Management MGMT625
LESSON # 20
CLASSIFICATION OF ORGANIZATIONAL SPECIES
Another major issue is the classification of organizational specie. Like biology it emphasizes population
within a species as unit of analysis. But then the problem is what characterizes an organizational form
(Specie)? Hannan and Freeman state, "An organization form is a blue print for organizational action, for
transforming inputs into out puts." The blue print can usually be inferred by examining any of the
· Formal structure of the organization in the narrow sense, that is through written rules of
· Pattern of activity within the organization- what actually gets done by whom.
· Normative order- the ways of organizing that are defined as right and proper by both members
and relevant sectors of the environment
Ulrich defines form as a "legally defined entity" with a population of firms consisting of similar
competencies, structures and strategies. Similarly organization form can be determined according to
other criteria, for e.g. technology, industry grouping and product.
2. Extent of Environmental Selection
The population ecology model stress that the environment determines the distribution and form of
organization through selection. Here environment in a biological sense is not a objective phenomenon.
Biologists refer to a very interesting phenomenon of environmental niche. The environmental niche in
an environment perceived by ANT is clearly different from that perceived by an ELEPHANT; minor
changes in an environment may spell the demise of population of ANTS but be unnoticed by an
ELEPHANT. In the same way the environmental niches inhabited by SMALL and LARGE
organizations are subjectively different. Therefore different species (organization) perceive and
experience the environment differently. Another thing to be take note of is that environments are
multidimensional and complex, not similar for all type of organization. Hence environment is different
for different type of organizations, while the ecological approach suggests that one focus one common
fate with respect to environmental variation.
Now the question is what is the effect of changes in environment on the mortality of population.
Individual organization mortality may be there out of an accident, incompetence, or rational choice. So
distinction should be there when owners arbitrarily decide to close down the business for personal or for
economic reasons. Similarly owners also set the tone for level of growth and profitability. Another
scholar talked of vital rates of founding and mortality (entries and exit), and process of founding and
mortality of organization. So the thrust of organization ecology should be the investigation of the
leading question, how social environment shapes the following dimensions of organization:
· Rates of creation and death of org. forms,
· Rates of org. founding and mortality, and
· Rates of change in organization forms.
What is more important to discuss and for further research is the relationship between adaptation and
selection, and determinant of vital rates.
Relationship between Adaptation and Selection
One such empirical study conducted by Carroll found the role of strategy in a way that the timing of
executive succession was found to be and important factor in organization survival. Similarly in
biological sense, adaptability is an individual behavioral phenomenon. Penning stressed the role of
adaptation and according to him, "Organization will maneuver themselves in their environment, so as to
acquire optimum external control and will shift their disposition whenever environmental conditions
Change Management MGMT625
dictate." To him entrepreneur is a "volitional individual" who enters an environment and make strategic
choices that ensure the best transactions with the environment.
Determinants of Vital Rates
Vital rates means death rates and founding rates of an organization. This leads not only to the study of
large organizations but also of entrepreneurship and small businesses. Here we are concerned with the
following possible determinants of organizational death and inception:
· Role of competition
· Institutional constraints
· Role of government ( for example subsidy, tax exemption given by US government to Chrysler
automobiles thrice in its history)
· Type of product or industry becoming obsolete
What causes death of an organization? Immediate factor could be attributed to the consistent sales
decline or poor financial performance as the most obvious indicator? However going in depth may
reveal these indicators as symptoms not problems. For instance what about the organizations those are
socially embedded and inter-linked with each other through alliances and network. In Japan Keiretsu or
Chaebol in Korea or big family based conglomerates in countries like Pakistan where social identities
and ties are more important than technically or transaction driven relationship. Therefore when social
ties (death of a network) cease to be effective hastens the death of an organization. Similarly if central
or lynch pin organization may forcibly closed, reorganized or dissolved, the constituent organization
will have to face a drift. Finally the big issue in ecology school is the issue of diversified organization
(un-related diversification) or huge conglomerates who dominate the international business; are they
equally affected by environment or laws of natural selection.
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