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Change Management ­MGMT625
VU
LESSON # 19
ORGANISATION ECOLOGY
Leading proponents organization ecology school of thought are Glenn and Carroll, and Hannan and
Freeman. In this theory population of organization is taken as a unit of analysis rather than single
organization. The dominant theme of population ecology is that effects of organization's environment is
critical in organization's survival and (performance) believe that forces internal to the organization are
less important. Principally, population ecologist think that organization do not change and adapt; and
consider that each time a new organization is born after a significant level of change. Pfeffer and
Salancik published their work as "The external control of organizations". This has led to the analogy of
natural selection processes as determining some aspects of organization. Miller and Mintzberg referred
to "the survival of organizational forms as being encouraged by Darwinian forces" (e.g. Weberian of
organization-dominance-of functional structure). Three issues are considered central in population
ecology model of change management:
1. Role of structural inertia in constraining adaptation
2. The classification of organizational species
3. The salience of the environment in determining organizational survival
1. Structural Inertia
Population ecology models of organization-environment relationship are considered alternative to the
dominant adaptation perspective. Though there are a variety of ecological perspectives yet they all focus
on selection phenomenon. The attribute patterns in nature to the action processes. Astley and Van de
Ven highlighted this adaptation versus selection as central debate in organization theory (OT). Selection
of new or changed organization forms occurs as a result of environmental constraints and inertia is
referred as an explanation for the lack of adaptive change. Therefore structural inertia limits the ability
of organization to change. Hanna and Freeman identified a number of processes that generate inertial
pressures both from internal structural arrangements and from environmental constraints.
A. Internal Structural Arrangements
One of the biggest inhibiting factors for organizational change is sunk cost. Sunk cost of the firm which
means broadly any amount of time, money and efforts (plant & equipment or cost of R&D and trained
personnel) develops a restraining force within an entity to freely look for alternative options. Structural
arrangements refer to the rules and resources which an organization deploys manifesting its
commitment levels. A communication structure in organization like barriers misperception amongst
various players at vertical and horizontal levels also facilitates inertial process. Internal politics for
vested interests amongst organizational members act as restraining force. The existing institutional
norms ­rules and regulations remain status quo oriented to inhibit organizational change
B. External Factors
Not only internal factor inhibit change but at times external factors like government and industry creates
barriers in smooth and consistent change management process. For instance there may be a very high
cost associated with a firm's decision to enter or exit any particular industry or market. Bounded
rationality, a concept given by Herbert Simon means managers are rationalizing not rational, meaning
thereby that decisions on the part of managers are always bounded by constraints like time, space, cost
and information. Therefore the choice of decision makers to go for alternative options is extremely
limited. Another relevant concept is of social legitimacy which imposes restriction in the decision
outcome for change or status quo. Managers will go for such decisions which are considered legitimate
and acceptable by society or by the members of the organization socially. Most of the time society is
slow to recognize and accept change, and more often it is conservative to accept change. So what
happens practically is that organization try to initiate change but then do not intend to go for complete
transformation. Miller and Freisen identified this kind of response to environmental changes as sluggish
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Change Management ­MGMT625
VU
adaptation. Miller also used the term adaptive rigidities caused by the avoidance of uncertainties, and
the fragmentation of the political coalition and its goals cushion organizations from the need for
adaptation. All these issues of structural inertia (and in a way with organization adaptation phenomenon
as well) explain the relative superiority of natural selection process over adaptation in the survival of
organization.
Therefore, population ecologists believe that environmental selection replaces adaptation as the vehicle
of change. Hannan and Freeman formulated theory well supported by empirical evidence that "stronger
the inertial pressures lower the adaptive flexibility and the more likely that the logic of environmental
selection is appropriate". Hence the proposition is the survival of organizations is determined by
environmental variations
By implications, we see population ecologists maintain lesser role for management, wise governance,
organization structure and bench marked managerial practices. There is paradox in this thinking. The
paradox with population ecology is that methodologically, the study deals with small organizations with
simple organization structure which were free from issues of sunk cost & politics (non-chain small
restaurant in 18 cities of California State). External constraints were not strong either. The paradox is
that inertia is, somewhat, largely a phenomenon associated with the complex department structures of
large organization.
To Astley and van de Ven, "Natural selection model fits small, powerless organizations operating in
environment with dispersed resources better than large well connected organizations operating in
environment with concentrated resources". For Aldrich, the structural inertia depends on the size of
organizations. The larger an organization, the greater the structural inertia and the more control the
organization can exercise over the environment (in-real life large organizations seem quite powerful to
shape or influence environment). Another scholar empirically says "the few organizations that survive
infancy owe their above average longevity to wise governance"
Therefore ecologist claim that inertia restricts adaptation and consequently enables selection forces to
dominate over adaptive strategy of the organization somewhat holds less ground. Going by this concern
that small organizations lack inertia and should have better adaptability to environmental changes. The
question then is whether this so in real life? How these dynamics are going to be in developing
countries.
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