Structuring of organizations: recent theories

A number of innovative views have recently emerged about why organizations are structured as they are. One view, the strategic contingency theory, assumes that organizations are open systems that respond to various opportunities and challenges from their environments. They develop various kinds of subunits to best respond to these opportunities and challenges. Organizational participants vary in their wishes, and the subunits to which they belong differ not only in their wishes but in their power. Power has many sources, one of which is environmental uncertainty. To the extent that a subunit can cope with uncertainty, thereby reducing it for everyone, it obtains power. Organizational structures are the outcomes of political contests within organizations.

Four quite different explanations for organizational structuring come from an ecological perspective, two of which will be discussed here. The population ecology, or natural selection, model, which draws from biology, views organizations as populations rather than as individuals. In this view, environments differentially select organizations for survival based on the fit between organizational forms and environmental characteristics. Positively selected organizations survive and reproduce similar others, which then form the starting point for a new round of selection as mutants appear. As the environment changes, new structures are selected.

Where the population ecology approach stresses selection, both in terms of what kinds of organizations are created and which ones survive, the resource dependency model stresses adaptation. As does the population ecology view, this model argues that one cannot understand the structure or behavior of an organization without understanding the context within which it operates. Organizations are not self-sufficient. They must engage in exchanges with their environments as a condition of survival, and the need to acquire resources creates dependencies among organizations. Those organizations that survive are able to develop strategies to change and adapt to their environments, exploiting those dependencies. Organizations are active, not passive, in determining their own fates.

In this respect, the resource dependency model differs from the population ecology approach.