Organisational theories are the foundation of the organizational structure that depicts the reaction and business's approach in light of the elements influencing the business. The accompanying report underpins the organizational theories and their utilization in enhancing organizational effectiveness. In the accompanying report, the four authoritative hypotheses had been altogether examined and investigated in the setting of hierarchical activities. It unmistakably clarified the fundamental contrast between the basic difference between strategic choice theory and deterministic theory. The assumptions and plus points had been canvassed in the report for every theory alongside their drawbacks. A basic examination had been improved the situation all the four speculations had additionally been done according to the necessity of the evaluation.
The first theory was Strategic choice theory that elucidates the role of a leading group or leader that influences the organisation by making decisions in a particular dynamic political practice (Eskerod, et.al, 2015). The next theory was Resource dependency theorywhich is based on the fact that an organisation should engage with other business entity in order to arrange and acquire resources (Yeager, et.al, 2015).Talking about the Institutional Theory, it is based on certain assumptions, such as the internal and external world of an organisation is subjectively perceived by stakeholders of those organisations (Scaraboto& Fischer, 2012). The last theory was population ecology that classifies organisation into population, simplification of population can be done, and making extrapolations about organisational behaviour (Getz, 2015).
Organisational theories are well-efficient in explaining the understanding and behavioural patterns within a business entity. In addition to this, it also serves as a scientific base for controlling, predicting, and influencing the efficiency of the organisation. According to Doh(2015), the area of organisational theory can be featured as a structure of knowledge to explain the actions taken up by organisations. There are four organisational theory that will be discussed in this essay, namely strategic choice theory, Population Ecology theory, Resource Dependency Theory, and Institutional Theory. The last three are categorised as determinist theories. A critical analysis of each theory will be provide in context of basic understanding of organisational action.
In day-to-day functioning of an organisation, it faces wide range of challenges that affect the organisational behaviour. It is important for the organisation to address to various facets of organisational behaviour, such as leadership, decision-making, motivation, team-building, and job satisfaction. The actions taken by the organisation can be understood from various organisational theories broadly classified as Strategic Choice Theory and Determinist Theory (Doh, 2015).
Talking about the Strategic Choice Theory, it explains and elucidates the role of a leading group or leader that influences the organisation by making decisions in a particular dynamic political practice. Strategic Choice Theory considers various important forces affecting employment relationships in the external environment. Making amendments in the external environment might force the organisation to make some sort of adjustment in the competitive business strategies (Davis& Adam Cobb, 2013). In order to make those changes, a wide range of options areconsidered and filtered. These options are later constrained in order to bring consistency in the beliefs, values, and philosophies established in the mind of the managers and decision-makers. In simple words, Strategic choice theory provides an option to the leaders and decision-makers within an organisation to make choices that further influence the organisational development dynamically.
This strategy supports the strategic structure within an organisationwhich trusts that a business has some authority over its place inside the market and furthermore over shopper conduct. The business can control the market through publicizing, changing its valuing methodologies and systems administration with different organizations. By concentrating on clear objectives, vital structure says that business chiefs can control the market to achieve its goals.
After the strategic choice theory, the strategic management also comprises deterministic theories. The basic difference between the two lies in the degree of adaptability assumed by the two theories in manipulating the business market. The deterministic theory emphasises on the point that marketplace control and regulates itself. The organisations are forced to act according to the changes in the market and challenges affecting the choices and patterns of consumers. In the deterministic organisational structure, overall marketplace, industry, and social environment identify the way the organisation is structured. Hence, it is quintessential for the company to focus its goals and objectives on generating profits and long-term sustainability in the market. There are three deterministic theories that will be discussed in this part. These are Resource Dependency Theory, Institutional theory, and Population Ecology.
Resource dependency theory is based on the fact that an organisation should engage with other business entity in order to arrange and acquire resources. This theory has both advantages and disadvantages. Since the resources available with the company are limited and scarce, there is need to access them from other firms. The theory is underpinned by the principle that resources are the crucial aspects of the organisational success and controlling and accessing them is the basis of organisational power. According to Yeager, et.al (2015), the resources are always under the control of the organisation that provides them rather than who needs them. Strategies must be carefully formulated and the same should be considered so as to keep an open access to resources. However, to get rid of such dependencies, organisation make use of many strategies and planning. This is because the sharing of resources results in differences in authority, sharing of power, and access to more resources that are essential for both organisation(Davis& Adam Cobb, 2013). The strategies taken up by organisations to avoid resource sharing and reduce the dependencies comprise political action, developing and diversifying links to other companies, and organisation’s scale of production enhancement. One such strategy is to build redundancy while acquiring resources so as to minimise the dependencies over other organisation. All these strategies not only reduces the dependencies of the organisation on others for resource sharing but also improves leverages and power.
Resource Dependence Theory outline the term ‘environment’ repeatedly in context of an organisation and business world. The environment comprises institutions. Namely labour unions, companies’ authorities, etc. According to Altholz, (2012), a broader definition of environment considered in RDT. Such definition does not take into account the groups controlling the resources the organisation requires. However, it implies the wider interaction between the organisation and the external environment.
According to Yeager, et.al (2015), organisations are adjusting their business strategies so as to adopt to the changes in the relationships with other enterprises. The theory has many assumptions, one of which is that uncertainties clouds the control of resources by the organisation, thereby making it a dependence reducing strategies imperative. Many researches have proved that as the dependencies and uncertainties increases, the need for dependence also increases. For instance, reduction in profits of an organisation might result in expansion of business activity through strategic alliance and diversification with other organisation. Research carried out by making use resource dependency theory has observed organisational adaptations to reliance. One adaptation contains aligning internal elements of an organisation with pressures created by the organisation. Organisations are attempting altering the environment as per their convenience.
Before discussing the Institutional Theory, it is important to discuss the term ‘Institutionalisation.’ It is termed as the process through which an institution, such as unions, business entities, etc., attains a durable and stable state (Scaraboto& Fischer, 2012). Talking about the Institutional Theory, it is based on certain assumptions, such as the internal and external world of an organisation is subjectively perceived by stakeholders of those organisations. In other words, it can be understood that managers being under the influence of expectations and social norms, see the business process in a specific way and act accordingly. Business entities are not autonomous bodies aiming at maximising economic opportunities. However, they are set within certain social expectations and norms that shape and constrain managerial choices. By complyingwith social norms, business entities secure support, approval, and public endorsement, thereby enhancing the legitimacy of the business.In addition to this, the institutional theory takes into account the processes through which structures, such as norms, schemes, and rules are established as commanding guidelines in context of social behaviour (Altholz,2012).The deterministic structure says that the business is compelled to be adaptable to changing economic situations, notwithstanding when it would preferably not be, while the key hierarchical structure grasps changes and adaptability, trusting that changing to fulfil buyer needs builds the association's image mindfulness and commercial centre position.
There are several distinctive features of IT. Getz (2015) has summarised the whole institutional theory in four interconnected constructs, namely limited rationality and functionalism, attenuated consciousness, external environments, and symbolic life of business entity. Institutional theory emphasizes on institutional environment that has the ability to influence the existing organizational structure and its development in a more influential way than market pressure. Innovative structures that could enhance the technical efficiency are legitimized in the business. Nowadays, organizations are adopting structural form even though there is a high risk of poor efficiency. In addition to this, Meyer and Rowan argue that legitimacy in the business helps in ensuring the sustainability of the organization (Scaraboto& Fischer, 2012). However, the formal legitimacy can lower the efficiency of the organization and hinder its progress towards gaining a competitive advantage. Hence, many researchers suggest that organization should decouple their technical section from such formal legitimizing structures.
The theory of population ecology is somewhere dependent on the Darwinist theory that supports survival of the fittest. In its simplest form,it can be understood as the survival of the organisation that competes for its resources (Getz, 2015). This theory classifies organisation into population, simplification of population can be done, and making extrapolations about organisational behaviour. The major downside of this approach is that it the major downside of this approach is that many traits associated with an organisation get lost in the process of aggregation. In other words, being a micro level analysis, it might obscure a large number of causal links between a specific organisational feature and its survival rates. The population ecology theory is based on the concept of niche which is characterised as a set of constraints that are significant for the survival of species. These constraints is characterised as resources that are important for the sustainability of a business. It is important to note that each niche has its capacity. There is a healthy competition among the niches for the resources and those niche that cannot compete will be selected out. In the long run, all the resources for the niches get exhausted and the survival of the entire population is at high risk.
According to Eskerod, et.al (2015), there are many benefits of population ecology theory. It offers a new way of breaking down the mental set of the traditional model and provide a sense of seeing the organisational world from a new perspective. One can approach to the organisational problem from several directions not just from one perspective. In addition to this, it is based on many concepts diffused to give a single theory. Moreover, by making use of this theory, organisation can identify both theoretical and methodical challenges. This helps the organisations in mapping the difficulties and proposing the solution for the same.
Organizational theories are the basis of organizational structure that describes the response and selected business approach in response to the factors affecting the business. The following report supports the organizational theories and their usage in increasing organizational efficiency. In the following report, the four organizational theories had been thoroughly discussed and analyzed in context of organizational actions. It clearly explained the basic difference between strategic choice theory and deterministic theory. The assumptions and advantages had been covered in the report for each theory along with their downsides. A critical analysis had been done for all the four theories had also been done as per the requirement of the assessment.
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