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Organizational Analysis: Week 5 Questions

(Contingency Theory and Resource Dependence)

Lawrence and Lorsch

• Lawrence and Lorsch's Hypothesis 7 (page 12) states: "When the environment requires both
a high degree of subsystem differentiation and a high degree of integration, integrative
devices will tend to emerge". We see later, on page 30 onwards, that practically all of these
integrative devices are either invididuals or teams occupying staff positions, whose mission it
is to find synergies or opportunities for collaboration/integration among organizational units.
Is integration possible without these specially dedicated devices? In other words, can
integration be left to individuals occupying line positions? What motivation
mechanisms/incentives would need to be provided for this type of integration to happen?
How would this affect the organization's form? (Luciana)

• Lawrence and Lorsch proposed four attributes of subsystems of organizations: 1)degree of

structure, 2)orientation of members toward others, 3)time orientation of members, 4)goal
orientation of members. Except the first one, which is about the structure of organization, the
others are all at individual level (at least, measured at individual member level). It was
delightful to see individuals in organizational studies, which generally have the weak point of
lacking individuals. But I wonder if those individual level characteristics can be considered
as an example of organizational feature (e.g. organizational differentiation). It is entirely
possible that the management group assigned communicative workers, who have social
interpersonal orientation, into sales department, rather than, the people’s orientation have
changed from the tasks. Even if this reverse causality is absent, still I wonder if the individual
level personality can be treated as suborganizational features. (Gru)

• How to discern the boundaries of the organizational environments mentioned by Lawrence

and Lorsch? (Phoenix)

• Is high differentiation and high integration always good? Can conflicts, at times, even be
heightened BECAUSE of the integration and differentiation? (Mary Carol)

• Do you think that differentiation and integration are necessarily separate or is there a false
dichotomy? Why? (Jessica)

• I'm intrigued by Lawrence and Lorsch's definition of an organization as a "system of

interrelated behaviors of people who are performing a task that has been differentiated into
several distinct subsystems, each subsystem performing a portion of the task, and the efforts
of each being integrated to achieve effective performance of the system. Differentiation is
defined as the state of segmentation of the organizational system. . . . Integration is defined as
the process of achieving unity of effort among the various subsystems. . . “Why do L&L
conceive of differentiation as a state and integration as a process in this definition, when,
later, at the conclusion of the paper, they write "other things being equal, differentiation and
integration are essentially antagonistic . . . one can be obtained only at the expense of the
other"? (Jennifer)

• My reaction to the paper by Lawrence & Lorsch is that their findings -- namely, that
successful organizations are able to effectively integrate highly differentiated subsystems,

Organizational Analysis: Week 5 Questions
(Contingency Theory and Resource Dependence)

and that this in large part requires the skills of a manager who can understand the goals and
constraints of each subsystem -- seem obvious. But presumably this was a very novel finding
in 1967, and recognition of its importance led organizations to improve integration of
specialized subsystems, which is why we're able to take it for granted today. If this is true,
are there ways we can get some distance from what we know now to fully appreciate this
impact of seminal findings in the field? (Rebecca)


• The natural systems mode of organization focuses on survival, and this reveals many insights
as to how organization decision making is influenced by interdependence with other
organizations through the task environment. This view helps us see broader arrangements of
power in which the interdependence of organizations can lead to more than a zero-sum game.
Although the net sum of power for an entire system will always be only a function of
technological advancement, i.e. particular subsystems can transcend zero-sum games, but not
the entire system. Moreover, the idea that organizations are trying to survive, primarily
(profit is secondary), is very useful because it accounts for the range of interests present in an
institution. But market pressures, particularly for certain organizations, create a context in
which these organizational interests concentrate around the idea of profit, in a way Thomson
does not fully express. He does not seem to go beyond saying that some organizational
departments are more influential than others given how dependent other departments are on
them, but perhaps a more direct discussion of how supply-demand forces shape
organizational priorities more directly is needed. Unrelatedly, I think the notion that firms
often misinterpret problems of effectiveness with problems of efficiency is very interesting
since, as the others allude, this is used as an escape strategy in society at large, e.g. in
politics, with torture debate. (Mazen)

• Thompson argues that "a significant function of the managerial level is to mediate between
the two extremes (i.e. the closed system aspects of the organization, given by the technical
level, and the open system aspects, given by the institutional level) and the emphases they
exhibit" (page 12). What are some specific activities connected with this function? How does
this function relate to domain building? Can we think of other managerial functions that
extend beyond this definition? (Luciana)

• Why does Thompson think that prestige is the cheapest way to acquire power from the
environment? What organization has been able to acquire prestige cheaply? On the other
hand, what does it take for a prestigious organization to lose its power? (Aaron)

• In Thompson’s theory, organizations seem to react in “rational” ways to technological and

environmental contingencies (see, e.g. propositions 3.3 and 4.2 regarding power over critical
resource providers, and economies of scale), yet his framing of the individual and
environmental paradigms are based on very “sub-rational” assumptions, for example
“satisficing” managers and imperfect markets. The “norms of rationality” in each of the
propositions suggests that the mechanisms by which these organizational behaviors are

Organizational Analysis: Week 5 Questions
(Contingency Theory and Resource Dependence)

somehow based on a group rationality or other social process. Is this the case? Where does
rationality really need to exist for Thompson’s model to hold? (Matt)

• Thompson, on page 30, explains the concept of a captive organization. Under what
circumstances is it beneficial or detrimental to be a captive organization? I wonder if there is
other work on the relationship between the captive organization and its environment and how
it differs from the analog relationship for a non-captive organization. Thomson of course
answers this question in part when discussing power and dependence but I am wondering if
there are aspects to this question that are left out of the chapter (eg. internal structures of the
organization, relationship to state/government. (Anshul)

• The concept of power (and dependence) seems to be based on the principle of supply and
demand. As the organization’s need for a resource is bigger and the organization does not
have alternative, its dependence on the relevant element of task environment increases
(power decreases). In reverse, an organization has power to the extent that it monopolizes a
capacity to supply a resource. Then, how is the power exerted? Against whom and how? One
immediate answer would be raising the price of its product or lessening of opponents’ prices
of products. In this case, the power is considered in the market, where the relative degree of
scarcity of a resource is expressed in the price. But Thompson’s power is not only economic
one (e.g. supply of patients or educated staffs). What other ways to exert power do we
observe in reality? (Gru)

Assumptions and Boundaries (Mainly Contingency Theory)

• This week's readings focus on resource dependence theory and the importance of
environmental conditions on organizations, which I thought made a lot more intuitive sense
than some previous readings that focus on organizations as independent units whose success
largely depend on internal structures and processes. I see that the overarching argument is
that in order for organizations to be effective, they must adapt and find appropriate strategies
to survive and thrive in the given environment. I am curious about what the class thinks
about the relationship in reverse, when environments and external conditions change in order
to fit and accommodate organizations? For example, some countries might change or alter
their labor laws in order to attract large corporations. What accounts for this relationship?

• In the Thompson article, the explanation of the theory is written in a tone that suggests
causality. However, would you argue that the directions of causality they assume are correct?
If so, why? For example, does efficiency lead to domain consensus or the other way around?
If you think about the major ideas they used (power, dependence, prestige, cooperation,
constraints, environments, domain, uncertainty, support, demand, etc.) they seemed to moved
from one concept to the next (A to B) without addressing whether you could move from B to
A whether on the same level or different. How do you think that the relationships feed back
to each other? In the Lawrence and Lorsch article, the issue of causality again arises as they
explain their evidence in only one direction (despite acknowledging that they can't assume a
direction in the relationship). However, could you explain a relationship where the attributes
affect the sub environments? Structure to Uncertainty? Moreover, what do you think are

Organizational Analysis: Week 5 Questions
(Contingency Theory and Resource Dependence)

some of the causal mechanisms in each of these relationships for which they show evidence?

• In terms of Lawrence and Lorsch’s definitions of differentiation and integration, how would
complex organizations that span the world- that is, huge international organizations- be
viewed? (Coca-Cola, BMW, H&M). Within the countries they serve and exist, these
organizations likely have highly “differentiated units” like a sales unit and a marketing unit,
and are likely highly integrated within country. But perhaps they are moderately integrated
across countries? How are these 3 levels of the organization viewed (Unit level,
Organization level, Across Borders level… and what is considered the environment)? (Mary

• Does Lawrence and Lorsch’s theory of differentiation and integration hold cross-culturally?
We know that different leadership styles seem to be more effective in some countries than
others; do different degrees of integration and differentiation work better in different
countries (specifically, organizations within a country that employee natives of that country-
not expatriates). How might we hypothesize that they would be similar/different? Is there
any research related to this? (Mary Carol)

Pfeffer and Salancik

• One advanced point of the resource-dependence theory of Pfeffer and Salancik is that they
laid out the source of uncertainty coming from environments – resources desired for a firm
but under control of outside the firm, while contingency theorists did not specify why
environments impose uncertainty on an organization. However, I think their resource-based
claim is somewhat narrow. How would they explain the fact that firms also respond to the
normative pressure from a general society? (Dong Ju)

• How to understand the balance of the organizational environments as both the provider of
resources for organizations and the sources of constraints in Pffefer and Salancik's sense?

• Pfeffer and Salancik said that loosely-coupled organization has more advantages in highly
uncertain situation than closely-coupled organization. Is this consistent with the claims of
contingency theorists that differentiation is a way of responding uncertainty? (Dong Ju)

Defining Organizations

• Pfeffer and Salancik describe organizations as "rational instruments for achieving some goal
or set of goals." They go further to say that "organizations are not so much concrete social
entities as a process of organizing support sufficient to continue existence." We've been
waiting all these weeks to help us define what we mean by organizations. How does this
compare to our conceptions of organizations we have discussed so far in this course? Could
Pfeffer and Salancik's definition be too broad to be useful? According to this definition, can
you ever not be not engaged in an organization? (Sae)

Organizational Analysis: Week 5 Questions
(Contingency Theory and Resource Dependence)

• I've been trying to map the different definitions and characterizations of "organization" that
we've been reading, to see where there are areas of greatest congruence or conflict among the
various theories and approaches -- to create a taxonomy of sorts. Could we discuss this a bit,
time permitting?

Comparing, Integrating and Extending the Theories

• Pfeffer and Salancik suggest that uncertainty in a particular resource results in either 1)
managers pursuing alternative, more stable resources [run away], or 2) selection processes
requiring organizational failure [fail]. Thompson asserts that organizations respond to
uncertainty by altering their boundaries [take over] or otherwise cooperating with those
resources to reduce risk [manage/contract]. Are these uncertainty-driven processes consistent
with the assumptions underlying other theories of the firm, or is this a distinct theory? (Matt)

• Both resource dependence/contingency theory and transaction cost economics appear to be

functionalist systems (revolving around effectiveness and efficiency, respectively), and even
appear to make the same predictions once you “properly” define what is “transaction cost”
and what is “effective”. We can ask how much of the difference between the two sets of
theories are true fundamental differences, how much are semantics? For example,
Williamson defines transaction costs very broadly, including the ex ante costs of safeguards
and the ex post costs of maladapation and misalignment due to unanticipated disturbances;
hence, Pfeffer & Salancik’s issues of asymmetric dependence relations, environmental
enactment gone awry, and considerations of interrole conflict can be incorporated into
transaction costs (and vice versa: efficiency and cost considerations are already explicitly
included in their resource dependence perspective). (Vince)

• Pfeffer & Salancik differentiate between efficiency and effectiveness as standards for
evaluating organizations. How (if at all) does this at all overlap with Thompson's recognition
of the role of uncertainty in decision-making, and his notion that in the face of uncertainty,
decision-makers are statisficing rather than maximizing? (Rebecca)

• The writers utilize many concepts from Durkheim: everything from his biological
functionalism to his terminology (for instance reference to “organic” versus “mechanistic”).
Yet, no mention is made of Durkheim or his works (although Parsons plays a large role).
Could some of the works have benefited from a direct revisiting of Durkheim, including a
critical analysis of the weaknesses of Durkheim’s own analysis of the division of labor? Just
two quick examples: Lawrence & Lorsch pass over the mutual influence of differentiation
and integration on each other, when that might be the most important (and generalizable)
relationship of study from a Durkheimian framework (that differentiation is not purely a
efficiency function, but more importantly a moral function of social solidarity within the
organization that can sometimes go awry). Or Pfeffer & Salancik, where the organization of
society (here the firm/organization) could serve as the very categories/organization for
thought (enactment/understanding of the external environment): the investigation of how the
existing organizational structure itself can condition, abet, or constrain enactment accuracy

Organizational Analysis: Week 5 Questions
(Contingency Theory and Resource Dependence)

(beyond the data gathering functions discussed). Or as Durkheim stated: “the organization is
no less a form of compulsion”. (Vince)

• One major theme this week is linkage, interdependence, or coupling (everyone uses different
terminology to refer to a very congruent set of ideas) and its implications for organizational
behavior. it seems predominantly viewed as a constraint and a handicap (eg, in thompson's
analysis, the firm grows to escape interdependence on an unpredictable environment (by
encapsulating the unpredictability within the firm). when does interdependence begin to get
rehabilitated (ie, when does embeddedness begin to be valorized) again? (or is it a separate
analytical stream being developed in parallel?) (Vaughn)

• Even though they use different terms, these theorists seem to be focused almost to exclusion
of all else, on control (in a formal-rational sense) and strategies entities within organizations
take to increase the range of their control. in this context, it isn't clear to me how "resource
availability" is significantly different from "predictability" in terms of implications for
organizational action. (Vaughn)

• Is there a way that resource dependence theory could help explain some of what happened
during the housing crisis? Who was depending on who, and what was happening in the
external environment (e.g. regulations, fiscal policy) from 2002-2007? Can resource
dependence explain “too big to fail”? Could it be one of the factors responsible for the fact
no legislation has been passed against any of the banks? (Aaron)

• Do you think that whether an organization is able to enlarge its task environment will depend
on the governing characteristics of the organization? How will it being a public or private
entity matter? Will it depend on the larger environment or network (regulatory, economic,
political) in which it exists? (Jessica)