Chapter 4

Environmental Influences
External Internal

Closed systems, Open Systems Mechanistic, Organic Systems

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Organizational Environments
External environment
The environment that is outside the formal boundaries

of the organization; having a set of conditions, circumstances, and influences that surround and affect the functioning of an organization. Effective organizations develop management systems that integrate management practices and organizational design with the characteristics of their external environment.

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Organizational Environments (contd)

External environment partitions (contd)
The general environmentthe broader milieu

(environment, political setting, surroundings) in which an organization operates along with many other organizations. The task environmentthe more specific and immediate (localized) environment in which the organization conducts its business.

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Relationship between the Task and General Environments and the Organization
General Environment
Sociocultural Economic Technological Legal/Political International

Task Environment
Suppliers Customers/markets Regulatory and influence groups Competitors Allies Manager and Organization

FIGURE 41
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Organizational Environments (contd)

Internal environment
All that is the organizationsuch as its space, climate,

machines/equipment, work and work processes, management and management processes, and organizational members.

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The Organization-Environment Relationship

Problems of environmental uncertainty
Managers can neither control nor predict everything

that will happen in the organizations interaction with the external environment.

Problems of interdependence
Organizations develop exchange relationships

with other organizations that create interdependencies between the partners.

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Managing Uncertainty and Interdependence

Strategies for dealing with uncertainty and interdependence:
Managing the boundary that separates the organization

from its external environment to reduce its impact on the organization. Reducing the level of uncertainty and dependency on the environment by increasing the organization control over the external environment. Integrating the organization with its external environment to create a boundaryless organization.
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Environmental Conditions
Degree of Environmental Change
Rules, regulations, SOPs Low High

Low

Stable/Homogeneous
Low Uncertainty

Shifting/Homogeneous
Moderate Uncertainty

Degree of
Environmental Segmentation
Stable/Heterogeneous High Moderate Uncertainty Shifting/Heterogeneous High Uncertainty

Source: J. D. Thompson. 1967. Organization in action. New York: McGraw-Hill, 72.

Boundary spanners, specialized roles

FIGURE 42
48

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The Organization-Environmental Relationship

Causes of Differentiation in Design and Management Practice
External Task Environment

Organization Design and Management Practice

FIGURE 43
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Burns and Stalker

A study of the relationships
environmental conditions, management practice, and

organizational design

between organizations and their environments. Identified two types of organizations:

Organic organization
An

organization whose structure is fluid and flexible.

Mechanistic organization
An

organization whose structure is fixed and rigid (also referred to as a bureaucracy).

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Mechanistic and Organic Organizations

Relationship
Structure Tasks Change Authority source Control Communication direction

Mechanistic
Rigid Well defined, stable, standardized Resistant From hierarchy and position Hierarchy Command-type and downward Instructions and decisions issued by superiors

Organic
Flexible Dynamic, loosely defined Receptive From knowledge and expertise From self and peers Consultative-type, up, down, horizontal, and diagonal Information and advice

Communication content

Source: T. Burns and G. Stalker. 1961. The management of innovation. London: Tavistock.

TABLE 41
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Closed and Open Organizational Systems

Closed system
An organization that is shut off to its external

environment and one in which managers look internally for ideas on productivity and efficiency improvements.

Open system
An organization that attempts to integrate itself with its

external environment and looks to the outside for ideas on productivity and efficiency improvements.

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Closed Systems of Management

Closed System
Institutional Level Administrative Level Technical Core

Note: The arrows represent forces in the environment that attempt to penetrate the system.
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FIGURE 44
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Open Systems of Management

Open System

Institutional Level
Environmental Information,

Administrative Level
Ideas, Beliefs, . . .

Technical Core

Note: The arrows represent forces in the environment that attempt to penetrate the system.
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FIGURE 44
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Control-Oriented Management, Mechanistic and Closed Organizations Stable Low Uncertainty Shifting

The Influence of Environmental Uncertainty

Homogeneous

Moderate

Heterogeneous

Moderate

High Uncertainty

Involvement-Oriented Management, Organic and Open Organizations FIGURE 45

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Linking Environments and Organizations

The boundary-spanning process
The means by which managers link the organization

with its external environment. Boundary rolesthose positions in organizations that link the organization with its external environment. Boundary spannersindividuals whose job it is to span the organizations boundaries and integrate the organization with the external environment.

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The Internal Environment

Structures
How are the jobs/work

Processes
How is coordination of

that employees do designed? What is the structural arrangement of the organization? What types of technology are used to produce products and/or services?

organizational components maintained? How is decision making conducted in the organization? How is information (communications) disseminated in the organization?
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People and their Beliefs

Organizations social system
Includes organizational membersmanagement, formal

leaders, and nonmanagerial employees and the beliefs and values they share.

Organizational culture
A pattern of basic assumptions invented, discovered, or

developed by a given group as it learns to cope with problems of external adaptation and internal integration.
Culture

is stable and resistant to change once it is established. Cultures have a strong effect on the performance of organizations.
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Managerial and Organizational Functions

Organizational climate
The prevailing organizational condition that reflects the

overall organizational tone or character. A companys personality that is a function of both its environment and its reactions to the external environment.

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Structure

Job Design Work Unit and Organization Design Technology

The Internal Environment and Organizational Climate

Processes
Coordinating Decision Making Communicating

Climate

People and Their Beliefs

Management and Formal Leaders Nonmanagerial Employees Culture
FIGURE 47
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