In this module you will learn


A bunch of concepts to describe the environment of organizations (see exhibit for specifics): The international environment has become increasingly important for many organizations.

Q - The industry sector includes: potential users of the organization's products (Y/N), competitors (Y/N), employment agencies (Y/N)?

Q - During the late 1970s and into the 1980s, power companies were faced with a great deal of uncertainty generated by groups protesting the use of nuclear power.  These events contributed to instability in what sector of the organizational environment of power companies?

Q - "An organization's domain is the buildings and grounds that are owned or leased by the organization and in which inputs are transformed into outputs."  (TRUE/FALSE?)

The basic outline for this module is the idea that the environment affects the organization in 2 essential ways, through

We review the various strategies that organizations use to achieve these 2 goals.


Environmental uncertainty is the absence of full information about the environment

There are 2 dimensions of environmental uncertainty:

EX: The complexity and stability dimensions can be combined into a 2-dimensional framework for environmental uncertainty. (Note that the framework assumes that instability is a worse source of uncertainty than complexity.)

Q - The two dimensions of environmental uncertainty are ___ and ___ ?

Q - "Environmental stability refers to the number and dissimilarity of external elements that have an impact on the organization."  (TRUE/FALSE?)


Organizations utilize a number of strategies to adapt to environmental uncertainty.

1.  Positions & Departments

The organization creates departments that specialize in dealing with a specific sector of the environment.
As a result there is a relationship
environmental complexity  ->  internal complexity

2.  Buffering & Boundary Spanning

Minicase:  Tommy Hilfiger (Daft p. 142).  The company sends researchers into music clubs to keep in touch with fashion trends among the youth, and gives free clothing to MTV stars.

Q - "Buffer departments attempt to insure that the technical core operates as an open system."  (TRUE/FALSE?)

Q - Sophie Lorimer is a researcher in the R&D department of a major chemical company.  Part of her job is to read technical and scientific journals, and to attend conferences to find out what new developments are occuring.  That part of her job corresponds to a (MAINTENANCE/BUFFERING/BOUNDARY SPANNING?) role.

3.  Differentiation & Integration

The classical research of Paul Lawrence and Jay Lorsch on differentiation and integration processes is especially important. Lawrence and Lorsch found that organizations in more uncertain environments tend to both The following exhibits summarize the Lawrence & Lorsch approach Q - Paul Lawrence and Jay Lorsch argue that an organization is more likely to need a number of specialized departments that have different cognitive and emotional orientations when the environment is highly (Choose one: STABLE/UNCERTAIN/DYNAMIC/MECHANISTIC)?

Q - "According to Paul Lawrence and Jay Lorsch, high differentiation in an organization implies that coordination between departments is problematic."  (TRUE/FALSE?)

Q - The study of differentiation and integration processes in organizations is closely associated with the names of (Choose one: CHEECH & CHONG/SONNY & CHER/LAWRENCE & LORSCH/BONNY & CLYDE/PAUL & VIRGINIE)

4.  Organic versus Mechanistic Control

Tom Burns and G. M. Stalker have emphasized the distinction between mechanistic and organic forms of organization The next exhibit compares the features of mechanistic and organic organizations Organizations tend to adopt a position on the Mechanistic <---> Organic continuum that corresponds to the degree of environmental uncertainty they face, so that greater uncertainty corresponds to a more organic control structure, and vice-versa.

5.  Planning & Forecasting

Organizations facing greater uncertainty will tend to increase their planning and forecasting effort.  (This is pretty obvious if you ask me!)

6.  Institutional Imitation

(Institutional imitation is discussed more fully in Module 5 as part of the institutional perspective.)

The institutional perspective argues that under high uncertainty, organizations tend to imitate others in the same institutional environment.  Consequences of institutional imitation


This framework summarizes organizational responses to uncertainty discussed in Section 3.


The resource dependence perspective views organizations as dependent on the environment for scarce resources (material and financial) and as striving to acquire control over the sources of these resources to minimize dependence on the environment.

The 2 general strategies to minimize resource dependence are

Various ways to implement these 2 general strategies are summarized in the next exhibit These organizational strategies to minimize resource dependence are examined in detail in the next 2 sections.


1.  Ownership

Various degrees of ownership are achieved through part ownership, controlling interest, acquisition, or merger.

2.  Contracts & Joint Ventures

Includes license agreements, supplier arrangements (EX: McDonald buys a whole crop of potatoes), and joint ventures.

3.  Cooptation & Interlocking Directorates

4.  Executive Recruitment

5.  Advertising & Public Relations

Minicase:  Toshiba  (Daft p. 151).  Toshiba already engaged in high-tech strategic aliance in the early 1900s when it contracted with GE to make light bulb filaments.  They are currently involved in more than two dozens major partnerships and joint ventures.  Toshiba illustrates the range of strategies that an be used to reduce resource dependence. Q - Roderick Cleaver is a militant member of a faculty union at a medium-sized college.  When the unions's Negotiating Committee is reporting to a meeting of the faculty, he always find fault with the work of the committee and strongly advocates striking.  When a member the the Negotiating Committee resigns because of illness, the union's Executive Committee appoints Roderick to take his place.  This is an instance of what organizational linkage strategy?

Q - McDonnell-Douglas hired a retired Air Force general for a top management position.  This is an instance of what organizaitonal linkage strategy?


1.  Change of Domain

 An organization can change its domain through acquisition and/or divestment (EX: Reynolds acquiring Nabisco)

2.  Political Activity & Lobbying

To influence legislation and obtain favorable regulations.

3.  Trade Associations

Trade associations of organizations with similar interests (EX: National Association of Manufacturers).

4.  Illegitimate Activities

If all else fails, let's try using some bribes, kickbacks, payoffs to foreign officials, illegal political contributions, industrial espionage, price fixing, etc.

Q - What's the most direct way for an organization to change its domain?


The next exhibit summarizes most of the discussion on the response of organizations to environmental uncertainty and their effort to minimize resource dependence.  This "big picture" illustrates the "top down" approach to understanding the materials in the course.

Last modified 5 Sep 2001