Deterministic Theory vs Strategic Choice Theory in Organizational Design

This essay critically analyzes the deterministic theory and strategic choice theory in organizational design and argues that deterministic theory is more compelling. It discusses the resource dependence theory, institutional theory, and population ecology theory and their impact on organizational behavior.

Running Head: MANAGEMENT THEORY AND PRACTICE 1
Management Theory and Practice

MANAGEMENT THEORY AND PRACTICE 2
Introduction
Organization theory includes the approaches for analyzing the organization and its related
stakeholders. The term Organization can be defined as a shared entity of various individuals that
is created and organized for meeting the specific needs and to practice common objectives. The
field of organizational theories is regarded as a knowledge structure by involving many concepts
to know about and describe the organizational structure and its activities. In modern business
management studies, there are many authors and researchers who state that opinions among
different theories and concepts of organization show the competition level of their thoughts and
opinions. Some of the scholars suppose that these organizational theories are derived from the
results of practical research and implemented to resolve the issues in real life business world.
This essay answers the question that “which is the most compelling theory between strategic and
deterministic theories”.
This essay includes the discussion about how different deterministic theories such as resource
dependence theory, institutional theory and population ecology theory make contribution to the
structuring and activities of organization. In this essay, the theories are analyzed by conducting a
critical analysis of the thoughts and ideas about the managers’ roles in generating positive
consequences for the firm. After analyzing the contribution of deterministic and agency theories,
it can be stated that it is complex to combine these theoretical models in one concept. The first
part of the report includes the discussion about both strategic choice and deterministic theories.
Moreover, it consists of the arguments on all three theories of organization. At the end, the essay
critically analyzes three theoretical concepts such as resource dependence theory, population
ecology theory and institutional theory.
Introduction about Both Theories
As per the opinion of Okasha, Elsaid & Abdelghaly (2013), organizational structure is a model
that highlights how the business activities are directed for achieving the goals of organization.
These business activities include rules, roles and responsibilities of employees. There are two
theories of organizational structure i.e. strategic choice and deterministic theories. Both of these
concepts are distinguished on the basis of adaptability level that they suppose in affecting the
market. Strategic choice theory is a system theory that emphasizes on the decisions to be made in

MANAGEMENT THEORY AND PRACTICE 3
any particular situationi. This concept states about the roles of leaders and managers in
generating diverse choices in a continuous process. Other theory of organizational structure is
deterministic concept which describes that external market and environment have a significant
monitoring and control on business processes. As per this theory, businesses are forced to accept
the changes in the market. There are three theories under determinism concept i.e. resource
dependency theory, institutional theory and population ecology theory. These theories have
different impacts on the organization and its structural design.
Considering the explanation of both the theories, it can be noted that deterministic theory is more
compelling as it focuses on the availability of resources and environmental impact on business. It
creates more compelling effect on organizational behaviourii.
Option 1: One is More Compelling
Arguments
Looking at both strategic choice and deterministic theories, it should be noticed that
deterministic theory is more compelling than strategic choice as area of this theory is wider than
another one. On one side, strategic choice is a concept which explains the roles and
responsibilities of leaders in the making impact on its staff and available dynamic options. In
opposite to this, deterministic theory of organizational action provides the organizational
structure and culture which has less control on organizational functions. As per this concept,
market and external environment has more control on the businesses. However, it is dependent
on an organization which organizational structure they want to choose to operate their business
activities. Among these theories, deterministic theory would be best fit as it helps the
organization to know about both its internal and external environment. It will be good for both
for-profit and not-for-profit businesses because it indicates less control on actions and these are
defined and controlled by external marketiii.
Among deterministic theories, resource dependence theory is one of the most crucial theories
that direct the companies to work as per the availability of resources. The companies may take
the support of other firms for resource availability. Before introducing anything new, the
companies need to analyze the external market and they need to accept the market trends and
changes. Institutional theory is another theory of determinism that imposes different rules and

MANAGEMENT THEORY AND PRACTICE 4
norms which the companies need to comply with to operate their business successfully. It is
more appropriate than strategic choice theory as it develops the potential and capacity to
businesses so that they can adopt and work according to the environmental changes. It is more
compelling as it provides more opportunities to businesses in order to develop an effective
organizational structureiv.
More Compelling Idea
As the above arguments states that deterministic theories are more compelling than strategic
choice theory so it is very important to understand the concepts and ideas about these three
theories i.e. resource dependency theory, population ecology theory and institutional theory.
Among these organizational theories, the major deterministic theory is the resource dependence
concept that describes that how the companies interact with the external environmental factors
and how they gather and use the resources so that they can be utilized for organizational benefits.
This theory recommends that a firm should manage its external environment for acquiring the
resources as per the organizational requirement for extensive future growth. This theory was
given by Jefferey and Gerald which emphasizes on power-practicing faces and behavior of
organization. This concept focuses on the link between a company and its resource holders. This
theoretical concept suggests that the managers at workplace should possess a great understanding
about needed resources of manufacturing and logistic process. In addition to this, they should
have the information if there is resource scarcity in the organization. It supports them to
formulate different strategies and tactics as per the needs and demands of resources. It can reduce
the resource dependencies in the organizationv.
Davis and Cobb (2009) have given their views that there can be different types of assets and
resources such as human resources, raw materials, financial resources, tangible and intangible
resources and final products. If a business entity attempts to manage its assets then other will be
dependent on this. Among companies, very much dependency will generate uncertainty in
external business atmosphere. In that situation, managers need to plan the operations and in order
to eliminate the associated risks and challengesvi. The adoption of resource based concept can be
known by the instance of ACME organization. ACME is an information technology company
that is working for a media firm i.e. XYZ multimedia company. By looking at this example, it
can be understood that IT organization is totally dependent on media firm because this is the

MANAGEMENT THEORY AND PRACTICE 5
single manner of producing significant profits. In order to utilize the assets and resources, the
managers can use different methods and modes such as joint ventures, mergers and acquisitions.
Thus, this can be identified that this concept gives the foundation to understand the impact of
behavior power of organizationvii.
Moreover, another theoretical concept of organizational design is institutional theory which
provides significant guidelines to evaluate the environment in the workplace and connections
with the focus on norms, values, expectations and rules. In this relation, Levitt and Mahalingam
(2007) described that these morals and standards assist the workplace organizational behavior.
To achieve ability to survive under competitive situation, the firms should follow all the rules,
regulations and laws of its environment. It is the process of organizations going towards
resemblances such as isomorphismviii. The theoretical concept of institutional theory can be
stated by describing 3 processes such as mimetic, normative and coercive. This can be evaluated
from a company that legal and political forces are the result of the coercive forcesix. Moreover,
normative forces are resulted from the cultural expectations. Running business operations as
successful firms can direct to the mimetic pressures. This organizational theory recommends that
success of company may have implied. The companies may fail when it does not comply with
levied regulations and values. For example, there are many transportation firms that implement
this approach that enable them to maintain the safety of ships and encourage compliance of
different standards and codes of safety managementx.
Along with the above concepts, modern firms can use Population Ecology Theory which was
given by Pfeffer and Aldrich in 1976. It is open system concept that consists of atmosphere of
companyxi. This is a significant theoretical framework which answers the question that why some
companies survive while other fail. Population Ecology Theory researches the changes in its
different divisions. This theoretical concept focuses on the changes in the mass population rather
than the changes in person using difficult possibilities. One of the major examples of this is gas
and oil producing companies which can be considered as population. It assesses the impact of
population’s behavior on company’s resultsxii.
In long run, structural inertia can improve with the growth of firms that can be an obstacle. This
barrier can resist the changes in company and its workplace environment. In a company, there
may be various causes of this structural inertia like financial restraints, limited investment and

MANAGEMENT THEORY AND PRACTICE 6
limited information. This concept covers three situations such as selection, variation and
retention. The example of General Motors can help in understanding this theory. This
organization has altered its organizational arrangement and utilized political factors to influence
the public policy in an effective way which guarantees the development and success for
organizationxiii.
The above paragraph indicates why this theory is more compelling in organizational design and
action. These theories have various strengths which make them more compelling such as these
theories indicate the connection between company design and workplace environment. Resource
dependence concept emphasizes on a single company. It focuses on the impact of agents
showcasing the principles to respond the organizational changes. Similarly, population ecology
is accountable for prominence of validity for the companies to stay competitive and successful.
Population ecology gives a company the most suitable company structure that can be selected by
environment. It helps in safeguarding the competencies and resourcesxiv. The foremost reason of
selecting this approach is that this theory defines the organization and its environment
effectively. It looks at all significant resources and competencies of company such as human
capital, good will, IPRs, physical resources and financial resources while other theories consist
of population and environmental factors only.
Less Compelling Idea
However, both the theories i.e. strategic choice and deterministic theories can be effective for the
growth of organization but deterministic theory provides more business opportunities to
businesses. This theory is less compelling than other organizational theories because this
approach is not a theory with the pre-decided objectives and actors. The focus of this theory is on
the internal environment of organization which is not enough for a business to survive in highly
competitive business environment. All the processes and decisions are controlled by the internal
management process so they can change the decisions according to their needsxv. Thus it can be
stated that it isolates the companies from external marketplace and environment. Due to this, the
companies will not be able to understand the available competitive pressure in the industry. It
may have an adverse impact on the position and growth of business in the market. However, this
theory gives the opportunity to choose from different options, but it can raise conflicts among
people and available alternatives. Thus, there may be chance that businesses fail to assess the

MANAGEMENT THEORY AND PRACTICE 7
market trends and changes. In this way, it can be noted that strategic choice theory is less
compelling than other theories of organizational designxvi.
Conclusion
In the limelight of above discussion, it can be concluded that any organization can use the above-
given three theories to develop its actions and structure. These theories are resource dependence
theory, population ecology theory and institutional theory. All three theories define the
relationship between internal and external environments of the company. In the above essay, all
the three theoretical concepts are analyzed critically. This critical analysis indicates that
deterministic theory is best theory between two that should be used by every company if it wants
to stay competitive and survive in long term. It is difficult to reconcile three theories in a single
concept. Companies adopt different concepts in different situations which develop relationship
between company and environment. It is a responsibility of the leaders to select most appropriate
theory as per the conditions.

MANAGEMENT THEORY AND PRACTICE 8
References
Abbott, K.W., Green, J.F. & Keohane, R.O., 2016. Organizational ecology and institutional
change in global governance. International Organization, 70(2), pp.247-277.
Biermann, R. & Harsch, M., 2017. Resource dependence theory. In Palgrave Handbook of Inter-
Organizational Relations in World Politics (pp. 135-155). Palgrave Macmillan, London.
Davis, G.F. & Cobb, J. A. 2009. Resource Dependence Theory: Past and Future. < Available
from http://webuser.bus.umich.edu/gfdavis/Papers/davis_cobb_09_RSO.pdf> [Accessed on 30
September 2018].
Drees, J.M. & Heugens, P.P., 2013. Synthesizing and extending resource dependence theory: A
meta-analysis. Journal of Management, 39(6), pp.1666-1698.
Eomnicki, A., 2018. Population ecology from the individual perspective. In Individual-based
models and approaches in ecology (pp. 23-37). Chapman and Hall/CRC.
Elsaid, N.M., Okasha, A.E. & Abdelghaly, A.A. 2013. Defining and Solving the Organizational
Structure Problems to Improve the Performanceof Ministry of State for Environmental Affairs –
Egypt. International Journal of Scientific and Research Publications, 3 (10), pp. 7-8
Mahalingam, A. & Levitt, R.E. 2007. Institutional Theory as a Framework for Analyzing
Conflicts on Global Projects. Journal Of Construction Engineering And Management. 133 (7):
517-528.
Miner, J.B., 2015. Organizational behavior 1: Essential theories of motivation and leadership.
Routledge.
Nienhüser, W., 2008. Resource dependence theory-How well does it explain behavior of
organizations?. management revue, pp.9-32.
Nilsen, P., 2015. Making sense of implementation theories, models and
frameworks. Implementation Science, 10(1), p.53.
Rockwood, L.L., 2015. Introduction to population ecology. US: John Wiley & Sons.

MANAGEMENT THEORY AND PRACTICE 9
Schiele, H., Ellis, S.C., Eßig, M., Henke, J.W. & Kull, T.J., 2015. Managing supplier
satisfaction: Social capital and resource dependence frameworks. Australasian Marketing
Journal (AMJ), 23(2), pp.132-138.
Simon, H. & March, J., 2009. Organizations. Blackwell, Cambridge.
Suddaby, R., 2015. Can institutional theory be critical?. Journal of Management Inquiry, 24(1),
pp.93-95.
Tran, Q. & Tian, Y. 2012, Organizational Structure: Influencing Factors and Impact on a Firm,
American Journal of Industrial and Business Management, 3, 229-236.
Whittington, R., 2014. Corporate Strategies in Recession and Recovery (Routledge Revivals):
Social Structure and Strategic Choice. Routledge.

i Elsaid, N.M., Okasha, A.E. & Abdelghaly, A.A. 2013. Defining and Solving the Organizational Structure Problems to
Improve the Performanceof Ministry of State for Environmental Affairs – Egypt. International Journal of Scientific and
Research Publications, 3 (10), pp. 7-8
ii Miner, J.B., 2015. Organizational behavior 1: Essential theories of motivation and leadership. Routledge.
iii Simon, H. & March, J., 2009. Organizations. Blackwell, Cambridge.
iv Tran, Q. & Tian, Y. 2012, Organizational Structure: Influencing Factors and Impact on a Firm, American Journal of
Industrial and Business Management, 3, 229-236.
v Biermann, R. & Harsch, M., 2017. Resource dependence theory. In Palgrave Handbook of Inter-Organizational Relations
in World Politics (pp. 135-155). Palgrave Macmillan, London.
vi Davis, G.F. & Cobb, J. A. 2009. Resource Dependence Theory: Past and Future. < Available from
http://webuser.bus.umich.edu/gfdavis/Papers/davis_cobb_09_RSO.pdf> [Accessed on 30 September 2018].
vii Drees, J.M. & Heugens, P.P., 2013. Synthesizing and extending resource dependence theory: A meta-analysis. Journal of
Management, 39(6), pp.1666-1698.
viii Mahalingam, A. & Levitt, R.E. 2007. Institutional Theory as a Framework for Analyzing Conflicts on Global Projects.
Journal Of Construction Engineering And Management. 133 (7): 517-528.
ix Suddaby, R., 2015. Can institutional theory be critical?. Journal of Management Inquiry, 24(1), pp.93-95.
x Schiele, H., Ellis, S.C., Eßig, M., Henke, J.W. & Kull, T.J., 2015. Managing supplier satisfaction: Social capital and
resource dependence frameworks. Australasian Marketing Journal (AMJ), 23(2), pp.132-138.
xi Rockwood, L.L., 2015. Introduction to population ecology. US: John Wiley & Sons.
xii Eomnicki, A., 2018. Population ecology from the individual perspective. In Individual-based models and approaches in
ecology (pp. 23-37). Chapman and Hall/CRC.
xiii Nienhüser, W., 2008. Resource dependence theory-How well does it explain behavior of organizations?. management
revue, pp.9-32.
xiv Abbott, K.W., Green, J.F. & Keohane, R.O., 2016. Organizational ecology and institutional change in global
governance. International Organization, 70(2), pp.247-277.

xv Whittington, R., 2014. Corporate Strategies in Recession and Recovery (Routledge Revivals): Social Structure and
Strategic Choice. Routledge.
xvi Nilsen, P., 2015. Making sense of implementation theories, models and frameworks. Implementation Science, 10(1), p.53.