Management Theory and Practice

This essay discusses how strategic choice and organizational theories such as resource dependency theories, institutional theory and population ecology theory assist in organizational action and design. It covers the primary dimensions of organizational design, classical arguments about the three organizational concepts, and critically analyzes all the three theories.

Running Head: MANAGEMENT THEORY 1
Management Theory and Practice

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Introduction
Organizational theories include the concepts which can be used for analyzing the organizations.
Under these theories, organization is described as a social unit of individuals which are
structured and managed to fulfill a need or to practice the mutual objectives. The scope of
organizational theory is regarded as a split body of information by covering several challenging
concepts to understand and describe the organizational structure and its business activities. There
are various scholars who entitle that arguments among these organizational concepts are the
extent of rivalry of their opinions, thoughts and ideas. Moreover, some management researchers
undertake that these theoretical concepts are generated from logical research findings and applied
to overcome the issues faced by real world firms. This essay is focused on how the strategic
choice and organizational theories such as resource dependency theories, institutional theory and
population ecology theory assist in organizational action and design.
The essay discusses about how all the theories can be reunited in a single concept by critically
evaluating the effective opinions and ideas about the responsibilities of leaders and managers so
that they can generate positive results for the company. After the evaluation of agency and
determinist theories, it can be said that it is very difficult to merge these theoretical concepts into
a single theory. Firstly, this paper covers the primary dimensions of organizational design.
Furthermore, it includes the classical arguments about the three organizational concepts. At the
end, all the three theories i.e. resource dependence theory, population ecology theory and
institutional theory are critically analyzed.
Fundamental Dimensions
An organization is the group of people with the mutual objective like a business and government.
It is an entity that includes various people like association, institution which has a mutual
objective and this goal is connected to external environment and its factors (Schiele, Ellis, Eßig,
Henke & Kull, 2015). In general, the organization can be described as the association of
individuals, who work together to achieve collective targets by allocating the human resources
and their roles. According to the open system concept, an organization is a structure which
transforms efforts from business atmosphere by the activities with management and production
technology. According to Tian & Tran (2012) an organization is developed by the individuals

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with the goal of achieving impacts that an individual cannot achieve solely. In their article, the
authors referred organizational system as a framework and structure of communication and
coordination among different divisions of a firm (Tran & Tian, 2012). In this context, Simon &
March (2009) stated that organization is a formal system of roles and responsibilities that
monitors and controls how its workforce is to coordinate and use the resources to accomplish its
common objectives. This can be organized and converted by using the organizational designing
process (Simon & March, 2009). The modern companies use different organizational structures
such as line, matrix and centralization.
In order to develop the actions of an organization, the management of a company considers three
basic dimensions like formalization, complexity and centralization. One of the most important
dimensions of design is formalization which is focused on the process to develop a formal
organizational structure and includes effective management of that structure (Greenberg, 2014).
Another dimension of company design is centralization, under which company makes the
decisions by emphasizing on single matter of company. In this, the senior level of management
makes all the decisions in organization. Moreover, complexity refers to the process to
differentiate the company on the basis of levels like spatial, horizontal and vertical.
Organizational Theories
An organizational structure defines an approach of business and its response to the marketplace.
There are two general theories of organizational structure i.e. strategic and deterministic. These
theories can be differentiated on the basis of adaptability extent that they undertake to manipulate
the market (D’Adderio & Pollock, 2014). This paper includes the deterministic theories only
which describe that the organizational strategies can be decided by its external factors. This
section includes the discussion about some organizational concepts that can be pursued for
organizational design and research. In this essay, there are three types of organizational theories
which serve to know about the organizational actions. The theories which are considered here are
Population ecology theory, Institutional theory and resource-based theory.
Among these theories, one of the foremost deterministic theories is resource dependence theory
which explains that how the organizations communicate with environmental factors and how
they collect and allocate its resources so that they can be used in the interest of organization. The

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firms should coordinate with its external atmosphere for getting assets and resources which are
needed for the survival and growth of organization (Malatesta & Smith, 2014). This
organizational theory is proposed by Jefferey and Gerald that focuses on the power-pursuing
characteristics and behavior of a company. This theoretical concept of organizational design
emphasizes on the connection between resource holders and organization. This theory
recommends that leaders in a workplace should have a good understanding and knowledge about
significant and required resources of its production and logistics system. Additionally, they
should have the knowledge about the resource scarcity (Nienhüser, 2008). This understanding
assists the managers to develop different tactics and strategies according to the resource
requirement and they can reduce the resource dependencies.
In this relation, Cobb & Davis (2009) stated that there may be different kinds of resources to an
organization like raw material, financial resources, human resources, finished goods, intangible
resource etc. If a company makes efforts to maintain its resources, then others will depend on
this. Too much resource dependency among organizations will create uncertainty in the business
environment. In that case, the leaders require strategizing the business processes and operations
so that they can mitigate the related risks (Davis & Cobb, 2009). The implementation of resource
dependency theory can be understood by the example of ACME system. It is an IT security firm
for media firm, XYZ multimedia co. This example states that IT Security Company is dependent
on Media Company as it is the only way of generating revenues and profits. In this way, the
companies may face some risks while implementing this organizational theory. In order to
overcome these associated risks, the security firm needs to find more companies so that it can
reduce the level of dependency on a single firm. To use the resources, the leaders can utilize
various approaches like mergers, acquisitions, joint ventures etc. In this way, it can be stated that
this theory provides the base to identify the effect of organizational behavior power.
Second organizational design theory is institutional theory that offers important guidelines to
assess the workplace environment and relationships with the emphasis on rules, norms, values
and expectations. In this context, Mahalingam & Levitt (2007) stated that these norms and values
help the company to develop organizational behavior in a workplace. In order to attain survival
ability, the organizations should comply with different laws, rules and regulations of

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organizational environment. Institutional theory is a process of the entities moving to similarities
like isomorphism (Mahalingam & Levitt, 2007).
This theoretical concept can be explained by defining three processes i.e. coercive, mimetic and
normative. It can be analyze from a firm that political and legal factors are the outcome of
coercive pressures and normative pressures are the result of cultural expectations. Furthermore,
operating the business as successful entities can lead to mimetic forces. Institutional theory
suggests the company’s success may have implicit. The firms may face failure when it does not
follow the imposed values and regulations. For instance, there are various shipping firms which
implement this type of theory so that they can manage the ship safety and promote the
compliance of Safety management code and standards.
Apart from above two theories, todays’ companies can practice Population Ecology theory which
was given by Aldrich and Pfeffer in 1976. This is an open system theory that includes company’s
environment. It is an important theoretical approach that gives the answer to the question that
why some of the organizations endure while others fail. Population Ecology theory studies the
changes in the firms’ different groups. This theory emphasizes on the population changes rather
than changes in the individuals adopting complex contingencies (DeAngelis, 2018). For instance,
gas and oil producers can be considered as a population. It evaluates the effect of the behavior of
population on the outcomes of a firm. This theory decreases the importance of groups and
individuals as it targets large population.
In the long term, structural dormancy can grow with the development of companies which can be
a barrier. It can resist the alterations in the organization and its workplace. In an organization,
there might be several reasons of this structural inactivity such as restricted information,
financial constraints and restricted investment. This organizational design theory includes three
situations of a corporation (Rockwood, 2015). These situations are like variation, selection and
retention. This theory can be understood by looking at the example of General Motors because
this company has made the changes in its organizational structure and adopted political factors to
impact the public policy in an effective way which ensures its existence and growth. However,
population ecology theory can be problematic sometimes as it is not able to respond the practical
events.

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Critical Analysis
Thus, a company can implement the above theories for the development of organization design
and action. All the three theories define the relationship between working environment and
organizational design. From the above analysis, it can be said that there are both similarities and
differences among above three organizational theories. Resource dependency theory focuses in
an individual company. It emphasizes on the effect of agents indicating the principles to give
response to the changes in an organization. The operations and working of agents is very
important for the organizations and contingencies changes (Hauser, 2014). So, it is very
important to develop best suitable strategies for business entities by assessing the entire
environment. Apart from this, population ecology and institutional concepts focus on the higher
level position which consists of the organizational population by emphasizing on the factors
from environment like legal and political factors. There are various similarities between
institutional and population ecology theories as both concepts suggest that the corporations are
determined by atmosphere selection. Institutional theory describes that macro-environmental
factors are the primary forces which can develop the structure of organization. Likewise,
population ecology is responsible for the importance of validity for the firms to stay competitive
(Miner, 2015).
There are various authors who claimed that there are no different between institutional and
population ecology theories. There are various differences in both perspectives. Institutional
theory is responsible for the group influence on what is considered authentic while population
ecology concept assumes that legality is the obvious result of size of population. Moreover,
resource dependency theory researches the relationships of different companies with different
dependencies (Melé & Cantón, 2014). This theory focuses on utilizing the power of agents to
make sure that there is an increment in the resources from its surroundings. Population concept
provides the best fit organizational structure which can be chosen by its environment to protect
the resources and competencies.

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Thus, the above essay finds out that resource competency theory can be considered as most
compelling concept for determinism and strategic choice. The primary reason of choosing this is
that this concept defines the organization effectively. It considers all the important resources of
company like financial resources, human capital, goodwill, intellectual property, physical
resource etc. whereas other two concepts include environment and population only (Suddaby,
2015). Resource dependency theory may lead the management to manage the firm by adopting
different methods like merger, joint ventures etc.
Conclusion
Thus, the above essay concludes that there are three major theories which can be used by an
organization to develop its structure and actions. These theories can be practiced to describe the
relationship between external and internal environment of organization. After evaluating all the
theories critically, it is found that resource dependency theory is the best theory which can be
used by the organization to survive in long run. It is not easy to reconcile all the above theories in
a single theory. Generally, the firms implement the theories in different situations that establish
the relationship between environment and organization. In a workplace environment, the leaders
should choose the most suitable theory according to the situations.

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