Management Theory and Practice

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

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Introduction
Organizational theories are the approaches which can be used for analyzing the organization.
Organizations can be defined as the people’s social units which are developed and managed to
fulfill a requirement or to practice the mutual objectives. Some of the scholars claim that
arguments among different organizational theories indicate the competition level of these
theories. Some authors suppose that these theories are resulted from research findings and
implemented to resolve real-world issuesi.
The objective of this essay is to answer the question that “can different organizational theories
can be reconciled into a single theory of organization”. In this essay, it is done by critically
analyzing different theories and identifying the opinions of different authors. There are three
different theories of organization i.e. institutional theory, population ecology theory and resource
dependency theory. All of these are popular as deterministic theories which contribute to the
organizational actions and design. Firstly, the paper provides a brief introduction about three
major dimensions of organizational design. Secondly, a paradigmatic controversy is initiated and
all three theories are analyzed critically. At the end, the above stated question is answered and
conclusion is given.
Fundamental Dimensions
In modern business environment, organization is like an open system as it affects and gets
affected by their internal and external environment. It works as a social unit of persons which is
organized and structured to reach its collective goals. An organization has a management
structure which determines the relationship between different members and actionsii. This
structure divides and allocates the responsibilities, roles and authority to practice different tasks.
In this context, open system concept states that organization is defined as a system that converts
inputs from external atmosphere through transformation mechanism with the production
technology and management to specific results. This transformation is provided by the
components inside the company that includes many related stakeholders like employees and
managers. According to Gurianova and Mechtcheriakova (2015) described organizational
structure as a framework and model of interactions and relations between different parts and
sections of an entity. In today’s organizations, there are different types of structure that are

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generally utilized by company’s management team. Because of differences in the components
and aspects, the differences of many organizational structures exist. To create the organizations,
there are 3 basis and major dimensions which need to be considered such as centralization,
formalization and complexityiii.
According to Simon and March (2009), formalization is the most important dimension of
organization that focuses on the developing formal organizational structure. The authors stated
that formalization can be analyzed by the level that regulations, rules and instructions are noted
in an organization and the extent of bylaws are practiced, applied and monitorediv. Moreover,
Mihm et al, (2010) stated that centralization can be defined as the extent which decisions are
created at a single point in the company. It entails the power range in independent decision
making and choice for an organizational position. Third organizational dimension is complexity
that refers to an organization’s denotative level that means isolation of components to structure
organizations. Often, organization’s complexity showcases the differentiation in vertical, spatial,
geographical and horizontalv.
Summary of Organizational theories
In a company, organizational structure describes the business operations methodology and their
response to the competition in the industry and market. Hillman, Withers and Collins (2009)
stated that there are two different types of organizational theories. One is known as strategic and
another is known as deterministic theories. Generally, the authors differentiate these theories on
the basis of flexibility level that they think to operate in the marketplace. There are three
deterministic theories such as institutional theory, population ecology theory and resource
dependence theory. Werner (2009) stated that each and every theory answers different questions:
population ecology examines why some of the companies fail or other firms succeed. Secondly,
institutional theory answers how the firms poetically formed by their official atmosphere. Last
theory, resource dependence theory expresses how firms communicate with their surroundings.
The author defined that each and every theoretical concept makes its own assumptions and
claims that comes with its own weaknesses and strengthsvi.
One of the most important deterministic theories is resource dependency theory. According to
Delke (2015), initially, resource dependence theory is introduced by Jeffery and Gerald that

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majorly emphasizes on the description of power-seeking behavior of firms. This theoretical
concept considers the link between the organization and dependent resource holder. As per this
theory, the agents are entreated to figure out priorities for dependent resources which are needed
by the firms and which suppliers are. The management team should have an obvious
understanding about the supply chain, rare resources and balance needed resources by the firms.
Later, they can implement different techniques and strategies on the needs of resources to
eliminate the dependenciesvii.
In this context, Cobb and Davis (2010) have expressed their opinions that an organization
possesses different kinds of resources like financial resources, raw materials, intangible, tangible
resources, human resources, finished goods and other required resources. When a firm manages
its resources, other firm will be totally dependent on the first one. This dependency among
different entities can cause uncertainty in external environment of business. Thus, there is a need
of operational planning and they need to make additional efforts to overcome different
challenges and risksviii.
One of the best examples to understand this theory is ACME Company that is working as an IT
form. Currently, it is offering its services to a media company, named as XYZ multimedia firm.
This example showcases that IT firm totally depends on XYZ Company as it is the only way that
supports it to generate great revenues. In this situation, the companies may face different risks
and challenges while implementing the concept of resource dependence. In order to overcome
these challenges and risks, ACME Company needs to look for other entities so that it can decline
the dependency level on XYZ multimediaix. For using different resources and organizational
assets, the agents and managers need to apply and utilize different techniques like mergers, joint
ventures, acquisitions and other methods. In this way, it can be recognized that resource
dependence theory provides the basis for knowing about the behavioral impacts of company.
Along with above theory, institutional theory is another theory that plays a vital role in
development of organization’s actions and design. According to Thoenig (2011), institutional
theory is an organizational theory that emphasizes on the set of values and norms that develops
organizational behavior. Generally, the scholars think that companies tend to be same because of
shaping by their official environment. This theory states that institutional environment of a firm
includes the regulations, rules and norms to which companies must abide for maintaining support