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Change Management MGMT625

LESSON # 19

ORGANISATION ECOLOGY

Leading proponents organization ecology school of thought are Glenn and Carroll, and Hannan and

Freeman. In this theory population of organization is taken as a unit of analysis rather than single

organization. The dominant theme of population ecology is that effects of organization's

environment is critical in organization's survival and (performance) believe that forces internal to

the organization are less important. Principally, population ecologist think that organization do not

change and adapt; and consider that each time a new organization is born after a significant level of

change. Pfeffer and Salancik published their work as "The external control of organizations". This

has led to the analogy of natural selection processes as determining some aspects of organization.

Miller and Mintzberg referred to "the survival of organizational forms as being encouraged by

Darwinian forces" (e.g. Weberian of organization-dominance-of functional structure). Three issues

are considered central in population ecology model of change management:

1. Role of structural inertia in constraining adaptation

2. The classification of organizational species

3. The salience of the environment in determining organizational survival

1. Structural Inertia

Population ecology models of organization-environment relationship are considered alternative to

the dominant adaptation perspective. Though there are a variety of ecological perspectives yet they

all focus on selection phenomenon. The attribute patterns in nature to the action processes. Astley

and Van de Ven highlighted this adaptation versus selection as central debate in organization theory

(OT). Selection of new or changed organization forms occurs as a result of environmental

constraints and inertia is referred as an explanation for the lack of adaptive change. Therefore

structural inertia limits the ability of organization to change. Hanna and Freeman identified a

number of processes that generate inertial pressures both from internal structural arrangements and

from environmental constraints.

A. Internal Structural Arrangements

One of the biggest inhibiting factors for organizational change is sunk cost. Sunk cost of the firm

which means broadly any amount of time, money and efforts (plant & equipment or cost of R&D

and trained personnel) develops a restraining force within an entity to freely look for alternative

options. Structural arrangements refer to the rules and resources which an organization deploys

manifesting its commitment levels. A communication structure in organization like barriers

misperception amongst various players at vertical and horizontal levels also facilitates inertial

process. Internal politics for vested interests amongst organizational members act as restraining

force. The existing institutional norms rules and regulations remain status quo oriented to inhibit

organizational change

B. External Factors

Not only internal factor inhibit change but at times external factors like government and industry

creates barriers in smooth and consistent change management process. For instance there may be a

very high cost associated with a firm's decision to enter or exit any particular industry or market.

Bounded rationality, a concept given by Herbert Simon means managers are rationalizing not

rational, meaning thereby that decisions on the part of managers are always bounded by constraints

like time, space, cost and information. Therefore the choice of decision makers to go for alternative

options is extremely limited. Another relevant concept is of social legitimacy which imposes

restriction in the decision outcome for change or status quo. Managers will go for such decisions

which are considered legitimate and acceptable by society or by the members of the organization

socially. Most of the time society is slow to recognize and accept change, and more often it is

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Change Management MGMT625

conservative to accept change. So what happens practically is that organization try to initiate

change but then do not intend to go for complete transformation. Miller and Freisen identified this

kind of response to environmental changes as sluggish adaptation. Miller also used the term

adaptive rigidities caused by the avoidance of uncertainties, and the fragmentation of the political

coalition and its goals cushion organizations from the need for adaptation. All these issues of

structural inertia (and in a way with organization adaptation phenomenon as well) explain the

relative superiority of natural selection process over adaptation in the survival of organization.

Therefore, population ecologists believe that environmental selection replaces adaptation as the

vehicle of change. Hannan and Freeman formulated theory well supported by empirical evidence

that "stronger the inertial pressures lower the adaptive flexibility and the more likely that the logic

of environmental selection is appropriate". Hence the proposition is the survival of organizations is

determined by environmental variations

By implications, we see population ecologists maintain lesser role for management, wise

governance, organization structure and bench marked managerial practices. There is paradox in this

thinking. The paradox with population ecology is that methodologically, the study deals with small

organizations with simple organization structure which were free from issues of sunk cost &

politics (non-chain small restaurant in 18 cities of California State). External constraints were not

strong either. The paradox is that inertia is, somewhat, largely a phenomenon associated with the

complex department structures of large organization.

To Astley and van de Ven, "Natural selection model fits small, powerless organizations operating

in environment with dispersed resources better than large well connected organizations operating in

environment with concentrated resources". For Aldrich, the structural inertia depends on the size of

organizations. The larger an organization, the greater the structural inertia and the more control the

organization can exercise over the environment (in-real life large organizations seem quite powerful

to shape or influence environment). Another scholar empirically says "the few organizations that

survive infancy owe their above average longevity to wise governance"

Therefore ecologist claim that inertia restricts adaptation and consequently enables selection forces

to dominate over adaptive strategy of the organization somewhat holds less ground. Going by this

concern that small organizations lack inertia and should have better adaptability to environmental

changes. The question then is whether this so in real life? How these dynamics are going to be in

developing countries.