Resource Dependency and Buffering Strategies
Thompson (1967) proposed that "organizations seek to seal of their
core technologies from environmental influences". "All organizations...are
highly motivated to secure enough stability, determinateness, and certainty
to be able to function effciently and effectively in environments that containt
unknowns and uncertainties" (Scott p. 195). There are several strategies
organizations can use:
Classifying or preprocessing inputs can aid in proper routing and filter
out undersirable inputs (Scott p. 195, Katz and Kahn p. 65). This can include
both raw materials and clients. However, coding is often imprecise and requires
resources to do it. Furthermore, if coding simplifies inputs too much it
reduces the ability of an organization to monitor the environment and maintain
flexibility with it (Weick 1979).
Gathering and storing critical raw materials before they are needed can
help buffer against supply uncertainties or price fluctuations and maintain
a consistent flow of inputs. However, the storage costs (both in underutilized
capital and potential for damage, spoilage, obsolence etc.) must be considered.
Organizations also attempt to reduce fluctuations in input or output environments
(Scott p. 196). This occurs through contracting (inputs) or advertising
(outputs) or special slack-time utilization incentives. Each has inherant
costs and benefits.
Organizational also attempt to forecast environmental changes and proactively
adapt to them. Predictions have associated costs and reliabilities.
Changing the scale of the technical core is a common buffering strategy.
Organizations expand and seek the optimal "economy of scale" (Thompson,
1967). Being large has distinct advantages -- more control over environments,
more time to resist threats or adapt to them. (Pfeffer and Salancik, 1978).
In other situations, however, downsizing may be the best strategy.