Chapter 6: Conceptions of Environments

While most researchers recognize that the environment has a strong influence on organizational behavior, there are many definitions and conceptions about environments in OB literature. This chapter explores the diversity of these conceptions.

Hall and Fagen (1956) state that "for a given system, the environment is the set of all objects a change in whose attributes affect the system and also those objects whose attributes are changes by the behavior of the system."

Organizational Groupings
Scott notes four common groupings of organizations in research at the ecological level -- organization sets, organization populations, areal organizational fields, and functional organizational fields. Different theoretical perspectives use different groups depending on their research objectives.

Remember that organizational fields and environments evolve over time. Organizations may develop temporary alliances with other organizations for specific purposes (even when competing in other arenas). Areal organization definitions are useful in some areas (communities) but not in others (transportation sytems).

Environment Typologies
Various researchers have developed typologies to describe organizational environments. Emery and Trist classified them by extent of interlocking relationships, and Warren based his on decision-making structure.

Meyer and Scott (1983) define two types of organizational environments -- technical and institutional. One can also cross classify these two environments according to the relative amount of pressure an organization encounters:

Subjective vs Objective Definitions of Environments
Should we rely on subjective or objective definitions of environments? Lawrence and Lorsch (1967) and Weick (1979) suggest that basing it on participant's perceptions is the best (if not only) way. Weick notes that participants enact their environment, selectively perceiving and modifying their environment, often unconsciously.

March (Cohen and March 1974) adds to this through definition of an attention structure to "describe the distribution of connections among people, types of information sent and received, distribution of problems,and (decision rules)" (Scott p 141).

Ultimately, you can't separate subjective(enacted) and objective characterizations of environments. Parts of the enviroment can affect organizational outcomes even if they are not perceived. What we measure dependes on what we are trying to predict -- predicting organizational choices may rely on participant perceptions, but predicting organizational outcomes requires additional information potentially unknown to the participants.

Organizations and Environments
Contingency and resource depedency theorists argue that organziations can adapt to environmental changes, while population ecologists emphasize structural intertia that prevents adaptation -- more optimal organizational forms are selected, and less optimal ones are replaced. But organizations also influence their environments, through advertising, building contracts with suppliers, mergers, lobbying, etc. Organizations can also select environments by changing their product mix or diversifying.

Absorption and Interpenetration
Organizations can absorb part of the environment (through vertical integration) or return part of their organization to the environment (outsourcing). All of this makes boundary definitions difficult.

The Evolution of Environments
The prevelant view is that modern organizational environments are becoming more complex at an increasing rate (Emery and Trist, 1965), largely through technical change. This means that uncertainty also increases, and the ratio of externally to internally induced changes also is increasing (Scott p. 147). This trend is still unclear, however. and there are instances where changing governance structures and technical changes may actually reduce uncertainty.

"Organizations are viewed as interdependent with environments in a number of senses. Participant's perceptions of their environments together with the attention structures of organizations result in enacted environments that are products of both environmental features and organizational information systems. Environments directly affect organizational outcomes, which in turn affect subsequent perceptions and decisions. Environments influence organizations, but organizations also modify and select their environments. And environments supply the materials and ingredients of which organizations are composed" (Scott p. 149)