Will the law of limited variety stand the test of time and changing environments?

Organizations are reflective of the external environments that they exist in as they are greatly influenced by these settings.  In particular, they “reflect the complexity of their environments.  So, for example, organizations in more complex environments map the complexity of the environment into their own structures” (Scott and Davis, 370).  The more numerous the sources of complexity, the more complex an organization will be in general.  This argument is brought up in Organizations and Organizing and commonly contested by open system theorists.

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Organizational Populations: Conceptualizing a Sublevel of the Ecological Level of Organizational Analysis

Organizational Populations

The population of organizations is one of three distinct sublevels within the ecological level of organizational analysis.  It essentially identifies groups of organizations that are similar in some aspect.  W. Richard Scott and Gerald F. Davis in Organizations and Organizing: Rational, Natural, and Open System Perspectives equate organizational populations to biological species, arguing that in both cases “the most relevant occupants of the environment are other actors of the same kind” (Scott and Davis, 116).  These similar organizations compete most directly for limited resources, thus being the primary source of competition.  However, due to their similarities, these organizations may also occasionally associate and cooperate in order to protect their mutual interests, as well as look to one another for guidance on proper protocol.  Each organizational population is distinct and can be described based on various features that are unique to that population.

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Sample Concepts

Sample concepts from last year:

1)      Contingency Theory

Contingency Theory states that organizations can be best adapt to the demands of the environment if their internal features match these demands. They are contingent on their environment. Uncertain environments filled with much change create different constraints and opportunities than placid environments. If the environment is more varied, individual subunits may be more differentiated. The structure, according to Lawrence and Lorsch, of each subunit should be suited to specific an environment to which it relates and the differentiation of the entire organization to match the overall complexity of the environment.

Satisfice (p. 114) – To settle for acceptable as opposed to optimal solutions, to attend to problems sequentially rather than simultaneously, and to utilize existing repertories of performance programs whenever possible rather than developing novel responses for each situation.

This concept is used by March and Simon as a way to simplify decision making in organizations. Some environments pose levels of complexity that organizations cannot manage unless they introduce simplifying restrictions on the information processed. This idea is found in relation to Lawrence and Lorsch’s contingency theory. This theory says there is no one best organizational form but many, and how well it performs is based on how well the organization’s form is related to the environment.

The idea of “satisfice” originally seemed like a cop out way to deal with problems, but after a little more thought, it seems necessary in some situations. When an organization has to deal with a very volatile environment it may be to difficult to think about coming out running rather than just getting through the unstable situation. I think that if Enron had taken this approach, rather than continually trying to impress Wall Street, the might have had a chance to avoid the complete destruction.