Organization–environment relations

Abstract

This chapter recounts how organization theorists took note of the idea that an organization is embedded in a supersystem when the general systems theory introduced the notion of levels of analysis in the 1950s. It discusses the economic exchange and competition that had long been used to explain organizational behaviour and performance, broadening the idea in the 1950s and 1960s to include other factors that soon revolutionized organization theory. It also describes the basic models of economic exchange, organizational stakeholders, inter-organizational networks, and sectors of the environment. The chapter analyses preliminary conceptual work that leads to a discussion of globalization and consideration of different ways in which organizational boundaries have been conceptualized. It cites ambiguity involved in defining organizational boundaries in order to introduce transaction costs, resource-based power, and organizational identity wherein different theories of organization–environment relations have been built.