Organizational Design, Diagnosis, and Development

Organizational Design, Diagnosis, and Development

Organizational Design, Diagnosis, and Development Session 9 Interorganizational Designs Objectives To clarify what Interorganizational Design (IOD) is and how it functions. To review the reasons for increased use

of IODs To distinguish between IOD designs with and without shared ownership To consider management issues regarding IODs Joint Ventures, Networked Organizations & Virtual Organizations The networked organization has a

common board Joint ventures and virtual organizations involve the development of an organizational form two or more independent organizations which are often competitors. The parent companies stay separate. Virtual Organizations

VOs are more limited in participation and time, more temporary than other IODs Creation of a complementary resource base of different organizations by a project team Co-operation of partners by common business understanding Integration of resource base by transaction governance system Formulation of a common network strategy and

Socialization by trust between involved partner. (Siebert, 1998) Coordinating Mechanism Total control Ownership control (mergers, acquisitions, joint ventures, minority investments) No ownership control (coordinated

contracting, franchises, licenses) Markets Enabling Factors for IODs Environment Technology Size Designs with Ownership

Mergers & acquisitions Joint ventures Minority investments Designs without Ownership Coordinated contracting Coordinated revenue links Franchising Licensing agreements

Management Issues Pitfalls Sharing in a competitive environment Outsourcing Other issues Purpose for formation Boundaries

Value creation Stability and Control Backwards & Forwards Summing up: Today we considered many variations of interorganizational designs: those that specify ownership such as joint ventures and minority investments; no ownerships such as coordinated contracting, franchises and licensing agreements;

and the concept of virtual organizations. Managerial issues for such designs were discussed. Looking Ahead: Nest time we begin the examination of organizational diagnosis and development with a look at the change process in organizations.

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