Organizational Design, Diagnosis, and Development

1
Organizational Design, Diagnosis, and Development

• Session 9
• Interorganizational Designs

2
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

3
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.

4
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)

5
Coordinating Mechanism

• Total control
• Ownership control (mergers, acquisitions, joint
  ventures, minority investments)
• No ownership control (coordinated contracting,
  franchises, licenses)
• Markets

6
Enabling Factors for IODs

• Environment
• Technology
• Size

7
Designs with Ownership

• Mergers acquisitions
• Joint ventures
• Minority investments

8
Designs without Ownership

• Coordinated contracting
• Coordinated revenue links
• Franchising
• Licensing agreements

9
Management Issues

• Pitfalls
• Sharing in a competitive environment
• Outsourcing
• Other issues
• Purpose for formation
• Boundaries
• Value creation
• Stability and Control

10
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.