What is the relationship between the organization and its surrounding environment

Organizations and Information Systems

Organizations and information systems have a mutual influence on each other. The information needs of an organization affect the design of information systems and an organization must be open itself to the influences of information systems in order to more fully benefit from new technologies. The organization's environment, culture, structure, standard operating procedures, politics, and management decisions are mediating factors that influence the interaction between information technology and organizations. [Figure 3-1]

FIGURE 3-1 The two-way relationship between organizations and information technology This complex two-way relationship is mediated by many factors, not the least of which are the decisions made—or not made—by managers. Other factors mediating the relationship include the organizational culture, structure, politics, business processes, and environment.

Technically defined, an organization is a formal, legal, social structure that processes resources to produce outputs. [Figure 3-2]

FIGURE 3-2 The technical microeconomic definition of the organization In the microeconomic definition of organizations, capital and labor (the primary production factors provided by the environment) are transformed by the firm through the production process into products and services (outputs to the environment). The products and services are consumed by the environment, which supplies additional capital and labor as inputs in the feedback loop.

A behavioral definition of an organization is a collection of rights, privileges, obligations, and responsibilities that is balanced over time through conflict and conflict resolution. [Figure 3-3]

FIGURE 3-3 The behavioral view of organizations The behavioral view of organizations emphasizes group relationships, values, and structures.

Technological change requires changes in who owns and controls information, who has the right to access and update that information, and who makes decisions about whom, when, and how.

          The technical and behavioral view of organizations complement one another. The technical definition describes how thousands of firms in competitive markets combine capital and labor with information technology, whereas the behavioral model describes how technology affects the organization’s inner workings.

          All modern organizations can be seen as bureaucracies that share some essential characteristics: clear division of labor, hierarchy, explicit rules and procedures, impartial judgments, technical qualifications for positions, and maximum organizational efficiency. Additionally, all organizations develop routines and business procedures, politics, and cultures.

          Business processes are collections of routines, or standard operating procedures (SOPs), which enable a firm’s efficiency. [Figure 3-4]

FIGURE 3-4 Routines, business processes, and firms All organizations are composed of individual routines and behaviors, a collection of which make up a business process. A collection of business processes make up the business firm. New information system applications require that individual routines and business processes change to achieve high levels of organizational performance.

Organizational politics reflects the political struggles due to divergent concerns and perspectives of individuals and groups within the organization. Political resistance is one of the great difficulties of bringing about organizational change.

          Organizational culture is the set of fundamental assumptions about what products the organization should produce, how it should produce them, where, and for whom. Organizational culture is a powerful unifying force that restrains political conflict. However, technological change that threatens commonly held cultural assumptions usually meets great resistance.

          No two organizations are identical. Organizations have different structures, goals, constituencies, leadership styles, tasks, and surrounding environments. Differences in these characteristics will affect the type of information systems used by the organization.

          One classification of organizations includes five categories: entrepreneurial structure (small startup businesses), machine bureaucracy (midsize manufacturing firms), divisionalized bureaucracy (Fortune 500 firms), professional bureaucracy (law firms, school systems, hospitals), and adhocracy (consulting firms).

          Organizations have different social and physical environments, which exert a powerful influence on the organization's structure. Information systems help organizations respond to their surrounding environments, from which they draw resources and to which they supply goods and services. Information systems are key tools for environmental scanning, helping managers identify external changes that might require an organizational response. [Figure 3-5]

FIGURE 3-5 Environments and organizations have a reciprocal relationship Environments shape what organizations can do, but organizations can influence their environments and decide to change environments altogether. Information technology plays a critical role in helping organizations perceive environmental change and in helping organizations act on their environment.

Organizations also differ in their ultimate goals, the types of power used to achieve them, the groups and constituencies they serve, the nature of leadership within the organization, the tasks performed, and the technology used.

          Although the IT function is organized in different ways for different firms, typically the formal organizational unit responsible is the information systems department. This department consists of programmers, systems analysts, project leaders, and information system managers, and is headed by a chief information officer (CIO). End users are representatives of outside departments for whom applications are developed. Today, the information systems department may act as a powerful change agent, suggesting new business strategies and products, and influencing organizational changes. [Figure 3-6]

FIGURE 3-6 Information technology services Many types of specialists and groups are responsible for the design and management of the organization’s information technology infrastructure.

What is the relationship between organization and environment?

What is the relationship between business and natural environment?

What is the relationship between an organization and a business?

What is the meaning of organization and environment?