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Functionalism Revisited: A practice based Functionalism
Unformatted Document Text:  Functionalism Revisited 6 investment in specificities are positively related to the formation of joint action. John’s finding (John, 1984) is particularly interesting. Studying franchise dealers in an oil company, he found that exercising a certain type of power – i.e., cooperative – rather than a coercive one resulted in more faithful compliance of the franchisees. Palay (1984) also found the development of trust among exchange parties in railroad freight investment. More clear conflict was found in Parkhe’s study (1993). Specifically, measuring the duration of relationship between two parties, he found that historicity of relations is negatively related to the opportunistic behavior. In conjunction with another finding, negative relationships between perceived performance of a strategic alliance partner and perceived degree of opportunistic behavior, his finding indicates that time or historicity plays an important role in interorganizational relations. The above studies give us a clue that social mechanisms based on social relations take an important role in influencing behavioral uncertainty. As I point out later, it is social relations that weaken the argument of TCA in general. That is, measuring and controlling behavioral uncertainty is closely related to the organizations’ social relations. However, when environmental uncertainty prevails, an organization’s needs and its behavioral orientation tend to change rapidly. This, in turn, results in unstable social regulation. Unpredictability is often measured as an indicator of environmental uncertainty. Heide and John (1990), for example, measured the unpredictability of volume and technology as a measurement of uncertainty. Klein and others (Klein, Frazier, & Roth, 1990; Klein, 1989). argue that uncertainty should be treated as a multidimensional construct with two separated concepts – unpredictability and changeability. They found that the former tends to be compliant with the main idea of TCE. But, the latter tends to show negative effects. It was interpreted that changeability requires organizations more flexible, versatile organizational structures. Rindfleisch and Heide (1997) point out that the measurement of behavioral uncertainty has been less developed. Anderson (1985) suggested that behavioral uncertainty is defined as the degree of difficulties measuring or evaluating work performance. Nohria (1992) argues that TCE and PAT perspectives tend to neglect the actual mechanisms of collaboration between firms. That is, suggestions that TCE and PAT make, at best, are about the form of governance, not about how the connections among the firms bind themselves within arrays of structural influences. Further, TCE and PAT do not pay attention to how such relations are shaped as interaction among the firms continues. In relation to this issue, perhaps the most critical position can be found from sociologists’ argument on embeddedness of social network. Granovetter (1985) argues that economics perspectives such as TCE and PAT often assume atomized individuals who are totally disconnected from social relations and influences. That is, the individual is always assumed to be interested in her own benefit; as a result, in economics, actions are considered metrically calculated. Baker (1990) also argues

Authors: Kim, Hyo.
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Functionalism Revisited 6
investment in specificities are positively related to the formation of joint action. John’s finding (John,
1984) is particularly interesting. Studying franchise dealers in an oil company, he found that exercising a
certain type of power – i.e., cooperative – rather than a coercive one resulted in more faithful compliance
of the franchisees. Palay (1984) also found the development of trust among exchange parties in railroad
freight investment. More clear conflict was found in Parkhe’s study (1993). Specifically, measuring the
duration of relationship between two parties, he found that historicity of relations is negatively related to
the opportunistic behavior. In conjunction with another finding, negative relationships between perceived
performance of a strategic alliance partner and perceived degree of opportunistic behavior, his finding
indicates that time or historicity plays an important role in interorganizational relations. The above
studies give us a clue that social mechanisms based on social relations take an important role in
influencing behavioral uncertainty. As I point out later, it is social relations that weaken the argument of
TCA in general. That is, measuring and controlling behavioral uncertainty is closely related to the
organizations’ social relations. However, when environmental uncertainty prevails, an organization’s
needs and its behavioral orientation tend to change rapidly. This, in turn, results in unstable social
regulation.
Unpredictability is often measured as an indicator of environmental uncertainty. Heide and John
(1990), for example, measured the unpredictability of volume and technology as a measurement of
uncertainty. Klein and others (Klein, Frazier, & Roth, 1990; Klein, 1989). argue that uncertainty should
be treated as a multidimensional construct with two separated concepts – unpredictability and
changeability. They found that the former tends to be compliant with the main idea of TCE. But, the
latter tends to show negative effects. It was interpreted that changeability requires organizations more
flexible, versatile organizational structures. Rindfleisch and Heide (1997) point out that the measurement
of behavioral uncertainty has been less developed. Anderson (1985) suggested that behavioral
uncertainty is defined as the degree of difficulties measuring or evaluating work performance.
Nohria (1992) argues that TCE and PAT perspectives tend to neglect the actual mechanisms of
collaboration between firms. That is, suggestions that TCE and PAT make, at best, are about the form of
governance, not about how the connections among the firms bind themselves within arrays of structural
influences. Further, TCE and PAT do not pay attention to how such relations are shaped as interaction
among the firms continues. In relation to this issue, perhaps the most critical position can be found from
sociologists’ argument on embeddedness of social network. Granovetter (1985) argues that economics
perspectives such as TCE and PAT often assume atomized individuals who are totally disconnected from
social relations and influences. That is, the individual is always assumed to be interested in her own
benefit; as a result, in economics, actions are considered metrically calculated. Baker (1990) also argues


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