External dependence of the organization: Causes and effective response

Abstract

Organizations can manage external dependence by establishing favorable external linkages and introducing changes in organizational design. This study analyzes from a theo-retical perspective how changes in technology and consumer preferences can promote a firm‘s dependence on external agents such as external firms and customers. The analysis is focused in main three objectives: first, finding a relationship between the changes in technology and the firm’s dependence on external actors. Second, to find a relationship between the changes in consumer preferences and the firm’s dependence on external actors and third, to find out the way the firm should respond to the change according to these environmental factors. The study concludes that firms with flexible organizational design are well equipped to cope with environmental changes. Firms not only need to access resources and capabilities from external organizations, but they also need to include their customer’s knowledge in product design and development process.