A Framework For Multilevel Organizational

A FRAMEWORK FOR MULTILEVEL ORGANIZATIONAL ANALYSIS IN DEVELOPING COUNTRIES

Mehdi Farashahi

Rick Molz

There is an ongoing debate over the transference of managerial and organizational skills, techniques, values and culture from developed countries to developing countries. We argue there is a false underlying assumption among academics in developed countries that the theoretical template of managerial and organizational attributes in developing countries is similar to what one finds in developed countries. Two key analytical insights are offered First, we explicitly differentiate organizational, environmental and cultural characteristics of developed and developing countries. Second, we apply Scott's (1992) natural/ecological level of analysis to create a framework to better carry out organizational analysis in developing countries. 

INTRODUCTION

As business activities become more international and geographical borders between countries become less and less relevant, closer and more frequent interactions among organizations, firms, industries and institutions occur both within and between countries (Lindholm 2000; Morosini et al., 1998). Understanding how organizations adapt, resist or adjust to today's changing environment requires a close analysis of both internal and external factors. Viewing modern organizations and commercial enterprise as open systems, it is important to look both at their contexts, as well as their component units. Further, more than 70 percent of the world population lives in the developing countries, and it is in these countries where the majority of the world's natural resources and future market opportunities are located. Both practitioners and researchers have become more interested in understanding the social and business activities of these contexts. 

Relationships between environment and organizations have been explored from different theoretical perspectives, including neo-institutional theory (DiMaggio and Powell, 1983), and structuration theory (Barely and Tolbert, 1997). Institutionalists have explored how organizations take their forms and behave according to forces from different institutional sources, including (1) global (Thornton, 1995), (2) national (Carroll, 1988; Cheng et al., 1998; Dacin, 1997), (3) specific geographic areas (Deephouse, 1996), (4) organizational fields (Austin, 1998; Davis, 2000), and (5) intra-organizational (Homburg et al., 1999). Most of the existing theoretical and empirical studies on organizations and management activities have been developed using samples from industrialized countries, or organizations established in these developed countries. Researchers have questioned the applicability of western theories on organizations and their management activities in developing countries (e.g. Clark, 1998; Gopinath, 1998; James, 1997). In their review on administrative theories of developing countries, Kiggundu et al. (1983) question the applicability of western theories in these contexts, particularly given the radically different macro environment. North (1994) and Olson (1992) argue that the successful national business systems of industrialized countries may not be appropriate in other parts of the world. Sullivan and Weaver (2000) argue one cannot assume theories and practices conceived in one culture are readily translated and implemented in other cultures. Scholars also have realized the limitations of applicability and universality of management and organization theories across cultures (e.g. Hofstede, 1980). 

This implies the need for an appropriate theoretical framework for understanding organizations and their management activities in non-western countries. This paper provides an approach in developing these theoretical frameworks. It begins with the basic assumptions of western theories. A matrix is built on the Scott's (1992) rational-natural system model to cluster these assumptions. The applicability of some of the basic western perspectives in developing countries' contexts is examined by comparing the nature of these contexts with the assumptions of those theories. Using the three dimensions of this matrix a set of propositions are developed for the characteristics of the most appropriate perspectives for understanding organizations and their activities in developing countries. Key to this approach for developing countries context is the importance of ecological level of analysis, which focuses on the relationship between organizations or class of organizations and the non-controllable external environment. 

The methodology used in this paper is a deduction process based on comparing the main assumptions of theories with the characteristics of the phenomenon to develop appropriate propositions. There are three major steps in our approach. In the first step, the major characteristics of the main phenomenon and its context (i.e. organizations and developing countries) are identified based on the corresponding literatures. These are put together to provide a clear perspective of the phenomenon. In the second step, various theoretical frameworks are grouped in a four-cell matrix based on their main assumptions and level of analysis. Finally, the main assumptions and level of analysis of theoretical frameworks grouped in each cell of the matrix are compared with the characteristics of the phenomenon and its context identified in the first step. The outcomes of this comparison process are the suggested propositions. 

This paper is organized as follows: Some of the common characteristics of national environments of developing countries are described in the first section. The next section elaborates on the nature of organizations and using different perspectives, leading to a newly defined matrix. The following section examines the implications of the new matrix, and argues that much of the comparative analysis between developed and developing countries focuses on the rational/individual or rational/structural level of analysis, ignoring Scott's (1992) natural theory of organizations, particularly at the natural/ecological level of analysis. Suggested guidelines for future theoretical and empirical studies are developed in the last section. 

The premise of this paper is this: in developing countries, the macro-environmental forces, especially at the national level, have the dominant role in shaping the nature of organizations and their activities. The complexity of organizations' actions in developing countries and the emergent nature of their goals make the natural open system perspectives the most appropriate approach for analyzing them. We argue the individual and structural levels of analysis are too limited to understand organizations in developing countries. Using an ecological level of analysis in a natural open system perspective to study organizations in developing countries will provide better understandings and theoretical frameworks.