External Effects on Organizational Behavior

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  • 0:03 External Effects on…
  • 1:18 Company Reputation
  • 2:23 Strength of the Local Economy
  • 3:04 Competitive Landscape
  • 4:18 Lesson Summary
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Lesson Transcript
Instructor: Dr. Douglas Hawks

Douglas has two master's degrees (MPA & MBA) and a PhD in Higher Education Administration.

Even though you are your own person, other people can influence your attitude and actions. In this lesson, we'll learn how the same is true with organizations - external inputs can impact behavior within the organization. Organizational behavior can be positive or negative behavior that impacts an organization's bottom line.

External Effects on Organizational Behavior

In the United States, from a legal perspective, organizations are often viewed as independent legal entities, much like individuals. But the only emotions, attitudes, and behaviors organizations can have come from the individuals that collectively make the organization. Organizational behavior is the study of how the individuals in an organization behave as members of a group.

Just like your good or bad mood can change if someone around you behaves a certain way, organizational behavior can be, and often is, influenced by external events. Because these factors are external to the organization, by definition they are outside of the organization's control. That makes it more important to recognize external factors that may affect employees and proactively mitigate any negative impacts.

Generally speaking, there are three categories of external effects that can influence organizational behavior. These are the role or reputation of the company in the local market, the relative strength of the local economy, and the competitive landscape of the industry. Let's talk about how these three external factors can impact the behavior of individuals inside an organization.

Company Reputation

Full-time workers spend at least eight hours a day at their workplace, and their position in that organization is often how they define themselves. What someone does for a living is one of the first things people ask when introduced to new people. It can be a defining part of how we view ourselves as individuals.

Companies that are well-respected and in exciting industries often have good reputations - maybe as corporate citizens that contribute to local service or maybe as innovative leaders of their industries. This makes companies like Google, Apple, and GE the kind of companies that can benefit from good reputations among investors, analysts, customers, and others. Being part of those organizations can be like a badge of honor for an employee.

The opposite is true if the company has a poor reputation. Traditionally, cable companies and cell phone companies have some of the poorest customer service records. Working for those companies, therefore, may not be seen as glamorous or exciting by employees, and that can have a negative impact on the workplace, leading to a poor organizational culture.

Strength of the Local Economy

Employee morale at a company can be based on the relative strength of the local economy. That's because if the economy is strong, there are jobs available and people often compare their compensation to open positions. If they feel they are underpaid or overworked, they're going to change their behavior.

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