Strategic Management: Formulation and Implementation

Three Types Of Technological Interdependence

Technological interdependence is the degree to which different parts of the organization must exchange information and materials in order to perform their required activities. There are three major types of technological interdependence:

Pooled interdependence
The type that involves the least interdependence is known as a pooled interdependence, in which units operate independently but their individual efforts are important to the success of the organization as whole. For example, if the local branch of the bank performs poorly and loses customers, its problems will have negative effect on the health of the bank as a whole.
Sequential interdependence
With sequential interdependence, one unit must complete its work before the next unit in the sequence can begin work. For example, a strike over a local issue at one plant of General Motors frequently causes workers at other plants to be laid off temporarily.
Reciprocal interdependence
The most complex situation is reciprocal interdependence, in which one unit's outputs become inputs to other unit and vice versa. When an airplane lands, the flight crew turns the plane over to the maintenance crew. After refuelling the plane, and performing other necessary activities, the maintenance crew releases the plane back to the flight crew so that the plane can continue its journey. Reciprocal interdependence is likely to require greater efforts at horizontal coordination than do the other two types of technological interdependence.

Thus managers need to give some thought to technological interdependence, when developing organization structure.