Global Interdependence Essay
As technology of the past gives way to the technology of the future, the world is becoming a smaller and smaller place. In economic terms, Global Interdependence is increasing as time goes on. In other words, we as the United States, as well as other countries, rely on each other for the three factors of production, Land, Labor and Capital. As noted in Thomas L. Freidman’s book, The World is Flat, there are several instances in which the Global Interdependence started. For example, the introduction of the Internet created a common forum in which people could connect to each other instantly was revolutionary in the interdependence process. In addition, the Global Interdependence Center, located in Philadelphia, PA is a non-profit organization that has a global goal. According to the GIC their mission is to “encourage the expansion of global dialogue and free trade in order to improve cooperation and understanding among nation states, with the goal of reducing international conflicts and improving worldwide living standards.” The American Economic system has become closely linked to foreign economies through global interdependence by the rise of new technologies, methods of communications and transportations that break down barriers that previously could not have been broken. This is shown in our relationships with countries and organizations such as China, The European Union, and OPEC.
As Globalization increases, countries become more reliant on each other for resources such as oil. Oil, nicknamed “Black Gold,” has become one of the most valuable resources in the world. According to the Central Intelligence Agency (CIA), the United States of America is the largest consumer of oil in the world, devouring a whopping 19,150,000 barrels per day. Next in line is the European union with 13,730,000 barrels per day. Third is China with a total of 9,189,000 barrels a day. In addition to consumption of oil, multiple countries produce and export millions of barrels a day. Topping the list is Saudi Arabia. Generating over 10% of the world’s oil supply, they often hold the reins for price per barrel of oil. In fact, 90% of Saudi Arabia’s export earnings are oil based. In addition, 45% of the nations GDP are petroleum based. Saudi Arabia may be the largest oil exporting country, but they are part of one of the most powerful organizations on earth, The Organization of the Petroleum Exporting Countries, or OPEC. Holding over 80% of the world’s oil reserves, OPEC is in a great seat of power. In fact, they can change oil prices globally with the flick of the wrist. The best example of OPEC’s power was in the 1970’s. As a result of an Israeli Palestinian conflict, Palestine influenced many oil producing countries to raise prices on Oil to western countries that supported the state of Israel. In November of 1973, OPEC cut oil exportation to “non friendly countries” by 25%. This caused a realization of how significant oil was to multiple countries including...
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Interdependence is the mutual reliance between two or more groups. This concept differs from the reliance in a dependent relationship, where some members are dependent and some are not. There can be various degrees of interdependence.
In an interdependent relationship, participants may be emotionally, economically, ecologically or morally reliant on and responsible to each other. An interdependent relationship can arise between two or more cooperative autonomous participants (e.g. a co-op). Some people advocate freedom or independence as the ultimate good; others do the same with devotion to one's family, community, or society. Interdependence can be a common ground between these aspirations.
History of interdependence of nations
Authors and leaders have written and spoken about interdependence throughout history, including Karl Marx, Mahatma Gandhi, Franklin Delano Roosevelt and Stephen Covey. Karl Marx first used the term interdependence in the Communist Manifesto (1848) in describing the universal interdependence of nations in comparison to the old local and national seclusion of independence and self-sufficiency.
The various classical civilizations over the ages established vast trading networks with one another. The exchange of goods and ideas occurred from the time of the early Indian Empire on the Indus River, all the way up to the Roman Empire on the Mediterranean.
Today, international interdependence is often said to be strong and to have increased. International trade is taken to be an indicator of interdependence, and its high and, with some interruptions, rapidly growing values are accepted as evidence of the increasing interdependence of nations. Between 1820 and 1992, world population increased 5-fold, income per head 8-fold, world income 40-fold, and world trade 540-fold. Sometimes international financial flows are taken as the measure of interdependence.
Measuring international interdependence
International disintegration is entirely consistent with a high degree of international interdependence. For interdependence exists when one country by unilateral action can inflict harm on (or provide benefits to) other countries. Competitive protectionism, devaluation, deflation, or pollution of the air and sea beyond national boundaries are instances.
Interdependence is measured by the costs of severing the relationship (or the benefits of developing it). The higher the costs to one country, the greater is the degree of dependence of that country. If a small country benefits more from the international division of labor than a large country, its dependence is greater. If both partners to a transaction were to incur high costs from severing economic links, there would be interdependence.
Role of interdependence in feminist philosophy
In the ethics of care approach to morality, Nel Noddings emphasizes the interdependence of people. She saw it as a hidden fact not often seen or discussed in male-dominated, justice-based, and judgment-based approaches to ethics. Carol Gilligan was an early proponent of the view that interdependence, rather than rules, underlay the basis of morality.
Interdependencies in organizational structures
There is a view that computer technology has allowed greater communication, interaction and interdependence. It is thought that this has massively helped the introduction and start up of new ideas and enterprises. This is supported by the work of Stephen Covey. Covey maintains that we function best as innovators when we recognise, and work towards, the role of interdependence.
In business people and departments must rely on one another to share information, financial resources, equipment and more, making interpersonal communication highly valuable to a company and oneself in order for a successful outcome.
Interdependencies exist when actions in one sub-unit of the organization affect important outcomes in another sub-unit. In a business or firm this can occur for example in terms of product quality, product cost and customer satisfaction.
According to the definition of complexity by Eppinger, interdependencies increase organizational complexity. He illustrated this by means of a design structure matrix. The reason Eppinger gives for increased complexity is that many cross-unit interdependencies require frequent coordination and information exchange. Managers of sub-units need to manage these interdependencies.
Four levels of interdependence in organizational structure
Pooled interdependence is the lowest form of interdependence resulting in the least amount of conflict. Departments do not directly depend or interact with one another, however they do draw resources from a shared source. Every separate department contributes to an overall goal, the outputs of each department are then pooled at an organizational level. Although the success and failure of each department do not directly affect one another, it does affect the overall success of the company therefore indirectly affecting one another. Pooled interdependence requires standardization in rules and operating procedures. An example of pooled interdependence is the clothing retail store The Gap. Each store acts as its own separate department with its own resources (operating budget, staff, etc.) While each store rarely interacts with one another, the success or failure of each store affects the company overall, which then affects each individual store.
Sequential interdependence is an asymmetrical chain of one way interactions. The output of one unit become the input for another unit. There is an increase in communication increasing the potential for conflict. People in the early part of the chain would remain more independent but the people in the latter part of the chain would be highly dependent on the first part. A major concern would be performance variability in the first part of the chain because it has a direct effect on the productivity of the later parts. Managing an environment with sequential interdependence would require adaptive planning and scheduling. An example of sequential interdependence would be Nissan. The engine and other separate parts of the car are assembled in separate plants and then are shipped to one site to build the final product. If the engine plant is running behind and not shipped in time, it affects the final product being completed.
Reciprocal interdependence has the highest potential for conflict because it requires the most amount of communication having the output and input of activities flow both ways between units. This network of two way relationships requires departmental dependency to create a successful outcome. The direct interaction between co-workers can cause a tight interconnection causing high level of productivity or can cause a high level of conflict. Managing a reciprocal interdependent work environment would require thorough constant information sharing. An example would be the Marriott hotel. The front desk is dependent on housekeeping to provide clean rooms to guests when they arrive and housekeeping is dependent on the front desk to share the information on what rooms need to be cleaned.
Comprehensive interdependence is an even tighter network of reciprocal interdependence. The potential for conflicts is very high due to the complexity of the interdependence. With an increase in frequent and intense communication, and a greater duration of time spent with one another, a difference in opinions or goals is very likely. The loss or addition of a team member can greatly affect the performance of the group. An example would be a brand management firm that depends on the all the departments for information. The market research department would need to work with product design as well as the sales department and vice versa to achieve effective and efficient productivity.
Factors to determine the degree of work process interdependency
- Criticality: For example, how large is the effect of the actions taken in the IT department of an organization on the important outcomes in the Engineering department?
- Uncertainty: This is related to both dependability and ambiguity. For example, can the Engineering department rely on the promises that the IT department has made to them? Moreover, to what level do the two departments have the same understanding of their respective roles and responsibilities?
If interdependencies are low of uncertainty and importance, then sub-units enjoy stable and isolated conditions. As uncertainty and importance increase, so does the intensity of communication and collaboration between sub-units and the possibility of conflict
If interdependencies are very high in both uncertainty and importance, then they are likely to produce chaotic situations.
Managing work process interdependencies between sub-units
There are four options to manage interdependencies between sub-units
- Eliminate an interdependency
- Add a new interdependency
- Change the degree of an interdependency between sub-units by altering its uncertainty and/or criticality. Hereby, the need for coordination is reduced
- Introduce coordination mechanisms, such as phone calls, fax, emails, occasional meetings, regular meetings, committees, liaison officers or integration managers, and cross-functional teams
Usually, the main advice for handling an interdependency has been to introduce a coordination mechanism. The right coordination mechanism needs to be chosen depending on the degree of criticality and uncertainty.
- Interdependencies that are relatively low in criticality and uncertainty, only require managers of the respective sub-units to interchange information (e.g. via e-mail or phone)
- Interdependencies that are considered at least moderately critical and uncertain, may require managers of sub-units to meet regularly to coordinate between them. Moreover, an integrator role (or liaison) can be created by making one employee responsible for coordinating work between the two sub-units.
- Higher degrees of interdependency may require more extensive integration.
Types of interdependencies
- Activity interdependencies
- Commitment interdependencies
- Resource interdependencies
- Governance interdependencies
- Social network interdependencies
- Are inherent to the actions between sub-units
- Are inherent to the degree of physical input from or between sub-units or the need for information
- Criticality: whether or not the activity interdependency is critical, can be established by measuring the effect of removing the interdependency on the performance of the sub-unit: if, for example, its performance drops heavily when specific information is withheld, criticality could be considered high.
- Uncertainty: whether or not it is likely for sub-units to deliver data, goods or services and its accuracy thereof, indicates the uncertainty.
Steps to describe them
- Describe the various tasks or actions involved in a specific work process.
- Put in a flow chart the routing of information among sub-units.
Managing activity interdependencies
- Adding interdependencies. Example: weekly reports by one sub-unit to another
- Removing interdependencies, which is the principle of modularity as proposed by Baldwin and Clark. Example: making use of standard interfaces.
- To commit to a contract between sub-units is key for a commitment interdependency (e.g. a contract of purchase between suppliers and clients)
- Use of contracts like spot, classical and relational contracts
- Commitments are established by negotiations in an ongoing, authorizing process
- Criticality: high when interdependency has a direct and significant impact on key work outcomes that a sub-unit is responsible for.
- Uncertainty: low (for the client) when a supplier faces and accepts consequential accountability for delivering a product or service.
Managing commitment interdependencies
- Consequential accountability (“no cure no pay”)
- Reducing ambiguity with more detailed service-level agreements and contracts
- Clarifying upstream dependencies
- Specifying interdependencies (“who owes what to whom”) is complicated, but can be done by using the Commitment Protocol as suggested by Scherr.
- Concerns interdependencies related to authority relations in organizations.
- Arise because of a need for formal approval of a sub-unit’s plans or activities by some party or because of a requirement to conduct an activity in conformance with a policy set by superiors.
- Criticality: whether or not a sub-unit’s governance interdependency is critical, depends on the potential effects of decisions made by other sub-units on the work process of the sub-unit
- Uncertainty: the level of uncertainty of a governance interdependency is indicated by its degree of stability and ambiguity
Managing governance interdependencies
It is possible that there are either too few (underrepresentation) or too many interdependencies (micromanagement – loss of autonomy). The strategies that are then to be undertaken are:
- Clearly define roles and responsibilities, since often in large organizations it is not clear who is responsible for making decisions or solving key business problems
- Make sure that adequate representation is guaranteed
- Make sure that governance maintains or increases trust
- Exist within the transaction of resources between units or when units share their resources Example: financial resource budgeting
- Are mostly based on financial resources, but can also be based on knowledge, human resources, equipment, etc.
- Criticality: whether or not a resource interdependency is critical, depends on the percentage of a sub-unit’s contribution to another sub-unit’s total resources.
- Uncertainty: increases if the resource flow fluctuates or if it is subject to competitive pressures from other (potential) suppliers, but decreases if resource providers lack the ability to switch suppliers.
Managing resource interdependencies
- Enlarge the number of resource providers
- Enlarge the share of resources from resource providers considered reliable
- Enlarge the dependency of the client units ( in terms of criticality and frequency)
Social network interdependencies
- Arise when the performance of a work process is influenced by informal ties among sub-units
- The informal ties are created by individuals who represent the sub-unit in his or her interactions with other organizational members
- The informal ties help sub-units to gather or share knowledge across the organization
- Criticality: higher when the effect of the interdependency on the outcome of a certain work unit is larger.
- Uncertainty: increases when perceived dependability and reliability of informal ties are lower. This is related to the level of trust that exists between the parties. Other authors like Sheppard and Sherman believe uncertainty also differs depending on the form and depth of the relationship. Consequently, they proposed four levels ranging from ‘shallow interdependency’ to ‘deep interdependency’
Managing social network interdependencies
- Increase the number of informal ties
- Bridge the gap between disconnected units in the organization
- Strengthen the quality of relationships
- Remove social dependency (however, this is very difficult)
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