''Institutionalized Organizations: Formal Structure as Myth and Ceremony''
(Chapter 2 from The New Institutionalism)

E.O. Laumann on New Institutionalism:
''Studies Organizations that don't do anything''
''Rehashed sociology from 30 years ago''

I think he (EOL) also might have referred to it as ''bullshit'' to, but I couldn't find a direct quote - wouldn't want to misquote the person writing and correcting this prelim question. Which reminds me so say that (as if it's not obvious from the above) Ed O doesn't think much of the New Institutionalism, so you might want to keep that in mind when writing your actual prelim question if the N.I. authors are brought up. For my part, I would have to agree with Laumann on this subject. From what I can tell, there is only one or two of the N.I.'ists that have any sense at all - and it's definitely not these two guys (ie. Meyer and Rowan). Neo-Institutionalism has an uncanny knack to make complicated and mysterious things that are not really that complicated (at least not when these same subjects were addressed 30 years ago). My impression is that they try to make things like an organization's relation with the environment and persistence of structural features in an industry into some kind of cosmic enigma. And don't say the word ''efficiency'' to them - because performance apparently has nothing to do with an organization's adoption of institutionalized standards. Rowan and Meyer, for instance, try to make institutional conformity into some kind of shell game that has to do with institutional myths and organizations where the formal structure doesn't have anything to do with its practical activities. They bring up this last bit a number to times, but like most of the article this is real vague and I still don't have any idea about what they are trying to say. So, in short, I think this article is basically crap - probably the stupidest thing I have read thusfar for the prelims (and keep in mind that I had to read Civilization and Its Discontents - and I *hate* Freud). Rowan and Meyer basically don't have anything to say (at least not anything important) and try to hide that fact by wallowing in a bunch of vague language. This summary is much longer than it deserves to be, but I tries to take the parts below pretty directly from the article in case someone can find out if they are actually saying anything - I kinda doubt it. I hate this article.

Formal organizations are typically understood to be systems of coordinated and controlled activities that arise when work is embedded in complex networks of technical relations and boundary-spanning exchanges. But in modern societies, formal organizational structures arise in highly institutional contexts. Organizations are driven to incorporate the practices and procedures defined by prevailing rationalized concepts of organizational work and institutionalized in society. Organizations that do so increase their legitimacy and their survival prospects, independent of the immediate efficacy of the acquired practices and procedures. There can develop a tension between on the one hand, the institutionalized products, services, techniques, policies, and programs that function as myths (and may be ceremonially adopted), and efficiency criteria on the other hand. To maintain ceremonial conformity, organizations that reflect institutional rules tend to buffer their formal structures from the uncertainties of the technical activities by developing a loose coupling between their formal structures and actual work activities.

M and R believe that a distinction should be made between the formal structure of an organization and its actual day-to-day work activities. They see a problem in that prevailing theories of formal structure assume that the coordination and control of activity are the critical dimensions on which formal organizations have succeeded in the modern world. M and R (not to be confused with Rowan and Martin of ''Laugh In'' fame) believe that there is a need for an explanation of the rise of formal organizations that is partially free from the assumption that, in practice, formal structures actually coordinate and control work. (Don't ask me what they are trying to say here.)

Institutional Sources of Formal Structure
M and R believe that fitting attention to the role of legitimacy of rationalized formal structures is woefully missing from prevailing theories of organization. In modern society, the myths generating formal organizational structure have two key properties:
1) They are rationalized and impersonal prescriptions that identify various social purposes as technical ones and specify in a rule-like way the appropriate means to pursue them rationally.
2) They are highly institutionalized and thus in some measure beyond the discretion of any individual participant or organization. They must be taken for granted as legitimate.

M and R count professions, technology, and programs among the many elements of formal structure that function as myths. These myths make formal organizations both easier to create and more necessary. Since these building blocks are considered proper, adequate, rational, and necessary, organizations must incorporate them to avoid illegitimacy.

Proposition 1. As rational institutional rules arise in given domains of work activity, formal organizations form and expand by incorporating these rules as structural elements. Implied here are 1A): as institutional myths define new domains of rationalized activity, formal organizations emerge in these domains, and 1B): as rationalizing institutional myths arise in existing domains of activity, extant organizations expand their formal structures to become isomorphic with these new myths.

Proposition 2. The more modernized the society, the more extended the rationalized institutional structure in given domains and the greater the number of domains containing rationalized institutions.

M and R emphasize the fact that organizations are structured by phenomena in their environments and tend to become isomorphic with them. One account (the one by bad prevailing theorists) says that this is comes about through technical and exchange interdependencies - ie. boundary-spanning exigencies. The second (good) account says that organizations structurally reflect socially constructed reality in a broad sense not captured by the bad theorists.

You might ask: ''Hey, where did these rational institutional myths come from?''
Well, R and M say that a real discussion is beyond the scope of this reading, but they do cite three processes as generating rationalized myths of organizational structure:
1) Elaboration of complex relational networks, 2) Degree of collective organization of the environment {I think this has something to do with mandate legitimacy of certain myths}, and 3) Leadership efforts of local organizations.

Efforts to mold institutional environments proceed along two dimensions:
1) powerful organizations force their immediate relational networks to adapt to their structures and relations.
2) powerful organizations attempt to build their goals and procedures directly into society as institutional rules.

Isomorphism with environmental institutions has some crucial consequences for organizations:
a) they incorporate elements which are legitimated externally, rather than in terms of efficiency; b) they employ external or ceremonial assessment criteria to define the value of structural elements; and c) dependence on externally fixed institutions reduces turbulence (buffers the organization) and maintains stability. As argued by R and M, institutional isomorphism promotes the success and survival of organizations.

Proposition 3. Organizations that incorporate societally legitimated rationalized elements in their formal structures maximize their legitimacy and increase their resources and survival capabilities.

Institutionalized Structures and Organizational Activities

The survival or some organizations depends more on managing the demands of internal and boundary-spanning relations (like the bad theorists say), while others depend more on the ceremonial demands of highly institutionalized environments (like new institutionalism says). In the case of the latter, the uncertainties of unpredictable technical contingencies or of adapting to environmental change cannot be resolved on the basis of efficiency, so internal participants and external constituents alike call for institutionalized rules that promote trust and confidence in outputs and buffer organizations from failure.

Organizations whose success depend primarily on isomorphism with institutionalized rules are confronted with two general problems:
1) Technical activities and demands for efficiency can conflict with efforts to conform to ceremonial rules of production.
2) Ceremonial rules transmitted by myths originating from different parts of the environment may conflict with each other.

Ceremonial activity is significant in relation to categorical rules, not in its concrete effects. Activity that has ritual significance, therefore, maintains appearances and validates an organization. These categorical rules conflict with the logic of efficiency. This is, in part, because institutional rules are couched at high levels of generalization, whereas technical activities vary with specific, unstandardized, and possibly unique conditions.

There are four partial solutions to the inconsistencies facing institutionalized organizations.
1) The organization can resist ceremonial requirements (although such a practice could result in an inability to document/portray its efficiency).
2) The organization can maintain rigid conformity to institutionalized prescriptions by cutting off external relations.
3) The organization can cynically acknowledge that its structure is inconsistent with work requirements (although I still have no idea what R and M mean when they say this).
4) The organization can promise reform.

There are, however, two ways in which an organization can resolve conflicts between ceremonial rules and efficiency:
1) Decoupling:
Proposition 4: Because attempts to control and coordinate activities in institutionalized organizations lead to conflicts and loss of legitimacy, elements of structure are decoupled from activities and from each other. This make take the form of: encouraging professionalism, making goals ambiguous or vacuous (ie. categorical rather than technical), avoiding integration, or emphasizing human relations. Decoupling enables organizations to maintain standardized, legitimating, formal structures while their activities vary in response to practical consideration.

2) The Logic of Confidence and Good Faith
Proposition 5. The more an organization's structure is derived from institutionalized myths, the more it maintains elaborate displays of confidence, satisfaction, and good faith, internally and externally. Confidence and good faith allow the organizations to appear useful in spite of lack of technical validation. Taking off from Goffman, they say the considerations of face characterize ceremonial management. Confidence in structural elements is maintained through three practices - avoidance, discretion, and overlooking. Participants not only commit themselves to supporting an organization's ceremonial facade, but also commit themselves to making things work out backstage through informal coordination.

Proposition 6. Institutionalized organizations seek to minimize inspection and evaluation by both internal managers and external constituents, both of which could uncover conditions that undermine legitimacy and ceremonial aspects of the organization.

Honor and Organizational Change

This article looks at executive conflict resolution and the imagery used at a toy manufacturing company he called Playco.

Until the late 1970s, conflict was minimized and ignored in the company. If problems arose, they were handled in private and with deference to ones' superiors. Two changes brought about the existence of open conflict and hostility.

1. The change of the management structure from a strict hierarchy to a matrix management (management in which authority may flow in different channels for different aspects of the work). Matrix management led to uncertainty about the location of power and responsibility which made disagreements more common and the identity of the person with the power to resolve the disagreement s less certain. This created structural conditions conducive to highly ritualized conflict management, framed in a code of honor inspired by imagery.

2. The 80s brought a time when hostile takeovers were common, and introduced into corporate language terms describing business relations as a battle. This imagery filtered down to a corporate level and led to a different perception of disagreement in the corporation. Conflict typically entered around executive coordination and responsibility, allocation of resources within the company, meeting times, ethical issues, executive style, etc.

3. When executives began to look at conflict in terms of battle, 'honor' came to be seen as an important trait. This means the executive will enter a battle in an overboard way and see the fight through to the end. A dishonorable executive will complain behind the other person's back or undertake covert aggressive action against them. The person's honor influences whether or not others will become involved in the battle, and what imagery will be used. Honor is valued for the same reason homogeneity of other background factors are valued - it allows a person to make reasonable assessments of what to expect in a battle - following the rules to resolve conflict. The Playco experience illustrates the impact of symbolic and structural dimensions of matrix structures and hostile takeovers inside corporations.

4. Implications of corporate honor:
a) Reputation and honor ceremonies provide stability and predictability in an intraorganizational context of high uncertainty and ambiguity.
b) Intracorporate reputation and honor ceremonies can be sources of control and information for top managers over their executive subordinates - through organized meetings to work out conflicts between subordinates.
c) Intracorporate reputation and honor ceremonies act as a check on the obfuscation of accountability in executive decision making created by the matrix and the language and practices associated with hostile takeovers - due to public nature of honorable vengeance. Conditions for honorable vengeance: relative distance, independence, equality, behavioral predictability.
d) Over time, the negative reciprocity engendered in matrix systems tends to increase internal organizational inertia. Participants are frozen together in endless patterns of negative reciprocity framed by honor.
e) Theories of economic organizations that assume pure substantive rationality by tope managers will poorly predict behavior.

Conclusion: Cultural and structural approaches to organization research are neither mutually exclusive nor antithetical. In explaining conflict management and organization change how do cultural and structural approaches intertwine to affect social settings and the people in them? Look at rationalities of formal and informal structures but also at the impact of symbols in conflict management and organizational life. One must consider how multiple sets of managerial interests and structural factors interact to produce organizational outcomes. Structure (matrices) and vengeance games are undertheorized.

The External Control of Organizations, chaps. 1,3,6,7

Chap. 1

Overview: The central thesis of this book is that to understand the behavior of an organization you must understand the context of that behavior, or the ecology of the organization. Most literature on organizations concentrates on the maximization of output (i.e. motivation of workers, organizational, ..) but this book asks how resources come to be acquired.

Organizations survive only to the extent that they are effective. The key to organizational survival is the ability to acquire and maintain resources. Organizations are dependent on the environment , this is an open systems perspective. Problems arise not merely b/c organizations are dependent on their environment, but b/c this environment is not dependable.

Most perspectives tend to be internal b/c internal processes are the most convenient to study. They are the most visible (e.g. one can interview workers and observe internal dynamics). But there is a conceptual bias in intraorganizational phenomena b/c the observer (i.e. the manager) tends to attribute causality to the actions of individuals rather than to some outside contextual factor. This underestimates the importance of social context for understanding organizational behavior. It also tends to assume that problems can be solved by changing elements within the organization . The importance of the individual in an organization is limited and minimal at best.

3 basic concepts for a contextual perspective.
1. Organizational Effectiveness. Ability to create acceptable outcomes and actions. Effectiveness is an external measure different from efficiency, which is an internal standard of performance.
2. Organizational Environment. An elusive term which may include all other organizations and events, or only organizations loosely coupled to any given organization. The most important actor in the organizational environment is a particular organization itself. How an organization learns about its environment, how it attends to the environment, and how it selects and processes information to give meaning to the environment, these are all important aspects of how the context of an organization affects its actions.
3. Constraints. Constraints are present whenever actions are non-random or are somewhat predictable. All behavior is inevitably constrained, by physical realities, social influence, information and cognitive capacity, as well as by personal preferences. Constraints can also be manipulated. This explains why individual action accounts for little variance in an organization, b/c it occurs within such a limited field of choice.

Finally, managers are important as symbolic leaders, and as actors. One function is to manipulate the environment to influence and control the social context. Both roles require the adoption of an external orientation to guide the understanding of organizational functioning.

Chapter 3: The Social Control of Organizations

Premise: ''Organizational activities and outcomes are accounted for by the context in which the organizations embedded.'' This guides us to focus on ''interorganizational influence activities'' especially when we note that ''many organizations have as their primary function and purpose the control and alteration of the activities of other organizations'' (39).

Interdependence: Any event that depends on more than a single causal agent is an outcome based on interdependent events... interdependence characterizes the relationship between he agents creating an outcome not the outcome itself. interdependence comes in two flavors: outcome interdependence (the outcome achieved by A is jointly determined with the outcome achieved by B), behavior interdependence (activities are themselves dependent on the actions of another social actor - e.g., organizing a poker game). Outcome interdependence may exist in two types of relationships between participants, competitive (you must do worse for me to do better; zero sum game) and symbiotic (output for you is input for me).

Interdependence varies with the availability of resources relative to the demands for them 9 if you and I each have our own money and both want chocolate ice cream and there is only one carton left, interdependence between us is high; if there are 20 cartons, interdep. is low). Interdep characterizes individuals transacting in the same environment with the connection being through the flow of can create problems of unpredictability and uncertainty for the organization. Uncertainty can sometimes be countered by increasing interorganizational coordination, which means increasing mutual control and increasing behavioral interdependence.

The Social Control of Organizational Choice:

It is the fact of the organization's dependence on the environment that makes the external constraint and control of organizational behavior both possible and almost inevitable. In general, organizations tend to be influenced by those who control the resources they require. There's a list of ten conditions which effect organizational compliance with a control attempts on p. 44, ranging from the organization being aware of external demands, to various components of strength of dependence, to competing demands facing the organization, to the organization's desire to survive.

Then, P and S outline some components of resource dependence that will affect the focal organization's response (it's vulnerability to extraorganizational influence):

1. resource importance: indexed by magnitude of exchange and criticality of the resource to the input or output of the org. Uncertainty with respect to the availability of an important resource threatens the org's existence, because it makes the participation of coalition members more doubtful.

2. discretion over allocation and use of a resource possessed by another actor. Bases for control may be possession, access, actual use of the resource and who controls its use, and the ability to make rules or otherwise regulate the possession, allocation, and use of resources and to enforce the regulations. The ability to make rules can determine the very existence and concentration of power and rules determine the extent to which dependence relations, developing from resources exchanges, can be used to accomplish the external control of behavior.

3. Concentration of resource control: Does the focal org have access to a resource from more than the source?

Dependence then becomes defined as the product of the importance o f a given input or output to the organization and the extent to which it is controlled by a relatively few orgs. The potential for one or to influence another derives from its discretionary control over resources needed by another and the other's dependence on the resources and lack of countervailing resources or access to alternative sources.

Then there are empirical demonstrations using Israeli managers and American firms' responses to affirmative action.

Chapter 6: Altering Organizational Interdependence

Three ways to control the context:
attempt to manage interdependence by extending into the relevant area - vertical integration
alter situation of interdep by increasing its own dominance so that those with who it exchanges become relatively more dependent on I -- horizontal expansion
reduce domination of other orgs by decreasing its reliance on single critical exchanges -- diversification.

Mergers: Data show they follow patterns of resource interdependence. Those mergers performed to cope with competitive interdependence are more likely when competitive uncertainty is highest (at intermediate levels of industrial concentration). Purchase interdependence is more important when the firm operates in a concentrated industry, thereby already possessing power with respect to customer organizations. Mergers to cope with sales interdependence are more likely when firms operate in industries with intermediate levels of concentration, where market uncertainty and, consequently, sales interdependence are most problematic.

Organizational growth and large size enhance the survival capacity of orgs, providing them with more power with respect to their environments and with more parties interested in their continuation. This is consistent with the notion that firms grow to deal with organizational dependence.

TVA and the Grass Roots: A Study of Politics and Organization

Selznick's book deals specifically with a set of major federal government initiatives pursued within the Tennessee Valley and centering around such projects as rural electrification, flood control, mineral development, and agricultural assistance and education. These all fell within the mandate of the Tennessee Valley Authority (TVA). Chapters 3 and 4 deal with the idea of ''administrative constituency.'' ''A constituency is a group formally outside a given organization, to which the [organization]... has a special commitment. A relation of mutual dependence develops, so that the agent organization must defend its constituency and [the constituency must defend the organization]. This relation gains strength and definition as precedents are established in behavior and in doctrine, and especially as the constituency itself attains organized form [e.g. special interest groups]'' (p. 145).

Coming out of the liberal and populist strands of Roosevelt's New Deal ideology, the TVA was supported at the federal level by those interested in showing how the federal government could apply its might toward local development which benefited grass roots constituencies. Because it is usually impractical for a large organization moving into an area to create its own set of social networks, it must usually associate with local organizations in order to utilize preexisting networks. In addition, the grass roots ideology of the federal planners suggested a strategy of utilizing local networks. Thus at the local level the TVA associated, by formal and informal agreements, with the offices of Land Grant College System.

What consequences did this have for TVA? Historically the Land Grant Colleges had tended to be tied to the interests of the wealthier farmers. There were a number of reasons for this. For example, the Land Grand College system tended to educate the kids of wealthier farmers, since these were the ones who could afford to go to college in the first place and the wealthier farmers were in a better position to experiment with the implementation of new techniques taught by the colleges. The Land Grant Colleges were also tied to locally based political and moneyed interests because Land Grant College System extension agent salaries were paid from local sources.

Thus, the TVA came to be institutionally tied to at least two distinct sets of administrative constituencies and the conflicting goals and interests characterizing them. ''The creation of the constituency relationship is a form of cooptation, the informal [or formal; see below] involvement of local elements in the process of policy determination'' (p. 146). Formal cooptation is by explicit agreement. Though these are de jure arrangements, they do not necessarily translate into de facto power sharing. Informal cooptation results from the actual sharing of power between formally separated organizations. Cooptation flows from power relations and power is never held completely by one or another party. The danger in coopting is that an organization will also in some way be coopted.

In the conclusion Selznick highlights certain axioms of organizational analysis. (1) ''All formal organizations are molded by forces tangential to their rationally ordered structures and stated goals ... (2) and will develop an informal structure within the organization which will reflect the spontaneous efforts of individuals and subgroups to control ... the [organizational] environment'' (p. 251). (3) Informal structures are indispensable to delegation and the process of organizational control. (4) Behavior within organizations ''is related to a presumptively stable system of need and mechanisms ... [that are] organizational, not individual, and include: the security of the organization ...; the stability of the lines of authority and communication; the stability or informal relations within the organization [etc.]'' (p. 252).

Unanticipated consequences of Organized Action (p 253): ''The meaning of an act may be spelled out in its consequences, and these are not the same as the factors which called it into being.'' ''the aim of action limits the perception of unanticipated consequences (254)'' or as the saying goes, hind-sight is 20/20. An organizational ''commitment ... refers to decision dictated by the focus of circumstances with the result that the free or scientific adjustment of means and ends is effectively limited'' and thus ... lead to ''unanticipated consequences (255).''

''Manufacturing Information Systems'' (1982)

Organizational sociologists have been interested in managers primarily as ''people drivers'' (in the Taylorist view), but many modern middle managers are not concerned with improving the productivity of manual workers, except indirectly. These indirect determinants of productivity can be manipulated by creating an information system that will routinely produce the right administrative details at the right times so that spare parts can be bought or so that a decision to buy a particular machine for a particular place in the line to reduce costs can be evaluated quickly.

Using data from a study of the building of the operations administration of the Norwegian State Oil Company, Stinchcombe identifies seven dimensions of operating characteristics of information systems (p. 94):


1. Quality of information improves dramatically with operational experience or information remains of same value. Preventive maintenance plans, operations manuals, versus capital values of installations.

2. Information generated in operations is only useful for further operations of the same kind or operating information enters other systems. Well reports, operator experience with particular machines, versus project design, cost statistics on operations .

3. Supplementary innovations in the information system add to the system rapidly during operations or information systems are stable. Software versus invoice processing for payment.

4. Flexible, detailed, shifting categories are needed for cost reduction projects or constraint is exercised by categories of systems outside organization. Cost reduction use of cost statistics versus financial and cost comparison accounting statistics.

5. Each figure is auditable by a ''trail of paper'' or figures are useful for decision purposes only.Financial accounts versus cost accounts.

6. Information is generated to guide one kind of activity crucial for guiding other activities, requiring reorganization, or information is in a ''closed'' loop within a department. Project design for construction useful for spare parts buying, maintenance plans, operating manuals, versus well reports.

7. Approvals systems for decisions are adapted to differing information and problems or authority is applied uniformly across cases.''Audits'' versus ''policing''; budgeting versus ledgers; procedures for various special situations versus organization manual for production organization.The social structure connected with different manufacturing information systems, the technical skills embedded in them, and the problems of keeping information separate from approvals are all determined ultimately by what sorts of technical or economic uncertainty they are designed to deal with. The conflicts between and within departments that arise from differences in what information systems are for and what uncertainties they respond to produce a ''politics'' of information systems.

Social Structure and Organizations (Ch 4 from Handbook of Organization)

The topic of this chapter is the relation of society outside organizations to the internal life of organizations. Central to the analysis is social structure, which AS defines for the purposes of this chapter as ''any variables which are stable characteristics of the society outside the organization.'' By organization, he means a set of stable social relations deliberately created, with the explicit intention of continuously accomplishing some specific goals or purposes.

AS organized this writing around a number of central topics:
1) The effect of social structure on the rate of foundation of new organizations, particularly organizations of a new kind or structure.
2) An attempt to explain on social structural grounds the correlation between the time in history that a particular type of organization was invented and the social structure of organizations of that type which exist at the present time.
3) The relation of organization to the use of violence in the larger society, particularly violence and unrestrained competition in the political arena. AS contends that the political activity of different sections of the elite of modern societies is oriented primarily toward the system of stratification among organizations, rather than classes of individuals and families.
4) The impact of organizational arrangements on the relations between social classes in the larger society. Since special purpose organizations are one of the main places where people of different social classes meet, relations within these organizations are main determinants of class relations in society at large.
5) The effect of organizations on social structure, more particularly the effect of the mere presence or absence of organizations on the solidarity and feeling of identity of ''communal'' groups. AS's thesis (which contradicts much previous work) is that the greater the number and variety of formal organizations in a communal group (eg. ethnic group or geographical community), the more solidary it is likely to be.

''Traditional populations'' are a poor social base for modern forms of political life requiring extensive autonomous organization of an electorate.

Conditions under which people will be motivated to form organizations to achieve various special purposes:
a) They find or learn about alternative ways of doing things that are not easily done within existing social arrangements.
b) They believe that the future will be such that the organization will continue to be effective enough to pay for the trouble of building it and for the resources invested.
c) They or some social group with which they are strongly identified will receive some of the benefits of the better way of doing things.
d) Mobility of resources of wealth, power and legitimacy needed to build the organization.
e) They can defeat, or at least avoid being defeated by, their opponents - especially those whose interest are vested in the old regime.
In short, the probability that an individual or group will be motivated to start an organization is dependent on the social structure and on the position of persons within it.

The ''Liability of Newness''
As a general rule, a higher proportion of new organizations fail than old. This is particularly true of new organizational forms, so that if an alternative requires new organization, it has to be much more beneficial than the old before the flow of benefits compensates for the relative weakness of the newer social structure.

Aspects of the ''liability of newness'':
a) New organizations, especially new types, generally involve new roles, which have to be learned. New organizations have to get by with generalized skills produced outside the organization, or have to invest in education. The distribution and generality of skills outside the organization, the socially induced capacity to learn new roles, and the ease of recruitment of skills to new organizations will affect the degree of disadvantage of organizational innovations.
b) The process of inventing new roles, the determination of their mutual relations and of structuring the field of rewards and sanctions so as to get maximum performance, have high costs in time, worry, conflict, and temporary inefficiency.
c) New organizations must rely heavily on social relations among strangers, which means that relations of trust are much more precarious in new than in old organizations. Such factors as universalistic religions and law, reliable negotiable instruments, and ethics of achievement all clearly make it easier to construct social systems out of groups of strangers.
d) One of the main resources of old organizations is a set of stable ties to those who use organizational services. The stronger the ties between old organizations and the people they serve, or the larger the component of personal loyalty in the consumer-producer relation, the tougher the job of establishing a new organization.

There are a number of basic variables that affect the likelihood of starting new organizations and their likelihood of their survival:
a) General literacy and specialized advanced schooling (most important variable):
Alternative ways of doing things come to the attention of prospective innovators more rapidly and cheaply through print than any other way. Writing down the law makes it easily available to many people as a basis for their calculations, and tends to increase the degree of formality and stability of legal arrangements. Concerted actions of physically dispersed people is greatly facilitated by written communication.
b) Urbanization:
Has the same effect of facilitating organization formation as literacy, especially when urbanization is slow enough to allow routines of urban living to develop without being swamped by new waves of rustics. Cities tend to show higher rates of universalism and social mobility, formation of schools, and higher literacy rates.
c) A money economy:
Liberates resources so they can be more easily recruited by new organizations, facilitates formation of free markets, depersonalizes economic social relations, simplified calculation of the advantages of alternative ways of doing things, and allows more precise anticipation of the consequences of future conditions on the organization.
d) Political revolution:
Can drastically shift the relative advantage of vested interests and new organizations by changing the normative basis on which interests are vested and by redirecting the armies and police that are the means of vesting.
e) Density of social life - particularly an already rich organizational life:
The main way to learn to form organizations is to form them - ie. previous experience. The richer the social life of a group, the more likely it is to have the resources to build new organizations. Vested interests, however, tend to oppose newly formed organizations. Therefore, new organizations with narrow purposes grow rapidly in an already rich environment. Whereas the wider the claim of the new organization, the more likely is it to run into vested interests.

Organizational forms and types have a history, and this history determines some aspects of the present structure of organizations of that type. Organizations which have purposes that can be efficiently reached with the socially possible organizational forms tend to be founded during the period in which they be come possible. Then, both because these organizations can function effectively with those organizational forms, and because the forms tend to become institutionalized, the basic structure of the organization tends to remain relatively stable. Organizations formed at one time, therefore, tend to have a different social structure from those formed at another time.

The growth of a type of organization tends to follow a pattern of spurts followed by periods of slow growth. The slow rates of growth after spurts generally indicated that few organizational restructurings are taking place, so that the date of the spurts is highly correlated with the present social structure of the type organization that originated in a particular spurt.

Certain structural characteristics - such as (relative) size, economic sector, and type of commodity produced - tend to display a high degree of stability over time. AS goes into this long analysis of how you can characterize the labor force of different industries on the basis of the age of the industry (ie. the period in which it developed), but it is basically an illustration of the points made above.

As believes that by combining the postulate that economic and technical conditions determine the appropriate organizational form for a given organizational purpose and the postulate that certain kinds of organizations (and associated technical systems) could not be invented before the social was appropriate to them, a complete theory of the correlation between age and structure of organizations could be developed.

Q: Why are organizational forms developed at different times systematically different?

A: An organization must have an elite structure of such a form and character that the people in the society who control the resources (particularly power, wealth, and legitimacy) essential to the organization's success feel that their interests are being served by the enterprise. In addition, the body of organizational structure must have such relations to the labor market as to attain an adequate quality of work (ie. insuring ''obedient'' labor). The organizations formed at any given time must obtain the resources (energy for physical work and knowledge/skill) essential to their purposes by the devises developed at the time. Extending an example from Weber, AS states that with the development of manufacture slavery no longer constituted an effective means of attaining work of the necessary quality. Therefore, formally free labor paid a wage became the dominant form of labor under manufacture. Furthermore, as modern economic sectors that depend heavily on knowledge and intelligence (rather than physical work) become more prominent, we see a trend toward salaried career labor and away from wage work.

The structure of Labor Market
The structure of labor markets (institutions and practices by which individuals are distributed among organizations) changes over the course of history. Therefore, the nature of the norms governing workers, quality of the competence that can be recruited, and bases of the motivation to work which an organization as to deal with and adapt its structure to all change.

AS identifies a number of important elements of labor market structure:
a) nature and quality of preparation for work roles outside employing organizations (esp. schools)
b) organization of licensing agencies and practices
c) nature of organized groups which determine the norms of the employment contracts (eg. unions, prof. assoc's)
d) manner in which particular jobs are (or are not) integrated into careers in which the quality of current performance affects future statuses
e) structure of competition for labor - range of alternatives open to people occupying a certain organizational statuses

AS goes on to illustrate how different organizations of labor (familial, bureaucratic/professional, unionized, and unorganized) vary according to these five point above. Again (imho), the points of variation seem to be more important here than a long, drawn-out exposition of different types of labor markets.

Taken together, these two kinds of social structural variables (the terms on which wealth and power are available, and the structure of the labor market) partly explain why organizations set up at different times have different forms at the beginning.

The problem with explaining persistence of organizational form is to specify who it is that carries ''tradition'' and why they carry it, whose ''interests'' become ''vested,'' by what devices, under what conditions established patterns cannot be changes

Selznick sees the basic process at work as one in which an organization has to make commitments to outside and internal social forces in order to solve its problems. Ideologies are elaborated to explain the power structure, to teach individuals their responsibilities, and to justify the stable relations between the organization and the outside. To allow outside organizations permanent control over some aspects of policy, to create and justify power distributions not only mobilizes social forces for present purposes, it also infuses the resulting structure with value - making it an ''institution'' rather than a dispensable technical device.

A new organization of a new organizational form has to be beneficial enough to be able to compete against established concerns, even without the advantage of free services and other advantages from sunk costs of older organizations. Further, another basic determinant of persistence of organizational forms is the degree to which the existence of an organization depends on its being better than its possible competitors. This latter point comes into play in situations such as monopolies.

When all is said and done, currently existing forms of organization may be preserved by one of these three processes:
a) They may still be the most efficient form of organization for a given purpose.
b) Traditionalizing forces, the besting of interests, and the working our of ideologies may tend to preserve the structure.
c) The organization may not be in a competitive structure (does not need to be better than alternative forms).


AS believes that a theory of stratification among organizations is the appropriate theoretical basis for the sociology of revolutions. By ''revolutionary situations'' AS (as far as I can make out) means conditions under which means of political conflict tend to become unlimited. A common feature of revolutions is that the use of violence in politics is not limited by the rules of the game - ie. the fight is not conducted under defined norms for deciding political battles. Extreme examples of this sort of unlimited political violence would be seen in civil war or under full-scale governmental terror. The means of competition among political forces can be ranged along a continuum of coerciveness - anywhere from speeches to organized armed conflict at the opposite extreme. AS believes there exists a variety of indices by which cases may be empirically analyzed. In short, a shift in the character of stratification systems of societies occurs, such that stratification among organizations (as opposed to families or individuals) becomes much more important, and creates forces in the political system of such a nature as to cause political conflicts to become unlimited.

A method to rank organizations, consequently, must follow if the above contentions are to be verified. AS proposes that social units which have credit rations are the units of a stratification system. Borrowing, for example, depends on an evaluation of the receiver - so a credit rating is a particular kind of ''reputational'' measure of stratification. Thus, it is a social unit (ie. organization, not individual) which has the kind of prestige that can be turned into control over resources on the basis of promised future performance. Societies may be classified according to the kinds of social units that provide such guarantees for credit - eg. house/lineage, nuclear family, special-purpose organization.

The general argument here is:
Rapid growth of the importance of stratification among organizations, entailed by modernization, tends to produce anomie in the politically crucial elites of the society (esp. leaders of organizations), for their membership in the elite and their status within it depends on the status of their organizations. Because the norms governing the ranking of organizations are unsettled, and because commitment to what norms there are is weakened by the meteoric careers of organizational leaders, the means of organizational competition tend to become unlimited.

Main variables limiting the means of competition:
1) Military control and 2) liberty both function together to stabilize political conflict. Further, devices for 3) elite socialization promote acceptance of the rules of the game. Restraint in political competition is encouraged if the military and police of a society provide violence to the political contenders on normatively controlled terms; if other means of competition are readily available; and if new elites are socialized (eg. through experience in school, parliaments, negotiations) to expect fair play if they play fairly themselves.


An organization is something of a ''community of fate'', in the sense that it is an aggregate where damage to the collectivity (or its members) is bad for the individual, and success of the collectivity is good. Organizations, however, differ from other communities of fate in that they are deliberately designed to reward people so that they are better off is some specialized purpose is achieved and worse off if it is not achieved. Further, organizations are among the groups where community of fate is shared among unequals - members of different social classes in this case.

In general, the fate of the organizational elite is more closely tied to the fate of the organization than is that of their ''inferiors'' because: organizational prestige is translated into personal prestige of the elite; elite value commitments are often more directly related to organizational goals than the commitments of subordinates; and elites appropriate money and other profits of the organization. Therefore, the central variable in relations between subordinates and superiors (and consequently between social classes) is the degree of dependency of the inferiors on the organization. The more the subordinate's needs and wants are met by the organization, the greater the superior's control.

There are a number of factors that come into play in influencing the degree of dependence of superiors on inferiors, or the degree of independence of inferiors:
1) Capacity of inferiors to organize in opposition to superiors.
2) Existence and availability of alternative sources for the satisfaction of needs now met by the superiors.
3) Vesting of interest of inferiors by a stable and efficient enforcement system, so that the status and rewards of inferiors are not precarious.
4) Content of laws and the efficiency of their enforcement.
5) Degree of institutionalized dependence of superiors on inferiors.
6) Alternatives for inferiors are inherent in some tasks - eg. the possibility to waste or destroy valuable resources of the superior's.
7) Nature of the ideology of superiors - eg. how independent inferiors ought to be, or whether it is right to use the power that falls into one's hands.


In this section, AS seeks to dispel the false impression inherited from the past that the more formal, impersonal, technical social relations there are in a group, the less intimacy, charity and mutual faith there is likely to be.

Rather, AS wants to show that in solidary groups where people treat each other as ends and identify with each other, the greater the number and variety of organizations, the greater the solidarity is likely to be. Community or communal group: any set of social relations that is held together by strong ties of solidarity; by tendencies to socialize the young to loyalty to the particular group, to intermarry and restrict friendship within the group, to treat other group members as ends rather than means, and to solve disputed within the group by standards of justice and need rather than standards of game theory. The communal group is a group whose norms (and their enforcement apparatus), ideals, and history of the community form a part of the culture of smaller (primary) groups of which the larger communal group is composed - thus overriding particular interests, limiting power and dependency within smaller groups to those consistent with community norms.

The problem of cultural infusion into primary groups can be divided into three parts:
1) Characteristics of the smaller groups that make them accessible to the larger.
The accessibility of primary groups to communal group culture is heavily determined by the organizational life of the larger group. Eg. literacy of primary groups is usually produced in schools organized by larger groups. The degree of accessibility of primary groups is also affected by the homogeneity of the social environment of the group. The social environment can be made homogeneous (by the larger group) by ecological segregation of groups life or by organization of communal institutions to fill most of the needs of the small group.
2) Characteristics of the larger groups that give them something to get at the smaller with.
The presence in the larger group of many organizations to serve the needs of smaller groups, rendering the smaller less institutionally complete and themselves more so, clearly aids in maintaining the homogeneity of environment of primary groups. Effectiveness of an administrative apparatus with power and will to coerce smaller groups into collective activity facilitates the incorporation of the smaller group. In addition, the larger group has to have a culture founded on a common fund of symbols and group experiences with which to penetrate the smaller group. This culture is transmitted via organizations. 3) Qualities of the history of the smaller and larger groups that leave a residue of interpenetration.
The history of a group can leave a residue of organization, common experience, and common culture that involves primary groups in the larger collectivity. Collective action, for instance leaves a residue of sentiments, but it also leaves an organizational residue - the organization of effort that resulted in solution of the problem continues.

Organizations in Action

Ch 2 ''Rationality in Organizations''

Technical rationality is the extent to which activities thus dictated by man's beliefs are judged to produce the desired outcomes. It can be judged on two criteria: economic and instrumental. The instrumental criteria is most important. it asks, do the specified actions produce the desired outcome? Complex organizations are built to operate technologies which are found to be impossible or impractical for individuals to operate. This does not mean, however, that technologies operated by complex organizations are instrumentally perfect.

Variations in Technologies

1)the long-linked technology
serial interdependence: act Z can only be completed after act Y, etc. (e.g., mass production assembly line). This technology approaches instrumental perfection when it produces a single kind of standard product, repetitively and at a constant rate. It approaches economic perfection when once adjusted, the proportions of resources can be standardized to the point where each contributes to its capacity.

2)the mediating technology
Some organizations primary function is to link customers who wish to be interdependent. This technology requires operating in standardized ways, and extensively -- e.g.., with multiple clients distributed in time and space (banks, insurance co.'s). Standardization assures each segment of the organization that other segments are operating in compatible ways. Bureaucracy is beneficial here.

3)the intensive technology
A variety of techniques are drawn upon in order to achieve a change in some specific object , but the selection, combination, and order of application are determined by feedback from the object itself (e.g.. a hospital's decisions about therapy for a patient)

Boundaries of technical rationality (for all three types above)

Technical rationality (system of cause/effect relationships which lead to a desired result) is instrumentally perfect when it becomes a closed system of logic. A closed system of logic contains all and only the relevant variable. Exogenous variable are excluded, A closed system of action corresponding to a closed system of logic would result in instrumental perfection in reality. (e.g.., mass production of chemicals). since technical perfection seems more nearly approachable when the organization has control over all the elements involved, under norms of rationality, org.'s seek to seal off their core technologies from environmental influences.

Organizational Rationality

Technical rationality is a necessary component but is not sufficient alone to provide organizational rationality, which involves acquiring the inputs which are taken for granted by the technology, and dispersing outputs which are again outside the scope of the core technology. Organizational rationality involves three major component activities which are interdependent:
1)input activities
2)technological activities
3)output activities.
Organizational rationality therefore, never conforms to closed system logic but demands the logic of an open system. However, the above proposition states that organizations subject to rationality norms seek to seal off their core technologies from environmental infleunces.How do we reconcile the two contentions?

Under norms of rationality, org.'s seek to buffer environmental influences by surrounding their technical cores with input and output components.

Organizations convert input and output into steady conditions for the technological core (e.g.., stock piling supplies from an irregular market, recruiting dissimilar personnel and making them reliable workers, taking warehouse and transit inventories). Buffering of an unsteady environment obviously brings considerable advantages to the technical core, but it does so with costs to the organization.

Under norms of rationality, organizations seek to smooth out input and output transactions.

Whereas buffering absorbs environmental fluctuations, smoothing or leveling involves attempts to reduce fluctuations in the environment (e.g.., sales during slow periods in retail).

Under norms of rationality, org.'s seek to anticipate and adapt to environmental changes which cannot be buffered or leveled.

To the extent that environmental fluctuations can be anticipated, they can be treated as constraints on the technical core within which a closed system of logic can be employed.

When buffering, leveling, and forecasting do not protect their technical cores from environmental fluctuations, organizations under norms of rationality resort to rationing.

Rationing is an ''unhappy'' solution; its use signifies that the technology is not operating at its maximum. Yet some system of priorities for the allocation of capacity under adverse conditions is essential if a technology is to be instrumentally effective -- if action is to be other than random.

The logic of organizational rationality

Core technologies rest on closed systems of logic, but are invariably embedded in a larger organizational rationality which pins the technology to a time and place, and links it with the larger environment through input and output activities. Organizational rationality thus calls for an open system of logic, which includes, environmental influences, constraints, and contingencies.

Ch 5 ''Technology and Structure''

Structure occurs in an organization when the major components are further segmented or departmentalized, and connections are established within and between departments. It is a socio-technical system containing both human and non human resources or facilities.

The synthetic organization

The synthetic org. is the ad hoc org, which usually emerges to overcome the effects of large scale natural disasters in communities. When knowledge of need and resources coincide at a point in space, the headquarters of the synthetic org. have been established. Org. responsibilities are thrown on the person who is there by happenstance. These org.'s are not efficient because they must order the actions of their components in a situation of interdependence and in the face of uncertainty.

A basic assumption in this book is that structure is a fundamental vehicle by which organizations achieve bounded rationality. Org.'s help members gain efficiency by delimiting responsibilities, control over resources, etc. If structure affords numerous spheres of bounded rationality, it must also facilitate the coordinated action of interdependent elements.

Internal interdependence

To say that an organization is composed of interdependent parts is not to say that each part is dependent on and supports every other part in any direct way. Yet they may be interdependent in the sense that unless each performs adequately, the total organization is jeopardized.

Types of interdependence:

1) pooled interdependence: each part renders a discrete contribution to the whole and each is supported by the whole.

2) sequential interdependence. X must act properly before Y can act, etc.

3) reciprocal interdependence: outputs of each become inputs for the others. Each unit poses contingency for the other.

All organizations have pooled interdependence, more complicated organizations have sequential as well as pooled, and the most complex have reciprocal, sequential , and pooled. Each type of interdependence contains increasing degrees of contingency.


In a situation of interdependence, concerted action comes about through coordination.

Ways to achieve coordination:

1) standardization : establishment of routines/rules which constrain action of each unit into paths consistent with those taken by others in the interdependent relationship.

2)coordination by plan: establishment of schedules for the interdependent units by which their actions may then be governed. More appropriate than standardization for dynamic situations.

3)coordination by mutual adjustment: transmission of new info during the process of action. Coordination by feedback.

Two observations:

1)distinct parallels between the three types of interdependence and the three types of coordination:
a)pooled interdependence - coordination by standardization
b)sequential interdependence - coordination by plan
c)reciprocal interdependence - coordination by mutual adjustment

2)the three types of coordination place increasingly heavy burdens on communication and decision. Standardization requires less frequent decisions and a smaller volume of communication during a specific period of operations than does planning, and planning calls for less decisions and communicative activity than does mutual adjustment. There are very real costs involved in coordination.


Positions in organizations are grouped according to priority, which is determined by the nature and location of interdependency, which is a function of technology and task environment.

Under norms of rationality, organizations group positions to minimize coordination costs. Coordination by mutual adjustment is most costly. The first priority, then, should be given to grouping to minimize the more costly forms of organization.

Organizations seek to place reciprocally interdependent positions tangent to one another in a common group which is local and conditionally autonomous. i.e., organizations seek to group reciprocally interdependent positions into local units, autonomous within the constraints established by plans and standardization.

In the absence of reciprocal interdependence, organizations subject to rationality norms seek to place sequentially interdependent positions tangent to one another, in a common group which is a) localized and b) continually autonomous.

The coats of planning are minimized when done in small units rather than large ones, and we would expect organizations to lodge the planning chore in the smallest possible cluster of serially interdependent positions.

In the absence of reciprocal and sequential interdependence, organizations subject to norms of rationality seek to group positions homogeneously to facilitate coordination by standardization.

least costly: homogeneity facilitates coordination because one set of rules applies to all positions in the group, and when changes of rules are necessary, one set of changes applies to all.

Summary so far:

The basic units are formed to handle reciprocal interdependence, if any. If there is none, then the basic units are shaped according to sequential interdependence, if any, If neither if the more complicated types of interdependence exists, the basic units are shaped according to common processes.

When reciprocal interdependence cannot be confined to intragroup activities, org.'s subject to rationality norms seek to link the groups involved into a second - order group, as localized and conditionally autonomous as possible.


The first step in a hierarchy:

On occasion, reciprocal interdependence is so extensive that to link all of the involved positions into one group would overtax communication mechanisms. When this occurs, organizations rank - order the interdependent positions in terms of the amount of contingency each poses for the others. Those with the greatest intercontingency form a group, and the resulting groups are then clustered into an over-arching second order group.
Each level is not simply higher than the one below, but is a more inclusive clustering, or combination of interdependent groups, to handle those aspects of coordination which are beyond the scope of any of its components.
The composition of each ore inclusive group is determined by coordination requirements - by the locus of interdependence/ contingency. The first rule for composition of this second order combination is to dispose of reciprocal interdependence not adequately handled by the initial grouping of positions.

After grouping units to minimize coordination by mutual adjustment, organizations under rationality norms seek to place sequentially interdependent groups tangent to one another, in a cluster which is localized and conditionally autonomous.

After grouping units to solve problems of reciprocal and sequential interdependence, organizations under norms of rationality seek to cluster groups into homogenous units to facilitate coordination by standardization.

When higher-priority coordination requirements prevent the clustering of similar positions or groups, org.'s seek to blanket homogenous positions under rules which cut across group boundaries, and to blanket similar groups under rules which cross divisional lines.

When dealing with coordination by mutual adjustment or by planning, organizations seek to localize interaction and to confine it to conditionally autonomous groups - to cluster positions and groups into the smallest possible inclusive units in order to minimize coordination costs. When coordinating via standardization, organizations seek to make rules pervasive in order to apply to the widest possible categories. Where grouping on the basis of common procedures is not feasible, organizations may still employ standardization by devising rules which apply to certain categories of activity whenever these occur in the organization.

When organizations employ standardization which cuts across multiple groupings, they also develop liaison positions linking the several groups and the rule making agency (e.g., ''staff''). These liaison positions are appropriate when the interdependence is of the pooled type, requiring the formulation, interpretation, and application of rules for standardization. They are less effective for more complex forms of interdependence.

Organizations with sequential interdependence not contained by departmentalization rely on committees to accomplish the remaining coordination.

Organizations with reciprocal interdependence not contained by departmentalization rely on task force or project groupings to accomplish the remaining coordination.

Structure reflects technological contingencies.

Ch 6 ''Organizational Rationality and Structure''

Review so far: (god, this book sucks!)

Technology sets the constraints around which the organization manipulates its variables, and technical rationality is maximized when the variables are under complete control of an organization.

Okay, new topic:

The crucial problem for boundary spanning units of an organization is not coordination (of variables under control) but adjustment to constraints and contingencies not controlled by the organization. (exogenous variables). Organizations attempt to isolate environmental cores by establishing boundary - spanning units to buffer environmental fluctuations. These responsibilities help determine the structure of input and output units.

Varieties of environmental constraints:

The elements constraints of task environment to which the organization must adapt vary from organization to organization. They may also change over time. Organizations find their environmental constraints located in the geographic space or in the social composition of their task environments.

geographic space: distance, costs of transportation/ communication
social composition: individual members, aggregates of individuals, organizations.
task environments: hostile or benign, homogeneous or heterogeneous, stable or rapidly shifting, confined or segmented, stable, or fluctuating.

Boundary - spanning structures

If org. structure is an important means of achieving bounded rationality, then the more difficult the environment, the more important it is to assign a small portion of it to the core unit.

Under norms of rationality, organizations facing heterogeneous task environments seek to identify homogeneous segments and establish structural units to deal with each.

Under norms of rationality, boundary spanning components facing homogeneous segments of the task environment are further subdivided to match the surveillance capacity (data collecting, etc.) with environmental action.

The organizational component facing a stable task environment will rely on rules to achieve its adaptation to that environment (this is the least costly, most efficient way).

When the range of variation presented by the task-environment segment is known, the organizational component will treat this as a constraint and adapt by standardizing sets of rules.

When the range of task-environment variables is large or unpredictable, the responsible organization component must achieve the necessary adaptation by monitoring that environment and planning responses, and this calls for localized units.

The more heterogeneous the task environment, the greater the constraints presented to the organization. The more dynamic the task environment, the greater the contingencies presented to the organization. Under either condition, the orgainization seeking to be rational must put boundaries around the amount and scope of adaptation necessary, and it does this by establishing structural units specialized to face a limited range of contingencies within a limited set of constraints. The more constraints and contingencies the organization faces, the more its boundary - spanning component will be segmented.

The organization as a joint result

Variations within organizations can be accounted for as attempts to solve the problems of concerted action under different conditions, such as techno and environmental constraints and contingencies. These conditions vary as :
1)organization's task environment changes
2)innovations modify technologies
3)the organization changes its domain and hence its task environment.

When technical core and boundary spanning activities can be isolated from one another except for scheduling, organizations under norms of rationality will be centralized with an overarching layer composed of functional divisions.

Under conditions of complexity, when the major components of an organization are reciprocally interdependent, these components will be segmented and arranged in self-sufficient clusters, each cluster having its own domain (''decentralized division'').

By identifying several separable domains and organizing its technical care and boundary spanning components in clusters around each domain, the organization attains a realistic bounded rationality. Organizations adapt their structures to handle constraints and contingencies.

Core arguments about structure

1) Organizations face the constraints inherent in their technologies and task environments. Since these differ for various organizations, the basis for structure differs and there is no ''one best way'' to structure complex organizations.

2) Within these constraints, complex organizations seek to minimize contingencies and to handle necessary contingencies for local disposition. Since contingencies arise in different ways for various organizations, there is a variety of structural responses to contingency.

3) Where contingencies are many, org.'s seek to cluster capacities into self-sufficient units, each equipped with the full array of resources necessary for the organization to meet contingencies. i.e.: variables controlled by the org. are subordinated to the constraints and contingencies it cannot escape. The more its technology and task environment tend to tear it apart, the more the organization must guard its integrity.

Thus org.'s facing many contingencies should exhibit quite rigorous control over those variable they do control. This helps to explain the paradox that the total institution is so highly routinized. There is a paradox in institutions between the double requirement for standardization and flexibility.

Complexity and Change

Organizations designed to handle unique or custom tasks, and subject to rationality norms, base specialists in homogeneous groups for housekeeping purposes, but deploy them into task forces for operational purposes.

Organizations must be flexible and adapt to change -- through the use of task forces or project management.

Whereas coordination is a central problem for the technical core of an org./ adjustment to constraints and contingencies not controlled by the org. is the crucial problem for boundary spanning components.

Ch 10 '' The Control of Complex Organizations''

The all-powerful chief of an organization can maintain control only to the extent that he is not dependent on others within his organization. The omnipotent individual assumption is consistent with the rational model approach to organizations, but is negated under any one of the following conditions:
1) When the complexity of the technology or technologies exceeds the comprehension of the individual
2) When resources exceed the capacity of the individual to acquire
3) When the organization faces contingencies on more fronts than the individual is able to keep under surveillance

Control within an organization is achieved through manipulation at each hierarchical level of the decision premises used by lower levels. The nature and stability of the dominant coalition must depend on it s ability to manipulate decision premises.

Processes of decision

''Basic Variables'' of decisions:
1)beliefs about cause/effect relations
2)preferences regarding possible outcomes.

Certainty or uncertainty regarding each variable [NOTE: think of this as a 2x2 table]

			              Certainty	      Uncertainty

BELIEFS         Certainty        computational strategy   compromise strategy
	         Uncertainty      judgmental strategy	 inspirational strategy

If each organizational unit takes as its decisional premises the outcome preferences and the cause/effect belief system specified by the next higher level in the hierarchy, the organizational structure conforms to Weber's bureaucratic model and the dominant coalition is indeed omnipotent. But in reality, there are often constraints on the coalition's ability to specify either variable.

Constraints on cause-effect premises

1)incomplete existing knowledge (affects judgmental strategy)
2)when the object worked on itself is dynamic (the pertinent variables are not unilaterally under control of the organization)
3)competition between the organization and others. Outcomes are in part determined by the behavior of others; cause/effect rels are uncertain (affects judgmental strategy)

The more numerous the areas in which the organization must rely on the judgmental decision strategy, the larger the dominant coalition

The less perfect the core technology, the more likely it will be represented in the dominant coalition.

The more heterogeneous the task environment, the larger the # of task environment specialists in the dominant coalition.

Thus, we would expect to find the small dominant coalition, perhaps the single individual in organizations repeating standardized technological activities to produce standardized results for standardized customers or clients.

As areas within the organization shift from characteristically computational to characteristically judgmental decision strategies, the dominant coalition will expand to include their representatives or vice versa (e.g., prison: custodial -] therapeutic goals. Prison admin. will enlarge dominant coalition to include professionals in therapy.

Constraints on outcome-preference premises

For the purposes of control over an organization, the effective preferences are those for which there is an instrumentally rational approach. Only those preferences which conceivably are outcomes of possible action by the org. are therefore relevant, and such outcome possibilities are constrained in several ways:
1) when the core technology of an organization must be employed on dynamic human objects, the outcome is in part determined by those human objects
2) when needed inputs are hard to get. Org. may be forces to compromise its outcome preferences.

Dynamics of organizational control

An organization's coalition is inevitably in process, as evidenced by conflict within the coalition.

Potential for conflict increases with interdependence of the members and the areas they represent or control.

Potential for conflict within the dominant coalition increases as external forces require internal compromise on outcome preferences.

Potential for conflict within the dominant coalition increases with the variety of professions incorporated. -also, when the realities of interdependence require that laymen be incorporated in the dominant coalition, conflict is likely

Coalition management

When power is widely distributed an inner circle emerges to conduct coalition business.

The organization with dispersed bases of power is immobilized unless there exists an effective inner circle (honesty, interest in the welfare of the larger coalition)

When power is widely dispersed, compromise issues can be ratified but cannot be decided by the dominant coalition in toto.

Management of the coalition

In the organization with dispersed power, the central power figure is the individual who can manage the coalition

In the highly complex organization, an individual can exercise significant leadership but only with the consent and approval of the dominant coalition. Thus the highly complex organization is not the place for a dictator to emerge. Neither the central power figure nor the inner circle (or their combination) can reverse the direction of the organizational movement at will.
Although the pyramid headed by an omnipotent individual has been a symbol of organizations, such omnipotence is possible only in simple situations where perfected technologies and bland task environments make computational decision processes feasible. Where technology is incomplete or the task environment heterogeneous, the judgmental decision strategy is required and control is vested in a democratic coalition.
For rapid, abrupt adaptation of an org. to a new set of circumstances, the bureaucracy is undoubtedly the most efficient.

''Cooperation Theory and Organizations,''

Overview: Organizational researchers have largely ignored cooperation theory in their analyses of social interaction in organizations. Experimental and field research in other disciplines (notably social and educational psychologists) have shown that cooperation as opposed to competition or individualistic goals, facilitates social interaction and productivity. However, Tjosvold says that we need to do the same studies in organizational contexts before we can generalize. Organizational researchers should extend cooperation theory to their research in order to understand the dynamics between superiors and subordinates and relations among departments. Key to all of this is how organizational members perceive their goal interdependence.

Tjosvold focuses on cooperation of individuals within an organization. He refers mainly to Deustch's theory of cooperation. Whether goals are cooperatively (positively), competitively (negatively), or individualistically (independent) linked affects the orientation, assistance, communication, influence, and attitudes of those in the organization.
- Cooperation fosters effective behavior, with expectations and behavior of help, assistance, and team. Reaching one's goal is perceived as positively related to others reaching their goals. This is high goal interdependence.
- Competition fosters bungling behavior, which consists mainly of obstructing others' goals. Goals are perceived to be exclusive of others'.

How one perceives goal interdependence, and the assumption of cooperation or competition affects
1. expected and actual assistance
2. communication and influence
3. task orientation
4. friendliness and support.

Reviewers and subsequent research supports Deutsch's theory. the effects of cooperation/compettion on various organizational members are listed below.

			Cooperation 		Competition

Social Interaction 	 +			-
Productivity 		split results 
rote tasks 		no effect 		+
complex  tasks 		+			no effect 

Cooperation theory also has possible applications for inter group study. Deutsch and later researchers suggest similar effects on groups as on individuals in an organization. Need more research though. Preliminary results show conflicting results. Many organizations are organized cooperatively but function competitively. (For example, our boss urges all departments to work together and share supplies and resources, but the department which stays most under budget wins a trip to Disneyland. )

In addition, cooperation theory is ripe for application to relations which involve individuals of unequal power and prestige, namely, unequal relations of superiors and subordinates. There are several issues which must be dealt with first.
- Power. Most previous definitions of power (i.e. Dahl, Weber, Etzioni) assumed competition. Power should be defined independently on goal interdependence as control over valued resources. Cooperation helps all involved. Tjosvold positively glows when he writes about Kanter and her discussion of power and leadership in the corporation.
- Participation. Increased participation by all, superiors and subordinates together, should increase perceived goal interdependence.
- Leadership. Mixed results. However, effective leaders tend to organize and rely more on cooperation to develop productivity and supportive relationships.

It is unclear what exactly convinces individuals that their goals are positively, negatively, or independently linked to those of others. However, organizational design may play a key role. Orgs. which values complete and accurate information may led to cooperation and perceived goal interdependence. Cooperation can also lead to organizational structuring of interdependence.

Implications for organizational practice include expanding roles of groups within the organization, encouraging superior and subordinate interaction, effective communication, and expressed goal interdependence.

The Economics of Organization: The Transaction Cost Approach

transaction cost economics: when transactions costs - the costs of planning, adapting, and monitoring task completion - are minimized by the top-down authority of firms, tasks will be integrated into the firm; otherwise, markets (contracting out) will prevail.

I. Antecedents of the t.c. approach
A. in economics:
Commons first argues that ''the transaction is the basic unit of economic analysis'' (550) and that diverse governance structures arose to mediate tc's
Coase noted that the boundary of the firm was variables, and asked ''what is it that determines when a firm decides to integrate and when instead it relies on the market?
Hayek said that an economy performs better when it can adapt to uncertainty (sometime this means markets, sometimes firms)
Arrow linked tc's with market failure B. in organizational theory:
Barnard (purposive orgs), Simon (bounded rationality), March and Simon (decision making), Cyert and March (organizational goals), Chandler (internal structure), and Thompson all show links with t.c. approach
C. contractual law:
Llewellyn noted ''a highly legalistic approach can sometimes get in the way'' of negotional
MacNeil: ''relational'' contracting needs to be recognized.

II. some rudiments
Think of transaction costs as friction. When they are high, what alternative ways of organizing them are available, and how can they best be minimized?
A. behavioral assumptions: humans are subject to bounded rationality ad at least some are opportunistic dimensionalizing: asset specificity (when a firm is ''locked into'' the transaction because of custom production or location etc.) and uncertainty raise the costs of transacting

III. efficient boundaries
A. schematic description -- the efficient boundary of a firm '' is the inclusive set of core plus additional stages for which own supply can be shown to be the efficient choice''
B. a simple model: controlling for uncertainty, as asset specificity goes up, hierarchical orgs (firms) displace markets
C. 2 examples
1. GM
2. merger wave of 19th C

IV. managing human assets: the employment relation
A. governance, general
firm specific skills will be protected by hierarchical relations tasks in which input cannot be individually measured easily will lead to hierarchical relations. four possibilities: 1.) internal spot market, 2.) primitive team, 3.) obligational market, 4.) relational team
B. some remarks on union organization
as asset specificity goes up, incentive to organize goes up and elaboration of governance structure (job security, grievance procedures, etc.) also goes up.

V. relation to the organizational literature
A. some comparisons: t.c. shares some things with pop ecology (variety of orgs because variety of transactions; contracting costs can be seen as a kind of natural selection mechanism), Thompson (bounded rationality and uncertainty, boundary issues -- but Thompson doesn't operationalize his concepts), Laumann et al. (organizational boundaries etc.), and bounded and posterior rationality folks (Simon, Weick -- different structures allow firms to negotiate the problems created by bounded rationality)
B. power; ''power theory (e.g., Pfeffer, resource dependency) is a pied piper whose enticements are better resisted in favor of more mundane efficiency considerations.'' Why? Because if all presidents of a firm come from marketing, it's not that marketing has more control over resources, it's that this arrangement is necessary for the efficiency of the firm. And how do we know there's an efficiency savings by having presidents come from marketing? Williamson isn't clear. It seems to be because if there were no efficiency savings, presidents wouldn't be coming from marketing... p. 572.

VI. concluding remarks
for all orgs, but especially for commercial ones, ''governance structures that have better transaction cost economizing properties will eventually displace those that have worse, ceteris paribus.''

Addendum to Williamson, Transaction Costs

Transactions are described in terms of three attributes: frequency, uncertainty and asset specificity.

Human assets are a somewhat special case. They can be described in terms of 1) the degree to which they are firm-specific (remember Becker-boy's general and specific training) and 2) the ease with which productivity can be metered (''shirking'' and opportunism are considered perpetual problems).

There are four internal governance structures a firm can adopt to deal with human assets:
[Note: think of this as a 2 x 2 table]

Easy to Monitor x Nonspecific Human Assets
Internal Spot Market
eg, casual sex, migrant labor
--neither workers nor firms have an efficiency interest in maintaining the association

Easy to Monitor x Highly Specific Human Assets
Obligational Market
--firm-specific learning, but tasks easy to measure

Difficult to Monitor x Nonspecific Human Assets
Primitive Team
six men are lifting a big heavy thing together, one of them can shirk, and it's really hard to catch that
--human assets general, but work hard to monitor

Difficult to Monitor x Highly Specific Human Assets
Relational Team
eg.: marriage, professional jobs with diffuse duties and lots of discretion
firm will engage in considerable social conditioning, ee's get considerable job security