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Is Organization Theory Obvious to Practitioners?

A Test of One Established Theory


Richard L. Priem • Joseph Rosenstein
Department of Management, College of Business Administration, The University of Texas at Arlington,
Arlington, Texas 76019, priem@uta.edu
Department of Management (retired), College of Business Administration, University of Texas at Arlington,
Arlington, Texas 76019

Abstract example. Comments were solicited from previous AMJ


Critics have argued that organization theories which ‘‘work’’ editors on ‘‘the state of the field of management at that
are obvious to practitioners; that is, the theories simply confirm time’’ (Mowday 1997, p. 1400). Comments from past
relationships that are already well understood by experienced editors representing the decades of the 1970s, 1980s, and
managers. In our study, four types of respondents—Chief Ex- 1990s included: ‘‘The extent to which work published in
ecutive Officers (CEOs) with business school education, CEOs AMJ influences the practice of management, an issue
without such education, graduating MBA students, and liberal given some prominence in the first editorial statement ap-
arts graduate students—were presented with theory-based pearing in the journal, has been a subject of continuing
performance-rating tasks. These tasks identified respondents’
concern over the years’’ (Mowday 1997, p. 1408); and
beliefs regarding high-performance alignments of business-
level strategy, structure, and environment for manufacturing
‘‘Never terribly popular with practicing managers, AMJ
firms. The respondents’ cause maps were then compared to one has lost even more ground in this regard’’ (Miner 1997,
another and to the alignment-performance relationships pre- p. 1427); and ‘‘As academic scholars, we were writing to
scribed by business-level contingency theory. ourselves, and our prose had little impact on the practice
The graduating MBAs’ cause maps reflected contingency of management’’ (Slocum 1997, p. 1431). In fact, AMJ
theory most closely. The MBAs’ cause maps were much closer is currently soliciting manuscripts for a special issue on
to prescriptions of the theory, however, than were those of ei- ‘‘knowledge transfer between academics and practition-
ther the liberal arts graduate students or the experienced CEOs. ers,’’ in part because ‘‘Considerable evidence suggests
This suggests that business-level contingency theory is not ob- that practitioners typically turn to sources of information
vious to educated laypersons, or to highly experienced practi- other than academics or the scientific literature when de-
tioners; both groups would find that the theory disconfirms as-
signing organizational policies and innovations’’ (AMJ
pects of their causal expectations. Further, each of the four
respondent types in our study emphasized different contingency
1998, p. 746). Many researchers are pessimistic about this
factors during the decision-making exercise. We discuss these situation changing anytime soon (Jacques 1992).
results and their implications. In his 1993 presidential address to the Academy of
(Organization Theory; Relevance; Obviousness) Management, Professor Don Hambrick of Columbia Uni-
versity took his audience on an It’s a Wonderful Life tour
of a hypothetical world in which the organization science
establishment actually made influential contributions to
practice. He then noted that ‘‘Right now, the major de-
The field of organization studies recently has had a quite bates regarding business and management are framed al-
limited role in ‘‘the world of affairs’’ (Hambrick 1994, most entirely by lawyers and economists’’ (Hambrick
p. 15). Indeed, commerce appears to proceed with rela- 1994, p. 15). Hambrick’s subsequent call to action ac-
tively little attention to the theories and research results knowledged the essential role of scholarship, but also ar-
of organization scientists (Bettis 1991, Daft and Lewin gued that ‘‘when an academic field has as its charge the
1990, Hambrick 1994). Scholars have long known this thoughtful preparation and guidance of practitioner pro-
disregard for organization theory. The 40th anniversary fessionals, and when an academic field deals in a domain
issue of the Academy of Management Journal—a top out- that vitally affects societal well-being, then that academic
let for management scholarship—presents an interesting field must enter the world of practical affairs. Without

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1526-5455 electronic ISSN Vol. 11, No. 5, September–October 2000, pp. 509–524
RICHARD L. PRIEM AND JOSEPH ROSENSTEIN Organization Theory

being co-opted, it must strive for influence and impact. and 3) research is the foundation of the organization sci-
That is our challenge. We should matter. We must mat- ences; little empirical research has addressed the issue of
ter’’ (Hambrick 1994, p. 16). Hambrick may have taken how obvious practicing managers might actually find key
a particularly strong stand in his address to provoke organization theories.
thought in his audience. Yet it is clear that at least some Our study takes a first step by evaluating the obvious-
academics are uncomfortable with organization science’s ness of one major contingency theory of organizations.
relative lack of influence; an applied science that cannot Specifically, how commonsensical is the theory, and to
command a practitioner audience is at best ineffectual. whom? These questions deserve answering—regarding
The situation now is quite different from the one that many organization theories—for several reasons. First,
existed when Fredrick Taylor testified before a concerned for scholars, determining the obviousness of an organi-
congress to clarify the likely effects of scientific manage- zation theory is the initial step toward obtaining data for
ment concepts on society. use in addressing the pervasive issue of practitioner dis-
The practitioner inattention to organization studies has regard. If a theory is descriptively or normatively accu-
been attributed variously by academics to the field’s: lack rate, but is unknown to managers, scholars may wish to
of aggressive self-promotion (Hambrick 1994); overly focus more on examining the theory’s relevance or pro-
narrow or excessively broad focus (cf., Daft and Lewin moting the theory. If, on the other hand, an accurate the-
1990, Pfeffer 1994); irrelevant theories (Bettis 1991); or ory is already known to virtually all practicing managers,
trivial theories (Weick 1989). That last explanation—triv- scholars may wish to redirect their resources to more
ial theories—is fundamental: discussions of relevance, pressing issues. Second, for practitioners, an accurate,
focus, or promotion are futile if the theories themselves relevant and nonobvious theory should redirect manag-
are ‘‘commonplace and ordinary’’—a dictionary defini- ers’ attention toward the work of organization scholars.
tion of trivial. Such theories will be viewed as obvious An accurate but obvious theory, however, confirms their
by practitioners: i.e., ‘‘easily discovered, seen and under- previous decision to disregard. Third, for society, the is-
stood, implying such ease of discovering that it often sug- sue of theory obviousness is elemental in determining the
gests conspicuousness or little need for perspicacity in the rightful place in the ‘‘world of affairs’’ for the enterprise
observer.’’ Finally, sense in the current context is the called organization studies. Should organization studies
‘‘reliable ability to judge and decide with soundness, pru- matter more than it does, or is practitioner disregard war-
dence and intelligence,’’ and common sense ‘‘suggests an ranted?
average degree of such ability without sophistication or We attempted to answer these questions for at least one
special knowledge’’ (Merriam-Webster 1998). If discov- organization theory through empirical research rather
ering and understanding an organization theory is indeed than continued speculation. We first identified the cause
commonsensical and requires negligible intellectual abil- maps—i.e., the beliefs about causal relationships among
ity, no amount of promotion or even theory relevance is variables in the theory—of respondents possessing dif-
likely to produce an interested practitioner audience for fering amounts of education in and practical experience
that theory. Thus, a first step in addressing the issue of with the theory. This was accomplished through a behav-
practitioner disregard is to determine the degree to which ioral simulation that measured managers’ beliefs directly
organization theory may be obvious to practitioners. rather than through the use of proxies (e.g., Gist et al.
Concerning theory obviousness, Weick has noted that 1998, Lawrence 1997, Markóczy 1997). We then com-
‘‘the reaction that’s interesting essentially signifies that pared the causal relationships specified by the theory to
an assumption has been falsified’’ (Weick 1989, p. 529). the respondents’ cause maps, in order to determine the
Similarly, the reaction that’s obvious signifies confirma- degree to which the theory confirmed or denied the re-
tion of one’s experience-based expectations. Thus, if an spondents’ expectations. If a respondent’s cause map
organization theory is truly obvious to most managers, closely corresponded to the theory, any subsequent pre-
the theory will neither deny nor clarify practitioner as- sentation of the theory would have only confirmed that
sumptions; rather, it will simply confirm commonplace respondent’s assumptions and likely have produced the
managerial assumptions and will undoubtedly be seen as exclamation, ‘‘that’s obvious!’’ If, on the other hand, a
uninteresting (Davis 1971). Surprisingly, however, even respondent’s cause map did not correspond to the theo-
though: 1) many have suggested that theoretical obvious- retical prescriptions, any subsequent presentation of the
ness may indeed be the basis for organization studies’ theory would have disconfirmed the respondent’s prior
lack of influence on practitioners (e.g., Anderson 1992, assumptions and likely produced the exclamations,
Lundberg 1976); 2) numerous theories have been devel- ‘‘that’s interesting!’’ or ‘‘huh?’’
oped over the past thirty years by organization scientists; This research approach mimicked recent studies that

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have compared citizens’ understandings of situational Vecchio (1987) offered a counter-argument: that per-
risks with scientists’ risk calculations, or with scientific ceptions of obviousness may be managers’ self-
measures of risk for the same situations. Bostrom, deceptions based on post hoc rationalizations. He sup-
Fischhoff, and Morgan (1992), for example, identified in- ported this assertion with examples of seemingly obvious
dividuals’ cause maps concerning ‘‘radon in the home’’ statements that were, in fact, directly opposite the results
risk factors, and examined the deviation of their subjects’ of a World War II study (Lazarsfeld 1949). One example
cause maps from an ‘‘experts’ consensus’’ causal model. of Vecchio’s ‘‘obvious but false’’ findings was that
A similar study identified the cause maps of three ‘‘While military combat was occurring, servicemen pre-
groups—environmentalists, engineers, and the general ferred to return home to the States. When fighting ceased,
public—regarding hazards associated with the space servicemen generally preferred to be stationed overseas
launch of nuclear energy sources (Maharik and Fischhoff (who would be shocked to learn that people do not like
1993). The cause maps of each group were then compared to be killed!)’’ (Vecchio 1987, p. 29). In actuality, ser-
with one another, and with the scientific standard. Thus, vicemen were committed to following through with the
these studies had previously compared the cause maps of combat, and during peacetime preferred to remain at
different groups with natural science data or theories re- home. Post hoc, either explanation seems plausible.
garding risk. In the context of our own work, we com- These examples involve tests of micro organization
pared the cause maps of different respondent groups with theories because we are not aware of even casual empir-
the causal relationships prescribed by a well-known so- ical tests of the obviousness of any macro organization
cial science theory. theories. Nevertheless, similar situations of ‘‘plausible
The sections that follow briefly review the literature on obviousness’’ may be found in the macro research liter-
the practical relevance of management theories, and on ature itself. Mintzberg, for example, has asserted that
the importance of business experience and education in ‘‘formal comprehensive planning may be warranted . . .
fostering theory-based judgment. Then, our study and its in relatively stable and predictable environments’’
results are presented and discussed. (Mintzberg 1973, p. 164). Fredrickson (1984, Fredrickson
and Mitchell 1984) similarly argued that comprehensive
Background strategy making processes may be too time consuming to
Practitioner critics have suggested that some management be used effectively in fast-changing environments. His
theories may be ‘‘nothing more than one ’blinding flash two-industry study found support for the idea that more
of the obvious’. . .’’ promoting ‘‘methods you’ve used comprehensive strategy making processes may be effec-
and taken for granted from your first day as a manager’’ tive in stable, but not in dynamic, environments. Post hoc,
(Carlough 1995, p. 1). Academic critics have sometimes this result may have seemed obvious to many. Other re-
characterized top journals as ‘‘presenting sophisticated searchers, however, have argued that the rapid change of
statistical analyses of trivial problems’’ (Slocum 1997, p. dynamic environments actually requires more, rather than
1430). Could management theories be that obvious to less, analytical comprehensiveness (e.g., Eisenhardt
practitioners. . . or perhaps even intuitively apparent to 1989). Recent empirical research has found a positive re-
nearly anyone? lationship between rational-comprehensive strategy mak-
Some scholars have argued that many management the- ing processes and firm performance in dynamic environ-
ories may indeed offer little insight, and thus are either ments, but no relationship in stable environments
irrelevant or obvious to practitioners (e.g., Anderson (Eisenhardt 1989, Glick et al. 1993, Judge and Miller
1992, Bettis 1991, Daft and Lewin 1990, Lundberg 1976, 1991, Miller and Friesen 1983, Priem et al. 1995). Al-
Thomas and Tymon 1982). These arguments, however, though these results are directly counter to Fredrickson’s
were generally speculative; there have been few empirical (1984), viewed through hindsight they may appear to sup-
tests. One exception is the work of Gordon, Kleiman, and port another ‘‘obvious’’ contingency theory of strategy
Hanie (1978), testing the obviousness of hypotheses from making processes.
then-recent industrial organization psychology research. Vecchio’s (1987) arguments, plus those incidents
Nonpsychologists (in this case, business students and wherein scholars or practitioners may have been overly
managers) were able to correctly predict 75% of research enthusiastic in accepting a theory, suggest that any ex-
findings presented to them when the research results were amination of a theory’s obviousness must be made with-
generally unequivocal. Gordon et al. (1978) concluded out first explaining the theory to an audience. This is one
that many I/O psychology research results were indeed strength of the Gordon et al. (1978) study, which pre-
commonsensical to the businesspeople who comprised sented alternative ‘‘theoretical’’ answers to the partici-
the psychologists’ clientele. pating managers. Explaining a theory to an audience and

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then asking if it seems obvious encourages feigned heroic figures, rather than because of efficacy in appli-
knowledge, and may result in strongly worded but un- cation (Clark and Salaman 1998).
substantiated claims of obviousness like in the Carlough Effectiveness is necessary, on the other hand, for a the-
(1995) comment above. Thus, one cannot rely solely on ory to be obvious. An ineffective theory could not be
audience self-perceptions to determine a theory’s obvi- labeled as obvious, even if most practitioners erroneously
ousness. believed its causal assertions. A highly effective theory
How obvious any theory may appear, however, does that has diffused widely through the populations of man-
depend in part upon characteristics of the audience; agers, however, still would be labeled as obvious. The
‘‘what is obvious to one person clearly may be novel to second condition, discussed previously, is more opera-
someone else’’ (Weick 1989, p. 526). Thus, the ‘‘degree’’ tional in nature. When attempting to evaluate obvious-
of a theory’s obviousness is intertwined with the sophis- ness, an individual’s cause map must be determined di-
tication and experience of the observer. How, then, can rectly, before any indication is given concerning the
obviousness be evaluated? What is the appropriate ref- causal assertions of the theory. Otherwise, post hoc ra-
erence group when testing the obviousness of an orga- tionalization is much too likely to inflate the number who
nizational theory? Thomas and Tymon (1982) offered one claim to see a theory as obvious.
useful approach. They defined nonobviousness as ‘‘the The practitioner criterion is perhaps overly rigorous,
degree to which a theory meets or exceeds the complexity since it classifies as obvious those theories that have been
of common sense theory already used by a practitioner’’ disseminated widely and have been shown to be effective
(Thomas and Tymon 1982, p. 348, emphasis added). through their use by professional managers. A less-
Thus, they argue that practitioners are the appropriate demanding criterion would be that a theory must only
yardstick for evaluating the obviousness of management provide insight beyond that which would likely result
theory—not academics, or journalists, or Wall Street an- from the application of common sense by a savvy lay-
alysts. Shrivastava later attempted to determine ‘‘the non- person. This criterion requires that a theory provide in-
obviousness or innovativeness of research results’’ sight beyond that obtained by the ‘‘practical intelligence’’
(Shrivastava 1987, p. 79) in strategic management using (Sternberg et al. 1995) that may be applied without spe-
two independent coders (likely, academics) who were not cific experience or professional education. The ‘‘savvy
identified as having extensive practical, strategic-level layperson’’ criterion thus would not label as obvious an
business experience. Shrivastava’s (1987) evaluation may effective theory that had been widely diffused throughout
have intended to determine how obvious research results the managerial community, unless that theory was also
were to academics. It did not meet the yardstick Thomas obvious to intelligent laypersons.
and Tymon (1982) suggested for judging obviousness. To
be nonobvious according to them, a theory must add some
incremental insight to practice, beyond the prescriptions Hypothesis Development
of already well-accepted or intuitively understood rules Mintzberg has argued that ‘‘it is the power of (a man-
of thumb. We agree that this is likely an appropriate test ager’s) mental models that determines to a great extent
for whether or not an organization theory could matter in the effectiveness of his decisions’’ (Mintzberg 1973, p.
the managerial world. 183). These causal models are indispensable to the man-
Under Thomas and Tymon’s (1982) practitioner crite- agerial judgments that produce strategic choices (Priem
rion, however, two other conditions are necessary for a and Harrison 1994). Managers’ individual backgrounds,
theory to be labeled as obvious. First, the theory must including their experience and education, can be expected
‘‘work’’ as a reasonably accurate representation of how to influence their understandings of important causal re-
the world operates. The theory must be functional as a lationships (i.e., their cause maps) and their choices
‘‘structural analogue of the world’’ (Johnson-Laird 1983, (Hambrick and Mason 1984). This leads to several ques-
p. 165). Thus, fads, fashion, and ideological ‘‘eras’’ in tions. Might some organization theories be apparent to
management theory (e.g., Abrahamson 1991, 1997; executives from their practical experience, even with no
Barley and Kunda 1992) are conceptually different from formal education in the theories? Is formal business edu-
obviousness. It is not necessary that management ap- cation also required before a theory may appear obvious?
proaches are effective for them to be widely adopted and Is formal business education alone enough? Alternately,
labeled as fads, etc.—the only requirement is popularity can even ‘‘casual observers,’’ with neither business ex-
(Abrahamson 1997). Indeed, untested theories offered by perience nor business education, simply intuit organiza-
management ‘‘gurus’’ may achieve popularity because tion theories through practical intelligence? That is, are
they reflect managerial values or identify managers as the causal relationships of management theory so obvious

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as to be apparent to nearly everyone? In this section we Liberal Education


briefly examine how an audience’s experience and edu- Liberal education, with its emphasis on ‘‘learning to
cation may influence their perceptions of what is obvious. learn,’’ could also be a factor. Useem (1986), for exam-
ple, reviewed longitudinal studies at AT&T and at Chase
Business Experience bank that compared career progressions of liberal arts
It may be that only highly experienced practitioners find graduates and business school graduates. Although busi-
some management theories obvious. In Gordon et al.’s ness school graduates had a strong advantage in obtaining
(1978) study, for example, managers with more business desirable entry level corporate positions, liberal arts
experience were better able to predict research findings graduates showed an increasing advantage in penetrating
than were those with less. Managerial experience also has higher positions later in their careers. Thus, it is at least
been related directly to firm performance (e.g., Gupta and possible that general as well as professional education
Govindarajan 1984, Norburn and Birley 1988). Thus, one may provide tools that help solve the complex problems
might expect that managers who throughout their careers common in organizational settings (e.g., Mintzberg et al.
were most successful in what is likely an intense selection 1976).
process—i.e., those at the pinnacles of their organiza- The foregoing discussion allowed us to develop tran-
tions—would be the ones most likely to find organization sitive hypotheses regarding the degrees to which the
theories obvious. cause maps of different audiences are likely to match the
These top managers are said to learn about key rela- causal relationships asserted by a theory. We would ex-
tionships through their own and others’ interactions with pect the cause maps of graduating MBA students, for ex-
their environments (Daft and Weick 1984, Walsh and ample, to closely match the relationships asserted by the-
Ungson 1991). The competitive environments they en- ory, because the MBAs all recently have been exposed to
gage in, however, are often highly complex; top managers organization theories in a formal classroom setting. This
face diverse tasks and can be overloaded with frag- expectation is consistent with theory and empirical results
mented, ambiguous information (Mintzberg 1973). Their concerning learning decay (Hebb 1949). Practical expe-
retrieval of previously acquired information on relation- rience, however, may be another venue for learning about
causal relationships in the competitive environment.
ships among variables therefore may be inhibited (Estes
Business experience has been shown to be related to both
1976). Thus, top managers’ experiential knowledge of
firm performance (e.g., Norburn and Birley 1988) and the
particular relationships, although potentially helpful, may
ability to correctly predict research findings (Gordon et
be attenuated due to retrieval interference caused by
al. 1978). We therefore expect that the cause maps of
other, more recent information.
CEOs who can draw on both business experience and
(less recent) business education will match the prescrip-
Formal Business Education tions of theory more closely than will those of CEOs
Professional education may be another factor that, by in- without any formal business education. Finally, we ex-
creasing one’s familiarity with organization theories, pect the causal maps of the graduating MBAs and both
could make the theories appear obvious. Business school categories of CEOs will match organization theory more
education has been subject to both popular criticisms closely than will those of liberal arts graduate students
(e.g., Meeks 1992) and formal evaluations (Miles 1985, who lack both experience and education related to the
Porter and McKibbin 1988, Leavitt 1989). Detailed eval- theory. Thus,
uations of the knowledge outcomes of business school
education, however, are sparse. They typically involve HYPOTHESIS. Cause maps will most closely match the
studies of the success rates of graduates of specific prescriptions of organization theory for (in descending
schools in passing CPA examinations (e.g., National As- order of fit): graduating MBAs; CEOs with formal busi-
sociation of State Boards of Accountancy 1990), or stud- ness education; CEOs without formal business education;
ies of salaries and salary progression over time for MBA and liberal arts graduate students.
graduates (Olson and Frieze 1989). These studies do not Even graduating MBAs’ cause maps, however, will not
directly assess graduates’ knowledge of important causal perfectly replicate theory; some divergence is likely due
relationships in the business environment. Nevertheless, to: variations among individuals in learning styles and
recent exposure to organizational theory in business abilities, and variations in quality of the classes attended.
school can be expected to increase near term familiarity. Within-group variation can be expected to produce some
One’s facility with the theories, however, will likely fade divergence from theory in the cause maps of other audi-
as time passes (Hebb 1949). ences as well, even if the other audiences are well versed

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in the theory’s causal assertions. Thus, comparing cause that incorporated all factors of the theory. This produced
maps directly to theory may be too strong a test of un- part worth utilities (i.e., beta weights) for each participant
derstanding. Rather, the MBAs’ cause maps may repre- that represented that participant’s perceived utilities for
sent a more appropriate benchmark against which other the theory’s factors and their interactions (Hair et al.
groups’ understandings of a theory’s causal assertions can 1987, Louviere 1988). These weightings, representing
be compared. participant cause maps (Johnson-Laird 1983, Louviere
The degrees of obviousness that differing audiences 1988, Priem and Harrison 1994), were then tested for the
might perceive when presented with a management the- between group differences predicted in the hypothesis.
ory can be related to the correspondence of their a priori Several characteristics made our CEO sample particu-
cause maps to the assertions of the theory. Those whose larly appropriate for the current study. First, we contacted
unprompted cause maps most closely replicate the causal the entire population of 106 firms within the researchers’
relationships asserted by the theory, for example, are most geographic reach that fit pre-established requirements.
likely to exclaim ‘‘that’s obvious!’’ because the manage- Thirty percent of these firms’ CEOs fully completed the
ment theory confirms their expectations (Weick 1989). task and other activities. There was no evidence of non-
Those whose cause maps depart from the theory’s asser- response bias (e.g., for categorical data on annual sales:
tions are more likely to exclaim, ‘‘that’s interesting!’’ X2 ⳱ 2.02, p ⳱ 0.37, n ⳱ 98; # of employees: X2 ⳱
(Davis 1971) or even ‘‘that’s absurd!’’ (Weick 1989), be- 2.28, p ⳱ 0.52, n ⳱ 105). Second, the pre-established
cause their expectations are repudiated. Thus, one may requirements mandated that any firm included in the sam-
evaluate the degree to which a theory is likely to be found ple must be an autonomous, nondiversified manufactur-
obvious through analysis of an audience’s a priori knowl- ing firm with at least 100 employees. The autonomy re-
edge of the theory’s causal relationships. It may be, for quirement ensured that each CEO was independent of any
example, that the cause maps of the CEOs without busi- influence from a parent firm, and was uniquely respon-
ness school education in our study match the theory being sible for organization design and performance. The non-
tested as closely as do those of graduating MBAs. That diversified requirement ensured that each CEO was fac-
theory would then add little to the ‘‘commonsense ing a single competitive environment, rather than the
theory’’ currently employed by practitioners. Thus, by multiple environments faced by diversified firms. The
Thomas and Tymon’s (1982) definition the theory may ‘‘greater than 100 employees’’ requirement ensured that
be classified as obvious, at least to those with very high-
each CEO was managing a consequential hierarchy. Fi-
level business experience. If, however, the liberal arts
nally, the earlier research project had shown these CEOs’
graduate students also produce cause maps that match the
cause maps to be related to firm performance. Specifi-
theory as well as do those of the MBAs, the theory may
cally, the degree to which each CEO’s cause map mim-
be called obvious by nearly any standard.
icked business-level contingency theory was found to be
positively associated with returns on sales and assets.
Method These return measures were adjusted by comparison to
Sample and Procedures similar firms over the previous five years, and were re-
Our research design permitted comparisons of cause ported by two other top executives and the CEO for 25
maps between four types of individuals: (1) CEOs with firms, and by one other top executive and the CEO for
both formal business education and top executive expe- eight firms. Thus, for our sample of manufacturing firms,
rience, (2) CEOs with top executive experience but with- business-level contingency theory works; there is no need
out formal business education, (3) MBA students ap- to generalize from another, potentially confounding con-
proaching the end of their business education but without text. It was particularly important to start with such a
top executive experience, and (4) liberal arts graduate stu- sample in the current research, so that any finding of non-
dents, lacking both business education and top executive obviousness could not be attributed to executives cor-
experience. Business-level contingency theory (e.g., rectly ignoring a nonworking, ‘‘bad’’ theory. This is why
Miller 1988) was selected for ‘‘obviousness testing’’ in we chose to use an older, more established theory rather
this study because it is widely recognized as a well- than a newer one that may have been relatively untested.
established and influential organization theory (Miner Thirty-three CEOs completed the research tasks. All
1984), and because it has been shown to be effective for but two of the 33 firms were privately held. Mean size
this particular sample of CEOs and firms in a larger re- was 354 employees. The firms manufactured a variety of
search project (Priem 1994). Study participants com- products, including ladies’ dresses, car wash equipment,
pleted two 2 ⳯ 2 ⳯ 2 full factorial metric conjoint tasks electronic components for the space shuttle, and plastic

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picnic ware. These manufacturing firms are likely fairly reasons. First, the theory is widely known in the academic
representative of others in the U.S. that meet our selection community. Miller et al. (1982), for example, is one of
requirements, since our area is geographically and eco- the ten most cited papers published in the Academy of
nomically similar to most others. The average CEO was Management Journal (Mowday 1997). Second, the the-
47.9 years old and had been with his (all were males) firm ory has been subjected to numerous tests with single-
for 13.4 years, 7.3 years as chief executive. Of the 33 19 business manufacturers such as those in our sample (e.g.,
held business degrees (mostly undergraduate) and 14 did Kim and Lim 1988, Miller 1988, Govindarajan 1988,
not. The graduate student respondents were attending a Miller et al. 1988). Third, the theory should be highly
large state university, in the mid-low range of prestige, salient for those, like the sample CEOs, currently in-
located in a large metropolitan area. The business stu- volved in decision making at the top of single business
dents were nearing the end of the ‘‘capstone’’ MBA busi- firms. Finally, because each CEO in our sample heads a
ness policy class (N ⳱ 32, average age ⳱ 29.8 years nondiversified firm, these CEOs may not have actual
old). They had been exposed during that class, and per-
business experience relating to corporate-level contin-
haps during their electives, to business-level contingency
gency theories (e.g., Chandler 1962).
theory. No special efforts were made to teach contingency
Early business-level contingency theories argued that
theory in the class, however, since neither they nor their
professor were aware of the nature of the study, nor that high performance is associated with the congruence of:
they would be involved. The nonbusiness students were organizational structure and the external environment
in the final two weeks of graduate-level English and so- (e.g., Burns and Stalker 1961, Lawrence and Lorsch
ciology classes (N ⳱ 27, average age ⳱ 31.8). Some of 1967, Thompson 1967); or structure and business-level
the sociology students may have taken an elective in com- strategy (e.g., Miller 1986, Porter 1980); or environment
plex organizations, which would have made them more and strategy (e.g., Miller 1988, White 1986). The more
likely to be acquainted with organization theories. Again, recent configural approaches (e.g., Miller and Mintzberg
however, no special efforts were made to familiarize 1984) extend contingency theory by suggesting that si-
these students with organization theory. multaneous alignment of business-level strategy (Porter
Neither the CEOs, nor the graduate students, nor the 1980), structure (Burns and Stalker 1961), and the exter-
students’ professors were aware of the nature of the re- nal environment (Duncan 1972) is required for superior
search tasks prior to the time at which they were per- performance (Lenz 1980; Miller 1987, 1988; Miller et al.
formed. Each CEO performed the business-level align- 1988).
ment tasks in his office, in the presence of a researcher. Specifically, differentiation strategies are said to be
The graduate student respondents completed the tasks in more likely to create sustainable competitive advantage
the presence of a researcher in co-acting groups, where in dynamic environments (Kim and Lim 1988, Miller
they worked independently on the task but in the physical 1988). Implementation of differentiation strategies re-
presence of other people (i.e., the class). Participation was quires structures with decentralized decision making,
voluntary for all respondents. All were guaranteed ano- relatively few formal controls, and little specialization of
nymity, and were debriefed following the task. activities (Porter 1980). Further, dynamism in the envi-
ronment encourages the development of such organic
Task Content
structures (Burns and Stalker 1961, Child 1975, Tung
Contingency theories have long been influential in strat-
egy and organization studies (Drazen and Van de Ven 1979). Conversely, the efficiency-based competitive ad-
1985, Hofer 1975, Schoonhoven 1981, Tosi and Slocum vantages following from cost leadership strategies are
1984, Venkatraman 1989). In Miner’s (1984) study of more likely to be achieved in stable environments. Cost
established organization theories, for example, the con- leadership strategies are most effectively implemented
tingency theory of organization (e.g., Lawrence and through more mechanistic structures that feature speciali-
Lorsch 1967) was the theory nominated most frequently zation of activities, formal controls, and centralized de-
by scholars as important (i.e., useful, practical, research cision making. And, stability in the environment encour-
generating) from among 110 distinct theories. Given this ages such mechanistic structures. Thus, the prescribed
importance, contingency theory may be particularly ap- business-level strategy-structure-environment alignments
propriate for an initial test of the obviousness of an im- are differentiation-organic-dynamic and cost leadership-
portant organizational theory. We specifically selected mechanistic-stable.
business-level contingency theory (e.g., Miller 1988) for Each respondent was provided with written definitions
this research for a number of practical and theoretical of: (1) low cost and differentiation strategies (Porter

ORGANIZATION SCIENCE /Vol. 11, No. 5, September–October 2000 515


RICHARD L. PRIEM AND JOSEPH ROSENSTEIN Organization Theory

1980, pp. 35 and 37); (2) mechanistic and organic struc- strategies very highly when they are aligned with dy-
tures (Burns and Stalker 1961), represented to the re- namic environments, but very low when they are aligned
spondent as ‘‘Type A’’ and ‘‘Type B’’ structures respec- with stable environments. The same respondent may sim-
tively to avoid any negative connotations associated with ilarly rate low cost strategies very highly when they are
the word ‘‘mechanistic’’; and (3) dynamic and stable ex- aligned with stable environments, but quite low when
ternal environments (Duncan 1972). Then the respondent they are aligned with dynamic environments. Regressing
was given a task sheet presenting all eight possible com- performance ratings on strategy and environment would
binations of these variables. Instructions asked each re- then indicate no main effect for strategy or structure, but
spondent to assign 100 points to his or her most-preferred a strong strategy-structure interaction in this respondent’s
(based on likelihood of success) combination(s), and then causal map. This mode of thinking is contingent, and the
to rate each of the remaining possible combinations of contingency is consistent with the prescriptions of busi-
these variables on a 100-point scale relative to the pre- ness-level contingency theory.
ferred combination(s), all other factors being equal. Each Statistical Methods of Analysis
respondent performed the task twice. The order of pre- Metric conjoint analysis (Louviere 1988, Priem and
sentation of the possible combinations, and of attributes Harrison 1994) was used to evaluate the cause maps re-
within combinations, was varied both within and between vealed by the respondents in completing the two 2 ⳯ 2
respondents. A background questionnaire was used as a ⳯ 2 full factorial rating tasks. A multiple regression was
filler task between replications. The tasks were completed computed for each replication of the conjoint task by
sequentially, with the respondent not allowed to look each respondent, regressing performance ratings on strat-
back and review earlier responses when completing the egy, structure, environment, and the double and triple in-
second task. This permitted evaluation of the consistency teractions of the full model. Orthogonal effect codes were
of each respondent’s ratings while controlling for order used in this analysis to establish the baseline relationships
effects and reducing carryover effects, although the filler posited by business-level contingency theory. Differen-
task and ‘‘no look back’’ rule likely resulted in more tiation strategy, organic structure, and dynamic environ-
noise in the data. The definitions and a sample task sheet ment were each coded 1; low cost, mechanistic, and stable
are provided in the appendix. In every case the researcher were each coded ⳮ1. The theory-based regression model
was present throughout the task to answer any respondent for the metric conjoint task was therefore: Y ⳱ x1A Ⳮ
questions. x2B Ⳮ x3C Ⳮ x4AB Ⳮ x5AC Ⳮ x6BC Ⳮ x7ABC, where
Thus, respondents were asked to rate, based on the like- Y ⳱ the performance ratings (0–100), A ⳱ strategy (1,
lihood of success, otherwise equivalent manufacturing ⳮ1), B ⳱ structure (1, ⳮ1), and C ⳱ environment
firms that varied only on attributes of strategy, structure, (1, ⳮ1).
and environment. This approach allows identification of The mean parameters (i.e., regression coefficients)
the cause map used by each respondent in arriving at the from the two regressions from each respondent represent
ratings, and ultimately allows comparison of these struc- interval-scale estimates of that respondent’s performance
ratings (i.e., utilities) for each of the factors and their in-
tures with the alignment-performance relationships of
teractions (see Louviere 1988 for details). For example,
business-level contingency theory. A nonstatistical ex-
a large positive parameter for a main effect in a respon-
ample may clarify this process.
dent’s cause map represents a general preference favoring
A given respondent may, for example, consistently rate differentiation for strategy, organic for structure, or dy-
all those alignments that include differentiation strategies namic for environment. These mean parameters expose
as much higher performing than alignments which in- the cause maps used by the respondents in making their
clude cost leadership strategies. This would indicate a ratings. For the case of business-level contingency theory,
strong, universal preference for differentiation strategies the parameters associated with the double interactions are
by the respondent. Regressing the respondent’s perfor- key. A respondent whose regression model shows large,
mance ratings on strategy would then indicate a strong positive parameters for each of the interaction terms has
main effect favoring differentiation in this respondent’s revealed a cause map that matches the prescriptions of
causal map. Such a mode of thinking is inconsistent with business-level contingency theory. A respondent whose
the prescriptions of contingency theory; this respondent regression model shows large, negative parameters for
always exhibits a strong preference for differentiation each of the interaction terms, on the other hand, has re-
strategies, irrespective of the level of environmental dy- vealed a cause map that, while contingent, is directly op-
namism or the type of organization structure. posite to the prescriptions of business-level contingency
By contrast another respondent may rate differentiation theory.

516 ORGANIZATION SCIENCE /Vol. 11, No. 5, September–October 2000


RICHARD L. PRIEM AND JOSEPH ROSENSTEIN Organization Theory

Results These mean comparisons of the relative strengths of


ANOVAs were performed to evaluate differences in contingent thinking among respondent types, however,
mean regression parameters (i.e., preference strengths provide little insight concerning possible differences in
from the task) for the interaction terms of the cause maps profiles of the cause maps across the types of respondents.
across the four types of respondents. Group (CEO with For example, even though two types of respondents may
business education, CEO without business education, each display contingent cause maps that match business-
MBA, liberal arts graduate students) was the independent level contingency theory, one type may place greatest em-
variable, and the parameters for the strategy-structure, phasis on strategy-structure relationships while the other
strategy-environment, and structure-environment inter- may feel structure-environment relationships are most
actions, respectively, were the dependent variables. These important to manufacturing firm performance. Therefore,
double interaction parameters are key in this study be- discriminant analysis was employed to further evaluate
cause, when they are positive and significant, they rep- the degree to which different aspects of strategy-
resent thinking that matches the alignment-performance structure-environment-performance relationships may re-
relationships of business-level contingency theory. Each ceive differing emphases across types of respondents. The
ANOVA was significant (F3,88 ⳱ 13.1, p ⬍ 0.0001; F3,88 dependent variable was the categorical group variable,
⳱ 3.0, p ⬍ 0.05; and F3,88 ⳱ 8.3, p ⬍ 0.0001, respec- and the independent variables were the respondents’
tively), and subsequent Scheffé tests showed similar pat- mean parameters from the regression model specified
terns of differences across respondent types for each in- above. The mean regression parameters of the cause maps
teraction. Given the significant intercorrelations among were quite effective in discriminating among the four
the strategy-structure, strategy-environment, and struc- types of respondents, with successful classification per-
ture-environment parameters (all p ⬍ 0.001 or better), centages ranging from 71.5% to 84%. The test of ho-
and the similar differences across respondent types, these mogeneity of the within covariance matrices, however,
variables were summed to produce a composite ‘‘contin- indicated that the cause map profiles were not consistent
gency thinking’’ variable. This variable reflects the de- across the respondent types (X2 ⳱ 196.6, p ⬍ 0.0001).
gree to which the cause map of each respondent matches Discriminant analyses were then performed for each pos-
the overall alignment-performance relationships specified
sible pair of respondent types. In all cases, the null hy-
by business-level contingency theory. Group means and
pothesis of homogeneity of cause map profiles was re-
their differences for this composite contingency thinking
jected at more than p ⳱ 0.01.
variable are shown in Table 1. These results indicate only
partial support for our transitive hypothesis. The MBA This result indicates that the strengths or the forms of
respondents employed much stronger contingent thinking the relationships among business-level strategy, structure,
during the tasks than did the other respondent groups, and environment, and performance are seen differently
the MBAs’ cause maps matched the prescriptions of busi- among all of the different types of respondents. In order
ness-level contingency theory, as predicted. No differ- to further explore this interesting finding, the strengths of
ences were found in cause maps across the other respon- the intercorrelations among the double interaction param-
dent types. eters in the cause maps within each respondent type were
compared across respondent types using Fisher’s Z trans-
formation (Cohen 1988). For example, the cause maps of
Table 1 Contingency Parameter Means and Standard the CEOs with business degrees showed a significant cor-
Deviations relation between the strategy ⳯ structure parameter and
the structure ⳯ environment parameter (r ⳱ 0.61, p ⬍
CEOs CEOs Liberal 0.01). Thus, those CEOs with business degrees whose
with without Arts cause maps had a large strategy ⳯ structure parameter
Business Business Graduate (matching contingency theory) also had a large structure
Degree Degree MBAs Students ⳯ environment parameter (also matching contingency
theory). These CEOs tended to focus on structure contin-
Composite (Mean) 9.5 7.3 30.4* 13.0 gencies. The strength of this correlation was greater in
Contingency
the cause maps of CEOs with business degrees than it
Cognitions (s.d.) 12.7 14.2 13.3 14.8
was in the cause maps of CEOs without business degrees
Variable
or the cause maps of MBAs (r ⳱ 0.61 vs r ⳱ ⳮ0.15 vs
*p ⬍ 0.05 from all other groups, Scheffe test. The larger the mean of r ⳱ 0.03, p ⬍ 0.03 & p ⬍ 0.025, respectively, by Fisher’s
the composite contingency variable, the closer the cause map is to Z test), who focused more on other contingencies. This
the prescriptions of business-level contingency theory. difference in parameter intercorrelation strengths between

ORGANIZATION SCIENCE /Vol. 11, No. 5, September–October 2000 517


RICHARD L. PRIEM AND JOSEPH ROSENSTEIN Organization Theory

types of respondents reflects different cause map profiles posteriori. Inflated obviousness claims made in hindsight
concerning which two-way contingencies are viewed as must be overcome in any valid test. Third, management
most important to manufacturing firm success. Full re- has aspects of art as well as science (Micklethwait and
sults of these analyses are presented in Table 2. Wooldridge 1996). This suggests that practical intelli-
The Table 2 results indicate consistency of causal map gence, gained from direct or indirect experience, may
profiles (i.e., relationship emphases) within respondent contribute to success and also must be accounted for in
types, but differences across respondent types. The chief the evaluation of obviousness (Sternberg et al. 1995).
executives with business degrees, for example, are con- Fourth, managers are frequently unable to accurately de-
sistent in their use of the structure-associated interactions scribe their own cause maps (e.g., Stahl and Zimmerer
when rating the performance of strategy-structure- 1984). Thus, an individual who cannot describe business-
environment alignments; if they recognize the strategy- level contingency theory may nevertheless be effective in
structure interaction, they also tend to recognize the aligning the key variables. This suggests that tacit knowl-
structure-environment interaction. The CEOs without edge, which is known but cannot be expressed (Polyani
business degrees exhibit consistency in emphasis on the 1966), must also be accounted for in the evaluation. And,
strategy-related interactions; if these CEOs recognize the finally, the theory itself must be effective in the day-to-
strategy-structure interaction, they tend to also see the day context of the managers involved; otherwise, the the-
strategy-environment interaction. The MBA students ory is neither relevant nor involving for them and they
moderately tend to notice the environment-related inter- may, correctly, be oblivious to it.
actions. The liberal arts graduate students appear to em- Our sample of CEOs with and without business de-
ploy cognitive structures that recognize both strategy and grees, MBAs, and liberal arts graduate students provided
environment contingencies, but tend to ignore structure respondents who varied in education and experience. We
as a key contingency variable. used metric conjoint analysis to operationalize the re-
spondents’ cause maps because 1) it is effective for con-
Discussion tingent relationships such as those found in business-level
Several special challenges present themselves when one contingency theory (Priem and Harrison 1994), and 2) it
is attempting to evaluate the obviousness of an organi- decomposes actual decision processes, a posteriori, to
zational theory. First, obviousness depends on the audi- produce individuals’ cause maps (Arkes and Hammond
ence, and can be evaluated from multiple perspectives. 1986). Thus, individuals revealed their cause maps before
Thus, considerable breadth of education and experience receiving any description of the theory, thereby reducing
is necessary in a sample if one is to evaluate the degree the inflating effects of hindsight. Another advantage of
to which a theory may be obvious to one group versus this technique is that respondents actually made judg-
another. Second, individuals presented with a plausible ments rather than merely discussing how they would
theory may feign knowledge and claim obviousness a make judgments in the future or recollecting how they

TABLE 2 Correlation Differences Among Groups

CEOs with CEOs without MBAs Liberal Arts


Business Degree Business Degree n ⳱ 32 Grad Students
n ⳱ 19 n ⳱ 14 n ⳱ 27

STRA*STRU 0.16 0.84*** ⳮ.00 0.53**


with -------0.007------- -------ⳮ0.0005------- -------0.03-------
STRA*ENV

STRA*STRU 0.61** ⳮ0.15 0.03 0.19


with -------0.03-------
STRU*ENV -----------------------------------------------------------0.025-----------------------------------------------------------

STRA*ENV 0.11 0.01 0.32 0.64***


with ---------------------------------------- -0.04-----------------------------------------
STRU*ENV ------------------------------------------------------------------------0.03------------------------------------------------------------------------

**p ⬍ 0.01, ***p ⬍ 0.001. Dashed lines with p values represent pairs of correlations with significantly different effect sizes.

518 ORGANIZATION SCIENCE /Vol. 11, No. 5, September–October 2000


RICHARD L. PRIEM AND JOSEPH ROSENSTEIN Organization Theory

have made judgments in the past (Golden 1992, Priem (1982) more rigorous criterion of adding insight to current
and Harrison 1994). By having respondents actually per- practice.
form a salient task, a posteriori decomposition techniques This finding has a number of implications. For practi-
can better capture both the ‘‘action’’ element of manage- tioners, business level contingency theory ‘‘works,’’ but
ment (Argyris and Schon 1974, Drucker 1995, Eccles and is not widely known or applied by those (i.e., the CEOs
Nohria 1992) and the contributions of practical intelli- of single-business manufacturing firms) for whom the
gence and tacit knowledge. All of these otherwise would theory’s prescriptions are most salient for success. Thus,
be lost via self-report methods. Finally, the task content— application of the theory by a manufacturing firm CEO
rating alignments of strategy, structure, and environ- would likely result in competitive advantage. For re-
ment—was particularly salient for two reasons. First, the searchers, this one theory works and is not obvious to the
alignment of these variables at the business strategy level practitioner audience. Expanded efforts to overcome
has been found to be related to firm performance (e.g., practitioner disregard of this theory appear warranted.
Kim and Lim 1988, Miller 1988). And, second, the degree These efforts may best concentrate on promoting the the-
to which the cause maps of these CEOs mimic contin- ory and further examining its relevance. Disregard would
gency theory has been found to be related to the perfor- still be justified if practitioners cannot effectively manip-
mance of their firms, suggesting that the theory ‘‘works’’ ulate the theory’s key variables (Thomas and Tymon
within the day-to-day context of these specific managers 1982). Also for researchers, this finding provides a small
(Priem 1994). bit of evidence about the convergence (or lack thereof)
Our study examined how cause maps incorporating of academic and practitioner viewpoints. Barley, Meyer,
business-level contingency variables differed across types and Gash (1988) found that academic writings on orga-
of respondents who either have or do not have formal nizational culture ‘‘moved toward’’ practitioners’ con-
education in business administration and experience as cerns over a ten year period. Thus, practice influenced
the top decision maker in a profit-seeking manufacturing theory. Our results suggest that, at least for business level
firm. We also compared these respondents’ revealed contingency theory, academic concerns and practitioner
cause maps with the causal relationships specified in concerns have not yet converged. Thus for society, our
business-level contingency theory. One might expect that finding suggests that business-level contingency theory
individuals with such diverse backgrounds would per- sustains the potential to influence practice, and can indeed
ceive relationships differently, and this indeed was found contribute more to the world of affairs than it has to date.
in our study. The MBA respondents’ revealed cause maps Any conclusions about the potential role of organization
were most closely in accordance with the contingent re- studies in society, however, must await similar tests of
lationships specified by business-level contingency the- many organization theories.
ory. This result is not surprising, given recency effects The profiles of the respondents’ cause maps for solving
and the emphasis placed on contingency theories in the alignment problem in our study differed among all
nearly all MBA programs. No differences were found types of respondents. Each respondent type regarded dif-
among CEOs with business degrees, CEOs without busi- ferent contingencies as more or less important. The CEOs
ness degrees, and liberal arts graduate students; all exhib- with business degrees gave their greatest attention to the
ited cause maps that were somewhat consistent with the structure contingencies emphasized in earlier literature
prescriptions of contingency theory, but to a significantly (e.g., Burns and Stalker 1961). This may be because many
lesser degree than did those of the MBAs. of these CEOs received their business degrees during the
Thus, educated individuals who are both naive to the 60s, 70s, and 80s, whereas the MBAs and liberal arts
theory and inexperienced in business leadership did not students were 90s graduates. The CEOs without business
fully employ the relationships of business-level contin- degrees paid most attention to the strategy contingencies.
gency theory when rating strategy-structure-environment This emphasis may be consistent with an ‘‘action’’ ori-
alignments. The theory therefore is clearly not obvious entation. The MBAs emphasized contingencies associ-
under the ‘‘savvy layperson’’ criterion. Further, experi- ated with the environment, consistent with much recent
enced business leaders, whether formally educated in MBA education (e.g., Pfeffer and Salancik 1978, Porter
business or not, also failed to fully use the relationships 1980). The liberal arts graduate students attended to both
of business-level contingency theory, even when under- the strategy and environment contingencies at the ex-
standing of these relationships has been shown previously pense of structure.
to be associated with profitability. The theory is therefore These results indicate that, although some rather large
clearly not obvious even under Thomas and Tymon’s differences in contingent thinking were found between

ORGANIZATION SCIENCE /Vol. 11, No. 5, September–October 2000 519


RICHARD L. PRIEM AND JOSEPH ROSENSTEIN Organization Theory

the MBAs and the CEOs (with and without business de- task examined each contingency factor at only two levels
grees), and between the MBAs and liberal arts graduate (i.e., 2 ⳯ 2 ⳯ 2 full factorial). It would have been pref-
students, other differences in cause maps may be rela- erable to examine more levels per factor so curvilinear
tively subtle. Each type of respondent considered dif- effects could have been evaluated. To increase our model
ferent contingencies to be more (or less) important to to even 3 ⳯ 3 ⳯ 3 full factorial, however, would have
firm performance when completing the business-level required the respondents to rate twenty-seven alignments
alignment-rating task. Future research in managerial cog- for each replication rather than eight. We judged this to
nitions may now be better able to anticipate subtle dif- be too great a demand on the CEOs’ time, and we were
ferences in cause map profiles, and may begin to clarify afraid it would have reduced the CEOs’ involvement in
their antecedents and consequences for different groups our tasks. Future research, particularly on micro theories
and settings. where potential respondents are more plentiful, may be
Our study has several limitations that must be noted. able to incorporate expanded models.
First, the demands of field interviews involving members Our research is further limited because it examined the
of elite groups such as CEOs (e.g., Hertz and Imber obviousness of only one, albeit an important and much-
1995), and the requirement that each CEO’s firm meet researched, organization theory, and did so for only one
pre-specified selection requirements, combined to limit organization theory constituency—CEO practitioners. It
sample size. The power of our directional tests to detect well could be that business-level contingency theory is
mean differences representing medium or large effect the only organization theory that is not obvious to CEOs.
sizes (i.e., d ⳱ 0.5 or d ⳱ 0.8) with alpha ⳱ 0.05 was We presently cannot know. Our work, however, presents
0.53 and 0.86, respectively. The power of our tests to a method suitable for future research evaluating the dif-
detect correlation differences through Fisher’s Z trans- fusion of other complex contingency theories, either
formations representing large effect sizes (i.e., q ⳱ 0.50) macro or micro, among appropriate practitioner groups.
with two-tailed alpha ⳱ 0.1 was only 0.49 (Cohen Moreover, the approach incorporates aspects of practical
1988—differences in correlations must be very large be- intelligence and tacit knowledge that are lost in other
fore they achieve statistical significance). Thus, some re- techniques. Metric conjoint analysis may be particularly
lationships with small-to-medium effect sizes in our sam- suited for evaluating the diffusion and/or obviousness of
ple likely remained undetected due to the relatively low micro organization theories. Practitioner disregard is just
power of our tests. Fortunately, the low power had little as large a problem for micro theories as it is for macro
affect on our conclusions, since the hypotheses all were theories (perhaps even more so), but there are fewer prob-
tested through patterns of significant effects rather than lems with access to appropriate respondents. More ad-
absences of significant effects. vanced conjoint designs may therefore be used with mi-
The relationships that were identified represent very cro theories because sample sizes can be larger. Still, the
large effects (Cohen 1988). This could be expected when technique also may be promising in future macro research
compared to effect sizes from most field studies because as a tool for evaluating relationships among top manag-
our study used a number of features that tend to increase ers’ cause maps, the designs of their organizations, and
effect sizes. These included a full factorial experimental the performance of their firms. There are many untapped
design incorporating behavioral simulation, a strong base research opportunities for testing the usage and obvious-
in previously tested theory, within-respondent replica- ness of organization theories.
tion, and careful sampling controls that helped ensure a
highly salient task (e.g., Gist et al. 1998, Mone et al.
1996). The large effect sizes suggest that the relationships
we found are likely to be practically, as well as statisti- Conclusion
cally, significant. Moreover, given the sparse empirical Business-level contingency theory was not obvious to ei-
literature comparing managers’ cause maps, it may be ther educated individuals naive to the theory or to expe-
that cognitive effects are generally stronger than those rienced, high-level practitioners; with respect to business-
typical in management field research. This, however, re- level contingency theory, the MBAs in our sample
mains an empirical question. outperformed both the CEOs and the liberal arts graduate
A second limitation is that conjoint tasks are both in- students. This result leads one to conclude that, at least
volving and time-consuming for respondents. The time for the one organization theory we tested, there should be
required for task completion limits the number and com- a prescriptive role for organization studies in the world
plexity of theories that may be evaluated with a particular of affairs. The view of organization scholars as simply
sample. Our research is limited, for example, because our chroniclers of businesspersons’ activities is unwarranted.

520 ORGANIZATION SCIENCE /Vol. 11, No. 5, September–October 2000


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This result also leads one to speculate as to why or- Appendix A


ganization theories are so frequently criticized as obvi- Definitions
ous—by both practitioners and academics—and why the OVERALL COST LEADERSHIP STRATEGY: Low cost relative to
organizational studies field seems to have so little influ- competitors is the theme running through this strategy, although qual-
ence on practitioners. It may be that business level con- ity, service and other areas cannot be ignored. The Cost Leadership
tingency is the only nonobvious organization theory. Or, strategy typically involves:
it may be that statements of most organization theories • tight cost and overhead control
are sufficiently plausible to appear obvious post hoc. • aggressive construction of efficient-scale facilities
Statements directly counter to the theories, however, may • cost minimization in areas like R&D, advertising, service and sales
also appear plausible, and therefore equally ‘‘obvious’’ • much managerial attention to cost control.
(Vecchio 1987). Academics, often long removed from DIFFERENTIATION STRATEGY: The theme of this strategy is
practice, may lack confidence and forcefulness when pre- the creation of products or services that are perceived industry wide as
senting theories to practitioners. Alternately, some prac- being unique. The firm cannot ignore costs in attempting to differen-
titioners may feign knowledge by commenting on ‘‘ob- tiate their offerings from those of other firms, but cost minimization is
viousness’’ when faced with a new, plausible academic not the primary strategic target. Approaches to differentiating can take
theory. many forms, including:
• product design or brand image
One implication is that academics would be well
• technology used, product features
served, when presenting a theory to practitioners or stu-
• customer service, dealer network, or other dimensions
dents, by first asking the audience what actions they • ideally, uniqueness may be achieved along several dimensions.
would take under various scenarios common to the the-
ory. The answers may likely forestall post hoc claims of ‘‘TYPE A’’ ORGANIZATION STRUCTURE: This structure is
obviousness. Another implication is that academics may characterized by the use of many formal rules, programs and proce-
dures. Typically:
be wise to increase efforts to disseminate their theories
• coordination is achieved through task standardization
among practitioners. Our finding that business-level con- • work is integrated through adherence to procedures and plans
tingency theory is unfamiliar to practitioners suggests that • communication is primarily vertical, up and down the hierarchy
Hambrick’s (1994) call for increased self-promotion by • decision making authority is centralized in the hands of top man-
academics was justified. Yet another implication is that agers
research itself can be a multifaceted tool. Academic re-
‘‘TYPE B’’ ORGANIZATION STRUCTURE: This structure is
search—used most often to determine the efficacy of the-
nearly the opposite of the Type A structure, with few rules and standard
ories—can also help to determine whether or not practi- procedures. Typically:
tioners actually make use of theories that have been found • coordination is achieved through frequent, face-to-face meetings
to be effective. A compelling case can be made against between, for example, R&D, marketing, and production representatives
practitioner disregard when it is shown that managers are • work is integrated via mutual adjustments between departments
not applying useful theories. • communication is often lateral, with frequent use of committees
Micklethwait and Wooldridge commented that ‘‘In • decision making is decentralized in the hands of lower-level man-
truth, many of our most esteemed and successful busi- agers.
nessmen seem to manage instinctively, and without hav- DYNAMIC ENVIRONMENTS: Are characterized by large
ing been particularly influenced by a formal study of the amounts of rapid and unpredictable change. Typically:
discipline’’ (Micklethwait and Wooldridge 1996, p. 165). • the rate of product obsolescence is high
They nevertheless argued that the ‘‘obviousness’’ criti- • product demand and customer tastes are nearly unpredictable
cism of management theory is less accurate than the crit- • marketing practices and modes of production must change fre-
ics avow. Our results suggest that relatively little appears quently
• the actions of competitors are extremely difficult to predict.
obvious to practitioners about business-level contingency
theory when there is no a priori statement of the theory. STABLE ENVIRONMENTS: Are characterized by relatively slow
Manufacturing firm managers who seek out information and predictable change. Typically:
on the theory, master it, and execute well will likely • the rate of product obsolescence is slow
profit. • product demand and customer tastes are fairly easy to forecast
• marketing practices and modes of production change only rarely
• the actions of competitors are fairly easy to predict.
Acknowledgments
The authors thank Greg Dess, Dave Harrison, and Dan Worrell for Strategy-Structure-Environment Preferences: Task One
helpful comments. An earlier version of this paper was presented at Please refer back to the Definitions presented previously as you review
the 1992 Academy of Management meetings, Las Vegas, Nevada. the strategy-structure-environment combinations represented below.

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Accepted by James Walsh; received May 21, 1999.

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