Daniel A. McFarland and Charles J.

Gomez

Organizational
Analysis
Acknowledgements

The material presented in this textbook consists of lecture notes that agglomerated into
their present form after nearly a decade of teaching organizational analysis at Stanford Uni-
versity. If there are positive features of the text and the course, then we think it fair to attrib-
ute such accolades to the scholars we heavily draw upon. In particular, the theoretical
work of Dick Scott, Graham Allison, Herbert Simon, James G. March, John Kingdon, John
Seely Brown, Paul Duguid, Joanne Martin, Deborah Meyerson, Gideon Kunda, Jeffrey Pfef-
fer, Gerry Salancik, John Padgett, Mark Granovetter, Paul Dimaggio, Woody Powell, Arthur
Stinchcombe, Michael Hannan, John Freeman and Glenn Carroll (and many more!) have all
been an inspiration to us and we have relied heavily on their work and its insights. Special
thanks to Narasimha D. Rao for permission to adapt his unpublished work into the case pre-
sented here. For further material, see Rao, Narasimha D and Daniel McFarland. 2006. “Inde-
pendent Regulators -The Case of the Indian Electricity Regulator.” Stanford School of Edu-
cation Case, 2006-10. Finally, a special thanks to Dan Newark for all of his help with editing
this text. We encourage all the readers of this text to go out and study these authors’ pri-
mary works and to take their classes wherever and whenever possible.

DM and CG

March 2014.

Note: This text was edited again in spring 2016.

i
Copyright Notice

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been made and copyright clearances obtained prior to publication of this work.  If you find
any errors and copyright concerns please contact the lead author. We will make special
efforts to correct errors and address concerns as quickly as possible. Similarly, if you
have any comments, or would like to request permission to use this work or a part of it,
please contact the lead author (mcfarland@stanford.edu).  And thank you for your interest
in Organizational Analysis!

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ii
1
Introduction to
Organizational Analysis

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Organizational Analysis goal-oriented. And then in cases that are not or-
ganizations, we see all these features no longer ap-
In this chapter, you will be introduced to the con- ply.
cept of an organization. In so doing, it will be-
come clear that organizations are everywhere and Examples Qualities
come in many different forms. Their ubiquity
Companies, Roles, rules,
means that many pressing social problems are or-
schools, families goals, recurring
ganizational in nature. Their variability and com- Organizations
and voluntary behaviors, clear
plexity require study. And this is why we need associations boundaries.
courses on organizations – all so we develop a bet-
ter understanding of the world we live in and how Street gangs,
Less clear roles,
to better manage it. Ambiguous friendship
rules, and goals;
porous
Cases groups, social
boundaries and
movements
What Is and Is Not an Organization? fluid participants.
No roles, rules,
Let us begin with our preconceptions and un- Random
goals, pattern of
derstandings. What is an organization? What is Not collections of
recurrence, or
not an organization? When most of us consider Organizations persons, isolated boundary.
organizations, we think of hospitals, schools, busi- individuals
nesses, stores, companies and factories. But what
about families, voluntary associations, and even Table 1.1 Organization as Concept
street gangs? What qualities make something an
organization or not?
One of the most frequently cited writers has
Varieties of Organizations
been Richard Scott, whose work we will draw on
heavily from time to time. Scott defines organiza-
tions this way: “Organizations are conceived as Now that we have some sort of idea what is and
social structures created by individuals to support is not an organization, we can start reflecting on
the collaborative pursuit of specified goals (Scott how common and important organizations are. Or-
2003: 11).” There is a lot packed into this defini- ganizations accomplish most of what society
tion, so let’s simplify it some. What Scott means wants and needs. From socialization (in schools)
is that organizations are groups whose members to re-socialization (in prisons and mental health
coordinate their behavior in order to accomplish care facilities), from tax collection, public admini-
shared goals or to put out a product. Given this, stration, protection and soldiering, to production
let’s reconsider what is and is not an organization. and distribution of goods, service provision, preser-
At some point, we encounter cases that are vation of culture, communication, and even recrea-
unclear. Some features of the definition may be tion. Organizations are the means by which many
lacking, while other features may be present. of our collective goals are pursued and accom-
Take, for example, a social movement. Many so- plished. For example, would disaster relief or
cial movements have specified goals, but the so- schooling be possible without organizations fo-
cial structure - or pattern by which participants as- cused on these efforts?
sociate - is emergent and can change dramatically Organizations are so common that they have be-
from one event to the next. As we reach ambigu- come the medium of modern social life – we can-
ous cases like these, the key features defining an not imagine existing outside them. We live in a
organization grow unclear – they are less of a world greatly made up of formal organizations,
group, involve less coordination, and /or are less their rules, structures, goals, members, and instru-

2
mental efforts. Organizations are also collective
actors (or social entities) that take action, use re-
sources, own property and enter contracts. They
are groups that have attained “thing” status.
Organizations are everywhere and they vary
tremendously. They vary in size such that some
are huge and others are small. For example, IBM
employs hundreds of thousands of employees,
while a community youth organization may be run
out of a basement and employ only a few individu-
als. Organizations vary by market sector, whether
private industry or public sector not-for-profits.
They can even be voluntary associations like un-
ions, parent-teacher associations, and religious
groups. Their social structures also vary. Some
are hierarchical like the military and football
teams; some are centralized dictatorships like per-
haps Henry Ford and Andrew Carnegie managed
in the 1920-30’s; others have flat governance struc-
tures like consulting firms, while yet others are
horizontally differentiated into many different divi-
sions and relatively autonomous units like univer-
sity departments.
Organizations vary by their context or sur-
rounding environment. Some firms vary by the
temporal context or era in which they are in. For
example, the context for the federal government is
very different today than it was in 1790; and a
time of recession is very different for most firms
than a time of economic boon. Firms also experi-
ence regional differences reflecting different cul-
tural contexts. For example, Euro-Disney worked
very differently than California’s Disneyland and
required a different organizational model and ap-
proach for relating to the local population. In sum,
the main idea here with “environment” is that the
same organization may not have the same effect in
a different time, culture, and set of participants.
Organizations are everywhere, they are very
important to the functioning of society, and they
are incredibly diverse. They have also changed
over the last 50 years and altered the modern
world. For example: manufacturing gave way to
the service industry in the U.S.; women have be-
come half the labor force; part time subcontracting
has grown; etc. The “organizational world” we
live in is changing right underneath us.
Organizational Problems and Reform
Because organizations are everywhere and
varied, they are often a source of consternation
and social problems. All too often, our problems
are organizational ones and we want to reform the
firms we interact in. Through this course, you will
gain a better appreciation of organizational com-
plexity and the difficulties of redirecting organiza-
tions in desired directions. Sometimes coordina-
tion and contracts fall apart and need to be renego-
tiated; schools do not live up to expectations and
need reorganization; a military may be gender bi-
ased and need to change; and government regula-
tion fails to prevent corruption. Participants fre-
quently propose and implement reforms in an ef-
fort to change an organization. Many reforms fail
long before they are ever implemented. They are
either rejected outright or they are dramatically
adapted to the local context. Those that are imple-
mented often end up looking very different from
what was planned.
Much of our research focuses on educational
organizations like schools and universities, so
many of the reforms we see try to change the na-
ture of schooling. Most of these reforms fail. In
fact they fail so routinely that a teacher gave one
of us a list of 45 “failed” school reforms, adopted
in very piecemeal fashion, that went through his
school over the span of 20 years. Here is that list:
Table 1.2 “Failed” School Reform Lingo
3
 Many of these are jargoned and hard to inter-
pret, but they often target change efforts on certain
organizational features over others. For example,
some are focused on the social structure. “Lead
Teachers,” number eight, is one such attempt. The
goal of that reform is to insert an additional level
in the flat hierarchy of faculty roles. So instead of
just having faculty and then a department chair,
there is now an additional level of Lead Teacher in
between. Other reforms present a technology or
schooling process that caters to a particular goal.
For example, “Heterogeneous Grouping,” number
13, gives students an active role in their education,
and emphasizes a goal of equality. The reform
calls for group-work instruction where different
task roles are rotated (e.g., speakers, note-takers,
etc). Yet other reforms attempt to manage pres-
sures from the external environment (numbers 12
and 27).
Most of these reforms are developed and
tested in one school and then packaged and ap-
plied in many other contexts. Unfortunately, the
local environment of each new context often dif-
fers from the original testing ground. As a result,
the reform’s goals may not be valued by the local
managers, or the targeted change may disrupt
other valued tasks and missions. In addition, there
is a governance structure in place within most
schools and districts that is threatened by change
efforts (especially those with external origins)
usurping their established coordination patterns.
In short, every reform emphasizes certain rules,
roles, participants, and goals, thereby supplanting
others or shifting attention. Since organizations
are in great part complex systems, the features are
interrelated, and a change in one element can fre-
quently result in problems elsewhere.
This textbook and course will help you think
more deeply and clearly about how organizational
reforms are generated and implemented, and what
factors likely contribute to their success or failure.
Why Understanding Organizations Matters
To this point we have presented a working
definition of organizations and explained just how
common they are. Now we want to convince you
why studying organizations is so important. Learn-
ing about organizations, reflecting on how they op-
erate, and considering a variety of means by which
they can be managed is an important skill most
everyone today should develop. We live in an or-
ganizational society, and many of the problems we
confront are organizational in nature. We need to
better understand and manage organizations if we
are to evolve as a society.
This textbook attempts to provide you with
such training. It is an introductory textbook on or-
ganizations that helps you grapple with the com-
plexity of institutional life. The textbook focuses
on actual cases of non-profits, educational institu-
tions, government agencies, private firms and the
policies aimed at changing them. The material is
designed for advanced undergraduates, master’s
students, and PhD’s interested in organizations.
So let’s cut to the chase – what is the utility
of this textbook to managers, policymakers and
analysts? Why should you care? Organizations
are everywhere! You cannot change or understand
society without knowing something about organi-
zations and how they work. Unfortunately, the so-
cial reality of organizational life is pretty messy
and complex. Therefore, we need conceptual
frameworks to help us make sense of it. For exam-
ple, What should you pay attention to? What mat-
ters? What does not? Where do you begin if you
want to study and change them? This textbook of-
fers you conceptual frameworks and tools by
which to do this.
Through this textbook, you will better under-
stand the problems that organizations -- like
schools, universities, non-profits and private firms
-- confront. There are so many problems that arise
in an organization that it is hard to relate all of
them, but here we can name a few:
• Organizations confront problems of defining
objectives (goals).
• Organizations struggle to get people to show
up and perform services (tasks).
• Organizations worry about the coordination
of persons trying to accomplish these tasks,
and even how to coordinate different tasks
4
 with one another (coordination / implementa-
tion).
• There is always a concern of drawing neces-
sary resources from the environment – organ-
izational inputs like money or revenue, mate-
rials, knowledge (input).
• Then they have to worry about outputs – dis-
pensing ideas, products, and funds to the en-
vironment (output).
• There is also the concern with selecting, train-
ing, and replacing members as participants
move through the organizations (partici-
pants).
• Organizations even worry about relations out-
side the firm – ties to neighbors and fits with
the surrounding environment (environmental
fit). For example, Walmart cannot just up
and move into any neighborhood!
This textbook exposes you to a variety of actual
organizational cases and then organizational theo-
ries that help make sense of what you have ob-
served. Through this textbook you will learn why
the famous psychologist Kurt Lewin said there is
nothing more practical than a good theory. Many
of you have organizational experiences that are of
great value. Think of them as experiences from
which you have developed different accounts or
interpretations. In most cases, your accounts focus
on certain features of the organizational context,
attribute causal force to certain elements and cer-
tain actors over others, and come to certain conclu-
sions as to why things happened the way they did.
Those accounts are in many ways a folk-theory (or
proto-theory). But as we all know people have dif-
ferent accounts of the same phenomenon, and the
same explanation or way of seeing organized life
cannot be universally applied. In many regards, it
is not enough to adopt one theory or one perspec-
tive on everything: in whatever career you pick,
you will confront new problems and new situa-
tions where your previously generated explanation
does not apply or where another perspective alto-
gether is needed.
This textbook exposes you to multiple theories
of explaining and managing organizations. Why?
To help you develop accounts that are different
from the ones you already know. To help you
think in new ways about organizations so that
when you go out and study one or manage one,
you do not just draw on rules of thumb that will
likely never work in a particular case, but adopt
different ways of seeing and thinking about the or-
ganizational phenomenon in focus.
So this textbook provides you with different per-
spectives you may not have considered before.
When you look at an organization now, it may
seem unbearably complex and composed of an end-
less array of features. Through organizational theo-
ries, you will learn to listen for different kinds of
music in all the noise. Each theory picks up on dif-
ferent features of organized life and renders them
into explanatory narratives you can use. By impli-
cation, our hope is that you will learn different,
and perhaps better ways of managing.
Finally, this textbook is designed to enrich your
understanding of organizational phenomena and
your experiences within them. You will not be
given a laundry list of advice or rules of thumb
that soon go out of style or fail to apply to the
novel situations you will likely confront. There
are no silver bullet solutions here. You will be
given a set of tools – ways of seeing, understand-
ing, and managing the complex reality of organiza-
tions. We will leave it up to you, and the actual or-
ganizational cases that interest you, to discern
which tool (or combination therefrom) best ap-
plies.
Features of Organizations
We will now identify some core analytic features
of organizations. These analytic features give us a
language or terminology we can use to make sense
of firms, their various forms, and their prevailing
problems.
Elements of an Organization
Organizations are complex, so it helps to have a
concept space, a set of things, or elements to focus
on in discussing them. This requires some abstrac-
5
tion from the details of our personal experiences in
organizations. Scholars like Leavitt (1965) and
Scott (2003) identify a finite set of organizational
elements for us to consider and focus upon.
T)
EN
NM
ORGANIZATION)
RO
VI
EN
Social)Structures)
Technology)
EN
Par6cipants)
VI
RO
NM
EN
T)
Figure 1.1 Features of an Organization
(adapted from Leavitt 1965: 1145; Scott 2003:18)
In the figure, an organization is represented as hav-
ing a boundary and being placed in a wider envi-
ronment. Every organization has certain ele-
ments: it has a set of social actors or participants,
a social structure by which they interrelate, goals
or a mission, and a set of technologies or tasks it
performs in order to render inputs into desired out-
puts. Let’s take each of these elements of an or-
ganization in turn.
Participants
First, we have an organization’s participants.
These are a firm’s social actors, employees, and
stakeholders. Participants are social actors that
make contributions to and derive benefits from the
organization. For schools these social actors are
adults and children, and they typically assume
roles like administrators (superintendent, princi-
pal), teachers, students, staff (from custodians,
counselors, nurses, cafeteria workers, to adminis-
trative assistants), and even parents and politicians
connected to the school in various ways. Partici-
pants can also be organizational actors, like firms
in a particular industry. If you recall, we noted
that organizations are often “things” listed in con-
tracts, and considered unitary actors. As such,
firms can be participants in one another’s affairs.
For example, in the technology industry, firms of-
ten have contractual relations, partnerships, shared
EN boards of director, and so on, and it is through
VIR
ON these relations that they influence one another’s
ME
NT affairs.
)
Social Structure
Goals)
Second, we have an organization’s social struc-
T) ture. This concerns features that regulate and es-
EN
M tablish the usual pattern of relationships between
ON
V I R participants. So social structure concerns the per-
EN
sistent relations existing among participants
within an organization. These can vary in form,
from some being vertically differentiated with lots
of status levels, while others are horizontally differ-
entiated with many different departments and divi-
sions. These social structures can vary in their de-
gree of formality. Formal structures entail clearly
prescribed and demarcated social positions while
informal structures emerge and are unplanned rela-
tions that persist. In a school, the formal structure
might reflect the prescribed roles we briefly men-
tioned above: principal, assistant principal, depart-
ment chair, teacher, students, counselors, etc. All
are roles with relational obligations. The informal
structure might be the actual advice relations and
friendships that arise between participants. For ex-
ample, some teachers may be popular and a locus
of authority even though they lack such a formal
position. Likewise for students: some may hold
undue authority and influence the manner in which
curricula are taught.
6

Figure 1.2 Formal and Informal Social Structure
(source - http://farm4.static.flickr.com/3303/3527073630_a9abc78619.jpg)
Social structures are more than recurring be-
havioral patterns – they are also cultural systems
that entail normative principles and cognitive be-
liefs (Scott 1995). In fact, these cultural aspects of
social structure often guide behavioral patterns.
For example, adults in classrooms often follow
norms and ideals concerning how a teacher or man-
ager should interact with others. That is, we have
a sense of better and worse role-performances, and
organizations tend to reward performances that
most coincide with the ideal.
Social structure can run even deeper and re-
flect cultural cognitive beliefs and understandings.
For example, we find it hard to imagine schools
without teachers and students, and this belief is dis-
tinct from our sense of better or worse ways to per-
form those roles. The belief that every school has
to have those roles is deeply ingrained. The belief
may invoke particular behavioral norms of teach-
ing (say traditional or progressive), and in turn,
this may partly shape the behavioral patterns wit-
nessed in an organization like a school. But it
need not do so perfectly. Other social structures
are at play – like those of gender roles, class differ-
ences, peer cultures, etc., and they can cloud the
clean appearance of prescribed forms of behav-
ioral coordination. What principles and beliefs
give shape to these structures so people’s behav-
iors adhere to them? Is it one of authority and con-
trol in the formal organizational chart; or is it one
of task adaptation via the informal organization?
Goals
Third, organizations have goals – desired ends
that participants attempt to achieve through the
performance of task activities (Scott, 1995). For
example, the goals of schooling concern the techni-
cal and moral socialization of youth (Bidwell
1965). If we focus on faculty in universities like
Stanford, we can see a historical change in the
goals being emphasized: from one of student train-
ing, to that of research production, to one of re-
source acquisition, to that of community service.
At some moments these multiple goals can come
into conflict and create problems.
If we look at concrete missions, they vaguely
relate some of these ends. Companies often relate
general goals such as Citi in the example below.
However, organizations also vary in the extent to
which their goals are focused or multifaceted,
clear or ambiguous.
Our goal for Citigroup is to be the most
respected global financial services company.
Like any other public company, we're
obligated to deliver profits and growth to our
shareholders. Of equal importance is to deliver
those profits and generate growth
responsibly.
(Source: http://commons.wikimedia.org/wiki/File:5/54/Citiipblogo.gif)
Technology
Fourth, an organization has a technology – or a
means by which organizations accomplish work or
render inputs into outputs – e.g., tasks. Tasks are
often called “technology” because machines and
factory lines accomplish many tasks. What is proc-
essed varies from material inputs of manufacturing
equipment to people being processed, educated or
coordinated to become more knowledgeable and
active citizens. For example, in schools, the tech-
nology consists of lesson plans, curricula, and
courses that transform students (input) into social-
ized adults (output).
7
Environment
Last is the environment: the physical, technologi-
cal, cultural and social context in which an organi-
zation is embedded. For example, what is the envi-
ronment a school confronts? Schools are often de-
pendent on state and city governments for re-
sources and funds, they rely on trained workers
and teachers from local universities, they depend
on the neighborhood they are situated in for clients
and student populations, etc.
Environments can vary culturally in the
sense that Euro-Disney initially did not work be-
cause an American version of Disneyland could
not just be plopped down in Europe without some
changes. Environments can vary technologically –
such as having an office in Silicon Valley where
everything is wired for internet access and video-
conferencing, in comparison to say one of our par-
ents’ home where they are still figuring out a com-
pact disc player. Physical environments also mat-
ter – consider for a second something as basic as
your firm’s location in a cold region versus a hot
dessert. Very different pressures emerge because
of these distinctive physical environments.
Elements Description
Actors / Participants Organizational participants that make
contributions to and derive benefits from the
organization.
Social Structure Persistent relations existing among
participants in an organization.
Goals Desired ends that participants attempt to
achieve through the performance of task
activities.
Technology / Tasks Means by which organizations accomplish
work or render inputs into outputs.
Environment The physical, technological, cultural, and
social context in which an organization is
embedded.
Table 1.3 Overview of Organizational Elements
Environment Linkages
All of the internal features of an organization
can come into relation with elements in the envi-
ronment (Scott 2003: 23-24). Let’s take each in
turn.
1. Participant–environment linkage: how po-
rous is the boundary for participants in the
school? Is it a total institution like a board-
ing school or monastery, or is it a loose com-
muter campus like a community college?
2. Technology-environment linkage: no organi-
zation develops all of its own tasks and tech-
nologies. They borrow many of them. Also,
they have to adapt to the norms and pres-
sures of larger occupational structures and
professions. Do schools get most of their cur-
ricula from textbook publishers, university
faculty, and practitioners in other schools?
3. Goals-environment linkage: the social value
we attribute goals varies. In some communi-
ties the safety of students may be of greater
concern than their achievement. In one
neighborhood, concerns about suicide will
matter, while in other schools it may be the
provision of equal opportunities. While
many of these same goals arise across set-
tings, they vary in their salience from envi-
ronment to environment.
4. Social structure-environment linkage: most
schools look the same in terms of roles, but
different communities espouse different be-
liefs and norms about how these roles should
be performed. For example, elite schools
may worry more about “stress” and progres-
sive models of teaching, while struggling
schools may see the best teachers as ones
who meet “standards”. In fact, in some com-
munities, the ideal form of instruction may
entail rote learning and traditional modes of
teaching.
All the organizational elements tend to have vari-
ous relationships with one another. While we only
list the interrelations with environment, it is feasi-
ble to consider the linkages between goals and par-
ticipants, such as how goals can lead participants
to self-select into a firm, and for it to form a com-
pany reputation and identity. In effect, with each
case, one can find that these features of organiza-
8
tions form a system of interdependence. By
identifying that system, the analyst acquires a
deeper understanding about firm functioning, be-
havior and management.
Degree of Ambiguity
These abstract elements are seldom clean, sim-
ple features in real world cases, however. In
fact, ambiguity is more often the reality we con-
front. For example, schools are often described
as having “uncertain technologies” for accom-
plishing technical and moral socialization (Bid-
well 1965). Schools have courses or course la-
bels, but it’s far from clear that particular tasks
and lessons lead to certain desired outcomes and
which do so more effectively over others. Also,
we have ambiguous indicators of accomplishing
said goals – e.g., do we use achievement tests or
citizen tests? Are these tests biased and inaccu-
rate? Furthermore, participants can belong to
multiple organizations, so the question becomes
which organization most influences them. Chil-
dren spend most of their day in school, so it is a
relatively contained environment in comparison
with other organizations. Nonetheless, children
bring with them all sorts of baggage and experi-
ences from elsewhere (family), and these can in-
fluence their behavior in school.
How Can All of These Elements Work Together
as a System?
Fortunately, Richard Scott’s review of organiza-
tional research not only identifies organizational
elements, but it also describes how theories in
different eras focused on certain organizational
elements over others and characterized their in-
terrelation in certain patterns (Scott 2003: 26-
30). In short, he recognized three classes of or-
ganizational theory.
The earliest class of theories regarded or-
ganizations as rational systems – Here, the theo-
ries characterized an organization as a collectiv-
ity oriented toward the pursuit of specific goals
and whose behavior exhibits a formalized struc-
ture. These theories tended to focus on the ad-
ministrative units of organizations and their proc-
ess of rational decision-making.
An ensuing class of organizational theories
characterized organizations as natural systems.
Here, the theories related an organization as col-
lectivities whose participants pursue multiple in-
terests, forged in conflict and consensus, but
who recognize the value of perpetuating the or-
ganization as an important resource (they want
to survive). In a natural system, it is the un-
planned, emergent relations and coalitions
which matter: the informal structure of relations
that develops among participations is more influ-
ential in guiding behavior than the formal struc-
ture’s role expectations and guiding principles.
This class of theories regarded an organization
as an adaptive organism.
Most recently, organizational theories have
come to characterize organizations as open sys-
tems – here, organizations are congeries of inter-
dependent flows and activities linking shifting
coalitions of participants embedded in wider
material-resource and institutional environments
(Scott 2003). This class of theory focuses more
on the environment than any other organiza-
tional feature.
Now, one could argue that these theories
reflect the organizations of their day. For exam-
ple, rational actor approaches may best fit indus-
trialization of the 1920‘s; natural systems may
reflect modernization and corporatist efforts of
the 1950-60’s; and open systems may reflect
global firms and startups of today. However, we
are not sure this is the case.
These theories may reflect changes in data
collection. As scholars developed more encom-
passing means of data collection, they could
shift their focus from the administrative unit to
the firm, and then later from the firm to the
broader environment. It’s possible that all or-
ganizations reflect features and processes that
rational, natural and open system perspectives
entail. These features may have always existed.
It was just that they slowly shifted in historical
salience and scholars became more attuned to
them as their access to empirical data evolved.
9
 Rational Natural Open
Primary Unit Single organization, or Single organization Multiple organizations
of Analysis administrative unit w/multiple actors and (organizational field)
(organization as unitary divisions (organization as
actor) coalition)
Organizing
Concepts
Actors / Leaders, organization Participants across roles Stakeholders, employees,
Participants (admin unit) and in direct environment and even mass consumers

Social Formal & planned / Informal & emergent > External world permeated
Structure hierarchical formal (external seeps internal organization
in/ norms enter) (beliefs enter)

Goals Specific missions / Multiple, conflicting Survival / legitimacy in

objectives goals environment

Technology / Maximization / Decision Contingent decisions / Less decision, more

Tasks trees / Standard operating Unintended outcomes emergence &
procedures (efficacy) environmental
determinism (legitimation)

Environment Ignored Minor role Major role

Table 1.4 Classes of Organizational Theories

(adapted from Scott 2003: 26-30)

Case: Overview of the Adams Avenue School Using Organizational Elements

Adams Avenue School
At this point, we want to discuss the case of
a school reform effort and identify the organiza-
tional elements being discussed within it so you
have a concrete sense of their application. We
draw on the example of a school organization be-
cause most everyone has experienced one. Regard-
less of how old you are or where you are from,
you have some sense of how a school operates and
how an organizational reform might operate within
them.
The case was not written for organizational
analysis, but rather for educators (Metz 1986).
Hence, the writer – Mary Metz – selects the fea-
tures she thinks characterize the case. We want to
identify the organizational elements in the case
and see if they help us understand what sort of ac-
count it is. What elements are the point of focus?
Which are characterized as having an interrelation
and being changed? Through such an application,
We hope you will begin to see that even when we
take off the book shelf a nearly random case, we
can see how the case draws our attention to particu-
lar details and how they interrelate – that we see
the beginnings of an organizational theory that
helps explain the case.
Adams Avenue School is a case about the
creation of a magnet school. A magnet school is a
pubic school that offers a specialized curriculum
so as to draw students from across zones of a city.

10
This magnet school serves middle school students
(grades 6-8), and uses a particular curriculum that
will hopefully serve both struggling and high
achieving students. It is meant to build a sense of
community, to bring into the fold lower academic
performing students, and to improve student
achievement.
Before becoming a Magnet School, Adams
Avenue School was a 7th grade annex to Williams
Junior High School (Grades 7-9), an overcrowded
school with an African American population in the
poorest part of the town. Williams Annex was es-
tablished to relieve overcrowding as well as severe
problems of discipline and under-achievement.
The Williams Annex was voluntarily staffed by
young faculty who lacked seniority at Williams
Junior High. Mrs. Michaels led the annex and she
had a good deal of say in how they developed their
program (but she was not an official principal).
She and her colleagues decided that the annex
should follow a multi-unit plan and be divided into
3 small schools of around 100 students each.
Meanwhile, the district was going through
change, and it was planning a new magnet school
program. The Williams Annex was selected as a
great site for becoming a new magnet, called “Ad-
ams Avenue Magnet School.” Mrs. Michaels was
selected as the principal by the district. Mrs. Mi-
chaels and the district leaders decided to adopt an
individually guided education curriculum (IGE)
even though many of the teachers lacked familiar-
ity with it. In the IGE curriculum, students pro-
ceed at their own pace and complete a series of in-
dividualized tasks showing mastery of the mate-
rial. Before the school opened, the faculty was
sent for training in this program, but it was tai-
lored toward elementary school students, so they
were ill-prepared when the school opened to 6-8
grade students. When Adams Avenue opened, the
faculty lacked materials but made due the best
they could. By their second year, the school re-
ceived funds and faculty received more training in
IGE. According to Metz, the school seemed estab-
lished and had a coherent program in place by its
third year.
Parent Involvement
Upon opening, Adams Avenue attracted
well-educated parents (mostly for the gifted pro-
gram) who had an influential role in the school’s
affairs and took up a good deal of the principal’s
and assistant principal’s time. These parents were
not afraid to tell the teachers what to do and check
up to see that they followed through. In addition,
they campaigned for the school at board meetings
and with the district office to retain an assistant
principal position and to get a larger, better build-
ing. As the school’s reputation grew, it attracted
the interest of lower-middle-class families and ordi-
nary families. By the third year of operation, the
magnet school’s population reflected that of the
surrounding community and had less of a bifur-
cated population of highly educated families and
working class families. By the third year, the very
high achieving kids of the initially aggressive par-
ents were now in 8th grade and would soon gradu-
ate.
Individually Guided Education
The textbook for the IGE curriculum was not
as clear as it might seem, given it was a specific
plan written by a specific group of educators. Fac-
ulty found it far from clear in implementation.
Hence, the principal had broad discretion in how it
was defined. Eventually the curriculum was de-
fined on two sets of requirements. The first speci-
fied a number of concrete learning objectives for
each subject in each grade, and students were to be
tested on them before and after instruction was
given, and this progress was to be monitored care-
fully. Second, children were grouped according to
the progress they had already made (pretest) and
instructed from where their knowledge left off.
These skill groupings were to be fluid and recon-
figured when a new objective was introduced.
The school kept its small school layout and
each school had four homerooms that travelled
through all the same classes together. Teachers in
each school had an hour a day for common plan-
ning and the lead teachers met with the principal
as an “instructional improvement committee” that
11
enabled two-way communication between teachers
and the principal.
School Character
Metz reports that teachers focused their atten-
tion on their work with students. Their energy was
directed toward planning and teaching, running
lots of extra-curricular activities, and so on.
Rather than speak of students in terms of IGE,
they spoke of them in terms of their relationships
with the students. The school was notable in that
potentially volatile relations were not evident, and
instead positive relations persisted between the fac-
ulty, parents, and students. There were exceptions
that suggested a harder past (in the first two
years), but the school was mostly in harmony by
year three.
Classes were heterogeneous in composition,
but as stated earlier, they were internally divided
into groups on the basis of skills development with
relation to each learning objective. Lower skill
groups had more African Americans, but they re-
mained relatively heterogeneous and the interac-
tions between students and teacher with students
were task-oriented and respectful for the most part.
Students themselves reported having interracial
friends and seemed open to heterogenous relation-
ships.
There was a general absence of conflict at
Adams Avenue. Discipline was often a simple mat-
ter. Faculty issued yellow cards as warnings, and
then formal referrals to administrators for disci-
pline which was noted in the child’s record. Metz
reports that these yellow cards were issued less
than two times a day for all 300 children over the
course of the year, and suspensions totaled less
than 1 out of 10 kids. Disciplinary problems were
more common than these formal indicators sug-
gest, but they were handled informally (and this in
turn reinforced positive relations).
If there was any conflict it was likely be-
tween the principal and some teachers. This con-
flict goes back to the end of the first year when
some teachers did not strike with the rest (and
sided with the principal). The union leaders were
especially bitter over this.
The program in practice
The teachers and principal followed the two
sets of practices believed to be the core of the IGE
program. Teachers charted progress and the princi-
pal checked it, but there was still some variation in
teacher compliance with IGE. Some teachers were
relaxed in their application of IGE. Some rotated
students through the same set of tasks in spite of
being in differently skilled groups, so they did not
have differentiated work. Some produced charts
on estimates of student progress rather than
pretest-posttest scores. These teachers said they
adapted IGE like this because it was a lot of work
(more than regular teaching) and they were unwill-
ing or unable to do all of it. A few other teachers
resisted IGE. They didn’t comply as a matter of
principle. They argued their subject matter was
ill-suited to IGE and required fundamentals, or too
many skill demonstrations. But even these relaxed
and resistant teachers were influenced – they con-
veyed clear purposes for each day’s instruction,
they had relatively well formed understandings of
each kid’s skills and deficits. Even if they didn’t
use the explicit features of the curriculum, they
seemed in-line with the general philosophy and fo-
cused on skill development in their subject,
thought carefully how to get that across to varied
kinds of students, and how to track progress. In-
struction also involved a lot of field trips, projects,
and a rich extra-curricular experience. This added
a personal element.
IGE Influences on School Character
Metz reports that the imposition of IGE changed
the character of the school – especially the rela-
tions of low achievers with teachers and students
of different races. That is, IGE induced a commu-
nal ethos and denser positive relations.
IGE influences on Traditional Curricular Structure
The IGE curriculum removed grade-level differen-
tiation from view. Instructional differentiation
was rendered more individualized, and it removed
both the stigma placed on a student performing at
12
4th or 5th grade level and enabled accelerated stu-
dents to work at a level beyond grade level. All
that mattered was forward movement for every
kid, not where they were moving forward from.
IGE Influences on Reward structure
Adams Avenue used report cards that emphasized
effort and the level at which the student worked in
each subject. Hence, a hardworking student with
5th grade skill levels may receive an “I” for supe-
rior effort and progress while the lackadaisical 6th
grader with 8th grade skills might get an “E” for
inadequate progress. The honor roll was based on
effort grades, not skill level grades. In this man-
ner, IGE’s reward structure worked to equalize so-
cial prestige and include lower performing kids
and give them academic legitimacy. This con-
versely lowered the rewards experienced by high
achieving students, and some teachers worried
these students were not pushed enough to excel
higher.
IGE influences on Classroom Task Structure and Re-
lationships
All the instruction was done in groups based on
skill where the students worked independently.
This meant no one performed before everyone pub-
licly, and achievement and schoolwork were more
a matter of private accomplishment and few oppor-
tunities for public embarrassment. Teachers spoke
with students as a group for instruction and then
guided progress individually. Metz reports that
everyone felt they got the attention and assistance
they needed. These relations built into ones of
trust between teacher and student and lessened con-
flict. They also equalized persons more, de-
emphasizing initial differences in skills and this
served to build interracial ties.
Physical space
School location in the downtown area of the city
lent itself to field trips to businesses and the mu-
seum district. The building was small, lacked suffi-
cient space for a gym, and its heating was not al-
ways certain. In spite of this, they did not want to
move to another building. Metz argues the context
put everyone into shared spaces, and created more
of a warm atmosphere. All the teachers reported
that the school's small size and partitioning into
three units enabled the teachers to know students
individually and have a healthy rapport with one
another.
Faculty culture and school ethos
Faculty regarded good relations with students and
each other an end in itself and helpful to learning.
With few exceptions, teachers viewed all students
as essentially good children, and they regarded the
mutual rapport as normal. The teachers did not
misidentify with their students.
This faculty culture was rebuilt, passed on,
and renewed. This occurred in several ways dur-
ing team meetings and faculty lounge conversa-
tions. Teachers tended to interject positive com-
ments into conversations that spun in negative di-
rections. New recruits got socialized through
these experiences so the culture was passed on.
Informal leaders respectfully sanctioned new teach-
ers adopting a negative view of students. They re-
directed attitudes so as to be one of respect and
building students up.
That said, few cultures are uniform. There
were exceptions and Metz remarks on five teach-
ers angrily confronting students. These teachers
tended not to use group instruction but rather
whole class and recitation. In addition, students
knew who they were and responded to them nega-
tively. That said, Metz is quick to point out that
these teachers were relatively negative, but not no-
ticeably so in comparison to say traditional school-
teachers and in other contexts. Her point is that
the school culture is a fragile construction that
needed to be reproduced and was far from a sure
thing.
Leadership: Principal's influence
The principal, Mrs. Michaels, influenced the tone
of interpersonal relationships via indirect and infor-
mal means, but controlled the IGE curriculum and
13
 Main Story-Line (dominant pattern of inference)
Technology ! Structure in good way in spite of population disadvantage and potential for
divisiveness.

District / Principal: Implement IGE reform.

its instruction via direct and formal means.

Organizational It was not official doctrine to have positive relations with students.
But the principal encouraged it in a variety of ways: in her speeches she
Elements in Adams valued building up students; she wanted relative assessments to occur
Avenue School (over objective / universal ones); she wanted teachers to do field trips;
she encouraged ethnic pride and was involved in those groups; and she
sought integration. She publicly appreciated teachers who led extra-
curricula and made it a point of giving them institutional resources they
needed for such endeavors. In short, the principal’s relations with faculty
and the students mirrored that of the school culture. Whether one influ-
enced the other is not clear, but they reinforced each other for certain.
The principal's relation with faculty over IGE was a different mat-
ter. The IGE program was imposed by the district and the faculty felt
they had no choice or discussion over it and felt a degree of resistance.
Mrs. Michaels resorted to formal hierarchical authority to implement
IGE. In the faculty meetings of the first two years, she reminded teachers
they had to implement IGE or find a job in another school or district. At
the end of the first year, she even demanded three teachers transfer, and
this led to a lot of conflict. Eventually two were persuaded to leave and
the third filed a grievance. Faculty were upset some since they felt the
involuntary transfer wasn't too fair, and that many didn't know how to im-

14
plement IGE the first year. By the third year, tice the contribution of their culture (students too)
teachers were more comfortable with IGE and re- or the technology (tasks). Their benign belief (un-
sisted less, and the principal resorted to more posi- conscious even) seemed natural to them and the
tive reinforcement and lessened her use of official culture operated at its best effect.
powers.
References
Teacher resistance
Bidwell, Charles E. 1965. “The School as a For-
A minority of teachers criticized the principal for mal Organization.” Pp. 972-1022 in Handbook of
her reliance on hierarchical formal authority to Organizations. J.G. March, ed. Chicago: Rand
push through the IGE program. The minority's an- McNally.
ger was recognized by the majority of teachers,
but it did not diffuse. Leavitt, Harold J. 1965. “Applied Organizational
Change in Industry: Structural, Technological and
Humanistic Approaches,” in Handbook of Organi-
Summary zations, 1144-70, ed. James G. March. Chicago:
Rand McNally.
The distinctive feature of Adams Avenue was the
constructive relationships. The school imple- Metz, Mary Haywood. 1986. “Adams Avenue
mented the formal IGE program to a moderate de- School for Individually Guided Education.” Chap-
gree, and the positive relationships seemed to rein- ter 4 (pp. 57-103) in Different by Design: The Con-
force the elements of IGE that seemed consistent text and Character of Three Magnet Schools.
with it. For example, the aspects of IGE that ren- Routledge: New York.
dered negative judgment private were reinforced;
the focus on individual or relative performance Scott, W. Richard, 1995. Institutions and Organi-
was reinforced; and the effort to nurture individu- zations. London: Sage.
als and relationships via supportive skills groups
was reinforced. The pride of slow learners was Scott, Richard. 2003 (1981). Organizations: Ra-
protected, and special activities built a sense of fun tional, Natural and Open Systems. 5th Edition,
and camaraderie. The technological (task) arrange- Englewood Cliffs, NJ: Prentice-Hall.
ment of the school did not work alone. It required
a faculty culture and school character that assumed
respect would breed further respect.
The lack of training and rush to get IGE go-
ing led the principal to use her formal authority
and to push IGE through. The principal believed it
was her choice to do this in response, and it was
not a pressure from the district office per se. This
pressure from the principal led the faculty to be re-
sistant and upset at first. A minority remained
somewhat angry even, but the faculty and princi-
pal did find ways to work respectfully and produc-
tively together (again, partly a result of the small
schools and positive, collegial ethos). The teach-
ers believed the small schools contributed to their
getting to know their students individually and this
was the secret to their success. They did not no-

15
2
Decision-Making in
Organizations

Source: http://commons.wikimedia.org/wiki/File:EXCOMM_meeting%2C_Cuban_Missile_Crisis%2C_29_October_1962.jpg
Decision-Making in Organizations

In this chapter, we will present a general in-

troduction and discussion to decision-making in
organizations. We will relate various rational sys-
tem views of organizations that tend to focus on
administrative units, or leaders of organizations. A
simple example of organizational decisions can be
found in the following figure showing a decision
tree. The choice is whether or not to upload a pic-
ture into this textbook. A variety of criteria apply
and help us decide. Fortunately, this particular im-
age of a decision tree was taken off Creative Com-
mons, and freely viewed, so we are okay. Nonethe-
less, it gives you an initial sense of what we mean
by decision-making.

Logic of Consequences - Rational Choice Theory

This week we draw heavily on the work by

James G. March concerning decision-making
(March 1999; 1994: chapters 1-2). March has
spent several decades studying actual decision-
making behavior in organizations. He classifies
types of organizational decision-making that helps
situate real world cases of organizations further –
particularly the rational and natural classes of or-
ganizational depictions Richard Scott relates.
March describes two general classes of organiza-
tional decision-making, or “logics of decision-
making” as he calls them: the logic of conse- Figure 2.1 Decision Tree
quence (or rational choice theory) and the logic of (Source - http://commons.wikimedia.org/wiki/File:)

appropriateness (what Graham Allison might call

“organizational process model”, 1969). The core
distinction between these logics is that one is con-
cerned with choices and instrumental efforts and
the other one is concerned with rule-following and
interpretive activity. Both are intentional forms of
behavior. The former entails means-end rational
action, and the latter entails value-rationality or
duty-driven behavior. Value-rationality contends
that regardless of the cost (or without attention to
them), we often make decisions.
Rational Actor Approach
The rational-actor model is essentially a
model that follows the logic of consequence. Ra-
tional decisions basically entail four aspects:
(1) The first is knowing your alternatives.
Here a decision maker asks, what are the
options available to me?
(2) Second, it is important to know the conse-
quences of these alternatives. Here, one
asks, what happens if I take each option?

17
 (3) Third, you have ordered preferences or
ranked goals and objectives in terms of
greater or lesser value. Here, you weigh
the value gained or lost by taking each op-
tion.
(4) The fourth aspect concerns a decision rule,
or a choice process (Graham Allison refers
to this as an “inference pattern”). Here,
the choice process is a rule by which an al-
ternative is selected on the basis of its con-
sequence for preferences. Two decision
rules are commonly discussed and reflect
different notions of a rational actor.
a. The first, is an ideally rational person,
traditionally called “economic man” by
its critics. This individual is typified
by clarity, and knowing, and consis-
tency of preferences and objectives, he
or she is an ideal form of a rational ac-
tor.
b. The second is a boundedly rational
person, and is typified by ambiguity,
and uncertainty, and knowing incom-
plete information, and inconsistency in
preferences or objectives. So, here we
have individuals who are more like the
real persons we all know.
fun sitting around wet all day. If we bring an um-
brella and it does not rain, then we have to carry it
around all day, and there is a cost to that. And, if
we bring an umbrella and it does rain, then we are
prepared and stay dry. We may even feel pretty
pleased with ourselves!
Let’s put these alternatives and consequences
in a matrix below, and then affix values from posi-
tive ten to negative ten so as to depict our prefer-
ences for them. Let's say that not bringing an um-
brella and it does not rain is a positive six. We are
happy to not have to carry the umbrella all day.
By contrast, let’s say that when we don't bring an
umbrella and it rains, we get wet and we find that
terribly disconcerting. We can give that conse-
quence a negative ten. On the other hand, say we
do bring an umbrella, and there is no rain, then we
have to carry it around. Carrying around a useless
umbrella all day is somewhat of an inconvenience,
so let’s give that a negative five. And last, if we
bring an umbrella and it rains, then we are kind of
pleased with ourselves for being prepared, so we
value that a plus eight.
No#Rain((60%)( Rain((40%)( Net(Expected(U7lity(
Don’t&Bring&Umbrella&
+6& 310& (6*0.6)&–&(10*0.4)&=&3.4&
Bring&Umbrella&
35& +8& (35*0.6)+(8*0.4)&=&0.6&

EU=34.0&
)&
Examples of the Rational Actor Model Rain
&(0.4
Net&
a&
rell Expected&
mb
Let’s use a very simple example of rational t&Br
in g& U
No&
UMlity&=&3.4&
D on ’ Rai n &( 0
choice in action, to see these aspects and distinct .6)&
EU=3.6&
types of choice processes. Soon it will be winter )& EU=3.2&
Brin &(0.4
in California, and that means it will be the rainy g&U
mb
rell
Rain
Net&
a&
season. As a result, many students will be faced Expected&
UMlity&=&0.6&
with the alternative of bringing an umbrella to No&
Rai n &( 0
class or not. Now let’s say you see certain conse- .
6)&
McFarland&Lectures&
EU=33.0&
quences to these alternatives. For example, there
is a 40% chance of rain, so the consequence is
40% it may rain, and 60% it may not. Figure 2.2 Decision Tree for Umbrellas
Now let's say we see certain costs and bene-
fits to each scenario and we prefer some over oth- Now all of this can be readily illustrated in a
ers. In the case of not bringing the umbrella and it decision tree. The first branch in the tree lists our
doesn’t rain, we rejoice because we did not have to options of bringing an umbrella or not. The sec-
carry it all day (yay!). In the case of not bringing ond branch list the consequences where there is
an umbrella and it rains, we get wet, and it is no 40% chance of rain and a 60% chance of no rain.

18
At the end of each branch is the preference or
value we affix to these scenarios. In the logic of
consequence model, we calculate the expected util-
ity of each scenario. To do this, all we have to do
is multiply the chance of rain (which is 40%) by
the preference we have for the scenario of not
bringing an umbrella and it rains (which is -10).
That gives us the first value of -4.0. That’s the ex-
pected utility of not bringing an umbrella and it
rains on us. But say it does not rain and we do not
bring an umbrella. Then we take the chance of no
rain (60%) and multiply it by the value we affix to
that outcome (+6). As such, the we have 0.6 x 6 =
3.6. That's the expected utility of not bringing um-
brella if it doesn't rain. If we add the two together
– of not bringing an umbrella in both cases - then
we get the net expected utility of not bringing an
umbrella = -4.0 + 3.6 = -0.4.
If we go through the same kind of operation
in the lower branch for bringing the umbrella, we
about it. Or are you a high cost person? Here you
see it as risky no matter what happens.
Let’s say you find it mortifying to be re-
jected, and you are a high cost person. We can de-
pict this in the table you see here. (i) Not asking
someone else and them saying “no”, hey, that is
good for us. It saved us the trouble, so it is a plus
two. (ii) Not asking them out, and they would
have said “yes” - that is a downer. Let’s give that
a negative eight. Pretty bad, but not terrible. (iii)
But then, asking them out, and them saying “no” is
just awful. We feel miserable over that, so it is a
negative ten. And last, (iv) us asking them out and
them saying “yes” is a plus ten and that couldn't be
better. Best of all worlds right there!
No#(90%)# Yes#(10%)# Net#Expected#U4lity#
Don’t&Ask&Out&
+2& .8& (2*0.9)&–&(8*0.1)&=&1&
Ask&Out&
.10& +10& (.10*0.9)+(10*0.1)&=&.8&

will find the net expected utility to be 0.6. If we (0.1

)& EU=&.0.8&
ept&
compare the two, then it is clear that bringing an Acc
Net&
umbrella - given our preferences or our sense of t&
Expected&
&Ou UClity&=&1&
costs and rewards for each outcome – is better ’t&Ask Reje
Do n ct&(0
. 9)&
than not bringing an umbrella because we really EU=&1.8&

do not want to be wet. Ask p t&(0.1

)& EU=&1.0&
&O ut& Acce
Now let’s do this for a more interesting case Net&
Expected&
- dating! Perhaps some of you are single and look- UClity&=&.8&
ing for love. Say you are wondering whether to Ambiguity)or)uncertainty) ct&(0
Reje
.9)&
ask someone out. Let’s consider the scenarios. (i) about)consequences)and)costs?)) EU=&.9.0&

You do not ask them out and they would have said
no. That is good, right? You're not embarrassed!
(ii) You do not ask them out and they would have
said “yes”. In that case, you miss out on someone
quite interesting and wonderful. That is a downer.
(iii) You do ask them out and they say “no”. That
is kind of, mortifying, right? That may be terrible.
(iv) And then, there is the last scenario which is
you ask them out and they say “yes”. When that
happens it is quite gratifying. How would you
value each of these options from positive ten to
negative ten?
It all depends. Are you a high-interest, low-
cost person? Meaning, you ask people out all the
time and you do not see much cost to it. Or are
you a low-interest, low-cost person? Meaning,
you seldom ask people out and you do not worry
Figure 2.3 Decision Tree for Asking Out
If we go through the decision tree again, we
can predict the net utility of each option of asking
someone out or not. Let’s even say they are very
attractive so our chances are low at 10%. If we go
through the math again like before where we don't
ask them out and get a yes, that equals negative
eight. Then we multiply that by the probability of
yes at 0.10 (10% chance). As such, negative 8 x .1
= -0.8 expected utility. The opposite of not asking
them out and they reject you has a positive utility
of 1.8. So, we have a net expected utility of not
asking people out equal to one.

19
 By contrast, if we actually ask attractive peo-
ple out, then given the probability that they will
say no and that we would be mortified, we have an
unexpected utility of -8. That's pretty severe, so of
course we just avoid the whole effort altogether.
Thus far, we have related two simple exam-
ples of decision trees. You can extend this to or-
ganizations, their types of decisions, and their
kinds of options. For example, if a company does
X, then a competitor or client has a probability of
reacting in a certain way. Later, the Cuban Missile
Crisis will be discussed as an example of this. In
that case there are clear choices, potential conse-
quences, and preferences affixed to each one.
That will bring this closer to a real world organiza-
tional case.
In all these cases there is clearly a ton of am-
biguity. Weather reports are not that accurate,
plus, we really have little evidence to go on in de-
ciding if someone might be receptive to being
asked out or not. Thus far, the rational actor
model is an idealized model that assumes hercu-
lean abilities of decision makers. In reality, most
of us are boundedly rational.
So what would a bounded rationality model
look like? What’s the choice process there? There
an actor is uncertain about consequences and
costs. Moreover, the ordering of preferences is not
so clear. To depict this, Herbert Simon (1947) re-
lated a theory of satisficing as a potential alterna-
tive, one that may offer a more accurate descrip-
tion of how we usually make decisions as bound-
edly rational persons. Instead of calculating all the
alternatives (would we ever really ask out every-
one in a room?), we start with one that is most
near us - e.g., not bringing an umbrella or not ask-
ing someone out like we always do - and then we
see if that option has a satisfactory consequence.
In most instances of satisficing behavior, we
think about a choice threshold, and we stop some-
where along our sequential search of options when
we find a choice that is “good enough”. But if we
do not meet our threshold, then we move on to the
next option down the list. So search is stimulated
by a failure to achieve a goal and it continues ex-
ploring alternatives until it is good enough to sat-
isfy it.
In the model below we look at the dating ex-
ample again from a satisficing perspective. Here
we have to choose from ten different people, and
we have to consider the expected utility of asking
them out and them saying yes. Rather than dis-
cerning the consequences for each, we begin with
the nearest persons and move further afield (A to
J), only deciding to ask them out as soon as we
reach a person above our expected utility threshold
of say, three. As soon as we hit that three we have
our point of choice.
In the figure we can see that threshold out
here on the vertical line. A was not good enough,
and then B and C are not either (< 3). When we
hit D, we find they are good enough, so we stop
searching. Because we have not considered every
option, we have not optimized our decision. After
all, H and J are two individuals who we would
have selected if we had considered them. In fact,
we could have found a more optimal choice, espe-
cially in J, who has the highest expected utility.
That is considered a satisficing decision, and it is
an example of how boundedly rational models can
be performed in a logic of consequence way.
A)
Threshold)
Order)of)Choices)
EU=)310)
C)
B) EU=)34)
EU=)35) D) EU=)3.0) Point)of)Choice)
E) EU=)310) F) EU=)0)
G) EU=)31)
H) EU=9.5)
I) EU=)3.3)
J) EU=)10)
McFarland)Lectures)
Figure 2.4 Satisficing Decision
Logic of Appropriateness
So far, we have discussed the logic of conse-
quence, or rational actor models. But there is a sec-
ond class of models, or a second class of decision
making, that March relates. He calls it the “logic
of appropriateness”. Most of the time in organiza-
tions, people follow rules even if it is not obvi-
ously in their self-interest to do so. For example,
when we follow orders in war and march to our
death, it seems hard to see much utility in that! In
those instances, we merely follow rules like duty.
20
And yet, a lot of behavior in organizations (and so-
cial life) is specified by rules - take for example
how we follow rules in tasks, routines, profes-
sional standards, norms, or standard operating pro-
cedures. When a problem or issue confronts an or-
ganization, it often becomes a question of finding
the appropriate rules to follow. Instead of valuing
alternatives in terms of their consequences, rule-
following matches situations and identities.
Rule-Following
Let's take a moment to think about what this in-
volves. Three factors are involved in the sort of
rule following that characterizes the logic of appro-
priateness (March 1994).
(1) Situations are classified into categories as-
sociated with rules and identities (roles).
What kind of problem is it? Who usually
addresses it? How has it been addressed
in the past?
(2) Decision-makers have official identities
and roles that are evoked in particular
situations. Who usually addresses this
kind of stuff? Who's the appropriate per-
son?
(3) Decision makers match rules to what they
see as appropriate to their role in the classi-
fied situation. They match rules and
identities to kinds of situations. They
say “this is an x situation for y people to
manage.”
One notices rule-following and the logic of ap-
propriateness being used in organizational deci-
sions whenever people follow traditions (path de-
pendence), hunches, cultural norms, advice of oth-
ers, pre-existent rules or standard procedures, and
heuristics (like rules of thumb). Decision-making
via rules can be as ambiguous as decision making
by means-end calculation. However, the ambigu-
ity here does not concern consequences and prefer-
ences, but rather a lack of clarity and ambiguity in
agreements, experience, imitation, and change. In
addition, rule-following is a less conscious form of
decision-making than means-end rational calcula-
tion. Rule-following behavior is intentional behav-
ior, but the type of inference being performed is
frequently implicit and taken-for-granted. It is in-
tended action we do not reflect deeply upon.
When ambiguous, the rule-following process is
less about finding a desired outcome than making
sense of situations and discerning what rules apply
and why (e.g., Karl Weick 1995 - sense-making
and meaning-making). The primary product of
decision-making may be less the decision out-
come, than the decision process establishing social
meanings and the identities of participants. So one
can say here, the decision process or theory ex-
plaining organizational dynamics suggests they do
not necessarily arise for reasons of improving con-
sequences but for engaging in a meaningful proc-
ess. This process will be most evident in chapters
four through six of this textbook when we discuss
processes of organized anarchy, organizational
learning, and organizational culture.
March also alludes to the fact that both the
logic of consequence and appropriateness get fur-
ther complicated when one considers that most or-
ganizations are composed of multiple actors with
inconsistent and often conflicting preferences /
identities. Here the theory of coalitions comes
into play as does the negotiation and bargaining
process (This will be akin to Graham Allison’s
“Bureaucratic Politics Model” and reviewed in the
next chapter). March suggests that a two-stage de-
cision model is often inaccurately depicted: stage
1 is the process of bargaining and coming to con-
sensus; and stage 2 is the decision when under-
standings are executed. Unfortunately, these two
stages are seldom discrete. There are many com-
pounding decision moments and consensus waxes
and wanes. The setup of a system and its imple-
mentation are intertwined. Hence, the world of al-
liances is not one of precision and formality, but
one of informal, loose understandings and expecta-
tions.
Last, in his reference to temporal orderings,
March evokes the theory of Organized Anarchy
(Garbage Can Theory, see Cohen, March and
Olsen 1972), which is the depiction of decision
making from a fully dynamic perspective. Here
we are just remarking on these theories in passing
– decision in coalitions and organized anarchies –
21
but please note them, as we will come back to
them over the next few chapters.
Case - The Cuban Missile Crisis and the
Prospect of Armageddon
Now that we have some idea of March’s lo-
gics and passing references to culture, coalitions,
and anarchic decision environments, we can turn
to Graham Allison’s study of the Cuban Missile
Crisis (Allison 1969). Why the Cuban Missile Cri-
sis? It has lots of nice qualities applicable to non-
profits and government agencies. In fact, crisis
management is common in organizations. And in
many instances, the stakes of policies and deci-
sions are enormous. Take for example the Ameri-
can effort to reform public schools (No Child Left
Behind Act) and the crisis schools are confronting
in order to meet standards - many are being
closed! Similarly, many organizations face punctu-
ated crises, like NASA facing the Challenger disas-
ter, or human resource departments coping with an
onslaught of harassment and grievance claims, or
companies coping with deaths or massive worker
turnover. In these circumstances, what do you do?
How can you describe what happened? How can
you “successfully manage” in such a situation?
More importantly, the Cuban Missile Crisis
was a huge event. It was arguably the closest we
came to World War III when well over 100 million
people could have died. In fact, John Kennedy,
the president at the time, is quoted as estimating
the chance of failure at 1 in 3 or even 1 in 2. Arma-
geddon should never have such good odds. Be-
cause of this, analysts want to understand how na-
tional governments and their organizations maneu-
vered the crisis. They want to get a better sense
for how to prevent disasters in the future, and to
possibly manage these crises better.
Let me give a brief summary of the Cuban
Missile Crisis so as to familiarize everyone with it.
The events occurred back in 1962, and they led the
United States to be on its highest state of war readi-
ness ever. It also led Soviet field commanders to
ready battlefield nuclear weapons to defend Cuba
if invaded. Fortunately, war was averted.
Figure 2.5 U2 Planes
(Source -
http://commons.wikimedia.org/wiki/File:U2_Image_of_Cuban_Missile_Crisis.jpg)
A little context may help – back in 1962, the
Soviet missiles could only reach Europe while
U.S. missiles could reach the entire Soviet Union.
Upon meeting with Kennedy at a summit, Soviet
Premier Nikita Khrushchev walked away thinking
little of Kennedy as a statesman and thought the
Soviet Union could get the upper hand. In April
1962, Kruschev thought the placement of
intermediate-range missiles in Cuba could deter a
potential U.S. attack against the Soviet Union. Fi-
del Castro, on the other hand, was worried the
U.S. would attack again after its failed 1961 effort
in the Bay of Pigs. Castro approved Khrushchev's
plan to place missiles on the island and saw them
as a deterrent to a US invasion of Cuba.
In the summer of 1962 the Soviet Union be-
gan to secretly build its missile installations in
Cuba. The crisis began for the United States
around October 15, 1962 when U-2 reconnais-
sance planes photographed Soviet missiles under
construction in Cuba. President John Kennedy
was informed of these installations and he con-
vened the EX-COMM, a group of his twelve most
important advisors. EX-COMM met for seven
days and Kennedy decided to impose a naval quar-
antine around Cuba. Quite a few key actors were
in this group, from Robert Kennedy, who was the
Attorney General; Dean Rusk, the US Secretary of
State, George Ball, who was the undersecretary of
state, John McCone; George Bundy, the National
22
Security Advisor; Ted Sorenson, special counsel to
the president; Robert McNamara, a very important
figure who was pretty domineering in the meet-
ings, and was the Secretary of Defense; and then
Llewellyn Thompson, ambassador at large, the for-
mer US ambassador, to the Soviet Union, who was
the only Russian expert on EX-COMM.
Figure 2.6 Naval Blockade
(Source -
http://commons.wikimedia.org/wiki/File:P5M_VP-45_and_DD-835_with_Foxtrot_sub_
at_Cuban_Missile_Crisis_1962.jpg)
On October 22, Kennedy announced the dis-
covery of the missile installations to the public and
his decision to quarantine the island. He also pro-
claimed that any nuclear missile launched from
Cuba would be regarded as an attack on the United
States by the Soviet Union and demanded that the
Soviets remove all of their offensive weapons
from Cuba. Once the crisis was public, tensions
grew. Kennedy ordered low-level reconnaissance
missions once every two hours. On October 23,
Khrushchev wrote Kennedy stating that the quaran-
tine constituted an act of aggression, propelling hu-
mankind into the abyss of a nuclear holocaust. On
October 24, Russian vessels turned away from the
blockade so, they saw “eyeball to eyeball,” as
Dean Rusk said. And then on October 25, the
blockade was pulled out further to sea, because
Kennedy and his Naval commanders were worried
about mistakes, and boarding any craft that might
trigger a nuclear war. Tensions were pretty high at
this point, and Kennedy raised military readiness
to DEFCON two on the 25th.
On the 26th EX-COMM received a letter
from Khrushchev proposing the removal of Soviet
missiles and personnel if the US could guarantee
they would not invade Cuba. On October 27 a U-
2 was shot down over Cuba and EX-COMM re-
ceived a second letter from Khrushchev demand-
ing the removal of U.S. missiles in Turkey in ex-
change for Soviet missiles in Cuba. At this point
the “Trollope ploy” was done where the United
States responded to the first letter accepting the
conditions and both sides largely agreed. It is
kind of an interesting ploy and an effort to get an
advantage in a compromise situation.
Tensions eased on October 28 when Khrush-
chev publicly announced he would dismantle the
installations and return the missiles to the Soviet
Union, expressing his trust that the United States
would not invade Cuba. Further negotiations
arose to implement the October 28 agreement and
the US secretly removed missiles from Turkey.
Allison’s Three Models
The Cuban Missile Crisis is a case of an inter-
national crisis that almost led to war, and it de-
scribes the kinds of actions that occurred during
this conflict. Graham Allison does this interesting
thing which is very emblematic of this textbook’s
ambition. He teaches you how to apply multiple
theories to the same phenomenon, and thereby ac-
quire very different perspectives of it. In so doing,
he comes to a deeper understanding of what hap-
pened that informs policy experts and persons in
such crises.
Allison presents three models that he thought
were the most useful, prevailing models at the
time: (1) the rational actor model (i.e., logic of con-
sequence model), (2) the organizational process
model (i.e., logic of appropriateness model), and
(3) the coalition model (multiple actors with incon-
sistent preferences).
23
Rational Actor Model
(Logic of Consequence)
When we use the rational actor model, we
assume every choice option or alternative serves a
purpose, and we predict their consequences and
our preferences for them (costs). Looking at the
table below, we see these basic organizing con-
cepts. Let’s deconstruct what they mean for the
Cuban Missile Crisis.
From Allison’s retelling, we know the actor
is a unified national actor, or the United States.
The problem that motivates US action is that the
Soviet Union’s placement of missiles in Cuba
needs a response. If we look at action as a rational
choice, then we have to break it down further. So
here, we look at the goals and objectives, and the
clear objective here is national security. The op-
tions and their consequences, basically concern the
courses of action available and the results that
could arise from adopting them.
Let's think about what those options were in
this case. The first option is to do nothing. And
Rational Actor Model 
 ble. And last, a naval engagement in the Carib-
(Adapted from Allison and Zelikov 1999:391)
The Paradigm Model 1
National government
there's a cost here -- The Soviets outflank the early
warning system; they reverse the United States’ ad-
vantage of power at the time; America loses credi-
bility in Europe; and so on. The second option is
to make a diplomatic response. And the cost here
is that the UN veto is probable because the Soviets
hold a seat on their permanent council. Time mat-
ters, and the missiles are already deployed, so we
cannot really wait. The third option is to approach
Castro. And, the cost here is that the Soviets are in
control of the missiles in Cuba, so Castro's influ-
ence is somewhat moot it seems. The fourth op-
tion is to invade, and the costs here are that the So-
viets could parallel with an invasion in Berlin, or a
retaliatory strike is possible with nuclear weapons.
The fifth option is an airstrike, and here the cost is
the probability of knocking out all the nuclear
weapons is only 90 percent since they are spread
out all over the island. Moreover, retaliation is
highly likely and a massive strike would be
needed to make that option succeed. So there's big
risk there. The sixth option is a blockade. The
cost of the blockade is that they could retaliate
with a blockade of Berlin. The benefits are that
you get extra time, and Khrushchev has time to
think and consider that a nuclear holocaust is possi-

Black!box! National state

labeled…! Generic state
Identified state
Personified state

Basic Unit of Analysis Governmental action as choice

Organizing Concepts Unified National Actor
Problem – motivates action
Action as a Rational Choice
Goals and Objectives
Options and Consequences
Choice

Dominant Inference Action = value maximizing means towards state’s ends

Pattern
General Propositions Increased perceived costs = action less likely
Decreased perceived costs = action more likely
!
24
bean actually favors the United States in this cir-
cumstance.
So, what was the actual choice? If we did a
decision tree of all these things and we looked at
value maximization, it would reveal that the block-
ade is the solution. But, why? Well, consider the
decision trees earlier. If Armageddon occurred,
then the costs to that consequence are so high that
even if it is highly improbable, it is likely that the
actors will not select it as their choice. Therefore,
through the rational actor model, we can some-
what interpret the series of events in the eventual
decision or choice that was made.
Organizational Process Model
(Logic of Appropriateness)
Organizational Process Model
(Adapted from Allison and Zelikov 1999:391)
The Paradigm Model 2
National Government
How does an organizational process model
apply? There are multiple organizations involved,
each with identities and standard operating proce-
dures for handling aspects of the problem. The ac-
tors are a constellation of loosely allied organiza-
tions. In addition, the problem is not confronted
as one thing. The problem is cut up and parceled
out to various organizations (matching via the
logic of appropriateness). Think here for a mo-
ment: if we are limited problem solvers, then or-
ganizations develop the capacity to do it better and
by experience. To a great extent that is why we
rely on organizations. We cue them to do things
they have always done and are organized to do.
By doing that we accomplish desired outcomes.
Let’s go down the list of organizations here.
What are their missions and capacities? The organ-
izational process model will see each organization
as quasi-independent, and they are going to con-
duct affairs according to their own missions (e.g.,
the navy, air force, etc.) and capacities. This leads

Leaders!
What actually occurs; Range of choice; Structure of situation; Innovation
!

A! B! C! D! E! F! G!

Basic Unit of Governmental action as organizational output

Analysis
Organizing Organizational actors – multiple!
Concepts Problems - divided up parceled out to various organizations (Matching!)
Organizational missions – independence & parochialism!
Action as organizational output
Objectives – compliance; Sequential attention to objectives; Standard operating procedures;
Programs and repertoires; Uncertainty avoidance; Problem-directed search
Organizational learning and change
Central coordination and control
Decisions of government leaders
Dominant Inference Action (in short run) = output close to existing output
Pattern Action (in long run) = output conditioned by organization view of tasks, capacities, programs, repertoires, and
routines
General Existing organized capabilities influence governmental choice
Propositions Organizational priorities shape organizational implementation
Special capacities and cultural beliefs; Conflicting goals addressed sequentially
Implementation reflects previously established routines, SOPs, programs and repertoires
Leaders neglect administrative feasibility at their peril
Limited flexibility and incremental change
Long-range planning
Imperialism
Directed change
! 25
to organizational parochialism where each organi- problems with each proposal. The Air Force could
zation conducts its affairs according to its own in- not guarantee success, and Kennedy (a World War
terests and defines success by whether they meet II veteran) did not like the idea of enacting a
those objectives. To accomplish objectives, organi- “Pearl Harbor” on another nation. Similarly, the
zations rely on standard operating procedures Navy could do a blockade, but they did it the way
(SOP), which means they have built in routines they trained to do it - 500 miles out - instead of
they tend to train with and follow repeatedly, and 180 miles off the coast as Kennedy commanded.
they get good at them. Larger programs are then This was even done after the President got angry
clusters or repertoires of SOP (e.g., fighting entails over it. Simply put, the Navy invoked their
multiple SOPs). SOP’s.
Organizations attempt to reduce uncertainty
by ignoring details, having regularized contact,
and conventionalized means of processing informa-
tion. However, this all leads to distorted informa-
tion. Organizations also perform problem-directed
searches, whereby each search is guided by avail-
able and familiar organizational routines. Coordi-
nation and control across different organizations
and their SOP clusters is always an issue (e.g.,
how do you get the Air Force and Navy to coordi-
nate their activity?). Executives merely call into
play different organizations and their SOPs.
Let’s give an example: It took a long time for
the report on sighted nuclear missiles to reach the
president. This information was lost in tons of in-
accurate information, and the transfer of the actual
message took a long time because it followed stan-
dard operating procedures. The first photos were
taken on September 12, over a month before the
actual report was made to the president. On Sep-
tember 19, analysis of the photos suggested the
presence of the missile silos. On October 4 they Figure 2.7 Surveillance Photo of Missiles Being
began to believe there were missiles there. At that Loaded at Port
point, there is a territory dispute between the Air (Source -
http://commons.wikimedia.org/wiki/File:Soviet_missile_equipment_beeing_loaded_at_po
Force and the Central Intelligence Agency (CIA). rt_in_Cuba_1962.PNG)
In addition, there is a mechanical delay from ensu-
ing U-2 flights over Cuba to confirm these suspi-
cions. Only on October 14 was there a flight that Bureaucratic Politics Model
confirmed the presence of missiles and that is used
to inform the president. The bureaucratic politics model asks the fol-
Another example: The EX-COMM leaders lowing: Is the government composed of multiple
are organizational representatives. When each one actors with different problems and objectives? Is
is asked their opinion, they respond as organiza- the choice an outcome of bargaining games that
tional representatives and state what a representa- unfold over time? Was power and skill a factor
tive of their organization could do. The Air Force that was involved? What compromises were had?
is a proponent of an airstrike and the Navy a naval What overlapping games were being played?
blockade. That is said even when there are clear

26
Who were the leaders, followers, staffers, and ad
hoc players?
Multiple players were there with different
perceptions, priorities, and focused on separate
problems. For example, the Air Force and Army
had very different views of the atomic bomb. The
Air Force saw it positively due to their success in
using it in World War II. However, the Army saw
it negatively due to their experience of it in Japan
while on the ground. Of course, all of these are
relative judgements. All of these players contrib-
ute to the coalition arrangement, and they are com-
piled over time into different outcomes. Had dif-
ferent players been involved, the outcome of the
Cuban Missile Crisis might have been different.
The key features of the Bureaucratic Politics
Model are the points of leverage, the personalities,
and various interest coalitions. How players nego-
Bureaucratic Politics Model
(Adapted from Allison and Zelikov 1999:391)
tiate, posit claims and thwart / work for them, is
how these temporary agreements arise and force a
decision. For example, take the actors and their
stances: Kennedy’s weak spot was Cuba due to the
Bay of Pigs fiasco. So he was very vulnerable
there. Re-election was key to him and he could
not fail on Cuba again. The military, on the other
hand, wanted to reprise the Bay of Pigs but this
time succeed.
What arose were two coalitions or viable op-
tions – adopt the blockade or perform an airstrike.
One coalition was formed when the defense secre-
tary voiced that a holocaust could be a potential
result – i.e., the President, Robert Kennedy, Robert
McNamara, and Ted Sorenson are all for the block-
ade. In contrast, the six chiefs of staff including
McCone, Rush, Nitzke, and Acheson, wanted an
air strike. The coalition fell apart due to a lack of
guarantee, the problem of retaliation, and Ken-
nedy’s concern of mirroring Pearl Harbor. So the
bureaucratic politics model assumes a variety of
views and actors alignments create different camps
that duke it out.

The Paradigm Model 3

National Government
A!!!!!!!!!!!!!!!!!!!!!!!!!!B!
!!!z!!!!!!!!!!!!!!!!!!!!!!!!!!!r!
!!!y!!!!!!!!!!!!!!!!!!!!!!!!!!!y!
Players in positions (A-F)
C!!!!!!!!!!!!D!!!!!!!!!!!E! Goals, interests, stakes and stands (n-z)
!!!n!!!!!!!!!!!!t!!!!!!!!!!!!!z!
!!!x!!!!!!!!!!!!y!!!!!!!!!!!!!f! Power
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!F! Action-channels
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!p!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!r!
Basic Unit of Government action as political resultant
Analysis
Organizing Players in positions
Concepts Factors shape players’ perceptions, preferences, stands
Parochial priorities and perceptions; Goals and interests; Stakes and stands; Deadlines
and faces of issues
Power
What is the game?
Action-channels; Rules of the game; Action as political resultant
Dominant Governmental action = resultant of bargaining
Inference
Pattern
General Political resultants
Propositions Action and intention
Problems and solutions
Where you stand depends on where you sit
Chiefs and Indians
The 51-49 principle
International and Intranational relations
Misexpectation, miscommunication, reticence, and styles of play
27
!
 Summary Table of Three Theories to Date:

Organizational Process (OP) / Limited Problem Solver (LPS)

Rational Actor (RA)
When does it apply? Exists when there is a unified actor with consistent preferences, Exists when the decision is guided by a logic of appropriateness – matching problem
lots of information, and clear goals (and time calculate). to actors with procedures for handling it (routine-process focus).

Summary or Basic Unitary actor or team that confronts a problem, assesses Dividing up problem, coordinating / activating organizational actors who have special
Argument objectives (goals) with regard to it, identifies options, the capacities / SOP’s for parts of problem, conducting sequential attention to objectives
consequences of said options, and then chooses option that (localized searches until problems resolved). Action guided by processes / available
minimizes costs. routines.
Variant: Bounded rationality and satisficing. Recognize
imperfect info, ambiguity, and select first satisfactory option
(good enough).

Key Organizational Elements

Technology (how Maximization of options (solutions). Matching identity and SOP’s (solutions) / programs / repertoires to problem.
solutions get
decided)
Participants Unified team or actor Organizational positions

Goals Goals are defined in regard to problem. Objectives – compliance to SOP’s, match with problem parts.
(what probs to
resolve)
Social Structure Formal roles, hierarchical. Actors in hierarchical organizational positions. Cue sequential routines that
accomplish task or solve problem by routines available (supply issue).

Environment Not salient except as influencing consequences of options. NA

Dominant Pattern of Action = Maximization of means to ends. Action = output close to prior output (path dependence), cueing of SOP’s appropriate
Inference to problem.
Management Know alternatives and their consequences for the shared goal, Know SOP’s, what problems they go with (matching), and who cues them. Improve
Strategies and select wisely. Improve information and analysis. rules and matching with problems. Management by rules.
Management by consequences.

28
Case - Electricity Regulatory Commissions tem, or exited the system by setting up their own
electricity or colluding with field personnel. How-
The Cuban Missile Crisis is a case where an ever, over the last thirty years, SEBs’ finances dete-
organization is forced to make a decision (i.e., a riorated considerably due to politicization and the
crisis). Another type of case concerns an organiza- SEBs’ own internal inefficiencies and agency prob-
tional reform, and that’s the sort of case we will lems.
focus on in this section.
This case describes the state electricity regu-
latory commissions (SERCs) in India, with a spe-
cific focus on the Karnataka Electricity Regulatory
Commission (KERC) at two key decision-points
in its history. The first involved KERC’s controver-
sial decision under the first chairperson to pass on
the cost of a Power Purchase Agreement (PPA) for
a power plant on to consumers. The second in-
volves the tenure of the second Chairperson and
focuses on an unprecedented investment proposal
to upgrade the entire transmission network in the
state of Karnataka. Both of these reform decisions
were contentious, laden with politics and carried
far-reaching economic ramifications.
In India, electricity is under the control of
both the central and state government. Jurisdiction
falls along predictable lines of inter-state versus
intra-state commerce, and centrally owned versus
state-owned facilities and organizations. In 1948,
the electrical utilities were organized around pub-
licly owned and controlled State Electricity
Boards (SEBs) and they were state monopoly
power companies. SEBs had a dual purpose (or
goals) as commercial entities and as instruments of
development policy. They were vertically inte-
Figure 2.8 220kV Tower near Ennore
grated institutions, generating, transmitting and dis- (Source:
tributing electricity to customers within the state. http://upload.wikimedia.org/wikipedia/commons/0/03/220kV_tower_near_Ennore.JPG)

SEBs employed as many as 80,000 employees in

large states. However, since the SEBs effectively
operated as extensions of the state Energy Minis-
tries, they fell prey to political interference on
many fronts. Primarily, SEBs acted as instruments
for accessing voter banks. The state Energy Minis-
tries directed SEBs to excessively subsidize par-
ticular consumers (usually farmers), and place in-
vestments strategically in politicians’ constituen-
cies – a practice likened to “campaign financing.”
To finance these subsidies and non-economic in-
vestments, industries were charged exorbitant tar-
iffs. Industries remained disgruntled within the sys-
State policymakers in the late 1990s were in-
fluenced by conditions stipulated by international
loans and an internal policy directed toward pri-
vate sector participation. Thus, they established in-
dependent State Electricity Regulatory Commis-
sions (SERCs) based on the US model of regula-
tion. The SERCs would discipline the SEBs and
usher in a new era of reforms. They had the diffi-
cult task of untangling the knots of public sector
inefficiency and political interference. SERCs
were called upon to regulate state-owned electric
utilities – the SEBs – and to usher in a transition

29
toward privatization and competition. In short, the
SERCs were established as instruments of “de-
politicization.”
The SERCs were to accomplish this by apply-
ing economic and financial principles to regulate
tariffs. Investments, and the operating costs of
SEBs. Tariff setting involved scrutinizing utilities’
annual revenue requirements based on their cost
structure, power purchase, and investments, and
by setting rates on cost recovery and a reasonable
rate of return. What makes this task challenging is
the absence of sufficient data to determine an ap-
propriate rate of return. Since utilities are under po-
litical pressure, they provide free power to farm-
ers. SEBs then mask their inefficiencies by over-
stating farmer consumption and understating tech-
nical and commercial (theft) losses within the sys-
tem. Thus, one of the regulators’ tasks is to parse
out the grey area between agricultural consump-
tion and actual system losses so as to discipline
costs related to actual system losses without affect-
ing subsidies related to agricultural consumption.
In addition, regulators have the difficult task of
regulating investment in underdeveloped physical
infrastructures. Since most Indian power systems
are underdeveloped, utilities are expected to at
least to maintain, if not upgrade, the system (e.g.,
replace burned-out transformers). However, regula-
tors inherited a culture where politicians, and not
engineers, directed investments. Thus, regulators
faced the difficult task of pruning investments
while being pressured to invest in infrastructure. It
was an untenable position.
SERCs became the institutional focal point
of reforms post-2000, tasked with a significant re-
orientation of the energy sector toward disciplin-
ing and removing corruption from SEB’s and at-
tracting private investment and competition. Cor-
ruption was targeted when finance ministries at the
state and national levels, pressured by interna-
tional donors, gave notice that budgetary subsidies
to the Indian electricity sector must be targeted
and transparent. They attracted private investment
by setting up market rules for competition pursu-
ant to the central Electricity Act of 2003, which
ushered in private participation in competitive mar-
kets. For example, SERCs phased out cross-
subsidies and rationalized tariffs. All of this cre-
ated a new playing field because understanding in-
ternational markets and their salience to the Indian
context was a complex and challenging task for
the recently established, resource-starved regula-
tors. Regulators had to understand the economic
aspects of these markets, but also the technical im-
plications for different market structures: all prod-
uct “deliveries” took place on a common grid that
obeyed the laws of physics, not markets.
Regulators consist of one to three members,
including a Chairperson and two other members,
typically one “Technical” and the third “Eco-
nomic.” Regulators typically rule on issues by con-
sensus, but formally require 2 out of 3 to agree on
an issue. The government appoints all regulators,
but they are selected from a candidate shortlist de-
termined by a search committee who solicits candi-
dates from both private and public sectors. Mem-
bers have five-year tenures, from which they can
be removed only on very egregious grounds, such
as moral turpitude. In practice, they do not face the
risk of premature removal.
Regulators direct a staff to assist them in
analysis, data gathering and writing. These usually
consist of Directors, Deputy Directors and lower
level staff for each functional area. A Secretary of
the state electricity regulatory commissions
(SERCs) serves as the point of interaction between
the SERCs and the outside world. In practice, the
Secretary and Director of Tariffs take on the bulk
of the staff responsibility to provide research, con-
tent, and engage in public relations. The overall
staff strength is 20-30, with 10 or less non-
administrative staff. For instance, Karnataka Elec-
tricity Regulatory Commission (KERC) had only
9 key staff, and 3 consultants on contract.
In practice, Members were selected through
an ostensibly independent search committee from
an applicant pool consisting mostly of retired bu-
reaucrats from the Indian Administrative Service.
In practice, rumors of political interference
swirled. They may or may not have prior experi-
ence with the power sector. Staff were hired
mostly from the State Electricity Boards (SEBs)
with few exceptions. In Karnataka, over 90 per-
cent of staff spent the bulk of their careers with the
30
SEBs. In all cases, the staff and Members spent
their careers in the public sector.

The Power Purchase Contract

Prior to the formation of KERC, the Tannir
Bhavi Power Company (TBPC) entered into a con-
troversial and ambiguous Power Purchase Agree-
ment (PPA) with the state-owned utility. The gov-
ernment typically negotiated and controlled these
PPAs on behalf of the utility company, and in this
case amidst rumors of corruption. The KERC was
required to grandfather all previous PPAs that ex-
isted prior to its formation. All new PPAs required
the approval of the KERC. When the TBPC’s PPA
went to the KERC for approval, the KERC was
pressured by the government to accept it but also
faced pressure from the public to reconsider it
since its cost was high. The current laws limited
what the KERC could do, so now it could either
absorb the full cost of the contract or face the con-
sumers’ anger. The KERC ordered the TBPC to
proceed with arbitration to resolve its disputes and
then to accept the resulting verdict. The Secretary
of KERC firmly believed in protecting consumer’s
interests. He wanted to set aside the PPA com-
Figure. 2 13 Overburdened Infrastructure
pletely, believing it to be unjust. However, the (Source: http://farm3.staticflickr.com/2546/3921003774_9fd0df75e3_o.jpg)
KERC Chairperson pushed back on this. The
Chairperson compromised to defer to the arbitra- Investment in Transmission
tion panel and seeking advice as to what his op- The SEB proposed an annual investment of
tions were. The arbitration panel ruled in favor of $600 million, which was five times the size of the
the TBPC. However, this was done with little dis- highest implemented budget in the SEB’s history.
cussion of the disputed provisions. The Secretary The KERC set up a committee to review the pro-
did not acquiesce. Instead, the KERC came out posal. This committee accepted the proposal, but
with a unique legal interpretation of the term “con- reduced the annual investment to $400 million,
cluded contract,” interpreting the grandfathering leaving the remaining amount for future appropria-
provision to apply only to contracts where both tion. The committee’s objective in the review was
parties “mutually consented” to the PPA. The con- to evaluate the results using a cost-benefit analysis
troversy gave the KERC cause to review the PPA. of the proposed investments and to determine the
Its subsequent order denied passage through to con- cost-effectiveness of reaching the desired level of
sumers, which the utility challenged in court. reliability in the transmission network. Many trans-
formers operated too close to their designed limits,
increasing the risk of failure and reducing their life
expectancy. However, other aspects of the SEBs
proposal cast doubt as to what the SEBs true mo-
tives were. Some argued that the utility developed
the project proposal to showcase the political expe-
diency of pre-allocated government investments.

31
The utility had never spent more than $100 million
in a year on any capital investment. In fact, some
claimed that they received orders from higher-ups
at the utility to include specific transformers in the
project. When they protested these requests, they
lost their jobs.
The KERC regulator first reacted to this pro-
posal by setting up an expert committee. Under the
previous Chairperson, the regulator was forced to
“step back” his scrutiny to large investment
schemes and, thus, disbanded a committee set up
to appraise all projects. This proposal merited scru-
tiny due to its unprecedented large scale. The regu-
lator expressed reservations on several occasions
as to their internal capacity to provide a reasonable
analysis, especially with the insufficient amount of
data. The regulator hired an outside consultant to
obtain an “independent” and “credible” perspec-
tive to make an informed decision. In the same
way, the regulator probably sought a similarly
credible opinion from the KERC committee on
this investment. The Chairperson pointed out that
this committee gives the regulator “some sem-
blance of credibility” in reducing what everybody
knew was an untenable size for an investment in
one year.
The KERC committee’s constitution pro-
vided guidance as to how to proceed. A retired bu-
reaucrat who had run the utility for many years
chaired the committee. He had faith in the basic
idea of the proposal and believed his role was to
add a dose of pragmatism to the project. The other
member was a representative from the external
consulting organization that drafted the proposal.
His role was to provide data from the review. The
third member was a former member of the KERC.
The Chairperson and the regulator staff were not
concerned with a conflict of interest arising from
having a retired KERC bureaucrat and an external
consultant who was associated with the draft. The
committee’s report recommended reducing the an-
nual budget from $600 to $400 million. The tone
and content of the report did not question the justi-
fication for the project. Instead, the report dwelled
on prioritizing parts of the project to allow its
piecemeal implementation and to allow for correc-
tions to any errors in the analysis.
The KERC adopted the recommendations of
the committee’s report without discussion or inde-
pendent analyses and opinions. However, the regu-
lator did go through the procedural motions that
permitted a public hearing and required the utility
to provide written responses to objections raised in
the hearing. The staff quietly solicited objections
from the public to encourage scrutiny of the invest-
ment. Many objections requested more informa-
tion and a more thorough analysis of the project.
However, the committee was not required to incor-
porate these objections into their analyses and writ-
ten report. The regulator also faced external pres-
sures from the Chief Minister, who summoned the
regulator and threatened to remove KERC staff for
forming the committee. The regulators were aware
that the utility would call its “bigger brother,” the
Energy department, to chastise the regulator for
stalling past project proposals. Finally, the Chair-
person was well aware of the media’s attention on
the project, and lamented the conflict that regula-
tors faced when balancing caution and the public’s
desire for action and “development.”
In sum, then, we have a case of electricity
regulation with enough detail that we can identify
various parties, their interests, and how they acted
so as to create a couple organizational decision-
arcs. Next, let’s apply a couple theories to see how
they help elucidate the case and these decision mo-
ments.
Figure 2.14 Thermal Power Station
(Source:
http://upload.wikimedia.org/wikipedia/commons/6/67/Sabarmati_Thermal_Power_Station
_(STPS),_Ahmedabad.jpg)
32
 Logic of Logic of Organizational Process
Appropriateness Consequences Model
Goals Regulators were
Regulators balanced tasked with
Regulators followed
external pressures of determining
SOPs in a weak
transparency with economic and
regulatory framework
organizational financial
at the KERC.
effectiveness. consequences of
decision-making.
Key Actors Regulatory
members in
Regulatory members in
KERC; SERCs;
the KERC; SERCs;
foreign donors;
national and state Regulatory members in
national and state
government officials / KERC; SERCs.
government
bureaucrats; political
officials /
officials.
bureaucrats;
political officials.
Social Structure Hierarchical, but
informal, relationships Dependence on
with politicians and foreign aid; formal Centralized (decision
lifetime bureaucrats reporting making).
balanced with formal structure.
obligations.
Technology Identify goals and
Follow SOPs: Adhere
relevant
Match situation to rule to regulatory
alternatives, assess
or procedure. frameworks like the
their costs, select
CBR.
best means to end.
Environment The KERC and Internal pressure Internal pressure
informal and formal balanced with balanced with wider
relationships with sider regulatory regulatory
stakeholders. environment. environment.

Organizational elements and organizational theories applied to the electricity

regulatory commissions in India.

33
Logic of Appropriateness:
The logic of appropriateness is a rule-based
approach to decision making. For regulators, they
must comply with external pressure and self-
imposed restraint in their use of power. Rules are
followed in organizations because they are “ex-
pected and legitimate” (March and Olson 2004).
Like most decision makers, regulators evaluate
new situations by comparing them to their past ex-
periences, considering their organizational role or
position, and then determining what rules match as
“appropriate.” Regulators readily use a logic of ap-
propriateness and are guided by their own experi-
ence, ideological slant, and their own personal val-
ues. These concerns are primarily geared towards
issues of legitimacy for their organization, in order
to create a value system driven by external expecta-
tions.
Which rules do regulators base their deci-
sions on, and how do they balance between their
past experiences and ongoing external pressures?
KERC, for instance, drew members almost en-
tirely from a pool of retired bureaucrats who have
spent their lives in the public sector. Many of these
bureaucrats come from the Indian Administrative
Service (IAS), thus their experiences in bureaucra-
cies shaped their identity, values, and work ethic.
One of the most striking characteristics of these
government bureaucrats is deference toward senior-
ity, especially to officials who are “political” in-
cumbents. For instance, if regulators imposed puni-
tive measures on state-owned utilities, then “the
sanctity is gone,” referring to this unspoken defer-
ence. In certain instances, regulators felt obligated
to political or senior officials for their selection
into the regulatory commission or for past favors.
This sense of obligation pervades the ranks of regu-
lators because they dominate energy institutions in
numbers and because the regulatory institutions
have not built up a strong identity of their own. In-
dian regulators are not typically taught the culture
of their institution, its wider goals, or relationship
to the government and stakeholders. For instance,
the first KERC Chairperson received conflicting
signals with respect to the scope of his authority
from the energy secretariat from the two govern-
ments in office. As a result, the regulators softened
their stance on investment reviews in the face of
government pressure to not “micro-manage” utili-
ties. This might also help explain why regulators
avoid pursuing hardline questioning of utilities out
of fear of discovering politically “damning” evi-
dence that they would then need to confront as a
“rule-maker.”
Logic of Consequences / Rational Choice Per-
spective:
Rational choice theory adopts a logic of con-
sequence perspective, and we can use it to inter-
pret the decision making and behaviors of regula-
tors according to their objectives, preferences, and
risk aversions. The behaviors of regulators can
best be described as “restrained” in their exercise
of power, suggesting a high premium on “pragma-
tism.” Regulators adjust their behavior based on
their perception of feedback. Regulators were
tasked to perform highly rationalized economic
and financial analyses, weighing the costs and
benefits of each action’s consequences to the or-
ganizations they oversee. In doing so, regulators
took ambiguous goals and rendered them into
measurable goals in order to make their decisions.
They also identified all the possible options and
subsequent consequences and evaluated them (Alli-
son 1969). Their goals were to uphold the reputa-
tion of the Karnataka Electricity Regulatory Com-
mission (KERC) as a reform-friendly, unbiased,
and autonomous organization that responds to ex-
ternal demands. However, the consequences regula-
tors most worried about were their own profes-
sional reputations and credibility. The KERC ap-
peared to be concerned with feedback from con-
flicting demands. On the one hand, they were wor-
ried about project approval from governments and
utilities, and on the other, they were worried about
scrutiny from segments of the public, like con-
sumer groups.
Regulators reconciled these conflicting objec-
tives by using their own values to narrow the
range of alternative actions and then as prefer-
ences for choosing among the remaining ones. The
actions of the KERC looked like they confirmed
approved projects but while adhering to procedure
and only making token adjustments to appease
34
critical stakeholders. To the Chairperson, the com-
mittee did not perform credible analysis so much
as provide symbolic credibility to approved pro-
jects. The committee approved projects without
any cost-benefit analyses their components. The
Chairperson could have been influenced by his be-
lief that the system needed improvements, such
that minor cost “irregularities” were outweighed
by the dire state of the system. Thus, if a project
was “good enough” to be implemented given the
current constraints and values, the Chairperson
and committee engaged in “satisficing.” For them,
it might have been good enough to reduce the an-
nual planned expenditures from an “unachievable”
level to a “reasonable” one. They might also satis-
fice by using crude and intuitive assessments of
possible outcomes that might meet their own objec-
tives.
Organizational Process Perspective:
The organizational process perspective por-
trays decisions as the result of people following
standard operating procedures (SOPs) and con-
strained by bureaucracy. This perspective is apt in
describing the Indian regulatory industry. First,
SERCs operate using centralized decision-making.
As a regulatory agency, heavily structured by stat-
utes, members often have to follow standardized
protocol, along with the directives of senior staff.
While the bureaucratic aspects of the State Electric-
ity Regulatory Commissions (SERCs) are small
due to their size, SERCs developed rudimentary
internal procedures, such as the Conduct of Busi-
ness Regulations (CBR); means for disclosing sen-
sitive information; and how to conduct meetings.
Many of these SOPs are imposed “top-down” and
followed with wide discretion. Many of the SOPs
were imposed and reluctantly followed rather than
developing organically over time, in response to
decision-making needs. In addition, SERC SOPs
were sometimes used as means to attract stake-
holder input (so different purposes).
For the KERCs, regulators responded to
stakeholder objections which arose in the process
of following SOPs. For instance, KERC staff had
procedures by which to solicit contributions and
objections from external stakeholders. In the trans-
mission investment case, regulatory staff encour-
aged outside experts and consumers for project jus-
tifications so that they could bring those to the at-
tention of the regulators. Regulators could then
cite consumer objections and justifications as the
basis or “lead” for an argument in their tariff or-
ders. This regulatory process allowed information
dependency to be mitigated by regulators. Stake-
holder input enhanced the regulators legitimacy
and autonomy. In some cases, the very act of go-
ing through these procedures conferred legitimacy
to decisions (see Institutional Theory). For exam-
ple, the act of setting up a committee and conduct-
ing a hearing gave the decision ostensible credibil-
ity in the public eye, even if the regulator may
have predetermined the outcome. As useful as
these procedures may have been, they did not
drive decisions. Rather, regulators were driven by
their desire for other sources of information and
legitimacy, after selecting a course of action based
on other considerations.
Conclusion:
Regulators in India’s electricity power sector
have extended state bureaucracy and its apparatus.
In the end, the lack of procedural rigor and goal
specificity made them draw up their own rules of
appropriate action. Regulatory outcomes ended up
being personality-dependent, on the one hand, and
externally driven by the government behavior to-
wards them, on the other. Indian regulators par-
tially follow rule and consequence-based forms of
decision-making, but they are nuanced by adher-
ing to organizational processes and satisficing in
an uncertain regulatory environment. Regulators
struggle to maintain credibility amongst multiple
stakeholders with competing and conflicting de-
mands. However, they also complied with govern-
ment authority, while struggling to maintain credi-
bility with these multiple demands. As a result, the
regulators exhibited a mix of following SOPs and
satisficing to appease their multiple stakeholders.
35
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Dubash, NK, ND Rao (2007), The practice and

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Making: How Decisions Happen. NY: The Free
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March, James G. 1999. The Pursuit of Organiza-

tional Intelligence. Oxford, UK: Blackwell Pub-
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March, J. G. and J. P. Olsen (04/09). The logic of

Appropriateness, Center for European Studies, Uni-
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Scott, W. R. (1981). Organizations: Rational, Natu-

ral and Open Systems. Englewood Cliffs, Prentice
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Simon, Herbert A. (1947). Administrative Behav-

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tions. Vol. 3. Sage.

Interviews and other cited empirical research were

conducted as part of a research project entitled "In-

36
 3
Coalition Theory

(Source: http://commons.wikimedia.org/wiki/File:Sikh_Coalition_Im.JPG/)
Review and Coalition Theory

Thus far, we have covered three organizational theories: Rational Actor, Organizational Process, and Bu-
reaucratic Politics. We applied these theories to cases like the Adams Avenue School, the Cuban Missile Cri-
sis, and the case of electricity regulatory commissions in India. If we line up these theories side by side (see
below), we can see how they compare. Much of this is review, so I will not cover it in detail here. For the pur-
poses of this part of the chapter, I just want to highlight how each theory implies certain management strate-
gies.

Review of the Three Theories Covered so Far

Summary Table of Three Theories to Date:

Organizational Process (OP) / Limited Problem Solver Coalitions /

Rational Actor (RA)
When does it Exists when there is a unified actor with
apply? consistent preferences, lots of
information, and clear goals (and time
calculate).
Summary or Basic Unitary actor or team that confronts a
Argument problem, assesses objectives (goals) with
regard to it, identifies options, the
consequences of said options, and then
chooses option that minimizes costs.
Variant: Bounded rationality and
satisficing. Recognize imperfect info,
ambiguity, and select first satisfactory
option (good enough).
(LPS)
Exists when the decision is guided by a logic of
appropriateness – matching problem to actors with
procedures for handling it (routine-process focus).
Dividing up problem, coordinating / activating
organizational actors who have special capacities /
SOP’s for parts of problem, conducting sequential
attention to objectives (localized searches until
problems resolved). Action guided by processes /
available routines.
Bureaucratic Politics (BP)
Exists when there are multiple actors with inconsistent
preferences and identities, and none of whom can go
it alone without assistance of others.
Focus on the players occupying various positions;
their parochial interests (their conceptions of
problems and solutions); their resources (expertise,
money, people) and stakes in game; and bargaining
processes between them that establish agreements /
coalitions.

Key Organizational Elements

Technology Maximization of options (solutions). Matching identity and SOP’s (solutions) / programs / Bargaining, or playing the game (within its rules), or
(how solutions repertoires to problem. political maneuvering.
get decided)

Participants Unified team or actor Organizational positions Players in positions

Goals (what Goals are defined in regard to problem. Objectives – compliance to SOP’s, match with problem Parochial priorities, goals/interests, stakes / stands.
prob’s to resolve) parts.

Social Structure Formal roles, hierarchical. Actors in hierarchical organizational positions. Cue Coalitions – enemy/friend
sequential routines that accomplish task or solve
problem by routines available (supply issue).

Environment Not salient except as influencing NA Deadlines and wider array of stakeholders.
consequences of options.

Dominant Pattern Action = Maximization of means to ends.
of Inference
Management Know alternatives and their consequences
Strategies for the shared goal, and select wisely.
Improve information and analysis.
Management by consequences.
Action = output close to prior output (path
dependence), cueing of SOP’s appropriate to problem.
Know SOP’s, what problems they go with (matching),
and who cues them. Improve rules and matching with
problems. Management by rules.
Action = result of political bargaining.
Bargain with players (log-roll, horse-trade, hinder
opposition’s coalition formation, etc). Learn others’
interests / weaknesses so you know how to manipulate
and win. Direct management of relations via
bargaining.

38
Review of Management Approaches – Rational were commended – the US Coast Guard and the
Actor, Organizational Process, and Bureaucratic National Hurricane Center.
Politics

As a manager using a rational actor ap-

proach, you will want to consider alternatives and
their consequences. You will want to improve the
quality of information you receive so you can
make a wise decision based on the consequences
you expect each option to have.
As a manager adopting an organizational
process approach, you will need to know what or-
ganizations are involved, what standard operating
procedures they have in place, and then assign
them pieces of the problem they are best suited to
Figure 3.1 Hurricane Katrina
address. Your job is to match pieces of the prob- (Source
lem to organizations capable of addressing them http://commons.wikimedia.org/wiki/File:6/67/FEMA_logo.svg;http://commons.wikimedia
.org/wiki/File:thumb/9/90/Hurricane_Katrina_GOES_August_29.jpg)
effectively.
As a manager adopting a bureaucratic poli-
tics approach, you are more of a negotiator. You
will identify the key players, learn their interests,
identify points of leverage and weaknesses so you
can successfully bargain with them, and then make
exchanges to acquire their support. You will work
relationships and alignments to your advantage.
So each theory implies a different sort of
managerial strategy. With that in mind, let’s con-
sider a new case and use it as a thought experiment
for trying out these managerial styles. With every
Figure 3.2 President Bush, Governor Blanco and
new example we consider, hopefully you will form
Army Corps of Engineers
a more concrete sense on how to apply theories to (Source: http://commons.wikimedia.org/wiki/File:BushVitterBlancoPoint.jpg)
real world cases.
In this chapter, we want to take the example We know it is an event that has already hap-
of Hurricane Katrina, which hit the city of New Or- pened, and there has been a great deal written
leans in 2005. Hurricane Katrina was the costliest about it online. We also know we have 20-20 vi-
natural disaster for the United States (estimated at sion in hindsight. But it is often hard to acquire
81 billion dollars in damage) and in its wake, over adequate amounts of material on a case that re-
1800 people died, and 80% of New Orleans was flects the depth of knowledge that leaders and ana-
flooded. Lawsuits were filed afterwards against lysts might have on an organizational crisis and de-
the U.S. Army Corps of Engineers who designed cision they are immediately involved with. The
and built the levee systems that failed, and there information we can glean on Katrina from reading
was an investigation into the responses of federal, online material begins to approach what we think
state, and local governments, resulting in the resig- involved participants or experts might have on the
nation of Federal Emergency Management ground floor. But the point is not to achieve per-
Agency’s director, Michael Brown, and New Or- fection here. It is pedagogical. We want you to
leans Police Department Superintendent Eddie get used to applying theories as lenses to cases.
Compass. Several agencies performed well and

39
 Therefore, let’s role-play and imagine we are
mayor Nagin -- what would we do? After reading
this textbook, you might want to put in your
toolkit as many theories as it can hold. After all,
people’s lives are at stake and you want to do the
best job possible:
• Which theory would you use to help you pre-
pare for the hurricane?
• Which would you use to help you manage
the situation after it hit?
Applying the Models to the Case of Hurricane Ka-
trina
As a rational actor, Nagin would consider
the problems and his goals with relation to them:
e.g., the storm is coming and will likely flood the
city and create problems he can only partially ad-
dress. He has various options to treat the problem
– do nothing, build up the levees better, evacuate
before, evacuate after, serve/protect all the while,
and drain/rebuild afterwards. He would think
about all the other actors involved (FEMA, Gov,
Army Cops of Engineers, Red Cross, Police, Fire
Dept, National Guard, etc). As a rational actor, he
would assume his staff and others are on the same
side because they too see the costs or conse-
quences of flooding and lacking a good response –
any death toll is too much. By relating the conse-
quences of various options (or not taking the ones
proposed) and identifying how the least cost in life
is accomplished, he should be able to get everyone
to mobilize and respond in an optimal way.
But we know people do not always have the
same goal, nor are they always motivated by conse-
quences. Some actors and organizations may
think the walls will hold, others will think 10 or
even 100 deaths will not need a response. At the
other extreme, they may be so overwhelmed with
the flooding that they will act on other instrumen-
tal grounds (for example: the National Guard may
be flooded themselves!). Nagin may have to in-
voke identity expectations, notions of duty, - the
logic of appropriateness! From an organizational
process standpoint, he needs to start partitioning
the problem up so the appropriate organizations
with experience and standard operating procedures
(SOP) are assigned to each part – the city has
evacuation plans, etc that he can commence and
coordinate. He knows police and fire departments
will assist there. But will their ability to perform
SOP’s remain if they are overwhelmed? What if
their homes and families are flooded too? Will
they privilege their family identity? (So perhaps
having police/fire family protection plans set is a
very good idea – as well as drills to prepare fire/
police for the worst) Also, Nagin might know that
some of these SOP’s work better in some neighbor-
hoods (rich) than others (poor) and can allocate
more where needed to make it work better.
Figure 3.3 Organizations Involved
(Source - http://commons.wikimedia.org/wiki/File:FEMA_logo.svg/;
http://commons.wikimedia.org/wiki/File:Hurricane_Katrina_President_Bush_with_New_
Orleans_Mayor.jpg
http://commons.wikimedia.org/wiki/File:Flag_of_the_Red_Cross.svg
http://commons.wikimedia.org/wiki/File:National_Guard_emblem.gif)
That said, as mayor, we might predict it is
likely the city be overwhelmed anyway, so we
need to appeal to other organizational actors who
coordinate a wider array of participants and rele-
vant SOP’s– e.g., Governor Blanco, the FEMA di-
rector, and the president of the United States. In
looking to these seemingly peripheral organiza-
tions, we begin to adopt a bureaucratic politics
model. We ask these other actors to commence
SOP’s that are under their jurisdiction. We might
even explain our reasoning via the Rational Actor
Model (costs). Here we would hope to get Na-
tional Guard support in evacuating remaining citi-
zens (helicopters), delivering needed supplies, and
maintaining order. We will also need to appeal to
the Army Corps of Engineers so as to be ready
with equipment to repair any walls after the flood-
ing occurs.
But we know this may not work – actors and
organizations have parochial interests. From a bu-
reaucratic politics perspective, we know the Na-
40
tional Guard will have its own problems if
flooded; the Army Corps of Engineers will not
want to be blamed for faulty walls; FEMA will not
want to look inept or totalitarian; and the Gover-
nor will not want to have her authority circum-
vented by outside organizations. Hence, we can
bargain with them. What do we bargain? We can
offer our public statement that they have worked
appropriately and diligently (not neglectfully, or
worse, prejudicially), etc. In short, our theories
offer you ways of organizing and ways of getting
coordinated action. They are descriptive and feasi-
bly prescriptive if you so wish.
All this is a caricature of course, but hope-
fully it gets you to think more about how to apply
theories to cases. Many of you are welcome to
consider this case in greater detail and how our
theories might apply. There is a multitude of infor-
mation about Hurricane Katrina online. It is a case
well worth analyzing – and especially since many
more hurricane’s will hit the gulf coast and eastern
seaboard of the United States in years to come.
The same could be said for earthquakes, torna-
does, tsunamis, etc. Through the careful study of
cases and application of organizational theories, it
is feasible to plan better and improve our manage-
ment of these recurring problems.
Why Theories Matter?
If you were an analyst or manager, why
would you want to learn these theories and apply
them? We see at least three huge benefits – imag-
ine you are called into an organization to help
them with a problem. Your training in organiza-
tional theories gives you a few useful skills: First,
you have a broader range of experiences. You
know other histories, examples, companies, and
accounts that are different from your own personal
experiences.
Second, you have a systematic way of think-
ing about an organization and its problems.
What’s likely to happen is that the employer
brings you into their office and explains their prob-
lem: “We have a problem with how the employees
relate to each other, and there seems to be a man-
ager who is really trying to drive a wedge between
everyone.” You will hear that and understand that
this is a problem with regard to social structure
and that the current interpretation is that the con-
flict is intentional or driven by a particular actor.
Now you probably don’t want to use such aca-
demic jargon to relate this to them, but you can rec-
ognize that this is an issue they see as focused on
certain aspects of the organization and has one
kind of explanatory logic applied to it. By relating
that back to them, you help them better understand
what it is they think they are seeing.
As an analyst familiar with the ideas in this
textbook, you are able to allude to other facets of
the organization – other actors, their beliefs, influ-
ences from the environment, technologies, compet-
ing goals, etc. You can also offer another form of
explanation – that actors are just following SOP’s
and there is a conflict between those emanating
from different units of the organization. In this
manner, you help the client see things in a differ-
ent way – and most likely, in a more useful way as
well.
Most every organization seldom wants an
outsider to come in and tell them what to do. If
they do, it will likely fail in implementation. They
will want you to help them figure out what is go-
ing on so they can propose solutions on their own.
You can help with that process, and by placing
them as central actors in the decision process they
are more likely to adopt some kind of solution and
reform that resolves at least some of their issues.
Coalition Theory
In the second chapter of the course you got a
good sense for how the rational actor perspective
and organizational process perspectives differed.
Those theories nicely corresponded with March’s
notions of decisions by the logic of consequence
and decisions by the logic of appropriateness. You
probably walked away with a less clear understand-
ing of the bureaucratic politics model. This chap-
ter will give a more elaborate depiction of that
model, and focus on its core process of exchange
41
and coalition formation. Within organizations, ance into a unified party, but it doesn’t last long.
you will frequently confront coalitions of interests, Other coalitions can be interest group based,
and you will come to realize that collective action where a variety of groups (or even distinct relig-
and organizational reforms are impossible if you ious sects) coalesce around an issue of mutual
do not build and manage a coalition to get things concern.There are even organizational coalitions,
done. Therefore, we turn now to Coalition theory. where different agencies and organizations coordi-
To relate this theory, throughout this chapter we nate their provision of services due to a great deal
will draw heavily on the writings by James G of overlap.
March (1962, 1994: chapter 4) and Kevin Hula
(1999) concerning coalition formation.
To this point, we have covered three theories,
and each has certain shortcomings. For example,
the rational actor view assumes people have the
same goal and that is seldom the case in reality.
Also, many people are not motivated by the conse-
quences of options. This leads us to an organiza-
tional / rule-following view, but this perspective
fails to take into account how peripheral organiza-
tions can matter, and how many of the routines be-
ing suggested and enacted have parochial interests
behind them. There is politics and change, and
rule-following is too static and path dependent to Figure 3 4 Senado de Chile
(Source - http://commons.wikimedia.org/wiki/File:Senado_de_Chile.svg)
catch it. Finally, we have the bureaucratic politics
model – and here we see more nitty-gritty politics
driving decision coalitions. Unfortunately, we did
not discuss thoroughly enough how interests are
negotiated and how collective decisions are
reached. Here we will spend more time elaborat-
ing and explaining how coalitions can be man-
aged. We will zone in on coalition dynamics and
its core process of exchange and negotiation.

Examples of Coalitions

Let’s start with something simple. What are

some examples of coalitions? The most common
ones are political and international coalitions. For
example, in Chile, there are many political parties
as shown in the diagram of circles. Some of the
parties find mutual interest and gain from working
together, so they form a coalition – like the “coali-
tion for change” (all the blue’s) or the “coalition of
parties for democracy” (most of the rest).
Another example might be seen in this de-
cent tree of Christian political parties in New Zea-
land. A coalition ends up being a temporary alli-
Figure 3.5 New Zealand Political Parties
(source http://commons.wikimedia.org/wiki/File:ChristianPoliticsNZ.png)
We have already read some discussions of
coalitions in chapter 2 of the course – both March
and Allison discuss them in various ways. In most
instances, coalitions are social systems led or or-
ganized by mutually inconsistent decision-makers
(Cyert and March 1963). Here it becomes difficult
to see the decision-makers as a team. Instead we

42
have a power-struggle or tenuous coalition that de-
scribes the decision process.
Looking back to our table of Allison’s theo-
ries and the outline of the Bureaucratic Politics
Model, we see there are multiple players in differ-
ent positions. There are various factors that shape
their preferences and stands – e.g., their particular
interests, stakes specific to them, the goals of
someone in their position, and the deadlines rush-
ing them to decide. Each actor has certain re-
sources or power (things people want), and they
enter a game of exchange or bargaining according
to rules. The end decision or organizational action
is the result of bargaining across these actors.
March describes coalitions in a nice way that
compliments Allison’s Bureaucratic Politics
Model and Hula’s notion of coalitions (Allison
1969; Hula 1999; March 1962, 1994). His focus,
however, is more on the central organizing process
of a coalition – the process that creates and sus-
tains a coalition. March argues that scholars de-
scribe coalitional decisions or coalition formation
as following one of two processes (among others).
The first process has been called a power-struggle,
and it has sometimes been analyzed and operation-
alized as a simple force model. A force model is
an extension of the expected utility calculations
we did for individuals last week, except this time
we have multiple actors with different preferences
(or different values placed on the outcome) and
they are given different weight in making deci-
sions. To calculate the decision a coalition makes
by the force model, we simply add up the expected
utilities weighting those of more important or pow-
erful actors.
For example, take our old example of the um-
brella and the expected utility of bringing it or not
(or even the dating example of asking someone
out or not). If we calculate that for each of you
and then weight your score by the relative power
you have, then add everyone up – we should have
our collective decision. The problem with this pro-
cedure is that power is depicted as a stable per-
sonal trait we can actually measure. But power is
not a personal trait (think triads [dependent no-
tions of rank]) and it changes over time. It is also
a tautological model and explanation: when people
get what they want, power is seen as explaining
why they got it. Plus, power can refer to many dif-
ferent things persons acquire. As such, it is hard
to measure as one construct everyone agrees upon.
So the force idea of just extending our pure Ra-
tional Actor Model to sets of people does not
really apply well.
Exchange Model
A better way to study power-struggles is
through exchange models (Emerson 1962). Here,
collective choices are produced by voluntary ex-
changes – e.g., trading and bargaining. This is the
central organizing process of Allison’s Bureacratic
Politics Model and Hula’s Incentives Theory – or
what we will just call “coalition depictions.”
The process of exchange is relatively simple:
(1) Every actor enters into a voluntary ex-
change relation regulated by rules (Alli-
son’s “rules of the game”).
(2) Participants bring resources to the table
(e.g., money, property, information, skills,
access to others, rights, knowledge, etc
~similar to Allison’s notion of “power” –
Please also note that Scott [2003] de-
scribes these powers or control over re-
sources as resting in various roles and po-
sitions in an organization -- ownership,
management (capital), worker expertise,
bridging roles, and rule-establishment of
external actors like regulative agencies).
(3) The process of choice is one where mutually
acceptable trades are arranged (within
the rules ~Allison’s “bargaining”).
(4) Each actor trades trying to improve their po-
sition, fulfilling their preferences / identity
as best they can until no more legal or mu-
tually acceptable trades are possible (this
presumes bargaining with no time limit –
but Allison and Hula add the reality that
we often face time-limits).
The exchange process as described above is the
core of the bureaucratic process model and to coali-
tion formation more generally.
43

How to Manage and Win at Exchange
As a participant in exchanges, your ability to fulfill
your preferences / identity depends on a few
things:
The first is your ability to control the rules.
Do you write the laws? Who defines the rules of
the game? Take for instance, Robert Caro’s ac-
count of Robert Moses in The Power Broker – an
unelected bureaucrat who ends up controlling poli-
ticians. He does this writing himself into legisla-
tive rules and as the person who controls the tran-
sit construction budget (arguably the largest chunk
of the city budget). Through this, he controlled
the election of new officials, helped promote them,
and he tore up the whole city and made the mod-
ern day New York city landscape (Caro 1975).
Another example of how to manage and win
exchanges is to control resources. Do you have
resources others want? Do others have the re-
sources you want? If you depend on others, or
they depend on you, then there arises power-
dependence relations. You may need to exchange
far more of your unvalued resources for those you
really need. Such leverage puts certain parties at a
disadvantage.
The third thing is control over preferences
and identities. Here, you want to transform per-
sons wants so others demand the goods you pro-
vide. You want to create demand and define oth-
ers preferences, or render their identities (in)com-
patible with the core interests of the coalition.
So to control exchange, follow the old saying
– “get rich, seize a hostage, and build a better
mousetrap!” (March 1994: 150)
Exchange Process in Coalitions
Now that we have a better sense of the ex-
change process and how to manage and win it,
let’s go back to coalitions and explain how they
work. Keep in mind that exchange is still the gen-
erative process of coalition formation. That has
not changed. All we want to talk about now is the
larger context of multiple exchanges or a larger
group.
Coalitions are social systems wherein deci-
sions are made and reforms are pursued within a
context of potential conflict. Four characteristics
help us understand the nature of larger coalitions
and how the process of exchange sustains them.
First, coalitions entail actors with mixed prefer-
ences and identities that do not always align. They
are often juxtaposed so they require bargaining.
Second, the objective of participants is to form a
coalition capable of making decisions favorable to
them. This is obviously difficult because of all the
internal inconsistencies. Participants have paro-
chial interests, and this is obviously difficult, be-
cause of all the internal consistencies within the
group. Third, in this context people have to make
exchanges, deals, agreements as to what decisions
will be made by the coalition. This follows the
core process we described above of exchange.
And finally, resources are extracted through such
coordinated action and distributed to coalition
members. This is what members get in return for
joining a coalition. The resources Hula will cite
are strategic incentives, information, and symbolic
benefits - Something we will discuss below.
Some important questions follow: Who will
be in the coalition? And how are the spoils di-
vided? This can follow both the Logic of Conse-
quence (which seems primary here) and the Logic
of Appropriateness. As an instrumental actor, you
join the minimal winning coalition so you can reap
the most rewards. As a rule-follower you seek coa-
litions that match your identity and the standards
you adhere to.
If we look back at the Bureaucratic Politics
model, we will see all the same features we are re-
lating here were coarsely related there. It is just
that here we have tried to anchor the description
more in the process of bargaining or exchange.
Above we described some of the means of control-
ling exchange which can be extended to control-
ling a coalition. However, most coalitions will re-
quire negotiation and bargaining more than any-
thing else. Hence, within the context of a coali-
tion, the manager or developer of a coalition is pri-
44
marily concerned with the interaction process by
which exchanges are negotiated.
Interactions that Create and Destroy Coalitions
What kinds of interactions create coalitions?
There are a variety of interactions, and they range
from horse-trading, bribing, persuasion, and mak-
ing threats, to management of information, log-
rolling, forming alliances, and joining associa-
tions. Managers of coalitions really need to focus
here!
Let’s take a look at “log-rolling.” What is
log-rolling? It is a coalition of individuals largely
indifferent to each other’s demands. For instance,
when there is a faculty meeting and we have a
vote, one of us might agree to not care about a hire
in policy research if the other does not care about a
hire in basic research. It is an exchange of acquies-
cence. Logrolls are particularly attractive for
single-issue participants with weaker feelings on
most issues. (Later, we will see Hula call these
“hanger-ons”). But if you violate log-rolling, sud-
denly people will make a stink over something
they normally do not care about and that can cre-
ate issues of trust and all kinds of problems. But
the point here is that in order to manage a coali-
tion, you need to think about a series of exchange
logics that have different kinds of allocations and
contingencies to them. And above we list a vari-
ety of them. So, coalitions are a dynamic accom-
plishment through forms of exchange. They entail
all sorts of wrangling and bargaining.
The dynamic nature of coalitions means they
are often under threat. There are variety of things
that threaten them. For example, ambiguity is
good thing for coalitions (March 1994). When is-
sues get cleared up or resolved, members tend to
leave a coalition. As such, clarity and resolution is
not always good for a coalition’s survival. Sec-
ond, outcome optimism is often needed (recall Alli-
son suggesting one look up/down/sideways and
build support?). You have to over-estimate posi-
tive consequences of coordinated action when you
are trying to bargain for a coalition. This often
leads to post-decision disappointment and danger
of dissolution during implementation. And then
finally, members often exaggerate their support.
When the “rubber hits the road”, or when the coali-
tion actually begins to adopt and implement
things, it begins to fall apart. All these weakly
aligned people find that once the initial formation
is hard, they no longer care to continue offering
support.
Coalitions, therefore, exhibit an odd dy-
namic. They start strong and end weak, or worse,
fall apart in implementation. Building them re-
quires constant bargaining (e.g., log-rolling, wran-
gling, horse trading, etc). Maintaining them re-
quires ambiguity and control over resources until
implementation is complete.
Kevin Hula and Lobbying
In this part of the chapter we look a little
more closely at Kevin Hula’s book on interest
group coalitions and their lobbying efforts in the
United States Congress (1999). Why lobbying? It
is not focused on a single organization or within
one, but it seemed highly salient to those of you
wanting to be leaders and social reformers. Most
social reforms in the United States or any democ-
racy require legislative decisions. And much of
that starts with lobbying and interest group coali-
tions that succeed in influencing and establishing
laws.
Hula uses an exchange model, which is simi-
lar to Richard Emerson’s notion of social ex-
change theory (1962). Participants engage in ex-
change for some benefit. With lobbyists, free rid-
ing is less relevant because they have already
made the decision to be involved with a cause in
some form. Hence, the issue is more about select-
ing a level and type of involvement, not whether
they get involved or not. Coalition brokers then
work incentives to get people to participate in dif-
ferent ways so as to effectively accomplish their
interest.
So why do other people – aside from the lob-
byist - join a coalition? Let’s look at this more
carefully: Hula gives multiple reasons why groups
would join an organization.
45
 First, he argues that groups benefit from be-
ing able to reference an explicit policy or goal to
which they and others agree on and can say they
are for or against. For example, in the Hula text,
he discusses CEF (committee for education fund-
ing). CEF is a coalition with a broad goal, and
many of the member group’s parochial interests
can be subsumed under it and listed (e.g., specific
programs). By subsuming a more particularistic
goal under that of an umbrella goal, they can strive
toward the larger one partially accomplishing their
narrower aims. Moreover, their narrow focus may
turn others off, and a broader coalition’s goal may
be useful to their efforts.
Second, by joining a coalition early, you can
shape its agenda and platform. Most issues get
ironed out earlier in a coalition’s formation than
later, and precedent exists for previously worked
out conflicts of interest (“why open that can of
worms again”-kind of thing). Information is a se-
lective benefit of membership – it fits parochial in-
terests. Members want to know of any future
threats to their perceived interests. This is espe-
cially of value to smaller groups with small staffs.
Therefore, it helps to get on committees that make
decisions, that deal with new issues, and know the
latest about bills being proposed on Capital Hill
(in congress).
Finally, there are symbolic benefits. Show-
ing something is an important issue is not the same
as making it one. Many organizations see some-
thing as important and join to show that, but they
do not have the resources to devote core member-
ship activities to it. Plus – it looks good to say you
were involved and busy. So reasons for existing
are reinforced. It serves higher ups in the organiza-
tion who are more concerned with company af-
fairs. And you can also claim credit when some-
thing goes well. For example, imagine coauthor-
ing, but you are the 5th author who does not do as
much. You can claim responsibility and rewards
from that collaboration or coalition. Therefore,
joining symbolically can be seen as paying off a
debt (reciprocation), setting an example, etc.
Some kind of symbolic benefit of membership
comes from it.
Now that we have some idea why members
join a coalition, we can start to ask and explore
why members vary in their commitment. The in-
centives a particular group responds to in joining
the coalition will strongly influence the ultimate
role the group will play in the coalition structure.
Understanding whether a group joins a coalition
for strategic reasons or selective benefits helps de-
termine whether it will become a 'core member,' a
'specialist/player,' or a 'peripheral, tag-along mem-
ber' of that coalition. (Peripheral groups aren’t
free riding because all groups have entered into a
transaction and the other participants have agreed
to the legitimacy of the exchange.)
Let’s look at the types of members and how
Hula describes their level of interest, goals, re-
sources, and commitments to the coalition. First,
let’s look at the core members (or Founders). Core
members view the issue as very important and are
interested in a broad range of issues on it. Their
goal is an overall strategic victory on the issue.
They bring to the coalition a high level of time,
money, reputation, expertise and membership.
And they commit to the coalition more than other
members.
By contrast, players (or specialists), care
about their specific goals and attempt issue-
honing. The usually bring enough resources to get
a seat at the negotiating table, so they often bring
expertise on a specific issue as their political capi-
tal (piggy-back effort). In-so-long as their specific
issue is at stake, they stay on with the coalition.
Then there are the tag-along’s. They have
the least interest, and their goal is to acquire coali-
tion byproducts. They bring few resources, but
they are willing to let others use their name.
Notably this model of coalitions ends in an
almost Hobbesian view – only the most central,
powerful actor invests most into the coalition,
while other less powerful actors invest much less
(king and citizens in Leviathan). The core players
are interested in getting the bill passed; the players
wanted a paragraph; and the tag-alongs wanted a
picture for their newsletter. Each lobbyist defined
his or her essential interest, and a symbiotic rela-
tionship was formed.
46
 We have been studying how research cen-
ter’s and new academic departments get created
here at Stanford, and we see many of these distinc-
tions. Large interdisciplinary research centers
seem to have core members hell-bent on address-
ing a broad goal and specific issues regarding it,
and they invest all they have into the effort. But in
building the center, they need to draw in other ad-
herents, many of whom only have a specific inter-
est, like performing a particular research project
that relies on expertise of some subset of faculty in
the center. Because of this, they join and lend
their name and reputation, and they even lend their
expertise on issues related to that, but they do not
attend all the events, nor do they work hard at forg-
ing the larger research community. And then there
are the tag-alongs or ‘affiliates’ who are tangential
to the center and not dependent on it for much of
anything, but they have related projects. Here, the
center can invite them to be an affiliate, and use
their name. In some cases, this can result in some
minor research funds going their way, school news-
paper article on their work, and recognition by col-
leagues (all by-products). But these members sel-
dom attend or do much of anything to promote the
community. Nevertheless, they give the impres-
sion of a larger, respectable, collective effort. In-
terestingly, a similar process arises when forging a
new department, but even more so as a variety of
goals and tasks must be accomplished – from es-
tablishing a program to establishing funding of fac-
ulty positions.
What do these commitments mean for the
maintenance of a coalition? Hula uses this nice
Rousseau quote to articulate this concern on page
43 (1999): “when hunting, those pursuing a deer
will be willing to share; those pursuing a rabbit
will not share.” In the coalition, core members
want nothing less than the stag and players will
jump for the rabbit if they can. Because of this, a
coalition manager needs to make sure the broader
goal is the route to an occasional rabbit.
For example, when one of us runs a large re-
search project focused on a larger issue, we try and
encourage the methodologists and computer scien-
tists (or specialists) to send off papers to confer-
ence proceedings and methodology journals. Our
larger research question is not methodological, but
many of these specialists hope the collaboration on
a new topic will help them innovate their methods
along the way. Hence, we have to point at “rab-
bits” along the way.
It is feasible one can view this variation in
commitment in another, more Machiavellian way,
however. Opponents can target less committed in-
dividuals and pick off members of a coalition –
you can show them alternative legislation where
their issue is subsumed (amendments!), etc. Tag-
along’s are of course the least committed to a coali-
tion. They won’t commit much energy to it, but
they join to get selective benefits of information
and symbolic clout. Tag-along’s are the third
group in the woods – discount hunters along for
the beer and company.
So members can have different goals, levels
of interest and commitment to the coalition. Asym-
metries are allowed at different levels because dif-
ferent exchanges are had. Leaders must be able to
welcome tag-alongs and differentiate real players
willing to go the distance. The danger for tag-
along’s is that they might feel betrayed in the end,
or used, thereby enacting a revolt. This occurs in
Hula’s case of proposition 187 (pp. 49) – the 1994
passage of the California bill aimed at illegal ali-
ens. Trust was hard to establish when there was
little commitment to the coalition.
So given all this how do you develop and
manage a coalition? Earlier, we talked about man-
aging exchange. Now the concern is going out-
ward and managing this larger, fleeting group of
exchanges and their alignments in some kind of
consistent way that meets your (core’s) interest.
First, as the manager of this loose coalition, you
want to think about and identify all the interested
actors / organizations in the environment. Con-
sider related issues, etc. Who would be interested?
Second, ask yourself why they would be interested
and whose side they would be on. - Friend or foe
kind of stuff - and keep in mind a friend of a friend
is a friend, and the foe of a foe may also be a
friend. You do not want to mobilize any opposi-
tion, and only garner support. However, you may
want to consider possible responses to oppositions
47
(e.g., like targeting their specialists and tag-
alongs).
Keep in mind that staff members have histo-
ries and inter-group linkages you can draw upon.
These can be effective conduits for coordination.
For example, a former employer might be a better
connection than a former employee – up-chain con-
nections are likely better than down-chain ones.
Some people even belong to multiple coalitions.
Use them as well for information. From this a his-
tory and wealth of contacts develops -- they can
efficiently identify potential partners and adversar-
ies, and their relationships can serve as points of
action and information collection (or “recepta-
cles”). With more linkages, you need not develop
lasting coalitions because you always have access
to new members and their resources. In the field
of education, there are fewer links and developed
networks, so long-term coalitions are relied upon
more heavily. Nonetheless, the basic rule in coali-
tions is one of immediate usage of ties as their
cache is now. Commitment is fleeting, exagger-
ated, and ambiguous. Last, as our earlier discus-
sion made clear – work exchange, by bargaining
and negotiating. Now that you know interests, alli-
ances and options, you can begin to horse-trade,
log-roll and so on. You can negotiate and work
the coalition into the shape you need.

48
Summary Table of Three Theories to Date:
Rational Actor (RA)
When does it Exists when there is a unified actor with
apply? consistent preferences, lots of
information, and clear goals (and time
calculate).
Summary or Basic Unitary actor or team that confronts a
Argument problem, assesses objectives (goals) with
regard to it, identifies options, the
consequences of said options, and then
chooses option that minimizes costs.
Variant: Bounded rationality and
satisficing. Recognize imperfect info,
ambiguity, and select first satisfactory
option (good enough).
Key Organizational Elements
Technology Maximization of options (solutions).
(how solutions
get decided)
Participants Unified team or actor
Goals Goals are defined in regard to problem.
(what probs to
resolve)
Social Structure Formal roles, hierarchical.
Environment Not salient except as influencing
consequences of options.
Dominant Pattern Action = Maximization of means to ends.
of Inference
Management Know alternatives and their consequences
Strategies for the shared goal, and select wisely.
Improve information and analysis.
Management by consequences.
Organizational Process (OP) / Limited Problem
Solver (LPS)
Exists when the decision is guided by a logic of
appropriateness – matching problem to actors with
procedures for handling it (routine-process focus).
Dividing up problem, coordinating / activating
organizational actors who have special capacities /
SOP’s for parts of problem, conducting sequential
attention to objectives (localized searches until
problems resolved). Action guided by processes /
available routines.
Matching identity and SOP’s (solutions) / programs /
repertoires to problem.
Organizational positions
Objectives – compliance to SOP’s, match with
problem parts.
Actors in hierarchical organizational positions. Cue
sequential routines that accomplish task or solve
problem by routines available (supply issue).
NA
Action = output close to prior output (path
dependence), cueing of SOP’s appropriate to problem.
Know SOP’s, what problems they go with (matching),
and who cues them. Improve rules and matching with
problems. Management by rules.
Coalitions /
Bureaucratic Politics (BP)
Exists when there are multiple actors with
inconsistent preferences and identities, and none of
whom can go it alone without assistance of others.
Focus on the players occupying various positions;
their parochial interests (their conceptions of
problems and solutions); their resources (expertise,
money, people) and stakes in game; and bargaining
processes between them that establish agreements /
coalitions.
Bargaining, or playing the game (within its rules), or
political maneuvering.
Players in positions
Parochial priorities, goals/interests, stakes / stands.
Coalitions – enemy/friend
Deadlines and wider array of stakeholders.
Action = result of political bargaining.
Bargain with players (log-roll, horse-trade, hinder
opposition’s coalition formation, etc). Learn others’
interests / weaknesses so you know how to
manipulate and win. Direct management of relations
via bargaining.
 solving the problem of low-achieving schools in
Chicago. The case relates key stakeholders and
groups, their interests and relations, as well as
their responses.

Figure 3.6 Chicago Skyline Figure. 3.7 Mayor Washington

(Source -
(Source -
http://commons.wikimedia.org/wiki/File:Harold_Washington_at_the_commissioning_of_
http://commons.wikimedia.org/wiki/File:Chicago_Sears_Tower.jpg/78px-Chicago
USS_Chicago_%28SSN-721%29.jpg)
_Sears_Tower.jpg)

Case - Chicago Public School Reforms Mayor Washington – The First Phase

The next case we want to review concerns

For the case, we made a summary table that
distinct educational reform movements in Chicago
lists concrete examples of the organizational ele-
that allow us to review the three theories we’ve
ments using Shipps‘ and Bryk’s separate accounts
covered thus far in the course. The case concerns
(Shipps 2003; Bryk 2003). These authors describe
the Chicago public school reforms that occurred
two distinct periods of organizational reforms that
from 1986 to 2001. For this depiction, we draw
experienced a wax and wane. The first period un-
heavily on the accounts of Shipps (2003) and Bryk
der Mayor Washington implemented anti-
(2003). The two works describe the reform efforts
bureaucracy reforms. The goals discussed con-
under two Chicago mayors: Mayor Washington in
cerned “killing red tape”, decentralizing power,
the early period (1986-1994) and then Mayor
and empowering local experts in each neighbor-
Daley in the later period (1994-2001). As these
hood. As the reform moved forward, the political
two mayors institute different reforms, there are
and economic context changed, and there arose
shifts in how the Chicago public schools are run.
other problems, like fiscal problems. In addition,
The basic change that occurred was an initial ef-
there were questions as to whether the killing red
fort at anti-bureaucracy, and then this was fol-
tape and empowering local experts actually im-
lowed by a period of managerialism and reforms
proved student achievement. Shipps argues that
aimed at establishing teacher accountability. Both
the anti-bureaucracy reforms began to wain and
phases and both approaches are different means to
fail because people came to realize there was little

50
evidence for their success. Moreover, reform ef- period that Anthony Bryk writes about. In this pe-
forts at decentralization rendered the Chicago Pub- riod, there is a response to the prior era’s shortcom-
lic Schools inefficient, and it struggled to achieve ings, and an effort to reform the system so it can
coordination in the face of a growing fiscal crisis. better respond to the fiscal crisis, problems of inef-
There were a variety of key participants in ficiency, and the lack of evidence demonstrating
this early phase: the democratic legislature, Mayor improved achievement. During the 1990‘s the
Washington, and the local school councils (LSC). goal is to establish greater accountability and more
The LSC’s were a conduit through which the de- centralization within the school system. This new
centralization of power and the empowerment of phase of school reform emphasized a form of
local experts could occur. Teacher unions were managerialism, and it brought in business leaders
also a pretty powerful group in Chicago, as was who were experts on running organizations effi-
IBEC (Illinois Business Education Committee). ciently.
IBEC had been prevalent in local Chicago politics
for a long time. That committee was composed of
business leaders who mostly wanted the education
system to create workers they could use in the lo-
cal economy. There was also school board nomi-
nating committee which nominated principals and
the like.
The social structure of participant interaction
was decentralized during this period. As such,
there arose a coalition across political parties and
interest groups that extended to local district and
neighborhood wards.
The technology and the tasks that were being
applied to accomplish this decentralization was a
reform effort to restructure governance of the edu-
cation system. Power and budgetary discretion
was allocated to local school councils. This in
turn influenced the nature of educational legisla- Figure 3.8 Mayor Daley
tion and standard operating procedures within the (Source -
school district during this period. Finally, the envi- http://commons.wikimedia.org/wiki/File:thumb/7/71/Richardmdaley.jpg/703px-Richardm
daley.jpg)
ronment was one where Mayor Washington, as an
African-American, empowered African-Americans
During the second phase there is a shift in
in the community and there was grass-roots in-
key participants. The Illinois legislature no longer
volvement in schools. This period was considered
had a Democrat majority, and it had flipped to a
to be somewhat of a renaissance for community
Republican one. There was a new mayor, and ex-
involvement in Chicago.
pectations around him were partly defined by his
father’s legacy as mayor. In addition, the school
Mayor Daley system had been centralized so that the legislature
gave Daley the responsibility for running the sys-
Toward the end of the decentralization phase tem well. And Daley delegated management of
Mayor Washington suddenly dies and there is a daily operations to a CEO for the district, Vallas,
new mayor elected, William Daley Jr. Daley is the and to the school board president, Rico. Certain
son of a former Mayor who held office for several players were still present. For example, IBEC was
decades. Daley is the mayor during the 1994-2001 still there, but now it had more of a central role.

51
In contrast, the teacher union leaders were still
there, but now they were sidelined in the decision
making. Therefore, in spite of some consistency
in players, their political fortunes had shifted. Cer-
tain players fell out of favor: the local school coun-
cils, teacher union, and the school board nominat-
ing committee. They had less authority and were
circumvented in decision making.
In the second phase, the social structure
shifted from a decentralized to a centralized struc-
ture. At the top was a coalition of managerial loy-
alists. Nonetheless, teachers still did the bulk of
the educational work and were called upon to im-
plement managerial reforms entailing more testing
and accountability. The administrators did not
fully understand teachers or how the school sys-
tem worked since many of them came from busi-
ness backgrounds. The hope was that this new
form of managerialism could be imported into the
education system and improve it.
Several technologies - policies that trans-
formed the system from one of local empower-
ment to centralized managerialism - characterize
this phase. The first of which was a change in gov-
ernance. The legislature had control over budgets,
and they altered the rules so that budgetary power
and managerial appointments was given to the
mayor. Moreover, the state legislature made Daley
accountable to them. Daley responded by further
centralizing the education system, and as such, the
governance structure was transformed. Second,
new technologies like high stakes testing were im-
posed, and regulatory factors like “probation” and
retaking a grade level was placed on underperform-
ers. Underperforming students had to go to sum-
mer school if they did not achieve at a certain
level. In response, scores went up, but that was
greatly the result of teachers now teaching to the
test. In addition, it was because many students
were retaking the test and for obvious reasons got
better as the test became more familiar. Neverthe-
less, high stakes testing served to recouple ground
floor educational efforts of teachers with the lead-
ership efforts of managers. It rendered social struc-
ture related to the technological core of teaching
and instruction.
Toward the later period of the reform, there
were some unintended consequences to this. The
teachers adapted to regulatory factors, and they
started to subvert the reform goals to preserve their
jobs, students’ self esteem, and so on. Bryk de-
scribes how more and more teachers begin to cheat
on the test. In short, the workers began to adapt to
the reforms so that they could demonstrate suc-
cess, even though that success was only in appear-
ance and possibly untrue.
The environment changes in the second
phase as well. The context was one where a prior
reform (under Washington) had failed, so there is
an effort to correct that. In addition, new prob-
lems had arisen -- pressing problems of fiscal is-
sues. As a result, politicians enter to deal with this
crisis and the legislature makes laws and shifts
power to the Mayor. Business concerns also enter
because the Mayor picks external staff from that
community. Over time, however, the reform
wanes as the environment shifts again.
In particular, public opinion concerning edu-
cational reforms change. Initially, the public is for
evidence demonstrating improvement and a desire
to have a system that stays within budget. How-
ever, the Mayor's coalition makes information non-
transparent. They claim successes even though
there's all kinds of other evidence to the contrary.
They try to manipulate the press in an effort to re-
port good news and to hide the bad. This kind of
decoupling - managing the environment to survive
- even when the depictions are not fully true, be-
gins to subvert reform. Goals for political success
(getting reelected) begin to eclipse those of authen-
tic educational success, and the public becomes
aware of this. Contradictions arise in the press
and opinions shift.
So we have this interesting account of the
waxing and waning of two reform efforts during
this 15 year period. It may be useful to combine
these phases into one table. But it is a pretty dense
table listing all the aforementioned organizational
elements of actors, goals, social structure, technol-
ogy and environment. For the analyst, the system-
atic portrayal can be very helpful.
52
McFarland Notes WEEK 2 – Org Behavior and Analysis

This time: Part I -- look for evidence of theories in the Chicago case (see handout).

1a (1986-Wax) 1b (Wane-1994) 2a (1994-Wax) 2b (Wane-2001)

Phases Anti-Bureaucracy Creation of fiscal problems Managerialism Problems of implementation
ELEMENTS
Goals Reform – kill red-tape, Why goals changed: No Reform – accountability and Why goal change: Draconian
decentralize, and empower evidence of success, little centralization (tests, no social effect in implementation
local experts. coordination, fiscal crisis promotion) felt…
Key Actors In: Democratic Legislature, Mayor Washington, Local School In: Republican Legislature, Mayor Daley, Vallas (CEO), Rico
Councils (LSC), Teacher Union, IBEC (IL Business Education (School Board President), IBEC & teacher union leaders.
Committee), School Board Nominating Committee (SBNC) Out – LSC, teacher union members, School Board Nominating
Committee.
Social Structure Decentralized power: coalition of strange bedfellows for Centralized power: coalition of loyalists that push others out.
governance (across parties and interests) Same structure of teaching, etc – but new heads from outside
(business).
Technology Local School Councils (LSC) / de-centralized cash usage  Legislation / appointments  Teachers adapt teaching to
decentralized structure, Legislation and SOPs (prior laws) centralized structure. regulatory factors: decoupling
High stakes tests / regulatory of instruction to survive;
factors (probation, summer subvert reform goals for local
school, etc)  scores go up. preservation (cheating).
Tests couple technical core to
social structure.
Environment Larger African American role… Past: Prior reform failed and Confound Environment:
Grassroots involvement created other more pressing Mayor’s Coalition makes info
problems. non-transparent to
Politicians enter: Legislature environment, manipulates
makes laws and shifts power press – decoupling to survive
to mayor! and subvert reform goals for
Business enters: Mayor picks political success in
external staff (loyal to him) environment (hide info! Or
and imposes it on system. make cloudy!)
McFarland Notes WEEK 2 – Org Behavior and Analysis
THEORIES
1a (1986-) 1b (-1994)
Phases Anti-Bureaucracy Creation of fiscal problems
Rational Actor Actor: Washington & Chicago Public Schools
Problem: low performing schools
Action as RC:
Goal – Reform schools and get rid of red tape
Options – fight, form coalition of IBEC and LSC’s,
Democrats and community activists dominate, etc.
Consequences – no consensus, coalition forms and action
taken, legislature rejects (Republican minority rejects) /
no $ acquired, etc
Choice – coalition of IBEC and LSC’s arises
Org Process No data – Shipps does not discuss this much - inferred.
Organizations: mayor office, legislature, Union, IBEC, SBNC
Problem broken up: LSC’s break up problem of reform to be
handled locally.
Missions vary and LSC’s move by their own SOP’s without
coordination  divergence of standards and costs soar.
Coalition / Players and positions: IBEC and Community Activists –
Bargaining unlikely bedfellows.
Parochial Priorities: businesses want to implement
“Reaganomics”, and LSC sought greater control/power.
Goals / Interests: better city for business, better schools for
educators and students.
Deadline: mayor dies, new one elected, etc.
Game: negotiating legislation of power, then implementation.
Problem with decoupling and resource allocation.
2a (1994-) 2b (-2001)
Managerialism Problems of implementation
Actor: Daley & Chicago Public Schools
Problem: broke, bad schools
Action as RC:
Goal – Reform for results and accountability
Options – Daley and Business dominate, prior alliance, etc.
Consequences – $ gotten & action taken, legislature rejects /
no $ acquired / no action taken, etc
Choice – new more centralized coalition forms
Business leaders fall back on their own SOP’s (managerial
program), not that of education system. Problem identified
using bus SOP’s.
Disconnect in view of SOP, or error in using them (grade
equivalence scores), creates problems. Lack of ed experts
makes local level further decoupled and resistant.
Players and positions: Republican legislature and IBEC
propose reform – give democratic mayor power
(undermines comm. activists). Mayor co-opts union
leaders…
Parochial priorities / goals: IBEC goals are business focused
and concerned with econ model (educ model / community
activism failed), so impose & regulate (~IMF) – as
environment / power shifts, so does emphasis on which
goals. Mayor reelection is a parochial goal.
Deadline: elections, contracts, fiscal years, etc.
Game: legislating power then implementation. In latter,
decoupling helps, couplingaccountability of power
Applying Models to the Case
Phase 1 - Mayor Washington 1986-1994
Now that we have described all the organiza-
tional elements relevant to this case, we can begin
to consider their analysis. Let's begin again with
the first era of Mayor Washington and apply each
of our theoretical models to the case of Mayor
Washington, and his effort at reform. The first
phase entails an anti-bureaucracy movement that
waxes and wanes. If we apply the rational actor
model, we would focus on particular actors in ad-
ministrative circles, like mayor Washington. The
core problem that commences the need for a deci-
sion is low performing schools. The goal would
be to reform the schools and get rid of red tape,
since that was regarded as the problem that was
preventing achievement and preventing buy-in to
the schools. The various options that they could
consider were (a) fight this reform effort, or fight
each other in terms of how resources are allocated.
For example, the legislature could combat the un-
ions. (b) Another option is to form a coalition,
such as one forged between IBEC and the local
school councils. The Democrats could form a coa-
lition with community activists and dominate be-
cause the democrats were in charge of local and
state politics at the time. With each option there
are likely consequences. If groups fight, then
there is likely no consensus and it just creates a dif-
ficult environment for every side. If you form a
coalition (IBEC and local school councils) and
take action, then that makes some sense. There
may be certain kinds of cost to that and you may
offend the legislature in power. The legislature
could reject everything. We can only estimate the
likely risks (we are boundedly rational!) and prob-
abilities for success here, and use that in our deci-
sion calculus. But conflict and stalemates have
huge costs, so we probably want to work with the
Republican minority. For all we know , they could
filibuster any political coalition’s efforts and stop
them dead in their tracks. That said, to some de-
gree, it is reasonable to predict how certain camps
will behave depending on the kind of options be-
fore them, right?
The rational actor model seems to begin to
provide some insight into why the observed coali-
tion of IBEC and the local school councils
emerges. It also helps explain why the grass roots
collaboration between businesses and community
level participants arises, and how an anti-
bureaucratic, localized effort begins to take shape.
The rational actor model may be the most viable
model if we believe there is a true consensus, and
one group does not necessarily dominate another.
If we look at an organizational process
model, it is not clear this case writeup affords
much detail. Shipps and Bryk do not discuss stan-
dard operating procedures so we have to infer
some of this.
If we apply the organizational process
model, we need to consider the organizations in-
volved and what they do. The organizations in-
volved are as follows: the Mayor’s office, the state
legislature, the union, IBEC, SBNC, and all those
actors you saw in the table. Seeing this list we can
next imagine how the problem is broken up and
addressed by each group. The problem is one of
low performing schools and red tape that's ren-
dered schooling difficult to assess (i.e., no consis-
tency across schools), decision making inefficient,
and daily operations expensive. Given the actors,
the local school councils (LSC) break up the prob-
lem so they can handle it locally. Instead of it be-
ing a “Chicago” problem, it is a series of distinct
problems for each district. That's actually how the
situation unraveled. With each district, the goals
vary, and the local school councils adopt their
own standard operating procedures. When you de-
centralize a problem and coordinate locally, each
of these councils comes up with its own way of
dealing with things. As a result, you have a diver-
gence of standards (one district worries about
achievement, another inequality, another about se-
curity and gang violence, etc). Solutions adopted
in one area are often not replicable in another com-
munity. As a result, costs soar as the complexity
of coordination across communities grows more
difficult. Decentralization creates local buy-in and
commitment, but it does not result in organiza-
tional efficiency.
55
 If we apply coalition theory or the bureau-
cratic politics model, we have a different perspec-
tive as well. We have to think about the players
and their positions. As such, IBEC and commu-
nity activists have parochial interests. IBEC wants
to support local business; the community activists
want their local communities to do well. As a re-
sult, they are strange bedfellows in a way (one re-
publican and the other democrat). The community
activists want support for their neighborhoods and
to serve the interests of their local schools. IBEC
is composed of representatives from large Chicago
corporations, so their interests are not so local. In-
stead, they had the redevelopment of Chicago in
mind as a means of not only making schools bet-
ter, but so as to have a potential pool of more quali-
fied employees, that will improve their business.
So, in spite of their different political leanings,
they had shared interests they could form a coali-
tion around.
Nevertheless, parochial priorities surfaced.
The business leaders wanted to implement “Rea-
ganomics”, which was a trendy economic policy
of the 1980’s -- it entailed less government, less
red tape, etc. Surprisingly, this aligned with the
parochial interests of local school councils that
wanted greater local control over neighborhood
schools. As such, in spite of their differences, the
two found overlapping interests, and this enabled
them to develop a coalition.
There is a deadline in all this, of course. In
the first period, Mayor Washington dies. It was an
untimely death and unexpected, and this led to a
new election and a shift toward recognizing prob-
lems with his reforms. In addition, there were dif-
ferent political games going on during this period.
There was a problem with decoupling and re-
source allocation to some extent. The decoupling
arose because local school councils were given
power, and it was difficult to coordinate all their
decentralized efforts. As such, governance at the
city and state level decoupled from the local level.
When fiscal concerns arose and requests for ac-
countability emerged, the decentralized system
failed to coordinate and they offered a cacophony
of responses. The decentralized system was great
for political games like power sharing and legisla-
tion of power, but not for the implementation of
top-down reforms or achievement assessments.
Discerning whether schools are performing better
or not required coordination and standardization,
and the decentralized system was structured to do
the opposite.
Phase 2 - Mayor Daley, 1994-2001
Next, let's consider Mayor Daley's era.
Mayor Daley comes into office the same time the
state legislature in Illinois turns Republican and all
kinds of problems like a fiscal crisis start occur-
ring in other state and city governments. As a re-
sult, they had to decide where to place their re-
sources effectively.
If we take a rational actor view here, Daley
and the Chicago public school system were central-
ized actors. The school system has a much more
unitary actor under them than in the prior decentral-
ized era. Unfortunately, the schools are financially
broke and they are not very good in spite of hav-
ing decentralized governance structures. Using a
rational choice model, the goal is to reform the sys-
tem so you get results (achievement) and there is
accountability (support for what does work and no
support for what does not). Daley's options were
that he could coordinate with business and domi-
nate; he could fall back on the prior alliance be-
tween local school councils; and so on. And the
consequences of each choice was different. With
one option, he's sure to get state money and he
might be able to take action. If he sticks with the
prior local school council alliances, then the state
legislature will likely reject his efforts and hold
back the allocation of education funds. As such, it
was clear he had to form a new kind of coalition
and make a new decision here. And the choice
was obvious - develop a more centralized coalition
with business leaders and a means of accountabil-
ity that was more efficient and managerial than the
prior local decentralized school council’s efforts.
The organizational process model provides
a different perspective. The business leaders fall
back on their own standard operating procedures.
That's why they came up with managerialism as an
approach. They didn't adopt the perspective or the
standard operating procedures of the school sys-
56
tem. Instead, they adopted the kind of procedures
they had become accustomed to in managing their
businesses. The schools on the other hand hold a
different view and a different set of standard oper-
ating procedures. There is a disconnect in these
perspectives and procedures that creates tensions
and problems. The educators didn't understand the
standard operating procedures that business lead-
ers wanted to impose on the education system. In
addition, the lack of educational experience com-
bined with a managerial perspective led to misun-
derstandings and unfamiliarity with educational
routines used to keep schools operating and teach-
ers happy. From an organizational standpoint, this
later period of mismatch across organizations and
or, organizational routines from different kinds of
leaders helps explain the troubles encountered in
the managerial era.
Finally, a coalition or bargaining perspective
also highlights certain qualities of the case. From
a coalition-bargaining view, we see that certain
players and positions matter more than others.
The Republican legislature and IBEC propose re-
forms and they form a coalition with the mayor.
As a result of his participation, the legislative
IPEC afford him power and resources. This cen-
tralization of power completely undermines the
community activists. They're pushed out. In addi-
tion, the mayor co-opts the union leaders in vari-
ous ways (see Bryk 2003).
Parochial interests come forward nonethe-
less. Members of IBEC press the interests of the
city’s business and economy. They feel that an
educational model and community activism failed,
so they push their own model. They centralize and
regulate, and they emphasize distinct goals of
achievement and efficiency.
With each phase there's an election, as well.
The new mayor falls back on parochial interests
(re-election and getting power), and then as the re-
form moves forward, other kinds of parochial inter-
est come into play and competes. As such, the bar-
gaining model offers a more dynamic, political
characterization of the reform process. Organiza-
tion’s aren’t just actors optimizing or organizations
following rules, it's a loose confederation of actors
and organizations with shifting interests dependent
on the timing and particular leaders involved.
A key factor in the coalition / bargaining
model is timing or deadlines. Here, of course,
deadlines are dictated by election cycles, contract
renewals, and fiscal years when budgets get done.
Those all have schedules with punctuated effects
on relationships and actors interests.
With each phase, the game shifts. In the ini-
tial period, the objective is to gain power. As
such, the new Republican legislature comes in and
wants to change the system for the better by cen-
tralizing authority. If they give money to the
mayor, then they can hold the mayor accountable.
If he fails, he will not be re-elected. In the later
phase, decoupling actually helps. If administrative
efforts are carefully linked to the ground level re-
form efforts, then the mayor is accountable. So is
the legislature. But if things do not go well and
they cannot find results that validate the account-
ability model, then they start to hide it. And this is
exactly what happens, through interactions with
the media and press reports, the mayor’s office and
CEO of Chicago schools try to withhold certain
kinds of information that might show the model
was not effective. They do this for parochial inter-
ests -- i.e., the mayor is trying to get reelected, and
so are other politicians. And so, it is not just a mat-
ter of meeting the goals, or enacting operating, op-
erating procedures that fit different groups. Now
it becomes a matter of adapting the implementa-
tion process to different purposes and the reporting
of their accomplishments for different purposes.
Some of these purposes fit some actors more than
others, and at certain times more than others.
In sum, each of our three models has applica-
bility here. If we line them up, we can see how
they compare and which one seems to explain cer-
tain phases of the reform era more than others.
But now we come a big question -- which explana-
tion works best?
This is a good case to discuss in class with
peers. There, one can ask if the rational actor
model works better in a centralized phase like
Daley's? Or, does it only superficially apply? Or
we can ask if most of the decisions followed an or-
57
ganizational process model of heuristics and rou-
tines?
Rather than me telling you what the right an-
swer is, I think it is best to leave it up to you and
see how you grapple with the issue. Trying to im-
plement these theories to actual cases and seeing
evidence for one over the other is an exercise in
itself, as is arguing one theory works best under
particular circumstances and phases, or two theo-
ries complement one another in some way to af-
ford a richer understanding of how Chicago public
school reforms rise and fall.
Figure 3.9 Decentralized and Centralized Net-
works
(Source - Figure. Decentralized versus Centralized
http://commons.wikimedia.org/wiki/File:7/78/Decentralization.jpg)
References
Allison, Graham T. 1969. “Conceptual Models
and the Cuban Missile Crisis.” The American Po-
litical Science Review 63, 3:689-718 – review 3rd
model from last time.
Bryk, Anthony. 2003. “No Child Left Behind,
Chicago-Style.” In Peterson, P. W., and West, M.
The Politics and Practice of School Accountabil-
ity, pp. 242-268. Washington, DC: Brookings In-
stitution Press.
Caro, Robert. 1975. The Power Broker (espe-
cially ch. 33, pp. 703-754). Vintage Press.
Cyert, Richard and James G. March. 1963
[1992]. A Behavioral Theory of the Firm.
Prentice-Hall, Ch. 3-7.
Emerson, Richard. 1962. "Power-Dependence Re-
lations." American Sociological Review 27:31-40.
Hula, Kevin W. 1999. Lobbying Together: Inter-
est Group Coalitions in Legislative Politics. Wash-
ington D.C.: Georgetown University Press (chap-
ters 1-5, 7, and 9 [pp.1-77, 93-107, 122-135]).
March, James G. 1962. "The Business Firm as a
Political Coalition," Journal of Politics 24: 662-
678.
March, James G. 1994. A Primer on Decision
Making: How Decisions Happen. NY: The Free
Press. Chapter 4, Pp. 139-174.
Scott, Richard. 2003 (5th ed). “Goals, Power, and
Control”, Chapter 11 (pp. 291-324) of Organiza-
tions: Rational, Natural and Open Systems, 5th
Edition, Englewood Cliffs, NJ: Prentice-Hall.
Shipps, Dorothy. 2003. “The Businessman’s Edu-
cator: Mayoral Takeover and Nontraditional Lead-
ership in Chicago,” in Powerful Reforms with
Shallow Roots, ed. Larry Cuban and Michael Us-
dan, pp. 16-34. NY: Teachers College Press.
58
4
Organized Anarchy

(Source: http://nopsa.hiit.fi/pmg/viewer/images/photo_2801526484_6f0480b4a2_t.jpg)
Organized Anarchy Model
This chapter introduces you to the basic fea-
tures of decision making in organized anarchies, or
what some call a “garbage can theory’ of organiza-
tions. When we teach coalition theory, we ask stu-
dents in our classroom to assume the role of differ-
ent organizations that have a contradictory stake in
an issue like that of the Milwaukee Voucher Pro-
gram (Quinn and McFarland 2006). Then every
group has a pair-wise encounter with each other
where they can apply a variety of exchange tech-
niques so as to try and forge a dominant coalition
behind certain solutions like universal vouchers,
targeted vouchers, magnet schools, more funding,
class size reduction or do nothing. Every year, the
student groups do a great job of playing to their or-
ganization’s parochial interests and manipulating
other organizations into joining some sort of collec-
tive resolution. But a lot of what they experience
goes beyond what coalition and exchange theories
of organizing capture. There is a far more chaotic
and dynamic quality to their discussions and deci-
sions that seemed more consistent with an organ-
ized anarchy model.
Organized Anarchy - Introduction
What do we mean that the decision process
resembled an organized anarchy? Well, for exam-
ple, some of them have a hard time coming up
with their group’s platform and identity (what’s the
platform of lower income parents in Milwaukee?).
Also, some of the group’s proposed solutions
changed over the course of bargaining – some ini-
tially proposed universal vouchers only to promote
targeted vouchers in the end. Almost all of the
groups thought in terms of an identity and what
that entailed. And they also thought about other’s
identities and interests when trying to manipulate
the situation in their favor.
Problems seemed to be brought up in a much
more dynamic and contingent manner. Some
groups brought up problems that fit their interests
(e.g., problem of choice for Republicans; problem
of equity for African Americans; problem of
achievement for businesses), while others men-
tioned several problems (educators). And then
they presented the problems in different orders.
The same occurred for solutions. Groups cre-
ated additional solutions to those arising in the Mil-
waukee case (e.g., sliding scale Vouchers). Some
solutions they never took up (do nothing). None
of the solutions and problems seemed to arrive as
set pairs. Instead, the solutions were matched with
multiple problems and those connections were ne-
gotiated. Each group tried to make a case for why
another group’s problems could be addressed by
their solution. As such, the bargaining was in con-
necting solutions and problems in a way that con-
vinced other groups.
The debates and decisions also followed a
temporal dynamic. Some of the students got up
and went to the restroom and their voice was lost
in pushing for certain problems and solutions.
Some pairs of groups took longer to finish their ex-
change and were rushed to make a deal before
their time was up and that seemed to affect deci-
sion outcomes. Some groups even back-tracked
on prior deals when they saw a better solution and
coalition emerge. Many students felt the ordering
of pair-wise meetings greatly affected which bar-
gains arose and which were dropped.
Garbage Can Model
A lot of what we have described pertains to
an organized anarchy view of organizational
decision-making, or what some organizational
theorists call “the Garbage Can Model”. This the-
ory was proposed by Cohen, March and Olsen
(1972), and throughout this chapter we will draw
heavily on their conceptualization (March 1994:
Chapter 5).
Most organizational theories underestimate
the confusion and complexity surrounding actual
decision-making. Many things happen at once;
technologies (or tasks) are uncertain and poorly un-
derstood; preferences and identities change and are
indeterminate; problems, solutions, opportunities,
ideas, situations, people, and outcomes are mixed
together in ways that make their interpretation un-
60
certain and connections unclear; decisions at one
time and place have loose relevance to others; solu-
tions have only modest connection to problems;
policies often go unimplemented; and decision
makers wander in and out of decision arenas say-
ing one thing and doing another. Organizational
decision making often looks like a mess!
With ambiguity, the story of decision-making
moves away from conceptions of order concerning
reality, causality, and intentionality to conceptions
of meaning. Here, decisions are seen as vehicles
for constructing meaningful interpretations of fun-
damentally confusing worlds (logic of appropriate-
ness!), not as outcomes produced by a comprehen-
sible environment. Hence, as we increase the com-
plexity of decision situations so they more closely
reflect reality, they become meaning generators
instead of consequence generators.
Given this chaos, is there any way to theo-
rize so as to get beyond interpretive, detailed, con-
textualized accounts? Cohen, March, and Olsen
(1972) describe organized anarchy in a relatively
simple model that describes the more chaotic real-
ity of organizational decision-making. In Garbage
Can Theory, “an organization is a collection of
choices looking for problems, issues and feelings
(problems) looking for decision situations (choice
arenas) in which they might be aired, solutions
looking for issues (problems) to which they might
be the answer, and decision makers looking for
work (1972:2; Italicized text added).” One can
view a choice opportunity (or meeting with deci-
sions) as a “garbage can” into which various kinds
of problems and solutions are dumped by partici-
pants as they are generated.
Taken in broad perspective, Garbage Can
Theory (or GCT, as we will be referring to it) sug-
gests the following possible metaphor for decision
making within an organization:
Consider a round, sloped, multi-goal
soccer field on which individuals play
soccer. Many different people (but not
everyone) can join the game (or leave
it) at different times. Some people can
throw balls into the game or remove
them. Individuals, while they are in the
game, try to kick whatever ball comes
near them in the direction of goals they
like and away from goals that they
wish to avoid. The slope of the field
produces a bias in how the balls fall
and what goals are reached, but the
course of a specific decision and the ac-
tual outcomes are not easily antici-
pated. After the fact, they may look
rather obvious; and usually norma-
tively reassuring (March and Olsen
1976. Ambiguity and Choice in Organi-
zations. p. 276).
What is an example of an organized anar-
chy? Robert Birnbaum uses GCT to describe the
American college or university. He describes the
university as a prototypical organized anarchy –
and especially the faculty groups like departments
and the academic senate. He views them as not
decision-making organizations, but meaning-
making ones… (439):
Organized anarchies need structures and proc-
esses that symbolically reinforce their es-
poused values, that provide opportunities for
individuals to assert and confirm their status,
and that allow people to understand to which
of many competing claims on their attention
they should respond. They require a means
through which irrelevant problems and par-
ticipants can be encouraged to seek alterna-
tive ways of expressing themselves so that
decision makers can do their jobs. They
should also be able to “keep people busy, oc-
casionally entertain them, give them a vari-
ety of experiences, keep them off the streets,
provide pretexts of storytelling, and allow so-
cializing” (Weick’s The Social Pyschology of
Organizing, p. 264).
So here we have this understanding that organized
anarchies are a context for meaning making not
consequence generators. That is kind of an inter-
esting, aspect of organized anarchies - that we
need these contexts within organizations so that
we feel like we have reasons and identities for be-
61
ing there and for addressing all kinds of concerns,
many of which may not be consequential. The
places we see organized anarchy are meetings (fac-
ulty meetings) and those kind of settings.
Now that we have some sense of where or-
ganizational anarchy resides, and and the kind of
general world it is, we can begin to identify their
characteristics. How do we know one when we
see one? What qualities do they have? The most
common things people reference are...
(1) Ill-defined goals, problematic preferences
and inconsistent identities. Within organ-
ized anarchies it is unclear which prob-
lems mater and which do not.
(2) Unclear technology. It is unclear what the
consequences are for each proposed solu-
tion or alternative; it is unclear how to
solve problems because the proposed solu-
tions lack evidence.
(3) There is fluid participation. Within organ-
ized anarchies people come and go. There
is participant turnover.
(4) There are quasi-independent streams of
problems, solutions, participants and
choice opportunities. Meetings come
and go on their own schedule; and partici-
pants enter and exit depending on theirs;
problems seem to be noticed and related
in ways independent of the persons pre-
sent or the possible solutions; and solu-
tions seem to hang around, waiting for a
problem that suits it some day.
When these qualities arise in a choice arena, some
form of organized anarchy is likely occurring.
Many of these features also seem to be interre-
lated in the process of choice. That is, organiza-
tions make choices by attaching solutions to
problems, subject to chance, timing, and who
happens to be on the scene. Take for example,
faculty senates. A decision situation (or choice op-
portunity / arena) is like a garbage can into which
various kinds of problems and solutions are
dumped by participants who attend the meeting.
In such a meeting, decisions happen when prob-
lems, solutions, participants, and choices coincide.
The timing is right, and solutions are attached to
problems, and problems are attached to choices by
participants who happen to have the time and en-
ergy to see them through. In short, Garbage Can
Theory is about the social construction of meaning
attached to a choice.
Now that we have a general sense of organized
anarchies, let’s look more carefully at their particu-
lar features. First, they entail (1) Choice opportu-
nities (what John Kingdon calls “policy win-
dows”, see Kingdon 2003). These can be meet-
ings, committees, and so on where the opportunity
and capacity to make a choice are possible. These
choice opportunities and policy windows can be
seen as “garbage cans.” The meaning of a choice
derives from how the “trash” is organized within a
can - or the mix of problems, solutions, and partici-
pants.
Second, organized anarchies entail (2) distinct
flows. Imagine three continual streams of “trash”
flowing through each “can.” It is all chaos in the
garbage can, but order is in the larger flows and
their confluences. Each stream flows relatively in-
dependent of the other. That is, problems get gen-
erated in public opinion (e.g., educational crises
like school shootings, national and international
exam reports, etc), solutions are constantly gener-
ated by academics and vetted even when their prob-
lem is not recognized yet (e.g., character education
and heterogeneous groupwork), and participants
come and go for other reasons (e.g., school boards
turn over, teachers come and go with tenure or
leave the profession altogether).
Let’s look at each of these streams in turn:
The first stream is one of issues or problems (p1,
p2, p3 ~ Kingdon’s “problems”). These do not
need to be real problems or even the most impor-
tant ones. They need to be perceived as such by
the participants in the choice arena. The second
stream is one of solutions (s1, s2, s3 ~Kingdon’s
“policies”). These pertain to ideas, bills, pro-
grams, all solutions [old and new], standard operat-
ing procedures that are revisited and even
changed. And they don’t need to pertain to any ex-
istent problem. They can lead or lag problems.
The third stream is one of participants or actors
(a1, a2, a3 ~Kingdon’s “participants” and as
62
stream, “politics”). In the government arena, poli-
tics determines what actors show up, what inter-
ests are represented. Even if a decision is good for
a congressperson’s constituents, they may pass up
on the meeting due to political concerns).
So there are these three streams, but they
mean little until a choice opportunity arises. All
too often, the opportunity just is not there. There
is no meeting, most people lack access to it, etc.
And even if there is a meeting, the right conflu-
ence of flows may not arise. The right problem
and solutions enter, but all the wrong participants
are there and the decision lacks energy and momen-
tum. This is why timing and finding the right mo-
ment matters so much!
The outcome of choice arenas can also vary.
In many cases, you can hold a meeting and no one
can agree on a problem or solution. One idea after
another is shot down and thrown away. On many
occasion, no decision gets made. In other in-
stances, the solutions adopted do not address a
problem. This can arise in two ways. The first is
by Oversight: sometimes choice opportunities ar-
rive and no problems are attached to them. Why
might this happen? It can happen if all problems
are attached to other choice arenas. In these in-
stances, people make choices and select solutions
before problems reach the meeting. Later, we will
show you such a case where the school board and
the administrators of a district cannot attend meet-
ings about a desegregation court order and its im-
plementation because they must focus on other
concerns like a teacher strike.
The second means by which an adopted solu-
tion fails to affix to a problem is by Flight: Here
problems are affixed to choice opportunities for a
while and exceed the energy of the decision mak-
ers attuned to them. Hence, the original problem
may move to another choice arena (like another
meeting or department). In these instances, people
wait for the problem to go away in order to pick a
solution. So, in these cases you will see later, peo-
ple table a decision or send it off into a subcommit-
tee. In both of these instances, the problems do
not get attached to a solution.
Of course, the case we are most interested in
as managers of organized anarchies is when a prob-
lem actually gets resolved: these are instances
where problems are brought up in a choice oppor-
tunity or meeting, and the decision makers attend-
ing that meeting bring enough energy/ability to
meet the demands of the problems. Here a choice
is made and the problem is resolved.
Each garbage can, choice opportunity, or
meeting, has different access rules. In particular,
every choice arena has an access structure or so-
cial boundary of sorts that influences which per-
sons, problems, and solution can enter or not. The
loosest structure allows for unrestricted access.
All the problems, solutions, and people are al-
lowed to enter, and this creates more energy, but it
also allows problems, solutions and participants to
interfere with each other. This increases conflicts
and time devoted to problems – you get greater an-
archy! Another structure entails hierarchical ac-
cess. Here, important actors, problems and solu-
tions are given priority access. For example, big
decisions may occur in executive meetings, while
unimportant issues are addressed by the rank and
file employees.
Finally, there is specialized access. This oc-
curs when special problems and solutions have ac-
cess to certain meetings. For example, in my
school, the costs students incur when printing their
papers on school printers may be an issue that
goes to the school’s technology committee, while
journal costs might be brought up in the library
committee. Therefore, certain specialists have ac-
cess to certain choices that fit their expertise (e.g.,
engineers with technology concerns).
63
 Another constraint influencing access to
choice arenas are deadlines. Deadlines character-
ize temporal boundaries and the timing of decision
arenas and what flows enter them. Here there can
be constraints on the arrival times of problems.
For example, there are seasonal problems like the
flu or cold weather. There can also be constraints
on the arrival of a solution, such as when we pro-
pose and implement 1 or 5 year plans. And there
are constraints on the arrival of participants, such
as that defined by the timing of work days, school
years, tenure cycles, and so on. There are even
deadline constraints on choice opportunities or
meetings, such as the meetings dictated by yearly
budget cycles and student admissions.
All of this compounds and characterizes deci-
sions in organized anarchies. Decisions arise from
the interaction of constraints (access structures
and deadlines) and the time-dependent flows of
problems (or issues), solutions, and participants
(decision-makers).
To this point, we have covered a lot of con-
cepts in a short amount of time. Let’s take the ex-
ample of a faculty meeting again and work
through the features we have mentioned and see
what they look like. We think this will afford you
a more concrete sense of what the concepts mean
and how to see and apply them in various cases of
organizational decision making on your own (or
rather, “meaning-making” where a decision might
not get made!).
Let’s begin with some of the problems that
might flow in an academic environment. One
problem might concern space usage – we have
more people than we have space at Stanford, so it
might be relevant (p1). Another problem could be
the need for additional money or resources (p2)
and whether the school has enough grant money to
function well. Other problems might concern a stu-
dent advising issue (p3), or even a research center
losing staff (p4), or concerns about the university
endowment and how it lost 1/3 its value in the re-
cession (p5). So those are our potential problems
swirling in the environment. The figure on the
next page captures this space.
The blue circle is the choice arena or faculty
meeting. Which actors or participants attend?
Let’s say it is an executive committee meeting
where access is hierarchical, and therefore only the
dean and associate dean can enter (a1-2). And fi-
nally we have various solutions: s1 could be a solu-
tion concerning minority recruitment; s2 could be
a plan to increase master’s student enrollments; s3
might be a new tenure policy; and s4 might be an
idea to find new donors for the school.
Now all of them might not enter the choice
arena, and the meeting agenda might have a cer-
tain order and have a finite timeframe of 1 hour,
thereby imposing a deadline. So let’s think about
this diagram and what we see:
(i) Let’s look at p1. It does not really seem
to go anywhere and not decided on before
a solution enters (decision by “flight”!).
(ii) p2 on the other hand connects. Or
rather, it is linked to s1, a1, a2. They get
enough energy to be decided upon (i.e.,
decision by “problem resolution”).
(iii) p5 is also linked when they discuss p2,
but the actors never see the endowment
decline being solved by increasing enroll-
ments. So the faculty who attend agree
that the problem of not enough resources
can be solved by increasing MA enroll-
ments – thereby increasing the funds got-
ten via tuition. So that is the choice deci-
sion that occurs. p5 is ultimately uncon-
nected to a solution. So it is another deci-
sion by “flight”.
(iv) And then p3 and p4 is never even
brought up before the meeting ends. So
the deadline affected its discussion.
(v)p1 through p5 could have affixed to s1,
but no actors latched onto it. A plan for
minority recruitment could then be re-
garded as having underwhelming support.
If it had been picked without connection
to a problem, then we would say it was
decided on via “oversight”.
Hopefully you now see how these streams
collide in the garbage can, and how their ordering
and deadlines matter.
64
 Problems Participants
(who attends)
(space needs) p1
a1 (dean)
($ needed) p2 p1
a1 a2 (assoc dean)
(std advising) p3 p2
a2 a3 (fac memb1)
(ctr decline) p4
p5 s2
a4 (fac memb2)
(endowment!) p5 s1

(minority recruitment) s1

(increase MA enrollment) s2 s1 s2 s3 s4

(new tenure policy) s3 Solutions

(plan to find new donors) s4

Figure 4.1 Decision Situation

Managing Organized Anarchy manager needs to realize the planning is largely

With all this in mind, we come to the ques-
tion of how to manage organized anarchies. If we
see an organization that resembles a garbage can,
how do we approach it?
Several types of reactions can emerge. First,
you can try and be a Reformer: eliminate garbage
can elements from decisions. Reformers create
greater “systematicity,” order, and control. In a
way, this is what Daley and Vallas did in the Chi-
cago public school case – centralize, rationalize,
fix streams and access, etc.
Oppositely, you can be an Enthusiast: here
you try to discover a new vision of decision mak-
ing within garbage can processes. This is sort of
what March and Birnbaum argue people should do
in choice arenas like the faculty senate. Here, the
symbolic and an excuse for interaction, and sense-
making. It is a way to make people feel like they
belong and to learn about views and identities.
The arena is more for sense-making and getting
observations than making decisions. Also, the
manager can view temporal sorting as a way to or-
ganize attention. The order can indicate what is
more of a concern for collective discussion. An
enthusiast will focus on the flows of problems and
solutions and regard them as a matching market
where energies and connections are mobilized.
Recognizing who is present, where links / time
and energy are sufficient, and then pressing the
case is how you’d approach it. Last the enthusiast
would see advantages in flexible implementation,
uncoordinated action, and confusion. It’s ok not to

65
decide at times, and to make choice arenas into a
space of meaning-making.
Last, you can be a Pragmatist and try to use
garbage can processes to further your agenda (idea
being that organized anarchies are susceptible to
exploitation). Here you can time the arrival of so-
lutions knowing attention is scarce. As such, you
can set the meeting agenda and work the order of
issues – put ones you want discussed up front. Put
last the ones everyone knows need to be passed
but you do not want discussed so you can rush the
decision. Be sensitive to shifting interests and in-
volvement of participants. You can be opportunis-
tic and when certain people are not there, press on
issues and solutions you care about that they
would oppose if they were present. Or, you can
abandon initiatives that are entangled with others –
if streams get tangled and the opposition is pre-
sent, move on. If an agenda arises that does not
suit your interests, overload the system to protect
your interests: bring up other problems and solu-
tions, slowing the process and making it more com-
plex. Otherwise, you can provide other choice op-
portunities (other meetings) to attract decision
makers and problems away from choices that inter-
est you. In this way you open up time for the is-
sues you are concerned with.
In sum, you have options on how you want
to confront organized anarchy situations. Under-
standing how these arenas operate afford you dif-
ferent levers to try and hopefully the ones related
here give you a sense of how to start. I hope you
find the organized anarchy model useful. I find it
especially helpful because it renders pathologies of
choice theoretically consistent. All too often, real
choice arenas are messy and this theory embraces
that mess and affords us a framework for making
sense of it.
We find garbage can theory especially help-
ful in explaining all sorts of meetings where there
are ecologies of choice and where problems and
solutions are fluidly discussed. It fits the policy-
government world, research and development
groups, crisis management situations, and most
any distributed, decentralized social system trying
to deal with issues.
Examples of Organized Anarchy
We will now cover a series of examples and
applications of organized anarchy. Hopefully with
each example, you will see greater relevance and
form a more concrete understanding for how this
theory can be applied. We have three examples
we want to discuss. The first concerns the case of
San Francisco Unified School District’s effort to
undergo desegregation in the 70’s as told by Ste-
phen Weiner. We want to show you how that case
can be elaborated using the garbage can frame-
work laid out in the last lecture. Following that,
we want to discuss John Kingdon’s book “Agen-
das, Alternatives and Public Policies.” Kingdon
writes a nice summary of Garbage Can Theory and
its application to the policy world and how legisla-
tive agenda setting is performed. It is a great read
that we hope all of you will experience. Last, we
will discuss the recent case of Title V in the No
Child Left Behind Act. This last case concerns an
federal act to reform the American primary educa-
tion system. We recount this briefly, using materi-
als most people can find online.
We understand many of you will not be famil-
iar with some of the particular cases we are relat-
ing, so we will try to afford a bit of overview and
summary so you get their gist. The point of the ex-
amples is to get you thinking as an analyst and
manager by applying theory to cases. It might be
a good exercise for many of you to try applying
these theories to cases of your own choosing. Just
view the ones we relate here as models and carica-
tures that you can apply, extend, and elaborate fur-
ther.
The San Francisco Unified School District
The case we want to discuss first was written
up by Stephen Weiner, and it concerns San Fran-
cisco Unified School District’s desegregation plan
adopted in the 1970s. Here is the general story: In
the 1960’s SFUSD experiences white flight, where
the white middle class families start leaving public
schools. At same time, desegregation court cases
emerge in the Southern United States and later
66
 Problems (p1-10) Participants (a1-6)

Problems that never Actors that never make it into the

enter but draw SFUSD
to other arenas…
p7 – Tch-Std Boycott
p8 – LatAmerOrg Sues
p9 – Financial Probs
p10 – Teacher Strike Problems that enter arena:
p1 – Integrity of comm schl
p2 – Bilingual ed
p3 – Busing ! white flight
p4 – SES integration
p5 – Deseg 2ndary
p6 – Deseg primary
choice arena:
a4 – SFUSD consultants & admin
a5 – working minorities
a6 – working men
Actors that enter arena:
a1 – community int grps
a2 – fed consultants
a3 – CAC (MC-WF)

s1 – Tristar (3 zones s2 – Horseshoe (7 zones,

bussing / more deseg) respects comm / less deseg)

Solutions that enter (s1-24)

Solutions (s1-24) Deadline!
Many solutions were proposed and
discussed, but few connected with
energy

arise in more Northern and Western states. No action is taken by SFUSD

Figure 4.2 Choice
Arena for Citizens
Advisory Council
(CAC)
during this period and the NAACP (National Association for the Advance-
ment of Colored People) warns the district it is too segregated. SFUSD
develops a desegregation plan that is immediately rejected in committee
due to cross-town busing fears. They fear such a plan would be hard to
manage and would be unwanted by the district’s stakeholders. Instead, a
citizens committee forms and develops a desegregation plan for only two
elementary schools.
In 1970 the NAACP files a suit demanding all 102 elementary
schools within SFUSD be included in the desegregation plan. The US dis-
trict judge would not rule until the Supreme Court ruled (arguing SFUSD
made a small effort with two schools and therefore showed good faith).
In the meantime, the judge advises SFUSD to devise a desegregation
plan. SFUSD appoints one staff member and three committees: Staff
Committee, Certified Staff Committee, and Citizens Advisory Council
(CAC). The third committee has the most energy and committed mem-
bers to this cause.
In 1971 the US Supreme Court rules SFUSD must desegregate its
elementary schools and must devise a plan in two months. So it is a case
of partial decisions and little or nothing happening – a pretty common oc-
currence when it comes to policy and school district reforms! Can GCT
apply here and help us understand the process of relative indecision?
67
Figure 4.3 School Board Meeting (not SFUSD)
(source - Figure 4.4 Teacher strike (not SFUSD)
http://commons.wikimedia.org/wiki/File:Beverly_Hills_Board_of_Education.jpg) (source - http://commons.wikimedia.org/wiki/File:London_Cuts-Demo_5704.JPG)

In many regards this is an instance of organ- p5 - Desegregating secondary schools

ized anarchy. First, it is ambiguous as to what de- p6 - Desegregate elementary schools
segregation means. The problems and preferences (the key problem!!)
for desegregation are unclear and it is ambiguous
how to accomplish desegregation. How does one Other problems arise but they are not taken up in
know desegregation has been accomplished? In the CAC:
effect, there is an unclear solution and an unclear
technology or means of bringing it about.. Moreo- p7 - Teachers and students boycott schools in
ver, there is a tight deadline and the participants in disrepair (budget woes)
this case keep changing – judges turnover, differ- p8 - Lawsuit filed by Latin-American organi-
ent committees form and dissolve, etc. Only the zation (demand for bilingual education)
threat of a lawsuit creates a choice opportunity! p9 - Financial problems are apparent with
So the case of SFUSD has many qualities that sug- teacher contract disputes
gest it is a case of organized anarchy. p10 - Teacher’s go on strike
Let’s identify the problems mentioned in the
case as related by Stephen Weiner. The figure on So while the courts demand SFUSD go through
the prior page identifies the problems, solutions, desegregation, they are contending with a variety
and actors involved with SFUSD desegregation. of other issues and problems. Many are quite se-
The focal arena is the Community Advisory Com- vere and draw necessary attention and resources.
mittee, since it is the arena in which a decision is A variety of participants are also involved,
ultimately made. The key problem for this arena but only some of them enter the choice arena that
is that of desegregating the elementary schools – takes up the problem of desegregation.
p6. At the outset, the participants were not sure
what integration should look like. They eventually a1 – Community interest groups
adopt a state standard that is very strong. All the a2 – Federal consultants
schools need to have a racial compositions within a3 – CAC
15% of the district average. a4 – SFUSD consultants and administrators
A bunch of problems enter the CAC choice a5 – working minorities
arena and are interrelated by participants: a6 – working men

p1 - Keeping integrity of school complexes Of these groups, the federal consultants are outsid-
p2 - Bilingual education needed ers with little understanding of constituent con-
p3 - Bussing disliked by whites (white flight) cerns and who cannot always attend. Because
p4 - SES integration wanted meeting times are scheduled during the day, the

68
most active CAC members tend to be white mid-
dle class women (stay at home moms), while work-
ing men and minorities are unable to attend due to
their day jobs (less energy to devote it). And fi-
nally, the SFUSD consultants and administrators
are drawn away by other problems that do not en-
ter the choice arena for desegregation (a4 attend to
p7-p10). Only a1-3 attend the meetings.
At the actual meetings, these participants
raise and discuss a variety of solutions: twenty-
four of them to be exact (too many to list). Here
are a few:
s1—s24 Twenty-four solutions developed
and narrowed down to two.
s1 - Tristar (3-zone plan written by techno-
crats)
s2 - Horseshoe (7-zone plan – less drastic)
What is not considered is the solution of simple
cross-town busing.
Kingdon and What Becomes Part of the Government’s Agenda.
Figure 4.5 United States Capital Building‘
(Source - http://www.flickr.com/photos/brad_holt)
If we put it all together we begin to see what
happens in the CAC arena. Certain actors get
pulled away (a4) to other problems arising in other
choice arenas, while other actors just cannot make
the meeting times (a5 and a6). In the arena, the
CAC is composed of mostly white, middle class
females. Their attention and energy is on p1 – sus-
taining the integrity of community schools and this
is related to p3 – how busing might lead to white
flight. They see s2 – the horseshoe plan as par-
tially addressing the desegregation order (p6) as
well as the problem of sustain community schools
(p1). By contrast the federal consultants see s1,
the tristar plan as the best because it most fully ad-
dresses the desegregation order, but they do not
connect the solution to the problems other partici-
pants find salient in the choice arena.
In a way the diagram sums up the decisions that
arose and how the deadline affected the outcome.
The deadline of the court decision pushed pre-
vented other problems and participants from fully
69
entering the discussion and decision. The case of
SFUD’s segregation plan could have been differ-
ent had there been a different deadline, different
meeting times, and different problems interfering.
Kingdon and Government Policy
Let’s next turn to the Kingdon text (2003).
Kingdon does a nice job of summarizing some of
the major tenets of organized anarchy. He does
this in his focus on American health and transporta-
tion policies that arose during 1976-1980 presi-
dency of Jimmy Carter. Kingdon asks: Why do
certain issues become part of the government’s
agenda while other issues do not? Kingdon’s re-
search finds that policy proposals are not necessar-
ily written in response to a particular event.
Rather, at any given time, there exist a multitude
of proposals ready to go and waiting for the best
opportunity for their introduction. An idea’s time
comes via a process of organized anarchy. Let’s
look at how Kingdon regards federal agenda-
setting as such a process.
He does so by first asking who are the par-
ticipants? -- Let’s start by identifying the various
participants in Washington, D.C.:
Within government there is …
• Congress: Upper and lower house, plus
congressional staff – they have scheduled
election cycles of 2 and 6 years so there is
some turnover.
• The president, plus the cabinet, staff, and
his political appointees. The President has
a large say in agenda setting but less con-
trol on alternatives. His election cycle is
every 4 years, and turnover then is likely
even if he is re-elected.
• Last there are civil servants: bureaucrats
who have longevity and expertise. They
turnover less frequently.
Outside the government:
• Interest groups: lobbyists, labor, profes-
sional societies, public interest/advocacy
organizations, etc.
• Academics and other researchers
• Media
• Voters
• General public/constituents
So you have all kinds of other actors and partici-
pants that can affect the legislative process and
they turnover somewhat rather variably.
Next – what is the process of policy forma-
tion? In what ways can we consider how a policy
originates and develops? Here, Kingdon considers
a few different models by which scholars have
characterized policy formation. The first concerns
origins. Where did the idea and policy come
from? How did the idea spread? The assumption
here is that it started somewhere and got taken up
more and more. We have an initial origin and if
we follow that origin, we will have some under-
standing for its development. A second view is
that of rational choice: We saw this earlier. Here,
the view is that we define the goals, identify alter-
natives, and choose the optimal alternative – e.g.,
the policy in question. Therefore, its adoption
should be based on predictions of the policy’s con-
sequences. A third view is that of incrementalism.
Rather than starting from scratch, new policies
build on existing policies. Changes are made at
the margins and what we see today is an adapta-
tion of prior ones.
Kingdon argues that each of these descrip-
tions has some value, but they do not describe the
process of policy formation as completely as Gar-
bage Can Theory (GCT). Kingdon asks how does
agenda setting resemble an organized anarchy?
Let’s take a step back like we did in the
SFUSD case and see if it fits the criteria. First, we
ask, is it a context of problematic preferences (in-
consistent, ill-defined)? And here, the answer is
yes - Action is often taken before identifying pref-
erences. Participants even disagree on their prefer-
ences and priorities. Second, we ask is there un-
clear technology? Kingdon says how the govern-
ment attempts to solve problems is often unclear.
There is not a clearly defined way to desegregate
schools, eliminate the achievement gap, end child
poverty: “it’s not like making widgets” (2003:85).
Third, there is Fluid participation and there is a
70
good deal of turnover in personnel. Moreover, the
importance of participants does not match their job
description and the executive branch is often in-
volved in legislative processes. Participants out-
side the government enter and exit the decision
making process all the time, and access varies. In
sum, the federal government would seem to be an
organized anarchy, as defined by Cohen, March
and Olsen.
Kingdon’s adaptation of GCT conceptualizes
three independent streams of problems, policies
(solutions), and politics (participants). These
streams converge (“couple”) at critical points. It is
this process that sets the agenda. He sees the
streams as somewhat independent. For example,
problems flow in and out of focus in the news and
for legislative actors. Policies are generated and
sit around for years, circulating without a home.
No Child Left Behind
Figure 4.6 Department of Education Building at Launch of NCLB
(Source - http://www.flickr.com/photos/dchousegrooves/)
Participants come and go. And the opportunities
for decisions (i.e., choice arenas or garbage cans),
arises at different times.
The independence of these streams is a key
point I want to reiterate: policy solutions can be
developed whether or not they respond to an actual
problem. The political stream is not necessarily
dependent on identified problems. And as King-
don says on page 88:
Advocates develop their proposals
and then wait for problems to
come along to which they can at-
tach their solutions, or for a devel-
opment in the political
stream...that makes their proposals
more likely to be adopted” (King-
don, p. 88).
These three streams must converge when a policy
window is open. That is, only when the conditions
are right will an issue find itself on a policy
agenda. If you have the chance, read Kingdon as
71
he does a wonderful job applying theory to this par-
ticular instance of agenda setting. Rather than re-
hash his application of GCT to particular instances
of agenda setting, we want to apply garbage can
theory to a new case many of you might not be fa-
miliar with – in this way we can afford you numer-
ous examples so you see how the theory can be ap-
plied in many instances, not just one.
No Child Left Behind
Our last example will concern a recent policy
decision: Title V of the No Child Left Behind Act
– the Promotion of Informed Parental Choice And
Innovative Programs (or NCLB). Briefly, NCLB
is the name of the 2001 reauthorization of the
1965 Elementary and Secondary Education Act
(which was part of President Lyndon Johnson’s
“War on Poverty”). When originally passed, the
primary focus of the Elementary and Secondary
Education Act was on improving the education for
economically disadvantaged students who met fed-
eral definitions of poverty. Over time, the Elemen-
tary and Secondary Education Act was expanded
to include bilingual education, education to indige-
nous communities, education in correction facili-
ties, magnet schools, foreign language programs,
midnight basketball, and migrant education.
The Elementary and Secondary Education
Act has been reauthorized several times since its
original passage in 1964, usually for approxi-
mately four- to six-year periods. President George
Bush signed the No Child Left Behind Act of
20011 into law on January 8, 2002. Title V pro-
vides federal grant support for Innovative Pro-
grams and Public Charter Schools. It also adds a
new incentive program to help charter schools
meet their facility needs. Included in this section
is a provision that provides transportation and
other support that allows students attending
schools that do not meet “adequate yearly pro-
gress” for two years to transfer to a charter school
or other public school.
So, how would we use Kingdon’s model to
describe how Title V entered the agenda and ulti-
mately became law? First we would look at the
problem stream. At any given time, a set of prob-
lems may rise in prominence and capture the atten-
tion of governments, often not because of political
pressure but because of systematic indicators that
purport to prove the existence of a problem. That
is, “problems” may not necessarily be true prob-
lems. They merely have to be “problems” in the
minds of some subsection of the public in order to
be considered.
What problems could Title V purport to solve?
!Failing schools with no sign of improve-
ment.
!Lack of innovation in public schools (charter
schools may be an incubator of innovation)
!There is a lack of competition. Public
schools are not pressured to improve.
!Unequal opportunity for lower income chil-
dren (these families have fewer options be-
cause they can’t afford private schools. Char-
ters are free public schools of choice.)
!Charter school funding (Claim by charter
school proponents that they receive a dispro-
portionate amount of per pupil funding from
the state).
In most cases we would agree that these problems
are probably true. However, we want you to under-
stand that it does not necessarily matter if you
think it is true or not. What matters is that a sub-
section of a population does - that there is energy
behind it, and actors are affixed to these kinds of
problems.
What are some of the indicators to this problem?
!International comparisons (USA behind)
!Achievement gap literature (by race, income,
urbanicity - disparities exist)
!Government evaluations and other studies
show many problems in schooling
All these indicators suggest the problems of our
education system are more than our biased view,
and exist beyond our own opinion.
What is the public’s perception of this problem?
72
Summary of the Problems, Alternatives,
Politics, and Open Policy Windows.

Figure 4.7 Bush Signing NCLB Figure 4.8 NCLB Symbol

(Source - http://commons.wikimedia.org/wiki/File:No_Child_Left_Behind_Act.jpg) (Source - http://commons.wikimedia.org/wiki/File:Nochild.jpg)

73
 !Public opinion is that schools in general are
failing (constant media bombardment of this)
!They see their own schools as a little better
than most (bias)
!Market forces make sense to people. They
like the idea of choice and think it could lead
to improvement.
!Bush presents rhetoric picked up in media:
“soft bigotry of low expectations”
In sum, there are streams of problems in the envi-
ronment that relate to the No Child Left Behind
legislation.
There is also a stream of solutions (policies)
that is occurring. To see these, we next look at the
competing policy alternatives being proposed to
address the problems above. Within governments,
specialists including lawmakers, staffers, advocacy
groups, researchers, and academics concentrate on
developing policy proposals: “Ideas are floated,
bills introduced, speeches made; proposals are
drafted, then amended in response to reaction and
floated again” (Kingdon, p. 117).
So lets look at this more closely. What are
the policy alternatives that speak to the problems
identified above? First there are school vouchers.
Here a student might get so much money from the
state, they could use that money to apply to and at-
tend another school of their choice (public or pri-
vate). Another potential solution is to promote
charter schools, which is somewhat like promoting
vouchers, but here students are limited to public
schools. One could view public school improve-
ment as a policy and solution. But how? Here the
issue is “unclear technology”. One could focus on
improving instruction (e.g., teacher preparation
programs, professional development training, or
new curriculum). Another way would be to struc-
ture the schools better like seen with some forms
of ability grouping, class size reduction, extended
school days, etc. Another would be accountabil-
ity: where one assesses adequate yearly progress
or conducts annual testing with rewards and pun-
ishments, much like NCLB adopts. There are
other less ambitious solutions too - like simply
throwing money at the problem and existing pro-
grams. Or you can ignore the problem and play
the blame game. One could argue it is not the role
of federal government to mess with schools and it
is the responsibility of the states, cities, districts,
schools and school teachers.
All these are viable alternatives, and you just
need to remember in Kingdon’s model, policy
does not necessarily follow problems. These pol-
icy alternatives in many cases were developed in-
dependent of the problems we have identified. In
fact, much of NCLB, including accountability pro-
visions, was developed under Clinton.
The third feature of NCLB we would look at
are the participants (politics) involved. The politi-
cal stream described corresponds to Cohen, March
and Olsen’s participants/decision-makers stream.
Even when a policy solution attaches to a problem,
passage is not guaranteed. Political factors such as
partisan concerns, ideological distribution of poli-
cymakers and interest group lobbying can work
against any proposal, no matter how complemen-
tary it may be to a policy problem.
In the case of Title V, the reauthorization of
Elementary and Secondary Education Act was
signed in 1994 and was scheduled to expire in
1999. Congress and the Clinton Administration
began work on the reauthorization process in 1999
and in 2000 but failed both attempts to finish the
work. Education was a central component to can-
didate G.W. Bush’s platform. And when Bush en-
tered office, one of his first actions was to send to
Congress a broad outline of his education pro-
posal. He vowed to “Leave no child behind”
which was hard to argue against on rhetorical
grounds. There was little Congressional criticism
of the final version of the bill (it passed 87-10 in
the Senate and 381-41 in the House) and received
support from even some of the most liberal mem-
bers, including Representatives George Miller and
Barbara Lee and Senator Ted Kennedy.
Recall from our discussion of solutions or
policy alternatives, above, that school vouchers are
an alternative. Although original versions of
NCLB contained voucher proposals for private
schools, this was given up in order to make the nec-
essary concessions for the Democratic support re-
quired for passage. In other words, the political
environment was accepting of the provisions of
74
NCLB as it was passed. Since that time, there has dency in its particular form and not well before un-
been some criticism (mainly around funding is- der a different guise and during Clinton’s era.
sues), but the public is still supportive of the gen-
eral measures of the law.
The final feature of NCLB we would look at
is the Policy Window, which concerns deadlines
and the convergence of streams. We’ve discussed
the three streams of problems, policy alternatives,
and politics. But these streams must converge
while a policy window is open in order for legisla-
tion to move. NASA has a ‘launch window’—a
time period in which a particular rocket must be
launched. If they miss the launch window, NASA
has to wait for the next one before it can go. The
same is true under Kingdon’s model. There are
particular times in which a policy window is open.
The policy window is not indefinitely open.
There are deadlines which constrain the amount of
time problem-alternatives have in order to be im-
plemented. Decisions typically must be made by
the end of the legislative session. Failure to do so
means that the process would have to begin from
scratch at the start of the next session. In addition,
legislatures are systems composed of decision mak-
ers that can change from one election to the next.
A favorable set of decision makers may disappear,
to be replaced with a new set of decision makers at
the start of the next term who may be less willing
to support the provisions of Title V.

In the case of Title V, The Policy Window was

open when there was a…
• Republican majority in Congress
• Republican president
• Frustration with public education
• Promising start of the charter school move-
ment
• Strategic use of language by proponents of
NCLB
• “Success” of state accountability laws (CA,
TX, others)

But most of the time, the policy window is closed.

So if we put all 4 features of Kingdon together, we
see the following table and understand better how
that legislation’s time occurred under Bush’s presi-

75
 Summary Table of Five Theories to Date:
Rational Actor (RA)
When does it apply? Exists when there is a unified
actor with consistent
preferences, lots of information,
and clear goals (and time
calculate).
Summary or Basic Argument Unitary actor or team that
confronts a problem, assesses
objectives (goals) with regard to
it, identifies options, the
consequences of said options,
and then chooses option that
minimizes costs.
Variant: Bounded rationality
and satisficing. Recognize
imperfect info, ambiguity, and
select first satisfactory option
(good enough).
Technology (how solutions get decided) Maximization of options
(solutions).
Participants Unified team or actor
Goals Goals are defined in regard to
(what probs to resolve) problem.
Social Structure Formal roles, hierarchical.
Environment Not salient except as
influencing consequences of
options.
Organizational Process (OP) /
Limited Problem Solver (LPS)
Exists when the decision is guided
by a logic of appropriateness –
matching problem to actors with
procedures for handling it (routine-
process focus).
Dividing up problem, coordinating
/ activating organizational actors
who have special capacities /
SOP’s for parts of problem,
conducting sequential attention to
objectives (localized searches until
problems resolved). Action guided
by processes / available routines.
Matching identity and SOP’s
(solutions) / programs / repertoires
to problem.
Organizational positions
Objectives – compliance to SOP’s,
match with problem parts.
Actors in hierarchical
organizational positions. Cue
sequential routines that accomplish
task or solve problem by routines
available (supply issue).
NA
Coalitions /
Bureaucratic Politics (BP)
Exists when there are multiple
actors with inconsistent preferences
and identities, and none of whom
can go it alone without assistance
of others.
Focus on the players occupying
various positions; their parochial
interests (their conceptions of
problems and solutions); their
resources (expertise, money,
people) and stakes in game; and
bargaining processes between them
that establish agreements /
coalitions.
Bargaining, or playing the game
(within its rules), or political
maneuvering.
Players in positions
Parochial priorities, goals/interests,
stakes / stands.
Coalitions – enemy/friend
Deadlines and wider array of
stakeholders.
Organized Anarchies /
Garbage Can (GC)
Exists when solutions are unclear,
participants turn over, and
preferences/identities are inconsistent.
Focus on choice arenas (when choice
opportunities / windows arise); the
distinct and decoupled streams of
problems, solutions, and participants;
and their access rules to the arena
(whether structural or timed).
Confluence of multiple streams, such
that solution is connected to problems
and enough actor-energy to see it
through.
Participant stream shaped by political /
career cycles & unplanned departures.
Problems stream determined by public
opinion, prominence / vocalness of
problems in firm, etc.
Access rules – segmented, hierarchical,
or democratic.
Deadlines and other choice arenas (e.g.,
decision in current arena may be means
of access to another choice arena…)

Dominant Pattern of Inference
Management Strategies
Action = Maximization of
means to ends.
Know alternatives and their
consequences for the shared
goal, and select wisely. Improve
information and analysis.
Management by consequences.
Action = output close to prior
output (path dependence), cueing
of SOP’s appropriate to problem.
Know SOP’s, what problems they
go with (matching), and who cues
them. Improve rules and matching
with problems. Management by
rules.
Action = result of political
bargaining.
Bargain with players (log-roll,
horse-trade, hinder opposition’s
coalition formation, etc). Learn
others’ interests / weaknesses so
you know how to manipulate and
win. Direct management of
relations via bargaining.
Action / decision = result of streams
collision in choice arena.
Time when your solution is raised (to
coincide with right participants and
cycle of problems) to maximize energy;
abandon entangled initiatives; know
how to overload system for policies you
detest; and generate choice opportunities
that work to your interests
(access/timing). Indirect managing of
situations.

76
References

Birnbaum, Robert. 1989. “The Latent Organiza-

tional Functions of the Academic Senate: Why Sen-
ates Do Not Work But Will Not Go Away?” Jour-
nal of Higher Education 60 (July/August) 4: 423-
443.

Cohen, Michael D, March, James G. and Olsen,

Johan P. 1972. A Garbage Can Model of Organi-
zational Choice. Administrative Science Quarterly
17(1): 1-25.

Kingdon, J. W. 2003 (1995). Agendas, alterna-

tives, and public policies, second edition. Long-
man.

March, James G. 1994. A Primer on Decision

Making: How Decisions Happen. NY: The Free
Press. Chapter 5, pp. 175-218.

Weiner, Stephen S. 1976. “Participation, Dead-

lines, and Choice” Chapter 11 (pp. 225-250) in
Ambiguity and Choice in Organizations. (eds)
March, James and Johan Olsen. Bergen: Univer-
sitetsforlaget

77
5
Organizational
Learning

Source: http://commons.wikimedia.org/wiki/File:Organizational_Learning_and_KM.jpg
Organizational Learning
In this chapter we will describe the theory of
organizational learning and what it entails. Before
we begin, we want to briefly revisit our theory of
organized anarchy by retelling how one of our in-
class exercises went. As a capstone experience of
organized anarchy, we try to create a garbage can
situation for students to experience in class. Every
year, we call a meeting with the students and ask
them to discuss the course and its grading policy.
We even tell them we will adopt a new class for-
mat and grading procedure if they can all agree on
one and convince us it will improve the learning
experience. To help with the process, we divide
them into groups and ask them to identify various
problems (i.e., a problem stream is created). The
problems they identify are as follows: there is too
much reading; lecture materials go by too quickly;
not enough time for individualized projects; not
enough time for group projects and discussion;
etc. We then ask another group to create a list of
policy changes they would like in the course (i.e.,
a solution stream is created): often they ask that
we allow them to rewrite papers; sometimes they
ask that everyone gets 10 points added to their
grade; or that lectures be posted online; or exem-
plary papers be shared.
All too often, there is little connection be-
tween the problems and solutions they select. For
example, the first two solutions of rewriting pa-
pers for a better grade and giving everyone 10
more points do not address any of the problems
they listed earlier. And the last one: what does the
posting of exemplary papers solve? Only the solu-
tion of posting lectures actually addresses a prob-
lem they list – that lectures go by too quick. The
next thing we do is discuss each solution. Very
quickly we see the energy affixed to certain solu-
tions, but then in discussion, it dissipates as people
identify additional problems the solutions may in-
cur. For example, what does the policy of giving
everyone 10 points do if they are graded on a
curve? Someone may even notice that if everyone
gets an A that it creates another problem: how will
we write recommendations for students hoping to
get into doctoral programs, or jobs if everyone got
an A? What distinguishes them? Same for the
other solutions. If we give students lecture notes,
does it mean they will stop doing the readings? If
we give them exemplary papers, will they merely
follow that format and not be creative? If we al-
low for group projects and group grades, it may
not be fair because some people do more of the
work than others. And again, how can we write
individual recommendations for graduate schools
and jobs if students have group grades?
With each solution, new problems are affixed
that render them less feasible. In fact, that is often
the kind of discussion that arises in organized anar-
chy. It is also a tactic used by people trying to pre-
vent the group from taking up a particular solu-
tion. In many ways, this is why there has never
been a drastic change in the class’s grading poli-
cies. Students – not just us! – raise new problems
with every proposed solution. Moreover, we have
a deadline pressing on us. We only have 20 min-
utes of class time to decide. As a result, we never
discuss all the solutions and only the most outspo-
ken students concerns get voiced.
The ambiguous nature of solutions, their con-
nection to new problems, and the lack of time all
compounded to render ambitious reforms minor
(amended legislation, if you will!). And simple so-
lutions can also quickly seem complex. In the
end, the class tends to agree on minor changes: stu-
dents can revise their papers once, they can do indi-
vidualized projects, and lecture notes are posted
after we meet as a class.
Most of you have experienced organized an-
archy like this firsthand - you just never realized it
until now. Go to your next meeting where a bunch
of equals with different opinions try to make a de-
cision. Watch the process unfold, and try and re-
member your lesson from organizational analysis
– many of you now have the capacity to enjoy and
understand the process anew, and possibly even
redirect the discussion in ways that meet your inter-
ests!
An Introduction to Organizational Learning
This chapter is not about organized anarchy,
but rather about organizational learning. In this
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chapter, we ask - What is the organizational learning perspective? In the

most general terms, the organizational learning perspective concerns adap-
Organizational
tation and learning from experience. But how does an organization
Learning - Practice, learn? Organizations learn by encoding inferences from history into or-
Understanding, and ganizational structures (so best practices into rules, routines, and roles),
people, technologies (curricula), and culture (norms, beliefs) that guide
Organizational behavior. That is, organizations reflect on what works well or not, and
Memory then encode that knowledge into its organizational elements (participants,
technology/tasks, social structure) so it can remember.
It is important to emphasize that organizational learning occurs at
the organizational level. There is no doubt that individual and team learn-
ing are related, but we need to keep in mind that it is the formal organiza-
tion and firm that is making efforts to learn from experience and pass on
that knowledge to its employees in the hopes of constantly improving per-
formance. In our discussion of the organizational learning perspective,
we draw on the writings of many writers – from John Seely Brown and
Paul Duguid (1991; 2000), to James March (Levitt and March 1988;
March 1991; 1994; March et al 1991), Linda Argote (1999), Lucy Such-
man (2007), Julian Orr (1996), and others. We merely want to afford you
a general framework you can get your mind around and apply in the or-
ganizational settings you participate.
One text in particular, Brown and Duguid (2000), contrast organiza-
tional learning with an organizational process model (if you recall, this
was Allison’s Organizational Process Model where organizations are

80
viewed as following routines and standard operat- proach in that it regards experiential learning –
ing procedures). Brown and Duguid describe two learning by doing (not learning about) - as the cen-
characterizations of routines or SOP’s – On the tral means to making complex organizations work.
one hand they are ostensive rules applied as a Now arguably, learning of this sort may not matter
guide and computer program (SOP ~ organiza- much for simple tasks like procurement, shipping,
tional process model); on the other, they are en- receiving, warehousing and billing – as this band
acted practices (the heart of understanding or of operations have really well-defined processes
knowledge). According to Brown and Duguid, a with measurable inputs and outputs. But experien-
manager of organizational processes will get a tial learning will matter dearly for management,
company to streamline their SOP’s to those con- and research and development where life is less
cerned with the core task and then spell them out sequential and linear, where inputs and outputs are
so they are clear. They remove SOP’s that are re- unclear. Here, making sense, interpreting, and un-
dundant, those that are in conflict with each other, derstanding are points of contention and highly val-
and those that are pointless. ued. To get at this, one needs to look at the actual
A good example of a “pointless rule” might activity and practice within routines and work proc-
be what we term blue-laws in the United States. esses.
These are laws created many years ago that are
still in legal texts even though they no longer ap-
ply nor are they enforced. For example: in Kansas
there is a law saying you cannot eat snakes on Sun-
day; in Connecticut you cannot eat pickles on Sun-
day; and in Massachusetts, cows cannot graze in
the Boston Commons. The organizational learning
perspective agrees that organizational processes
and SOP’s matter, but it focuses on the practice of
these procedures, and argues it is through their
practice that they have meaning, relevance, and ef-
fect (and conversely, it is their lack of practice that
make routines irrelevant and forgotten).
In fact, many organizational procedures can
not be looked up in a book or manual. And even if
they can be found in a manual, merely reading
about them does not result in understanding and
knowledge for most persons. Finding the right rou-
tine is hard (it may not even exist), and enacting it
well is even harder as each new situation will dif-
fer from the one before. You constantly have to
adapt rules and procedures so as to fit changing
situations and actual work experiences. Without
practice and experience, you have no “real” knowl-
edge about working.
Take the example of self-defense routines.
They are learned as a routine, but then they are Example of Blue Laws
practiced in bouts and used in relation to other rou- http://commons.wikimedia.org/wiki/File:Ontario_Sunday_Laws.jpg/

tines. That is, they are not just read in a book, but So enacted practice is a route to understand-
are practiced and applied before the student be- ing, shared knowledge, and expertise. Brown &
comes an expert fighter. As such, organizational Duguid give the example of computer help-lines
learning differs from the organizational process ap- and Xerox machine repair experts to illustrate this

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point (Much of it is drawn from work by Julian Orr and Lucy Suchman).
This line of research finds that the machine manuals often don’t tell you
Xerox and
what you need know, no matter how much you codify things. You can
Organizational write out procedures for every problem a Xerox machine can have, and it
Practices is still terribly inefficient (and painful) to ask people to read those manu-
als as a means to becoming experts on repairing or using Xerox ma-
chines. Instead, a great deal of professional understanding comes from
practice – actually doing the repairs and work yourself. This type of
learning is central to many professions: think about how doctors learn
through residency training, lawyers by internships, teachers by student-
teaching, emergency personnel by simulations, etc – and hopefully many
of you will understand these theories via case-applications!
There are several characteristics about enacted practices that distin-
guish them from ostensive rules you read in a textbook: First, practices
are inherently collaborative and interactional. Practice entails collabora-
tion that leads to an indivisible product. For example, in the case of
Xerox machines, it involves talking to clients, interacting with machines,
and fixing them so they afford the output desired.
Second, practices are shared and understood through stories. As per-
sons perform an activity, they develop accounts or stories. And these are
understandings of what happened and why. In many cases, these are like
formalisms – represented arguments (we do this all the time in tables, fig-
ures, models, stories, etc). They can be readily remembered, passed on,
and accessed by others. They not only tell of specific information but

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principles of causation and process! As such, the
type of knowledge and its representation has a spe-
cial link to memory.
Third, practices entail improvisation and ad-
aptation via use. A central aspect of organiza-
tional learning is individual adaptation and learn-
ing to apply a rule. We improvise rules and rou-
tines so they can be applied to the world as encoun-
tered (we relate particulars of the world to general
schemas of the organization). Even if organiza-
tions do not recognize this process of adaptation
and improvisation, it continues to happen. The
Xerox representatives learned tricks to get by and
understand a problem. Same for teachers and stu-
dents: they adapt lessons to the situation, tell the
same joke to different effect, etc. There are “End-
less small forms of practical subversion taken up
in the name of getting work done” (Suchman
1996:416).
Encouraging Organizational Learning
If successful practice and knowledge in-
volves improvisation, then how do we encourage
their occurrence and transfer within an organiza-
tion? That is, how do we engineer an organiza-
tion that learns? There are many things you can
do:
1. First, you can value improvisational efforts.
If an organization ignores or devalues im-
provisation and rule-adaptation, then those
adaptations will happen anyway and as a
form of resistance to the formal organization.
Do not penalize improvisation, but look for
decoupling between routines and their impro-
vised enactment – where does that occur?
Where do the standard operating procedures
say one thing and personnel do another?
You should focus and revise those routines!
2. Second, create collaborative practices by
which useful improvisation is generated and
transferred. You should embrace improvised
practices and develop a means of noticing
which improvisations worked well and then
try to pass them along to others. For exam-
ple, in the Xerox case, they had a help desk
that took calls from clients struggling with
their machines. Rather than ask the employ-
ees to look each question up in a manual,
they had experts placed at the same help
desk as novices – such as giving them neigh-
boring seats or the cell phone numbers of
Xerox experts. In this way, they can over-
hear experts, ask quick questions, and ac-
quire their built up organizational memory of
adaptations and improvisations of the man-
ual that works. The valuation and learning
of successful improvisation allows for contin-
ual improvement and organizational memory
to be passed through participants. This exam-
ple presages a third means of enabling organ-
izational learning.
3. Put successful adaptations and knowledge
into organizational memory. How do you
retain the knowledge generated in collabora-
tions? How do you pass on what works
well? Improvisational knowledge has an in-
formal quality, a short life, and it fades from
memory! Then people reinvent the same
fixes again and again from scratch. Hence, it
is important to develop means of passing the
knowledge on and remembering it.
What social organization encourages improvi-
sation and the generation of knowledge and under-
standing, and then makes sure it gets shared and
stored? An organization that supports collabora-
tion does. It affords lateral linkages and opportuni-
ties to discuss work practices. Also, an organiza-
tion that develops a practitioner database does: rec-
ognize and value practical knowledge creation,
and help members use it so it need not be rediscov-
ered and reinvented every time.
So again – Xerox’s structuring of the help
desk by placing novices and experts together
helped pass knowledge on to new personnel. In
addition, in today’s technological world, we can
use listservs and generate practitioner knowledge
repositories that may become an accessible data-
base to others. Examples of this can be found at
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quora.com or even stackoverflow.com. There you
can post any kind of question, but some of them
are technical and/or practical. For educators an ex-
ample could be found at curriki.org or tes.co.uk,
where curricula and lessons are posted.
Organizational Learning In-depth
For the remainder of the chapter, I want to
discuss various topics that are discussed from an
organizational learning perspective. The first topic
concerns learning curves. Here, organizational
learning experts ask, how do we know organiza-
tional learning has occurred? Let’s use a school as
our example, since it is an organization most of
you are already familiar with.
What are some indicators schools could use
to denote that they improved and accumulated use-
ful knowledge? Some examples might be test
score gains, attendance, and office referrals. We
might want to see teachers becoming more effi-
cient at getting students to learn (say teacher time
per pupil [hrs] per instruction type x cumulative
gains). This is sort of what we would want to see.
Notably teachers might be inefficient at first giv-
ing students much time for little test score gain,
but then this can improve.
The&Rela3onship&Between&Labor&Hours&Per&
Vehicle&and&Cumula3ve&Output&
time per pupil (hrs)
Labor&Hours&Per&Vehicle&
Teacher
Cumulative test score gains
Cumula3ve&Output&
Figure 5.1 - Learning Curves
One can even imagine curves like this for dif-
ferent instructional formats or even curricula. It
might be easier to envisage this for manufacturing
– say for producing cars or airplanes and reducing
the number of complaints or recalls. But the same
could be done for schools in terms of the number
of arrests or office referrals here on the y-axis.
And then one can envisage this for multiple firms
or schools, discerning which has a steeper learning
curve, suggesting that the organization is reflect-
ing on its performance and developing means to
improve or foster expertise.
How do you generate gains in learning
curves? What might be some tricks that can gener-
ate more effective/efficient ways to teach class les-
sons in a school? We raise this because a manager
of organizational learning will need to consider
means by which participants learn and improve.
For example, they may want to focus on improving
personnel – such as getting fresh talent, preventing
initial startup costs via a mentoring program with
experts, or improving recruitment so as to attract
better talent. The manager may want to improve
work routines – such as getting better-designed
tasks, removing stale ones, and allowing tasks to
become familiar (efficient). The manager may
also want to afford opportunities to discuss routine
improvements and document that. They can also
consider ways of improving their technology –
such as getting better designed textbooks, develop
a better physical layout, and so forth.
Even if you do generate gains, it is important
to keep in mind that learning curves often plateau.
All too often, we learn to resolve the simplest prob-
lems first and acquire large gains. Then the im-
provements peter off and we get bogged down in
complex issues that have smaller gains. Hence, as
a manager of organizational learning, you may
want to shift your firms focus after learning begins
to plateau. For example, a school reformer may
want to move on from one reform to another, esti-
mating learning curves and deciding when to put
in place organizational memory / stable procedures
to ensure gains are retained, but then switch to
some other concern.
Another problem with learning curves is that
they are only as good as the indicator used. Firms
tend to improve on the indicator and ignore other
issues. For example, it is common knowledge that
in schools with high stakes testing that teachers
teach to the test. But it is not always clear these
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tests measure what we hope – some tests measure
only a narrow band of intellectual development
and too strong a focus on any single exam may cor-
respond with less time on other intellectual endeav-
ors (like music, sports, physics, etc.).
Another important topic for the organiza-
tional learning perspective concerns organiza-
tional forgetting and memory: Why / How does
forgetting and remembering happen in organiza-
tions? What are the conditions of knowledge de-
preciation and knowledge storage? Again – if we
consider schools, it is clear they are primarily for-
getting organizations since what works well as an
instructional innovation in one classroom is sel-
dom spread among other classrooms. But why?
How do they forget?
There are multiple reasons organizations
forget. Often it is because exogenous factors cre-
ate distractions and prevent practitioners from re-
cording what works (teacher strikes, lawsuits, odd
schedules, other events, etc). It is also because old
knowledge frequently becomes obsolete with new
audiences (old tricks no longer apply). Teachers
get out of date – I need to learn the latest method
in order to stay current. A big reason schools (and
faculty) forget is because their personnel work in
relative isolation. Everyone gets their own room
and has little time to share what works well or
does not work well with their colleagues. I might
do something well, but no one ever hears about it.
Turnover is also an issue – it can lead to loss of ex-
pertise. For example, in poor American schools
teacher turnover is dramatic. And even our treat-
ments of sending in temporary teachers (like Teach
for America) results in little organization memory
– and in the contexts that most need it!
So how can organizational memory be
stored within an organization like a school?
Technology/curricula are great for storing knowl-
edge about successful practice, but it is not easy to
access and tends to remain relatively static.
(Wiki’s, annual reports – are all visible, interactive
forms of knowledge, but they may not get picked
up very often or widespread in an organization.)
Successful tasks and routines can be encoded into
the organization but they are less stable than curric-
ula. For example, team teaching might be a new
routine that has great returns in some cases, but
how it is enacted may vary greatly and the same
positive return may not be observed elsewhere.
Personnel (faculty) are great storage units and
transfer vehicles, but they leave and take knowl-
edge with them if they leave! Organizational mem-
ory is not just a database of ideas, it is a database
of knowers with experience. You need ideas and
cultivators of them who are in the know, so retain-
ing key personnel who train others is a very impor-
tant means to engineering organizational memory
– and especially if the sort of knowledge needed is
tacit or implicit and hard to codify and make sense
of in rule-books. Last, Cultural features like sto-
ries and community ceremonies can be great
means of preserving organizational memory, but
they might be prone to forgetting (as oral culture
can be) and it might focus too much on particular
individuals (exemplars and pariahs) than situations
– so you might want a database created by work-
ing people. And again, with computing we now
have the capacity to collect and store practitioner
knowledge. As we said before, websites like
Quora.com and curriki.org are feasible models to
use. There a searchable repository and demo pres-
entations and materials can be stored.
Communities of Practice
Most discussions of organizational learning
mention the formation of communities of practice
and how they can facilitate and influence knowl-
edge creation. When we consider communities of
practice, we are really asking about the micro-
social processes that create new knowledge and/or
adapt and combine old knowledge in new ways.
From an organizational learning perspective, the
general argument is that in order to acquire knowl-
edge, you need to enter a community of practice as
an apprentice. This community of practice is a
world entailing work, learning, and communica-
tion among people of a common working identity.
In this world of people who practice and identify
with what they do, you will hear stories and talk
about practice, and participate in applying and
adapting routines.
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 In a community of practice, learning is a
demand-driven, identity-forming, social act. As
such, it creates cohesive groups of persons work-
ing on the same task (~persons share bonding, co-
hesive forms of social capital). Here knowledge
can travel rapidly and be assimilated easily, but it
can also be coordinated or negotiated, and then
communicated in applied ways. By entering the
community, the participant enters strong, reinforc-
ing bonds (bonding capital) that generate confor-
mity and shared identity. This means members
identify with the organization, and it becomes
grounds for interpreting and judging, and reflects
an understanding.
A good example of entering a community of
reinforcing relations is when a person learns chess
and becomes increasingly involved in a chess
league. Most of us can not just learn about chess
from a book. We find it much faster and easier to
watch chess players play and then try playing it
with them by assuming the role of a chess player
ourselves. Over time, we may then enter leagues,
increasing our interactions with other chess play-
ers and develop further expertise (a ranked, master
chess player!). Over time, we may even become a
core member and take on the identity of chess
player as one central to our selves – it may even
become a profession we embrace as our own.
The leap you need to make is in recognizing
that the same can be said for consultants, lawyers,
teachers, etc. Communities of practice are possi-
ble in a variety of organizations. How might we
generate a community of practice? Let’s take the
example of a school again. Our goal is pretty
straightforward here– we want to create a social
structure that encourages learning and remembers
what works well. To do this, we might want to In-
still collaboration in a safe environment that al-
lows for risks. We would want to provide training
to the entire faculty (not just part). We would
want to encourage meetings that entail sense-
making without decisions (remember garbage can
theory?). We want to encourage frequent communi-
cation whereby standards and procedures can be
learned. For example, we might want to denote
lead teachers and use them as experts in contact
with new teacher apprentices; we might want to
create mentoring and classroom observation oppor-
tunities; we might want to encourage storytelling /
cases from individual experience and organiza-
tional self-appraisal. Last, we would want to think
about ways to remember individual and organiza-
tional practices and knowledge (database), ways to
create a knowledge base (what people need to
know to do their work well), and how such knowl-
edge can be distributed and interpreted (lots of
meetings concerning practice).
Now you have some sense of what a commu-
nity of practice entails, how it is an asset to a firm,
and you have some ideas how to foster their crea-
tion. But communities of practice are not a pana-
cea. Merely forming one will not result in an opti-
mal learning organization. COP’s have certain
shortcomings that we need to remedy or at least
supplement! COP’s provide collaboration without
reach. Groups are also often homogeneous (hetero-
geneity has high startup costs). This generates lo-
cal maxima (not global) and multiple equilibria.
Groups often only reach local solutions instead of
best ones. And they are susceptible to groupthink
(bias and uniformity that harms organization).
Negative social capital can also be an issue: tight
groups with wrong attitudes and poor knowledge
can be a disaster!
Networks of Practice
One needs to look outside the local commu-
nity to form bridges with other communities and
prevent group think. To overcome these shortcom-
ings, organizational learning theorists speak of net-
works of practice and knowledge transfer. Net-
works of practice (NOP) are like professional com-
munities (secondary groups) where people may
never get to know each other but adopt similar
practices, similar resources, and similar identities
(technician, sociologists, etc). Here knowledge
about practice can travel rapidly and be assimi-
lated readily. The reach of knowledge is greatly
expanded. Whereas members of a COP learn by
doing practices together, in the NOP, member
learn about ostensive rules by way of books and
inter-organizational networks (learning by talking
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and sharing).In contrast with COP, NOP’s have reach. They span COP’s.
Networks of The inter-COP linkages is viable because members share identities. This al-
lows actors to communicate in relatively similar ways (info sharing across
Practice groups that bridge capital).
How might we generate a network of practice? One way is to Head-
hunt for experts in other firms. You poach talent, so to say. Another way is
to send your personnel off for training in a new technology (Bootcamp or
summer school!). Many firms will perform reverse engineering of a product
– they will look at another firm’s product and take it apart looking to under-
stand how it can be made for their own COP. Firms can also build NOP by
making sure people transfer across units (people across departments), prod-
ucts, and even organizations. Last, firms can employ people who bridge
communities of practice and facilitate knowledge transfer across them. In
schools, one can find this with professional development leaders who work
at multiple schools trying to retrain teachers.
However, just like COP’s, NOP’s have shortcomings:

1. No community is had, only reach.

2. More “learning about” than “learning to be.”
3. Local adaptations are less of an emphasis.

87
In many ways, NOP’s and COP’s need each other.
It is in their combination and integration that many
organizations develop practices by which they can
continually improve and strive toward global op-
tima of performance.
Exploration, Exploitation and Learning Traps
Many scholars regard organizational learning
to be a varied process, and potentially dysfunc-
tional. For example, James G. March writes that
organizational learning can proceed by a process
of exploration and exploitation, and either route
can result in learning traps or suboptimal forms of
decision making (March 1991).
When March discusses learning by explora-
tion – he means the process of searching, generat-
ing variation, risk-taking, experimenting, play,
flexibility, innovating, etc. (the process of generat-
ing new practices). In some of the case materials
by Louis and Kruse, we see them describe schools
and school reform as frequently stuck in an explo-
ration mode. There are lots of great ideas but none
of it really sticks or matches what we need. (Louis
and Kruse 1998: 31).
When March discusses learning by exploita-
tion – he refers to the process of refining, choice,
production, efficiency, selection, implementation,
and execution (the process of eliminating inferior
forms). Here, the organization attempts to im-
prove by repeating the same task again and again.
Notably, a firm that constantly explores can not
really get good at a task as it has not really prac-
ticed it much. Conversely, a firm that constantly
exploits, gets good at performing one task, but it
does not see new ways to enact it.
This leads March to reflect on learning traps
that many organizations encounter. One subopti-
mal form of learning arises from what is called a
“failure-trap”. Here, an organization’s failure can
lead to exploration. And because most exploration
often fails, the firm can get trapped in a negative
feedback loop of failed explorations. An opposite
form of learning trap is called a “competency
trap”, and it arises from positive feedbacks. Com-
petency traps can arise in two variants:
(i) If feedback is positive, you stay in exploitation
mode (e.g., a short-term, local solution) and
never search for a better solution (e.g., a long-
term, global solution).
(ii) The more you become proficient at a rule or
practice, the better you get at it, so you are
more likely to use it again and again. Positive
feedback makes the substitution of another rule
or practice less likely – and when you do
switch, you bungle it from having focused
your training so much on one skill.
If firms want to avoid learning traps and to be-
come a successful learning organization, they need
to balance exploration and exploitation and beware
of learning traps that can push them into subopti-
mal situations.
Applications of Organizational Learning
Now, let’s briefly review the theory of organ-
izational learning and then introduce a couple
cases for you to ponder. The first case concerns
the implementation of organizational learning in
schools, and it can be found in the writing of Louis
and Kruse (1998). The second case concerns the
World of Warcraft and how guilds operate in that
context.
Before we begin analyzing these cases, we
should first review the basic features of an organ-
izational learning perspective. When does the the-
ory apply? When does organizational learning hap-
pen? Organizational learning occurs in an organi-
zation when the participants are continually con-
cerned with improving their practice. They are fo-
cused on the core technology – how the organiza-
tion turns an input into an output. As such, it con-
stantly monitors, reflects on, adapts, and remem-
bers practices that work well. In some cases, learn-
ing is suboptimal or even false, and this too is of
relevance to the study of organizational learning.
The general perspective of organizational
learning is to view an organization composed of
practices that form the core routines of organiza-
tion, and to zone in on an organization’s intelli-
gence or capacity to alter and improve them. This
enriches the participant’s identity or role and fur-
88
thers their commitment to the organization. From
this perspective, the organizational elements are as
follows:
1. The technology – or means by which org learn-
ing occurs – is via internal adaptation, where
actors alter routines to fit local realities (what
Brown and Duguid called “knowledge”).
2. The participants are members within the or-
ganization performing the routines and enact-
ing practices.
3. Their goal is to resolve application problems
– to improve their practice so that it better ac-
complishes defined goals and identities.
4. The social structure entails mostly informal,
lateral relations, frequent communication, ne-
gotiation and dialogue. Identities and roles
are key and closely linked or coupled with
practices. Participants are involved in both a
community of practice entailing local bonding
ties and peer pressures, as well as networks of
practice that span out to other communities
and facilitate knowledge transfer.
5. And the environment is a source of inter-
organizational knowledge, tricks, and trans-
fers.
What is the dominant pattern of inference, or
the mechanism of inducing action? Action is the
result of local actors searching, improvising, col-
laborating, translating and sharing. Through an or-
ganizational learning approach, change and im-
provement occurs because the individuals and the
groups inside the organization are able to acquire,
analyze, understand and plan around information
(or “knowledge”) that arises in their practice and
the wider environment. They continually adapt
and learn.
And finally, the theory affords some manage-
rial implications. To garner a learning organiza-
tion, the manager should consider ways of encour-
aging dialogue, continual improvement of core
practices, and improvisation. They should find
ways to create greater communication within the
firm so ideas are passed and shared, and they
should find ways to create bridges to outside
groups so they can access distinctive forms of
knowledge. They should also find means of creat-
ing organizational memory of what works so it is
retained.
Case: Agassiz and Okanagon
Now that we have reviewed the basic features
of an organizational learning perspective, we can
begin to discuss some applications of the theory to
real world cases. The first case is mostly de-
scribed for us in the reading (Louis and Kruse
1998), while the second I will summarize, but
leave mostly for you to consider on your own.
The first case affords a description of schools
that implement organizational learning. In this
reading, the authors describe two exemplary
schools doing better than expected. They say both
schools are learning schools where the faculty re-
flect and study their practice in an effort to continu-
ally learn and improve. According to these
authors, learning schools share an inventory of
prior knowledge about the school, its curriculum,
instructional methodology, and students. Learning
schools ‘know themselves’ and take the time to de-
velop a shared vision and vocabulary with which
to discuss issues of teaching and learning.
The first school Louis and Kruse discuss is
Agassiz Elementary. In Agassiz Elementary, the
faculty learn from each other and engage in a dia-
logue about their instructional practice and how
they can improve it. The principal (as manager)
tries to stimulate and encourage such dialogue.
She acts as a facilitator of knowledge more than a
director. The teachers also seek to learn from each
other, and engage in dense webs of frequent con-
versation over practice -- a COP of sorts. The
teachers frequently interact in weekly grade level
meetings, monthly meetings for Kindergarten to
3rd grade and 4-6th grade teachers so they can think
more broadly; and 30 minutes a month of teacher
observation. Hence, teachers have frequent, close
relations over practice. This results in a good deal
of peer pressure to improve instructional practice
89
Organizational Elements
Technology Advisory Council of teachers and parents, Curriculum Committee, Reading
(what brings Recovery, grade level teams (6) and faculty study groups (2) to coordinate
about org curriculum, flexible staffing, teacher involvement in hiring, team teaching.
learning) Restructuring Roundup for conferences ! all develops teacher interaction and
within-school networks of practices.
Participants Teachers, Principal, Parents
Goals Increase student learning and improve teaching
Social Structure 36 teachers (moderate size) organized in a semi-horizontal fashion (see
committees above). Relations are collaborative – teachers are part of a team;
they have some decision-making power and leadership roles. Mrs. Cole, the
principal, is an intellectual leader. While listening to everyone, she still makes
some decisions autonomously.
Environment Context of Desegregation and “White Flight.” District reforms include open-
enrollment magnet schools, school-based management, relief from state
curricula, personnel and testing regulations. 650 students.

Agassiz School Organizational Elements

and a culture valuing constant improvement (so
much so that the teachers even pay to attend con-
ferences and join groups that meet on weekends
and evening). The school also holds a conference
on professional development that teachers from
other schools can attend. This not only brings in
money, it compels the Agassiz teachers to assume
the identity of knowledge producers and expert
educators.
If we take the case and render it into our or-
ganizational elements we will see where the
authors place the greatest emphasis (see the table
on the next page). The technology in this instance
is the tools used to bring about organizational
learning. In many ways, these are all social struc-
tural treatments: e.g., a variety of meetings, the de-
centralization of authority and greater input from
teachers, etc. All of the means of engaging in
learning are relational and cultural. The partici-
pants of this case are members of the school staff
and some are parent. Students are not really men-
tioned. The goal of Agassiz is to increase learning
and improve teaching – and they hope to do this
by reflecting on their practice. The social struc-
ture is small, intimate, and the relationships are col-
laborative. The principal (leadership) facilitates
and mentors more than imposing her will. Moreo-
ver, her focus is on practice. Last, what we know
about the environment is related in the setup of the
school and its history. But the case makes little of
it. Instead, the case zones in on practice, social re-
lations, and rituals fostering reflection and im-
provement on it. Some of these relations extend
into the environment, but only in order to draw in
or send out knowledge on instructional practice.
Now if we focus on management, we see that
the school instated several routines and institu-
tional arrangements to foster such a learning com-
munity. These in turn are feasible managerial
strategies to use in other settings.
The second school Louis and Kruse discuss is
Okanagon Middle School. Okanagon Middle
School is much larger than the elementary school
and with just as disadvantaged a population. Oka-
nagon school is divided into 9 families (also called
“small schools”); students and faculty of core sub-

90
 Organizational Elements
Technology Interdisciplinary Units - teachers collaborate on the units and work to fit the
(what brings curriculum to their students’ learning needs. School divided into ten
about org “Families” – Core teacher family (science, history, etc.) and Discovery family
learning) (language, band, special ed). School-wide Evaluation Committee. Community
Council for curriculum with teachers and principal ! all develops teacher
interaction and within-school networks of practice.
Participants Teachers, Principal
Goals Educational equity and opportunity for poor urban children.
Social Structure 84 teachers (large) organized in a horizontal fashion. Relations are
collaborative – teachers have important decision-making power. Teacher
discretion over staffing, schedules, some resources, and even aspects of the
curriculum. Mr. Stone, the principal, is important but not as autonomous as in
Agassiz.
Environment Okanagon Community School initially closed due to poor achievement.
Reopened as Okanagon Center for Advanced Academic Studies, a magnet
school focused on performing arts. 1,500 students.

Okanagon Middle School Organizational Elements

jects are assigned to families and work within
them. These families have wide discretion over
what they want to work on and improve. Each
family also has a leader with an expanded teacher
role that includes administration and mentoring of
other teachers. All the family leaders get together
as a community council with the principal to pon-
der the school’s direction more generally.
The school has a strong culture. It proudly an-
nounces it has a dream to level the playing field
for its students, and render the content of curricula
more relevant to their students. The school is very
concerned with statewide assessments and the fac-
ulty have established a variety of powerful school
wide committees that perform self-assessments
and pressure the faculty to perform well on such
exams. But the school also has its own standard of
sorts – the “Okanagan Standard” where students
are called upon to perform community service and
conduct research projects. External ties are impor-
tant at Okanagon, and trips to external conferences
are common, but they rotate across faculty rather
than centering on any single faculty member.
Hence, information is found elsewhere and pre-
sented to the rest of the faculty.
There is some issue of coordination across the
families and some debate as to where organiza-
tional learning should focus and what standards to
pay special attention to. The school holds a yearly
retreat and the families do find some topics of
agreement. As a result, there has been a push for
greater school-wide coordination. This has cre-
ated some tension, but it seems to be helping.
If we look to the organizational elements
again, we can begin to see how Okanagon is simi-
lar to and different from Agassiz (see table above).
The technology – as before - are the tools used to
bring about organizational learning. These again
are all social structural reforms: the school is di-
vided into smaller family units, they form a variety
of different committees and councils that encour-
age frequent interaction and assessment over prac-
tice and achievement. All of Okanagan’s means of
engaging in learning are relational and cultural just
as it was for Agassiz. The participants of this case
are members of the school staff. Students and par-

91
ents are not really mentioned. The goal of Okana- nering improvements in organizational perform-
gon is slightly different in that it has a equality and ance. It also sounds like a lot of work! - these
social justice concern more than Agassiz did. The teachers are showing up on weekends and staying
social structure is large, but divides into smaller late into the evening (4-7pm) so as to improve
units. Relationships are collaborative and the their practice. Louis and Kruse argue they aren’t
teachers / families have great influence, whereas experiencing burn out, but is this sustainable?
the principal at Agassiz had greater say. Last, Will they eventually burn out? Or is this a model
what we know about the environment is related in that will sustain commitment and fulfill identities?
the setup of the school and its history. But the Now that we have some sense of an application to
case makes little of it. Instead, just as with Agas- real organizations like schools, what about its rele-
siz, the case on Okanagon zones in on practice and vance to an organization online, in a less tradi-
the social relations, culture and rituals fostering re- tional case of an organization, like say, the World
flection and improvement on it. Some of these re- of Warcraft?
lations extend into the environment, but only as a
means to drawing in or sending out knowledge on
instructional practice.
Looking at its management, we see that the
school instated several routines and institutional
arrangements to foster such a learning community.
They encourage constant improvement and fea-
tures of both community of practice (COP) and net-
works of practice (NOP).
So what do we see in general at these reputed
“Learning Schools?” The schools frequently seek
out internal and external bases of knowledge – in
both local peers and experts beyond the setting.
They both have processes in place that help trans-
fer individual knowledge and expertise (e.g., Agas-
siz’s professional development showcase). Both
schools create knowledge via self-appraisal and
self-assessment (Okanagon’s focus on state testing
and the creation of their own standards is evidence
of this.). Both settings search for expertise and
knowledge beyond the school and they seek to dis-
seminate their own beyond their own walls.
Figure 5.2 World of Warcraft Game.
Hence, teachers read and attend external groups
(Source:
and then report back, demonstrating, running semi- http://commons.wikimedia.org/wiki/File:World_of_Warcraft_-_Mists_of_Pandaria_Box
nars in their own school on those topics. Last, _Art.jpg)

there is systematic learning via structures that fa-

cilitate constant contact (Agassiz’s grade level
meetings, Faculty Study Committees, Restructur-
ing Roundup; or at Okanagon’s many committees,
Curriculum Committee, Evaluation Committee,
Portfolio Committee).
In the end – these schools are cases for how
features of a COP and NOP can be formed, height-
ening identities and worker commitment, and gar-
World of Warcraft
Some of you may have no idea what we are
talking about here, so let us explain. The World of
Warcraft (WOW) is a massive multiplayer online
role-playing game (MMORPG) that was created
by Blizzard Entertainment. It is currently the
world's most-subscribed MMORPG (9.1 Million).

92
The game itself is extremely intricate with many
options and rules. Players can pick races, profes-
sions, etc. There is even a currency that players
pay real money for. The main goal is to interact,
go on quests, acquire wealth, power and experi-
ence, and so on. Many people play this, and they
play it often. They log many hours a week in addi-
tion to their day-jobs.
One of the main objectives in WOW is to com-
plete quests. Many of these quests are difficult to
accomplish. The monsters are too strong for a
small band to overcome, or the problem is too intri- Figure 5.4 Guild emblem from the World of War-
cate to solve without a large collaborative effort. craft
Hence, characters often form guilds – groups of http://commons.wikimedia.org/wiki/File:b/be/Ware_guild_original_
logo.png
100 (small) to 200 (large), and they are like com-
munities. In the communities the players chat, co-
ordinate quest efforts, etc. They also develop iden-
John Seeley Brown does a nice job of dis-
tities as players and as a team.
cussing the WOW and why it is a sort of learning
Here is a screen shot of what it looks like
organization. You can view his video directly
when you are a lonely Orc in WOW. And here is
here:
an emblem of one of the guild’s on WOW.
http://www.youtube.com/watch?v=BhuOzBS_O-
M

Brown argues that the guilds in the World of War-

Figure 5.3 Screenshot of Orc in World of Warcraft
http://commons.wikimedia.org/wiki/File:Male_orc.jpg
craft resemble a community of practice and net-
work or practice, and that they are such a learning
organization that they are able to confront a multi-
tude of very complex problems, to coordinate their
efforts, and to collectively learn and remember
what worked well so they can train new personnel
to go out and collaboratively solve the same and
new problems on their own. Rather than recount
Brown’s argument, take a look yourself and see
what you think!

93
 Summary Table of Five Theories to Date:
Rational Actor (RA)
When does it Exists when there is a unified
apply? actor with consistent
preferences, lots of information,
and clear goals (and time
calculate).
Summary or Basic Unitary actor or team that
Argument confronts a problem, assesses
objectives (goals) with regard to
it, identifies options, the
consequences of said options,
and then chooses option that
minimizes costs.
Variant: Bounded rationality
and satisficing. Recognize
imperfect info, ambiguity, and
select first satisfactory option
(good enough).
Key Organizational Elements
Technology Maximization of options
(how solutions (solutions).
get decided)
Participants Unified team or actor
Goals Goals are defined in regard to
(what probs to problem.
resolve)
Social Formal roles, hierarchical.
Structure
Environment Not salient except as
influencing consequences of
options.
Dominant Pattern Action = Maximization of
of Inference means to ends.
Management Know alternatives and their
Strategies consequences for the shared
goal, and select wisely. Improve
information and analysis.
Management by consequences.
94
Organizational Process (OP) /
Limited Problem Solver (LPS)
Exists when the decision is guided
by a logic of appropriateness –
matching problem to actors with
procedures for handling it (routine-
process focus).
Dividing up problem,
coordinating / activating
organizational actors who have
special capacities / SOP’s for parts
of problem, conducting sequential
attention to objectives (localized
searches until problems resolved).
Action guided by processes /
available routines.
Matching identity and SOP’s
(solutions) / programs / repertoires
to problem.
Organizational positions
Objectives – compliance to SOP’s,
match with problem parts.
Actors in hierarchical
organizational positions. Cue
sequential routines that accomplish
task or solve problem by routines
available (supply issue).
NA
Action = output close to prior
output (path dependence), cueing
of SOP’s appropriate to problem.
Know SOP’s, what problems they
go with (matching), and who cues
them. Improve rules and matching
with problems. Management by
rules.
Coalitions /
Bureaucratic Politics (BP)
Exists when there are multiple
actors with inconsistent preferences
and identities, and none of whom
can go it alone without assistance
of others.
Focus on the players occupying
various positions; their parochial
interests (their conceptions of
problems and solutions); their
resources (expertise, money,
people) and stakes in game; and
bargaining processes between them
that establish agreements /
coalitions.
Bargaining, or playing the game
(within its rules), or political
maneuvering.
Players in positions
Parochial priorities, goals/interests,
stakes / stands.
Coalitions – enemy/friend
Deadlines and wider array of
stakeholders.
Action = result of political
bargaining.
Bargain with players (log-roll,
horse-trade, hinder opposition’s
coalition formation, etc). Learn
others’ interests / weaknesses so
you know how to manipulate and
win. Direct management of
relations via bargaining.
Organized Anarchies /
Garbage Can (GC)
Exists when solutions are unclear,
participants turn over, and
preferences/identities are inconsistent.
Focus on choice arenas (when choice
opportunities / windows arise); the
distinct and decoupled streams of
problems, solutions, and participants;
and their access rules to the arena
(whether structural or timed).
Confluence of multiple streams, such
that solution is connected to problems
and enough actor-energy to see it
through.
Participant stream shaped by political /
career cycles & unplanned departures.
Problems stream determined by public
opinion, prominence / vocalness of
problems in firm, etc.
Access rules – segmented, hierarchical,
or democratic.
Deadlines and other choice arenas (e.g.,
decision in current arena may be means
of access to another choice arena…)
Action / decision = result of streams
collision in choice arena.
Time when your solution is raised (to
coincide with right participants and
cycle of problems) to maximize energy;
abandon entangled initiatives; know
how to overload system for policies you
detest; and generate choice opportunities
that work to your interests
(access/timing). Indirect managing of
situations.
Organizational Learning (OL) /
Knowledge-Practice Model
Exists when there are clear feedback loops,
adaptations, memory, and support of actor-
expertise / adaptations of rules to local
reality.
Acknowledges routines, but focuses on
practices within them that enable their
continual adaptation and change to fit
reality – i.e., practices reflecting
organizational intelligence.
Internal adaptation, or where actors alter
routines for the better and fit reality
(knowledge).
Members of organization doing work /
SOP’s
Application problems – pattern recognition
not there (no fit).
Informal, lateral relations, communication,
negotiation, & collective improv. Actor
identities (demand) important. Network of
practice (professional identity / reach) &
community of practice (cohesive group).
Source of inter-organizational knowledge /
tricks / transfers.
Action = result of local actors collaborative
search (trial & error / transfer) and adapting
rule to situation.
Find ways to create lateral ties among
workers so “knowledge” is passed /
transferred more readily / quickly (if
possible, quickly), create means to
organizational memory of what works.
Create applied, social learning experiences
with means to retaining and transferring
expertise. Want communication, collective
improvisation, practice and knowledge
References:
Argote, Linda. 1999. Organizational Learning:
Creating, Retaining and Transferring Knowledge.
Boston: Kluwer. (Concretely addresses many org
learning themes).
Brown, John Seely and Paul Duguid. 2000. “Prac-
tice Makes Process,” and “Learning in Theory and
Practice.” Chapters 4-5 (pp. 91-146 [and endnotes
appended]) in The Social Life of Information. Bos-
ton, MA: Harvard Business School Press.
Brown, John Seely and Paul Duguid. 1991. “Or-
ganizational Learning and Communities-of-
Practice: Toward a Unified View of Working,
Learning, and Innovation.” Pp. 58-82 in Organiza-
tional Learning. Eds. Michael Cohen and Lee
Sproull (also listed in Organization Science, 2(1),
Feb. 1991.). London: Sage.
Leithwood, Kenneth and Karen S. Louis. 1998.
“Organizational Learning in Schools: An Introduc-
tion.” Chapter 1 (pp. 1-8) in in Organizational
Learning in Schools. Tokyo: Swets & Zeitlinger.
March, James G. 1991. “Exploration and Exploi-
tation in Organizational Learning.” Organization
Science, 2, 1: 71-87.
March, James G. 1994. A Primer on Decision
Making: How Decisions Happen. NY: The Free
Press. Chapter 6, pp. 221-272.
March, James G., Lee Sproull, and Michael Ta-
muz. 1991. “Learning From Samples of One or
Fewer.” Pp. 1-19 in Organizational Learning.
Eds. Michael Cohen and Lee Sproull (also listed
in Organization Science, 2(1), Feb. 1991.). Lon-
don: Sage.
Orr, Juliann. 1996. Talking about Machines: An
Ethnography of a Modern Job (Collection on Tech-
nology and Work). ILR Press.
Suchman, Lucy. 2007. Human-Machine Recon-
figurations: plans and situated actions, 2nd edition.
New York: Cambridge University Press.

Louis, Karen Seashore and Sharon D. Kruse.

1998. “Creating Community in Reform: Images
of Organizational Learning in Inner City Schools.”
Chapter 2 (pp. 17-46) in Organizational Learning
in Schools. Tokyo: Swets & Zeitlinger.

Levitt, Barbara and James G. March. 1988. "Or-

ganizational Learning.” Annual Review of Sociol-
ogy 14: 319-340.

95
6
Organizational Culture

(Source: http://farm3.staticflickr.com/2339/1807614622_61a0cdc0f1_z_d.jpg)
Organizational Culture
We often ask students in our class to perform
an exercise where they got together in small
groups and developed designs for a “learning
school”. Each group came up with different inter-
esting designs. Their main efforts focused on creat-
ing opportunities for discussion about the core
technology of instructional practices -- e.g., having
small schools within schools, as well as grade-
level meetings, departmental meetings, and so on;
opportunities to transfer ideas -- e.g., speaker se-
ries, training sessions, rotating teachers through
assignments, mentoring programs; and means of
establishing organizational memory – data collec-
tion, storage, and analysis, rule formation, men-
toring, and so on.
All of their design suggestions established
interactional settings and routines through which
faculty could discuss and study their practice.
They forged a system wherein they could continu-
ally self-assess their performance and make sure
their core technology worked well. That said, a
problem became readily apparent. Their designs
assumed teachers would work extra hours, that
there were resources to fund their training, and
where resources were lacking, it was assumed that
the stakeholders would all come together and pick
up the slack. It became clear that a key assump-
tion of the organizational learning approach was
that everyone shares the same values, is willing to
work extra hours, and is on the same page reform-
wise. In effect, it assumed participants all share
and buy into the same organizational culture. But
what is an organizational culture and how do you
study it? That’s what we will cover in this chapter.
Exploring Organizational Culture
Most of you recognize organizational cul-
tures when you see them. Take Google for exam-
ple – they are here in Silicon Valley and employ
many thousands of people, some of whom are in
this class from year to year. The company has a
clear logo, and it is emblazoned on all their
“shwag,” from pens, to shirts, to cars, to even lava
lamps. And those of us in the area have heard
about the availability of excellent free food, play
areas in the work space (like ping pong or bowl-
ing), the large campus, park-like environment, and
even Google bikes readily available to Google em-
ployees to use and share as they move from build-
ing to building. We also know about the long
hours the employees work, the great benefits, the
casual atmosphere, and the seemingly endless com-
mitment many of them show for their firm. In
short, it has a culture and we can see it.
Within an organizational culture, actors
make sense of their existence according to identi-
ties and norms, and these are often constructs af-
forded by the organization they are in. Think of
the culture at firms like Apple or Facebook – all
have an identity and norms surrounding their per-
formance of it. As such, the motive in an organiza-
tional culture is the expression and fulfillment of
an identity – a strong intrinsic motivator! An organ-
izational culture entails normative (valued) and
cognitive (implicit) aspects of organizational so-
cial structures. These are deep structural facets
that guide interaction. If we could only control
this and engineer it, we would have zealous work-
ers! We would have the sort of worker buy in that
organizational learning seems to need! However,
we will look carefully at Gideon Kunda’s book, En-
gineering Culture, to put into question the organ-
izational culture ideal. Kunda offers a more nu-
anced account of organizational culture: in making
the organizational culture the focus of engineering,
one renders it something that controls and re-
presses…a means of capturing souls.
What is an organizational culture?
What does it mean to engineer an organiza-
tion’s culture? For managers, organizational cul-
ture is a gloss for an extensive definition of mem-
bership in the corporation that includes rules for
behavior, thoughts and feelings. These add up to
be a well-defined and shared notion of the “mem-
ber role.” Culture is seen as the vehicle by which
we can influence the behavior and experience of
others – something to be engineered via making
97
presentations, sending messages, running boot- So how do you study organizational culture?
camps, writing papers, giving talks, etc. The cul- What are the elements of a culture? One thing we
ture is a mechanism of control: “You can’t make can focus on are practices. If you recall, practices
them do anything; they have to want to (Kunda: are a central concern of the organizational learning
7).” Engineering culture is the ability to elicit, approach. The difference here is that we do not
channel, and direct the creative energies and activi- presuppose persons in an organization buy into
ties of employees. By engineering organizational and align with the practices being enacted like or-
culture, we create a membership role in the firm ganizational learning does. With an organizational
that employees embrace as their own identity and culture perspective, we look carefully at how par-
self. ticipants relate to these practices and express them-
Let’s look more closely at the concept of or- selves through them.
ganizational culture and define it. Organizational
culture is generally viewed as the shared rules gov-
erning cognitive and affective aspects of member-
ship in an organization and the means whereby
they are shaped and expressed. The traces of an
organizational culture are the shared meanings, as-
sumptions, norms and values governing work be-
havior; they are the symbolic, textual, and narra-
tive structures in which norms and values are en-
coded; and it is found in the structural causes and
consequences of cultural forms and their relation
to organizational effectiveness (Martin and Meyer-
son 1988).
Engineering an organizational culture is a
managerial strategy. Organizational culture is a
means to normative control: it is an attempt to
elicit and direct the required efforts of members by
controlling the underlying experiences, thoughts,
and feelings that guide their actions. Under norma-
tive control, members are driven by internal com-
mitment, strong identification with company
goals, and intrinsic satisfaction from work. In
short, it is the employee’s self that is claimed in Figure 6.1 Script for Dancing (Dance Notation)
(Source - http://commons.wikimedia.org/wiki/File:Feuillet_notation.jpg)
the name of corporate interest. (Kunda: 11)
Let’s spend a little more time discussing ob-
servable features of organizational cultures. We In many instances, the traces of cultural prac-
think this is important because all too often, the tices can be found in formal scripts or rules of con-
discussion of culture can quickly seem abstract. duct. When we reflect on societal cultures we
We want to make sure you see grounded, real fea- have certain things in mind, like a code of eti-
tures you can point to in organizations when you quette, or a procedure or script for dancing. We
consider what its culture is and how to re-engineer may also notice informal customs that emerge and
it. In particular, we are going to draw heavily on are not planned, such as customs of style. Below
Martin and Meyerson’s work on organizational cul- is a diagram showing changes in skirt fashion
ture, since they afford the level of concretization showing how hemlines have risen, thereby show-
we prefer (1988; Martin et al 2004). ing changes in style.

98
Figure 6.2 Skirt Fashion
(Source -
http://commons.wikimedia.org/wiki/File:Hemline_%28skirt_height%29_overview_chart_
1805-2005.svg)
What are the parallel practices within organi-
zations? Within organizations, these practices can
be formal policies, rules, roles, and procedures –
like job descriptions, pay distributions, perform-
ance assessments, and so on. Examples of formal
policies can also be found in organizational charts
(here the rules are about positions and their rela-
tion). But formal policies can also be standard op-
erating procedures (e.g., like rules for promotion,
or as here, rules for processing prisoners). Or
even manuals for operating software or codes of
conduct in an organization. All are formal poli-
cies.
Figure 6.3 Formal Organizational Chart
(Source -
http://commons.wikimedia.org/wiki/FileOrganizational_chart_of_Headquarters%2C_D
epartment_of_the_Army.gif
Figure 6.4 Manuals
(Source -
http://commons.wikimedia.org/wiki/File:KC85-HBS.jpg/800px-KC85-HBS.jpg)
Organizational practices can also be informal
customs – like norms of communication, customs
of style and conduct, how conflict is managed, and
habits of interaction. For example, workplaces
may have different customs of when to talk, how
to address each other (“Bill” or “Mr. Jones”), how
to argue (kindly or hotly), and so on. Some work-
place customs even concern dress codes and fash-
ion styles. For example, in Silicon Valley, there is
a trend for executives to wear colorful socks. Or
to wear those shoes that look like gorilla feet.
Such behavioral and stylistic norms emerge and
are not planned.
Other cultural elements are artifacts – these
manifest in multiple forms. For example, societal
cultures often have certain symbols like religious
relics and art, historical buildings, or the images
placed on regional postcards. They also reference
certain tools, like the ancient artifacts and technolo-
gies the region invented or utilized in important
historical events (teepees, arrowheads, ionic col-
umns, bronze spears, cannons, etc). The parallel
symbols in organizations are their logos, and the
parallel tools are the computers and magnetic reso-
nance imaging machines used within the work-
place. Each signifies the organization and what it
does (technology or medicine).
Cultures also entail rituals like dances,
games, activities. Organizations also have rituals
– but they tend to be different activities and en-
99
counters. For example, organizations often in- rangement that reflects distinctions of culture and
volve meetings and presentations of work. These meaning.
can be of varying forms and styles, reflecting a par-
ticular form of collegiality (whether strict and hier-
archical or loose and friendly).
Cultures frequently entail stories people tell,
and even language or jargon (dialects) that acts as
code differentiating them. Organizations too have
stories – we all know the story told of Facebook
and its founding, as told by the movie: The Social
Network. We also know the story of other foun-
ders, like Waren Buffet of Berkshire Hathaway.
But this also extends within the firm, to heroic
teachers and pariah deadbeats. Firms even have
their own jargon. Google, for example, has a se-
ries of terms they use on their campus to refer to
various types of employees:

Noogler (new google employee)

Loogler (employee in legal department)
Gaygler (lesbian, gay, bisexual and transgen-
der google employee)
Spoogler (spouse of googler)
Zooglers (employees in Zurich)
Xooglers (ex-Google employees)

The use of special acronyms too are common. We
cannot begin to tell you how many acronyms Stan-
ford uses for its research centers on campus, many
of which we cannot deconstruct into their composi-
tional terms (SLAC, ICE, SHIPS, FSI, E-IPER,
etc, etc).
Martin and Meyerson also argue that cultures
are qualified by physical arrangements, such as
architecture and placement of objects. One can
readily comprehend this when comparing say a Ca-
thedral to a Quaker meeting house – both are Chris-
tian religions but of very different architectural
styles. Even the seating is very different. In the
Cathedral, seating is hierarchically arranged while
in the Quaker house it is arranged for dialogue.
Within an organization, we can see similar varia-
tion in physical arrangement. The differences in
office building versus campus layout; the differ-
ence between closed impersonal cubicles and open
desks. Again, we see differences in physical ar-
Figure 6.5 Physical Arrangements
( S o u r c e - h t t p : / / c o m m o n s . w i k i m e d i a . o r g / w i k i / F i l e : R e d b o x _ O ff i c e . j p g ;
http://commons.wikimedia.org/wiki/File:Office-Cubicals-5205.jpg)
Last, Martin and Meyerson argue that cul-
tures differ in the content themes they highlight.
Content themes are abstractions used to organize
interpretations of an organization’s practices and
artifacts. One can see these content themes or cul-
tural abstractions being used in the 2012 American
Presidential Election. We hear two candidates
voicing ideological themes that highlight their dif-
ferent values and beliefs (they express normative
arguments – vote for “life” and “deregulation” ver-
sus voting for “choice” and the “middle class”.
They express ideational themes that concern inter-
pretations about the meaning of events. For exam-
ple, that current unemployment is a result of the
prior president’s economic policies or this presi-
dent’s; that economic reports are a sign of improve-
ment or a sign of continued problems; and so on.

100
Figure 6.6 Content themes of last US presidential election
(sources - http://commons.wikimedia.org/wiki/File:Romney_Skidmore.png/; http://commons.wikimedia.org/wiki/File:Jeri_and_Ann_Romney.jpg;
http://commons.wikimedia.org/wiki/File:Bush_Inauguration08.jpg/; http://commons.wikimedia.org/wiki/File:Obama-harding.png;
http://commons.wikimedia.org/wiki/File:Michelle_Obama_official_portrait_headshot.jpg; http://commons.wikimedia.org/wiki/File:RWB-donkey.png)

At each political party’s convention, we saw how these content

themes are externally presented to the public (public face). But it was
Cultural Content
also interesting to see both candidates try to portray content themes as in-
Themes ternally held as well. For example, Ann Romney knows the real Mitt is
funny; or that Michelle Obama knows the real Barack Obama is the same
guy he was 4 years ago. And these portrayals are made in spite of, or
counter to, what most of us see in the public image.
Within a firm, this internal perspective on content themes is usually
the inside view on say a Google: i.e., what it is really like to live and
work there (what we see backstage and in private, and that can be rein-
forcing or undermining). These cultural elements -- whether practices,
roles, procedures, rituals, stories, jargon, symbols, tools, physical arrange-
ments or even content themes – all begin to form a mosaic of a culture.
The culture becomes a system of these meanings and affords us a larger,
holistic sense of what that organization’s culture is.
Martin and Meyerson portray organizational cultures as amassing in
certain types of paradigms or styles: they call them integrated, differenti-
ated and ambiguous. The most common assumption is that organiza-
tional cultures are integrated, recognizable and uniform. This requires
reinforcing elements where ideology and practices and themes all align
(so consistent elements are mentioned, organization-wide consensus ex-
ists, and members deny there is ambiguity). Management and public rela-
tions often espouse a uniform view– but it is seldom present for long.
The integrated culture hides conflict and tensions (repressed existence).

101
 Integrated Fragmented

Ambiguity

Figure 6.7 Metaphorical Images for Types of Organizational Culture

(Sources clockwise starting with the “integrated” figure - http://commons.wikimedia.org/wiki/File:4/4a/Uniformity%2C_plantation_on_Black_Hill%2C_Forest_of_Alyth_-_geograph.org.uk_-_1433738.jpg;
http://commons.wikimedia.org/wiki/File:Galapagos_archipelago_250m.jpg; http://commons.wikimedia.org/wiki/File:Confusion_of_Tongues.png)

That said, it is possible there are entrepreneurial firms and schools where
all the employees are committed to a common vision and purpose/ideology
The different types of – they may actually have an integrated organizational culture.
organizational Martin and Meyerson (1988) explore whether a single firm, OZCO,
has an integrated effort to develop egalitarianism. For there to be an inte-
culture: integrated, grated culture of egalitarianism, they would need to identify a series of cul-
fragmented, and tural elements that reinforce and support this claim. Hence, they find that
the firm publicly claims to be egalitarian, has formal and informal prac-
ambiguous. tices in place to encourage it, has various stories, rituals, jargon and physi-
cal arrangements, that all seem to reinforce and support the existence of
egalitarianism.
A second perspective of organizational culture is that of differentia-
tion or fragmentation. Here, one can regard an organizational culture like
an archipelago or as having different groups or camps with their own per-
spective and culture. Rather than a uniform culture, there is a differenti-
ated one.
Turning to Martin and Meyerson’s case of OZCO again, we see in-
stances where egalitarianism is not uniformly perceived and differences of
opinion exist. For example, egalitarianism as an affirmative action ideol-
ogy does not fit the perks and hiring practices being used. In many ways
the differentiated system is conflicted and has countering efforts, or at
least efforts pulling the organizational culture in different directions.
Schools are great examples of such a decoupled system: the admini-
stration of a school tends to show the external environment a school’s test

102
scores and extracurricular activities but it does not seeming to be a hologram, an archipelago of cul-
talk to teachers about educational process (the in- tures, or a jungle.
ternal perspective is not the same as the external
one looking in). As a result, different subcultures
can emerge, and this creates consensus within sub-
cultures but not across them. What results is incon-
sistency, and channeled ambiguity. Is differentia-
tion a more accurate view of organizational cul-
tures in most firms? Do these different cultures
exist in conflict or harmony? Differentiation
might work better for a highly differentiated con-
text like a multinational firm, or a steeply hierarchi-
cal organization.
Last, we have the view that organizational
cultures can be ambiguous, unclear and confusing.
In my mind, I see this sort of organization as one
that gives mixed signals (like this sign – is the
road closed or open for wide loads?); or that the
organization can be seen in several ways (e.g., ge-
stalts); or everyone is speaking different languages
and it is hard to make sense of things (e.g., The
Tower of Babel is perhaps a silly allegory here, but
it might help you grasp the concept).
In an ambiguous organizational culture the
elements are unclear and confused. If we return to
Martin and Meyerson’s example of OZCO, we
find that the ideology of egalitarianism is confus-
ing to some, there are unclear procedures and con-
fusion on how to implement things. As such, ambi-
guity equals lack of clarity, lack of consensus, and
confusion over what things mean and how to do
them.
Figure 6.8 Ambiguous Sign
By comparing the cultural paradigms, we get (Source -
a better sense of how they differ. Each has certain http://commons.wikimedia.org/wiki/File:Ambiguous_Sign_-_geograph.org.uk_-_1391048
.jpg)
defining characteristics that distinguish them. For
example, an organizational culture practiced by in- It would be easy at this point to think that an
tegration only mentions consistent elements, exhib- integrated culture is most desirable, but perhaps
its consensus across the organization, and denies not for everything. After all, many cults and in-
ambiguity. In contrast, cultural differentiation en- stances of group-think do not end well! In some
tails some inconsistency, exhibits consensus within ways, we get the impression that organizational
subcultures of the firm (not between), and chan- learning presupposes an integrated organizational
nels ambiguity (denying it for their own subcul- culture. For it to work, it often seems to require an
ture, but seeing it in others). Last, a culture of am- organizational culture that is much like a “cult”.
biguity lacks clarity, has issue-specific consensus, However, in other instances of organizational learn-
and frequent confusion. Ambiguity here is ac- ing they espouse the need for improvisation and
knowledged. One can envision these cultures as this might require an organizational culture that
lacks clarity.

103
 There are reasons to believe an ambiguous or
differentiated culture may be more useful. An am-
biguous and differentiated culture can create incon-
sistencies and confusion, but they can also afford
variation and be a hotbed for innovation. An or-
ganization situated in a dramatically changing envi-
ronment may do well to be differentiated or am-
biguous so it can more readily adapt and survive.
Also, we get the impression that an ambiguous or-
ganizational culture is the type characterized in the
theory of organized anarchy and the fragmented
culture is the type characterized in coalition the-
ory. In many ways, organized anarchy suggests
the manager should embrace ambiguity as it is
there where creativity can arise. Similarly, coali-
tion theory suggests managers should embrace dif-
ferentiation and bargain one’s way to success
within such a context.
Many of you can see that the organizational
theories we discussed earlier may have a proclivity
toward one form of organizational culture over an-
other. Our point here is that different paradigms of
organizational culture may be more or less useful
to a firm and its situation. It is not clear an inte-
grated form will be the one most desired in every
context. In fact, Martin and Meyerson’s case on
Ozco suggests all three forms of organizational cul-
ture may be present in the same organization. As
such, they are co-existing and have variable pres-
ence in different sectors of the firm’s social struc-
ture.
Some of you may now wonder how organiza-
tional culture differs from organizational learning.
If you recall, organizational learning seemed intent
on developing a particular set of interactions and
practices that led to a self-aware and learning or-
ganization. It took certain surface structures and
sought to implement them so they would change
deeply held beliefs and understandings (deep struc-
ture) and this would result in organizational partici-
pants who continually improve their practice.
By contrast, the organizational culture ap-
proach is agnostic as to what kind of culture is
best – it may all depend on the context. Moreover,
it begins with deep structures, like content themes,
rituals, symbols, etc, and sees how they influence
surface interactions, work relations and company
performance. So in some ways, organizational cul-
ture fleshes out what practices are to a richer ex-
tent and how cultural elements form larger gestalts
or systems of meaning that guide behavior. These
cultural systems come in many forms, only some
of which may be a learning culture. Others may
be an egalitarian culture; or a self-fulfillment cul-
ture, etc. Moreover, it is feasible that ambiguous
and differentiated forms may be advisable under
certain circumstances.
Gideon Kunda’s Engineering Culture
Next, we will discuss Gideon Kunda’s text,
“Engineering Culture” (1992). We do not know
which company the pseudonym “Tech” refers to.
In fact, there are so many high tech firms in Sili-
con Valley that resemble Tech, that most of us will
recognize this kind of culture (and that is Kunda’s
point). Here we have a case study of an organiza-
tional culture formed in a high-tech company that
seems to influence control and commitment to the
corporation. Kunda approaches organizational cul-
ture in many of the same ways Martin and Meyer-
son describe. But his primary focus is on interac-
tions, and his main tool is ethnographic observa-
tion.
Organizational Culture as Ideology
Now Kunda’s focus is on the context of nor-
mative transactions: managerial conceptions of cul-
ture, how it is enacted, and the responses of mem-
bers. As such, Kunda views organizational culture
as an ideology. He sees cultural enactment in
terms of rituals enacting the ideology and instilling
it. And he focuses on how members negotiate
their need for distance and embracement of the cul-
ture and its rituals.
Kunda regards organizational culture as a
means to normative control – controlling the
hearts and minds of employees. The management
is seen as defining organizational ideology
(Kunda: 52). For members, the company perspec-
tive on the culture is familiar, systematic, compre-
hensive, thought-out, well-articulated, and associ-
104
ated with the company’s interest. This depiction
of organizational culture as ideology is consistent
with anthropological conceptions of ideology, such
as that of Clifford Geertz – “all ideologies are sche-
matic images of social order publicly offered in
the name of those with a claim to authority as
maps of problematic social reality and matrices for
the creation of collective conscience (Geertz
1973:220; Kunda:52).”
So what authority gets across in an organiza-
tional culture? Whose image of social order is of-
fered and practiced?The inscription of the organiza-
tional identity falls into three distinct categories
each of which derives its authority from a different
source. First there is managerial authority which
derives from the documented opinions of senior
managers, the company philosophy, taped
speeches of the CEO, company mission statements
– all framed in terms of morals and ideals. A sec-
ond form of authority is expert authority. This
type emanates from technical papers, reports, and
memos that internal experts write. The third form
is one of objective authority. This type of author-
ity comes from selective representation of materi-
als produced by outside observers of Tech, such as
news clipping, TV ads, etc. All of these forms of
authority combine to create a company perspective
and ideology. Their influence is additive and com-
pounding.
Managerial authority is obviously ritualized
by senior management, and reflects their views of
Tech. These managers focus on the attributes of
the collective (Tech - “us”) as a way of lending the
members a moral significance as well shared goals
and history. The managers present their views
through their speeches, interviews, and editorials,
and these give personalized and animated views of
Tech ideology, complementing and fleshing it out.
They build a “we” sense by referencing the past,
their mission, and shared values, as well as identi-
ties of self and others. Membership in the commu-
nity is presumed to define one’s social existence
and personal experience. You not only assume a
role, but incorporate it and become it, making it a
part of your self – or so that is how the senior man-
agement inserts themselves.
The image is that there is no conflict be-
tween individual and company goals (an inte-
grated paradigm). The organization claims to
give employees a place to grow and develop, a
moral order to participate in, and simultaneously
sustains the company and affords members a
“meaningful” identity. Individualism is a way to
serve the collective interest, and heavy self-
investment in the company affords personal re-
turns and freedom (greater autonomy and author-
ity). Personal meaning is derived from participa-
tion in the collective.
A good place to see this is in the company
documents on goals and missions. They are all
catch phrases and abstract ideals (e.g., “mom and
apple pie”). They entail things no one would dis-
agree with and only want they would want to emu-
late. They characterize their members as creative,
hard working, good people.
It is not just Tech who does this. Take a com-
pletely different company of Levi jeans and their
mission statement.
People love our clothes and trust
our company. We will market the
most appealing and widely worn
casual clothing in the world. We
will clothe the world.
(Source - http://commons.wikimedia.org/wiki/File:7/75/Levi%27s_logo.svg)
As you can see, it is related in moral and norma-
tive terms with mentions of strong relationships
with customers, mentions of trust, product quality
and universality. What is not to like about it?
Expert authority is mostly enacted by inter-
nal experts. Such experts focus more on the re-
quirements and attributes of a member’s role. As
insiders, experts give an aura of independence,
practicality, and scientific credibility. A good ex-
ample of this expert view and identity portrayal
can be seen in the Kunda’s account of a native an-
thropologist’s study of Tech culture (Ellen Cohen).
Her register of speech is often open, pragmatic,
and critical/helpful – so seemingly balanced. Her
moral tone is not evident and the ideological fa-
çade is acknowledged some. This view is consis-
tent with a managerial perspective but it is less
105
ideal and more real. The expert even acknowl-
edges downsides and her prescriptions are prag-
matic. Role performance is more based on per-
sonal success and self-help. That said, the expert
is still viewed as partisan by employees.
The creation of objective authority comes
from outside the firm from academics, consultants,
and journalists. Organizations typically decide
which of these perspectives to relate and share,
and they are mostly positive. These accounts tend
to be edited, selective reviews of the company
from outside that are used to reinforce things fur-
ther. Academic pieces seem to offer an objective
view that the company members (mostly profes-
sionals) are oriented toward the firm and its cul-
ture (science). Popular books tend to get closer to
the manager’s ideal but from an external basis.
They relate the zeal / culture to enhanced perform-
ance claims (common sense). Last, journalism is
the most widely seen form of media – clippings
are posted often focused on CEO giving a rational
actor imagery. Many similar themes are ad-
dressed, but negative / critical pieces are not
shown (journalistic observations).
All three of these views compound to form
one integrated view of Tech – membership in Tech
entails heavy involvement, strong bonding to cthe
ompany, and zeal – leading to a collapse in bound-
ary between self and organization. This accom-
plishment is seen as leading to economic success,
and is accomplished by designing an environment
based on individual autonomy, informality, mini-
mal status distinctions, and seeming disorganiza-
tion (Kunda:88).
The company culture and ideology is enacted
and instilled in members via presentation rituals of
an organizational self. Presentation rituals occur
everywhere in the participants everyday lives –
[the performance of such rituals...]
“is a framing device: members acting as
agents of the corporate interest attempt to es-
tablish a shared definition of the situation
within which reality claims derived from the
organizational ideology are experienced as
valid (Kunda:154).”
These rituals are used as vehicles for the exertion
of symbolic power that defines reality.
We know that may seem like a lot of jargon
to some of you, but mull it over a bit. What we
mean here is that every time a Tech employee or
manager does a presentation, voices a slogan, or
interacts in a meeting, they act as an employee
(not as a father or mother) and as an agent of the
firm. Even people listening in the audience play
their role complement, expecting professional be-
havior and a style of interaction that makes the eve-
ryday reality of living in Tech seem different from
elsewhere but seemingly valid and natural.
We can see Tech rituals everywhere. We just
have to look. If you recall Martin and Meyerson’s
focus on cultural elements, you will see many of
the same elements discussed in Kunda. Ritual
presentations of self are most often observed in
persons behavioral displays. At many organiza-
tions, these are time-bound interactions specific to
a particular audience and setting. In these interac-
tions, we see people present and attempt to estab-
lish a positive definition of their self. They wran-
gle and maneuver so as to do a good job and to
come off in certain ways. We see these displays
most frequently in presentations, question-&-
answer sessions, and meetings (notably, all are de-
cision arenas).
They are also in the mundane, private, every-
day chatter at lunch, in back offices, and at the wa-
ter cooler. We can also see presentations of self in
artifactual displays when we walk by work spaces
or observe participant’s dress. These are standing
exhibits of self meant for passerby’s and by-
standers. At Tech these exhibits are found at desks
where they display personal mementos, Tech stuff
and humorous jokes about the company.
One can see distinct types of artifactual dis-
play at Stanford depending on which department
you walk through. For example, walk down the
hallway of the law school and the computer sci-
ence departments. At the law school their offices
resemble a lawyer’s office with cherry wood, L-
shaped desks, neat shelves, and so on. In addition,
they dress relatively formal in comparison to the
rest of campus. By contrast, in the computer sci-
ence department, the faculty offices are casual,
106
toys and equipment are strewn about, and the pro-
fessors dress in t-shirts and sneakers (or flip-
flops). A very different notion of organizational
self exists in those two parts of campus and one
can readily infer it from mere standing exhibits.
We can capture and record behavioral and ar-
tifactual displays in a variety of ways – through in-
terviews we get personal accounts of self, through
observation and recording we get a record of talk,
interpersonal behavior, and exhibits. Through ac-
tive note-taking and involvement, we can even
form understandings of these encounters as if we
are participants (as opposed to foreigners). All of
these devices help us compile evidence on how rit-
ual interactions shape the worker’s organizational
self.
Upon observing many such interpersonal ritu-
als and speaking with Tech employees, Kunda
comes to observe a persistent pattern or style to
these interactions. Tech rituals have at least two
features:
1. Tech rituals are characterized by a decen-
tralization of power. In everyday rituals,
power arises in the shifting environment of
different speakers, reputations, projects,
teams, and so on. And these seem to entail
many speakers, changing projects, and shift-
ing reputations – so power seems decentral-
ized.
2. Tech ideology is one of openness, informal-
ity, individual initiative and real feelings.
Hence, symbolic power is often exerted sub-
tly. It is revealed in brief episodes of social
drama, like question & answer sessions in
talks where some individuals seem to estab-
lish authority (and if you recall – that can be
of several forms – managerial, expert, and
external). Some people just come off
smarter, they project a self and statements
others identify with, and in character-jousts –
like disagreements, or debates – they tend to
win.
At Tech, these mini-dramas of control are an
ever-present part of presentation-rituals. The dra-
mas follow a predictable pattern – there is a chal-
lenge, rising tension, and then actors acting in the
corporate interest use various techniques to sup-
press and redefine dissent, silence the deviants,
and gain support. In short, it is through micro-
rituals in meetings, talks, presentations, and the mi-
nor disagreements and gaffes, that persons come to
exert norms of behavior and guide presentations of
self so they reflect and reinforce Tech culture.
Individual Reactions to Organizational Culture
Thus far, we have described how Tech cul-
ture is a normative culture developed and imposed
as a means of normative control. The company en-
gineers the culture to acquire greater worker com-
mitment and to increase worker efficiency. And
this is accomplished by having members enact a
variety of behavioral displays or interpersonal ritu-
als, where standards and identities are assessed
and redirected in ideological ways. In this man-
ner, the firm hopes to go deep into the persons psy-
che – to have them embrace their organizational
self as their virtual one – and from this all sorts of
company gains will result. But how do Tech em-
ployees react to these presentation rituals of self
and the seeping in of an organizational culture and
identity? Are they fine with it? Do they dearly
value the organizational self they portray? Or do
they feel like a “tool”, or like they are just playing
a part? Do they resist and play an ambivalent self?
How do they respond to Tech culture?
Kunda writes that employees respond in
several ways. The most common outcome is the
expression of role-embracement – here, this embra-
cement is expressed whole-heartedly in talks by
top level management; it is reserved and tentative
in training workshops; and pragmatic / conflictual
in work group meetings. Participants who em-
brace their role (like managers) may experience
some emotional dissonance. In those instances
their perception of an acted role and the experi-
ence of an authentic self, become hard to disentan-
gle. They find it hard to have an identity distinct
from the one they have at work.
A second reaction is to engage in role dis-
tance. Here, the Tech employee suspends their
107
role-embracement in the process of performing be-
havioral displays. We have all seen individuals
separate their formal role from their self. When I
teach, I may drop my teacher role at the beginning
or end of class, during transitions and timeouts,
and so on. These brackets intersperse my presenta-
tions and are opportunities for role-reversals: I can
talk to students as a peer, joke, mention my kids,
and so on.
At Tech, there is a degree of role-distancing.
This occurs when members assume a reflective
and openly self-conscious stance. They comment
on their condition and the ritual performance itself.
When this occurs members temporarily detach
themselves from their performance of the member
role, comment on it, and share with others the
awareness of the theatrical nature of the proceed-
ings. They put colorful labels on behavioral sce-
narios. They say they are “setting up”, that they
do not want to engage in “pissing contests”, “back-
stabbing”, “crucifying”, “hanging by their shoe-
strings”, or engage in “hidden agendas”, etc.
The act of distancing oneself from your
presentation and manager role does not invert the
hierarchy like our jokes might, but rather they con-
front the meaning of authenticity (who is “real”
and who is not) and inclusion (who is “in” and
who is “out”) that is being enacted. This is actu-
ally more important than many realize. By enact-
ing role-distance and taking a self-aware stance on
your talk and role, you show you are a person dis-
tinct from it. “I am just a guy playing my part like
you are!” By doing this, we connect and there is a
communion among the self-aware and talented ac-
tors who comment on their roles and performances
(Kunda: 158).
Some Tech employees are aware of all this
and show a great deal of social skill performing it.
That is, they have the controlled ability to shift
stances and frames. This ability to shift stances is
key because members evaluate each other on their
ability to express both embracement and distanc-
ing and knowing when to stop (Kunda:158).
Kunda calls this a contrived self because
participants enact rituals with an explicit aware-
ness of the dramatic mechanisms that underlie the
process of framing reality, and an open acknow-
ledgement of the manufactured nature of cultural
categories and symbols, including those that are
central to the ritual performance itself. And this is
where it gets interesting! The self-consciousness
that can be seen as a fatal flaw is now itself ritual-
ized. This creates a potentially unstable balance
between role-distance and embracement that con-
stantly calls into question the authenticity of expe-
riences associated with the member role for per-
sons targeted by normative control.
Presentation rituals are vehicles of enacting,
enforcing and reinforcing the sanctioned display of
member roles and are thus a mechanism mediating
normative demands and responses. The mediating
role of rituals is not simple though. They can jux-
tapose a variety of themes and stances: for exam-
ple, they can juxtapose ideology and common
sense; notions of obligation and choice; serious-
ness and humor; affirmation and denial; internal
and external viewpoints; participation and with-
drawal. Switching between embracement and dis-
tance forms a web of normative pressures.
In the end, you have to wonder if a strong
organizational culture leaves room for individual
freedom of expression. What is real and pre-
scribed here about your self? Even the contrived
self – one that you accomplish by social skill and
by switching between embracement and distance –
is something the organization prescribes and re-
wards. Think of all the managers who effectively
do this performance and dance. They are not that
unique! It is sort of like the rebellious kid. Sure
they rebel, but they rebel much like all the other
kids and are not that unique.
Not all members are invested equally in
Tech. Some members are marginal, like temps
and what Kunda calls wage 2 class earners. They
are not subject to same role demands and organiza-
tional ideology, so they are exempt to a degree be-
cause demands on their self are reduced. At the
same time, it makes some of them feel left out and
they develop an “estranged view”.
108

Figure 6.9 Wage 4 and Wage 2 Worker
(Source - http://commons.wikimedia.org/wiki/File:Robert_schonberger.jpg;
http://commons.wikimedia.org/wiki/File:thumb/Marissa_Mayer.jpg/)
Other members are fully invested. These are
typically higher status members of the firm, or
what Kunda calls wage 4 class employees. These
employees must meet the enormous demands of
their member role and face a fundamental di-
lemma. By seeking acceptance and higher status,
these actors expose themselves to greater demands
of the organizational ideology. They must sell
their soul! The price of power is submission! Low
status participants merely submit their behavior
but not their attitude. The high status participant
gives up their behavior, thoughts and feelings.
This can lead to a “cynical view” as these mem-
bers form a contrived self.
Balancing Demands of Organizational Culture
To this point you may be thinking the follow-
ing: if I join a firm with a developed organiza-
tional culture and I want to get to the top, then I
may find myself being brainwashed! Luckily, all is
not lost. Even if you play the part of a contrived
self and are cynical about your self and the firm,
you can do some things that leave room for your
“authentic self”. The organization need not take
over all of who you are.
We all have multiple identities and selves.
We are one thing at home with our kids and an-
other at work with our students. In both instances,
we may show role-distance and reveal our charac-
ter or something about us as people independent of
those identities. The organizational self for Tech
managers is one that arises from balancing accep-
tance and rejection of the organizational ideology
and the member role it prescribes (Kunda:161).
You can prevent the contrived self from be-
ing your authentic self in several ways. First, you
can manage time. Tech work takes lots of time
and energy. This blurs the distinction between
work and non-work. As a response, people create
boundaries around their time and their relation-
ships that develop at work. Non-work time is sa-
cred, protected, and kept separate. Workers can
also define their authentic self by what they want
to become, or in spheres outside work.
Second, you can manage your response to
the organizational self. Many workers regard
over-involvement as a problem. They believe that
having a fair exchange with the company is desir-
able, and anything else is undignified
(Kunda:177). In fact, role-distance is often con-
doned.
Cognitive distancing and disputing popular
ideological formulations is viewed as a good idea.
You need to be autonomous enough to know what
is going on in the company and dignified enough
to express such knowledge. Otherwise, you will
be seen as a zealot or a “tool”. Employees do this
by being (i) cynical and complaining a lot; by per-
forming (ii) detached theoretical observations (us-
ing a lens like a scientist or researcher), and by
(iii) adopting a common sense perspective (they
effectively try to view the organization from an al-
ternative frame of reference).
Workers can also distance themselves emo-
tionally with respect to their feelings. This can
happen by (i) denial. Here, they claim their mo-
tives for membership are purely instrumental, like
for money, and deny an emotional attachment.
Emotional distance can also arise from (ii) deper-
sonalization. In these instances, they distance
themselves from emotions experienced at work.
They say they are “have a thick skin”, or talk
about their emotions abstractly as “pain” or “warm
fuzzies” etc, and they do not take things person-
ally. Last, they can regard their emotions in terms
of (iii) dramatization. Here they view emotional
expression as strategically driven. It is used to ac-
complish goals, and therefore suspect of authentic-
ity.
109
 In sum, actors engage in two efforts at self-
preservation: (1) they attempt to control and stake
boundaries to their other selves by managing time
and separating work from non-work; (2) and they
seek to control their cognitive and affective re-
sponses at work when they are enacting their or-
ganizational self.
So let’s sum up Kunda’s argument. Accord-
ing to Kunda, organizational cultures are a means
to normative control or an ideology. The ideology
is enacted and instilled in members via presenta-
tion rituals. These rituals are like layers of control
plied on. Lower status workers are under utilitar-
ian control (they want pay!), but higher ranking
workers are under cultural and utilitarian control.
They sell their selves to the company! Now this
might be desirable or not. And most every “true
member” of an organization performs some role-
distancing. In so doing, they free up other features
of their self independent of the company. But
even so, the higher one goes, the more role-
embracement is needed and the distancing be-
comes part of a contrived self and an act.
But ask yourself something - is Kunda view-
ing organizational culture as a “cup half empty”
when maybe we can see it as a “cup half full”? If
I do not embrace my organizational self, then I
must be embracing another self in other spheres of
my life. For example, one might embrace being a
youth league soccer coach. Why is that organiza-
tional self more sacred? What if my organiza-
tional self at Stanford also serves some good? Is it
ok then? Or perhaps Kunda is saying any role-
embracement has this quality of becoming more
and more of our virtual self? With any role we
fully embrace, we eventually assume a self-
referential perspective on it. But then this process
is merely descriptive of our being in an organiza-
tional world and how we manage our selves more
generally in today’s society.
We do not have all the answers. We just
know Kunda hit on something profound. We want
to create an integrated organizational culture and
for employees to embrace it in many of the organi-
zations we hope to found and manage. And yet we
have this precarious relation with our self when
participating in such an organization.

110
 Summary Table of Resource Dependence Theory (RDT)
When does it apply?
Summary or Basic Argument
Key Organizational Elements
Technology
(how solutions get decided)
Participants
Goals
(what probs to resolve)
Social Structure
Environment
Dominant Pattern of Inference
Management Strategies
111
Organizational Learning (OL)
Exists when there are clear feedback loops, adaptations,
memory, and support of actor-expertise / adaptations of
rules to local reality.
Acknowledges routines, but focuses on practices within
them that enable their continual adaptation and change
to fit reality – i.e., practices reflecting organizational
intelligence.
Internal adaptation, or where actors alter routines for the
better and fit reality (knowledge).
Members of organization doing work / SOP’s
Application problems – pattern recognition not there (no
fit).
Informal, lateral relations, communication, negotiation,
& collective improv. Actor identities (demand)
important. Network of practice (professional identity /
reach) & community of practice (cohesive group).
Source of inter-organizational knowledge / tricks /
transfers.
Action = result of local actors collaborative search (trial
& error / transfer) and adapting rule to situation.
Find ways to create lateral ties among workers so
“knowledge” is passed / transferred more readily /
quickly (if possible, quickly), create means to
organizational memory of what works. Create applied,
social learning experiences with means to retaining and
transferring expertise. Want communication, collective
improvisation, practice and knowledge sharing to arise.
Organizational Culture
When the cognitive and normative aspects of social structure
are of concern and seem to guide organizational decisions
(sense-making) and outcomes.
Actors seek expression and fulfillment of identity, and
organizational culture is the medium for such
expression/sense-making.
Matching, sense-making / meaning-making, or where actors
seek to express beliefs, norms, and values via a variety of
practices and externalize them in artifacts depicting shared
understandings / notions of appropriateness.
Actors within the organization, and those salient to meaning-
making.
Create intrinsic motivation (sense of fulfillment), and
remove differentiation / cynicism in most cases.
Deep structure composes the elements of culture – themes
(beliefs & norms), their expression via practices (rituals,
etc), and their manifestation or expression in artifacts
(reports, mission statements, etc).
Many elements of culture have origins from outside, and
they are transported in, then translated to the local culture.
Action = result of deep structure or culture that is generated
in the organization, but which is mediated by the member’s
relation to it.
Find ways to confer ideology and lead others to identify with
it (using a variety of practices and artifacts), but don’t make
it so explicit / fanatical that cynicism emerges. Give room
for autonomy and self-expression so distancing is
unnecessary, and encourage members to generate a culture
of their own (~org learning culture NE to Tech culture which
is top-down engineered).
References

Geertz, Clifford. 1973. The Interpretation of Cul-

tures. Basic

Kunda, Gideon. 1992. Engineering Culture: Con-

trol and Commitment in a High-Tech Corporation.
Philadelphia, PA: Temple University Press.

Martin, Joanne. 1992. Cultures in Organizations:

Three Perspectives. New York: Oxford University
Press.

Martin, Joanne and Debra Meyerson. 1988. “Or-

ganizational Cultures and the Denial, Channeling
and Acknowledgment of Ambiguity.” Chapter 6
(pp. 93-125) in Managing Ambiguity and Change,
L. Pondy, R. Boland, and H. Thomas (Eds).

Martin, Joanne, Peter J. Frost, and Olivia A.

O’Neill. 2004. “Organizational Culture: Beyond
Struggles for Intellectual Dominance.” To appear
in S. Clegg, C. Hardy, W. Nord, and T. Law-
rence, (Eds.) Handbook of Organization Studies,
second edition, London: Sage Publications.

Van Maanen, John and Gideon Kunda. 1991.

"The Smile Factory: Work at Disneyland." Pp. 58-
76 in Reframing Organizational Culture (eds. Pe-
ter Frost et al). Sage.

112
7
Resource Dependency
Theory

Environment

Tech
Core

Firm

(Source: http://commons.wikimedia.org/wiki/File:Circular_buffer.svg/)
Resource Dependency Theory
We now begin focusing on theories that are
primarily concerned with the environment and
how they influence organizational effectiveness
and survival: resource dependence theory, network
organization, and neoinstitutional theory. These
theories and conceptual frameworks are relatively
recent contributions to organizational research,
most emerging in the literature in the 1980’s on-
ward. All of these theories provide what Scott
calls an “open systems” perspective on organiza-
tions (Scott 2003). Each of these theories will ar-
gue that there is no single best way to organize a
corporation or to make decisions. The optimal
course of action is always contingent (or depend-
ent) upon the external situation of the firm. As
such, the best way to organize a firm depends on
the nature of the environment to which the organi-
zation relates. The theory we will discuss in this
chapter is Resource Dependence Theory, and it
views an organization in terms of its resource de-
pendencies with other firms in the environment.
Resource Dependency Theory Compared
Given we have already covered a series of
different theories, it may help to contrast them
with the theory of resource dependence. So let us
review a few and compare them: we will look at
coalition formation, organizational learning and
organizational culture, and we will discuss how
they differ from the resource dependence perspec-
tive. In the earlier chapters, we learned about coa-
lition formation and what it entailed. We learned
that coalitions arise when multiple actors have in-
consistent identities and preferences, and none of
them can go it alone without the assistance of oth-
ers. We read about “players” having their own in-
terests and resources, and how they had to negoti-
ate (or exchange and bargain) until they reached
an agreement by which coordinated action could
follow. We also learned that coalitions could be
managed and formed through various processes of
exchange and bargaining – like horse-trading and
log-rolling. These exchanges were all pair-wise,
or dyadic, and they aggregated within a group to
form a shared goal and agreement. The time
frame on these exchanges and agreements were
narrow – as the coalition agreement was often fleet-
ing.
Resource dependence theory is similar to coa-
lition theory in that it concerns exchange and ef-
forts to produce agreements. However, it differs
from coalition theory in at least two important
ways. First, it shifts the unit of analysis from coali-
tions of persons to inter-organizational relation-
ships of dependence. Here, the concern is with a
focal organization and its multiple resource de-
pendencies with other organizations in the environ-
ment. Second, while coalition theory focuses on
narrow windows of time specific to each transac-
tion, resource dependence theory concerns ex-
tended forms of exchange, or exchange relations.
An organization can form a wide variety of buffer-
ing or bridging maneuvers used to overcome per-
sistent dependencies in the environment. For ex-
ample, you will learn that when a company merges
with another, it is often a means of absorbing de-
pendencies and acquiring a degree of autonomy in
the environment.
These dependence relations can also be asym-
metric – in fact, managers of resource dependence
actively seek ways to render other firms dependent
on them, but not vice versa. So with resource de-
pendence theory, we have an egocentric view of an
organization trying to acquire the best exchange
relations it can in an environment of many poten-
tial partners.
In prior weeks we also discussed organiza-
tional learning. If you recall, organizational learn-
ing focused on how organizational participants
adapted their practices within the firm as they en-
gaged in the process of doing their work. This
was facilitated by efforts to encode best practices
into organizational memory and by communicat-
ing about practice in local communities of practice
and by communicating outwardly in networks of
practice beyond the organization.
Managers try to develop employee concern
with improving practice and by forging social rela-
tions and interactions that facilitate knowledge ex-
perimentation and transfer. Most of the emphasis
lies in local adaptations of routines – and as such,
114
the argument is that internal application (learning
by doing) is the main means to understanding and
expertise.
Resource dependence theory has some simi-
larities with organizational learning. Like organ-
izational learning, resource dependence theory fo-
cuses on the technological core of an organization.
However rather than describe the internal process
of practice improvement and knowledge transfer,
it describes how the technological core of an or-
ganization is buffered from the environment. Re-
source dependence theory describes how the or-
ganization (as a sort of unitary actor) bridges with
firms in the environment so as to garner autonomy
and control. Hence, concern is placed on becom-
ing effective in an external environment and by es-
tablishing certain SOP’s for resource exchanges
with other firms. So the focus shifts from a mostly
inward view to a mostly outward one.
In the last chapter we discussed organiza-
tional culture, and there the goal was to create an
ideology or culture that members identify with per-
sonally, and managers used all sorts of strategies
(rituals) to make that happen. Now of course, it’s
possible that different paradigms of organizational
culture (integrated, fragmented or ambiguous) will
apply best to your firm’s goals or context – but the
general argument is somewhat similar to that of or-
ganizational learning: adaptation is internal to the
organization and not focused on external relations
outside. Whereas for organizational learning, the
effort was to generate relations and practices, here
the effort is to engineer deeper social structures of
cognition and norms. Here, managers worry about
internal contingencies, like layering on a culture
too thick and having organizational members react-
ing in resistant ways. For example, you recall
Kunda’s worry about generating cynics. Managers
have to balance the effort of prescribing a culture
while allowing participants room for themselves.
Otherwise, the participants relation to the culture
will undermine its effect.
As such, organizational culture is inherently
concerned with the process of sense-making and
ritual performance. Standard operating procedures
are viewed as practices, and deeper, broader sets
of practices than perhaps organizational learning
relates. By contrast, Resource dependence theory
is not concerned with sense-making but with the
selection of SOP’s that manage the firms resource
dependencies in the environment. In a way, re-
source dependence theory is a step back toward
the organizational process model. It brings our
theories back up to the surface of ostensive rules
and routines, and away from deeper forms of
sense-making. Managers form and select SOP’s
that concern relations in the environment; and they
seek relations that create favorable exchanges – or
favorable consequences. So resource dependence
theory is also a shift back toward a logic of conse-
quence in certain regards.
We can also discuss the prior theories in this
textbook more generally – as natural systems, as
compared to the open organizational system being
characterized in resource dependence theory. A
good example of this can be found in how prior
theories described organizational uncertainty. It
was something that arose within the firm, from in-
consistent preferences, identities, unclear rules,
routines, practices, and so on. Resource depend-
ence theory is also concerned with organizational
uncertainty, but it sees uncertainty as residing in
the firm’s external relations of interdependence.
When external dependence relations are not man-
aged and coordinated well, they create uncertain
conditions (if not unfavorable conditions) for the
firm’s survival. Prior theories also regard depend-
ence and uncertainty differently from resource de-
pendence theory. For example, for coalition the-
ory, dependence is not a problem but something
sought after to make the coalition hold. And uncer-
tainty or ambiguity is often reason for why a coali-
tion stays together.
By contrast, in resource dependence theory,
the firm tries to accomplish autonomy and cer-
tainty, and it does this by freeing itself from de-
pendence on other firms and by forging contracts.
Hence, whereas uncertainty and dependence are an
asset to coalition formation, they seem to prevent
firms from acquiring an advantageous resource po-
sition. In sum, the shift from immediate local ex-
change conditions within a firm, to externally sus-
tained exchanges in the environment, seem to have
115
different consequences and implications for each
of our theories.
An Overview of Contingency Theory and Resource De-
pendency Theory
Let’s now briefly discuss the history and
core features of the theory of resource dependence.
Resource dependence theory, in part, grew out of
Contingency Theory. Therefore it helps to under-
stand the core features of that theory before going
further. Contingency Theory was a class of organ-
izational theory from the 1950’s through the
1970’s that argued a firm’s optimal course of ac-
tion was contingent upon the internal and external
situation it found itself in. As such, contingency
theory offered a natural and open system view of a
firm. Perhaps the most complete characterization
of contingency theory can be found in Thompson’s
work (1967). He describes how firms need to
buffer and protect their technical core from all
sorts of internal and external disturbances that can
disrupt its functioning. He affords several prescrip-
tions on how to minimize these contingent prob-
lems:
• For example, managers need to seal off their
technological core and buffer it from internal
and external influences.
• Managers can prevent and reduce environ-
mental uncertainty by distinguishing both the
input-acquisition functions (such as supply)
and output-disposal functions (such as sales)
from the technical core.
• Internal strategies of the firm might include
stockpiling and smoothing, or internalizing
uncertainty through growth (thereby absorb-
ing uncertainty).
• External Strategies include maintaining alter-
natives and minimizing dependence. Some
specific aspects of this include cooptation,
contracting, and coalescing (like joint ven-
tures).
Resource dependence theory builds off contin-
gency theory and greatly elaborates on maneuvers
firms can use to manage disturbances in the exter-
nal environment. 

Resource dependence theory was founded by
Jeffrey Pfeffer and Gerald Salancik. According to
Pfeffer and Salancick, organization’s modify their
boundary so as to manage disturbances in the exter-
nal environment. The firm’s central goal is effec-
tiveness in a context or environment (e.g., sur-
vival). This is different from organizational learn-
ing where internal efficiency and improvement is
the focus.
Resource dependence theory is primarily
focused on relations with the external environ-
ment, rather than on ones within the firm. As
such, resource dependence theory views organiza-
tional conditions in a particular way. It presumes
there is environmental determinism. This means
an organization’s behavior can be explained by
looking at its context, such as external constraints
and controls. It assumes an organization’s specific
goals are contingent on dependence relations keep-
ing it alive (i.e., the relationships that secure its
necessary resources). Within this context, the
firm’s general goals are to find greater certainty
and autonomy. From this it follows that organiza-
tions respond to resource dependencies in at least
two ways: they comply and adapt to dependencies
or they avoid & manage them.
What are the core features of resource de-
pendence theory? One of the most important fea-
tures of the theory concerns the resources involved
and how they establish dependencies. To identify
resource dependencies, it helps to ask - What are
the key resources in an environment? And who
controls the resources in question? Resources
come in a variety of forms, they are valued differ-
ently depending on their importance and availabil-
ity, and they differ in terms of who has discretion
and control over them.
There are various types of resources firms
depend on, such as physical materials. These
might be actual materials the organization builds a
product from. But firms may also depend on tech-
nical resources like information or knowledge as
well. And last, they may depend on social re-
sources, like prestige and reputation, that enable
them to survive. All these resources can vary in
value. On the one hand, their value can differ by
116
 Physical) Technical) Social)
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Types of Resources
the importance of the resource. Is it in demand - is it valued? Does the
firm need the resource to survive? Is there a “critical” resource? For ex-
ample, What does Stanford need to survive? Does it need students?
Does it require a physical location, books, teachers, students, money, heat-
ing, food? What can it live without? Is there demand for safety, healthy
food, expert teachers, and awards? For example, what is the greatest de-
mand of Stanford alumni – it is sustaining high SAT scores, winning na-
tional championships (prestige)? What resources are considered most
and least important?
On the other hand, does the availability, or supply of the resource
influence its value? Is the resource scarce? Do only some of the other
organizations have it? How concentrated is the resource? Are there alter-
natives to the resource? Can another kind of resource be substituted for
it? Who else has it? Let’s consider Stanford again – what does it offer
that is unique and that no other can provide? Discretion over a resource
also defines relations of resource dependence. Discretion is defined in
two ways: First, who controls the resource? Can the exchange partner dic-
tate how you use the resource? Is the resource regulated by the govern-
ment (changing districting to increase resource / student pool)? Is your
firm dependent on the supplier (materials and funds) or consumer (stu-
dents / families)? Second, what controls dependencies? (laws) Are there
copyrights or contract licenses (curriculum)?
In sum, resource dependence varies from a variety of factors: there
are different types of resources, and they can vary in value due to their im-
portance and availability. And then certain actors and institutions can con-
trol discretion over them. Now clearly, important and rare resources are

117
of greater value. Moreover, actors and institutions
that have the greatest discretion over them (and
least amount of dependence) will be the most
autonomous and capable for forging certain rela-
tions with other firms in the environment.
Figure 7.1 Resource Value (Demand and Supply)
(Source - http://commons.wikimedia.org/wiki/File:Supply_and_demand_curves.svg/)
Managing Resource Dependence
Once you understand the value attributed to
a resource and the game of resource dependence –
which is to be autonomous and establish beneficial
resource relations with the environment (on impor-
tant ones you control!) - a variety managerial
strategies follow. Some of the first managerial
strategies echo contingency theory: protect the
technological core from the environment via buff-
ering strategies – like coding, stockpiling, down-
sizing (or what some call, “removing slack”), ad-
vertising (which showcases strengths), an so on.
None of these buffering strategies change the core
task and technology of a firm. They are more con-
cerned with putting SOP’s in place to manage the
organization’s boundary. Let’s take each strategy
one at a time:
1. First – firms can perform coding – Coding
occurs when an organization classifies inputs
before inserting them into the technical core.
Such preprocessing facilitates proper routing
and, if necessary, proper exclusion. For ex-
ample, many schools track and stream stu-
dents. This classifies inputs (students) into
homogeneous ability groups so as to buffer
instruction from uncertainty (when you have
students of wide ability, your technology – or
curriculum in this case – is variably received
and has uncertain effects).
2. Second, firms can buffer their core tasks by
stockpiling. Organizations can collect and
hold raw materials or products, thereby con-
trolling the rate at which inputs are inserted
into the technical core or outputs are released
to the environment. It is easy to imagine this
for raw materials like wood needed for furni-
ture manufacturing. But another example of
this can be found in universities. A good por-
tion of a university’s budget is dependent on
grants, but granting agencies can change the
amount of funding they make available, and
some years faculty fail to secure those funds
(so you have cycles of feast and famine!).
This is partly why universities are increas-
ingly concerned with securing endowments
and gift funds. Universities with large en-
dowments can stockpile funds and dip into
them during difficult times and maintain the
same number of students in their programs.
3. A third strategy entails leveling, or smooth-
ing. Leveling is an attempt by the organiza-
tion to reduce fluctuations in input or output.
Whereas stockpiling is a passive response,
leveling entails a more active attempt to
reach out into the environment so as to moti-
vate suppliers of inputs or to stimulate de-
mand for its outputs. Here, an example
might be a district (or even a university
again) advertising its strengths so that enroll-
ments and housing values stay high. By cre-
ating demand, they sustain inputs in a reces-
sion.
118

4. A fourth maneuver entails forecasting – If en-
vironmental fluctuations cannot be handled
by stockpiling or by leveling, organizations
may have to anticipate changes and attempt
to adapt to them. For example, a university
may foresee that their school will lack funds
and look to identify sources for private fund-
ing – say, if a Republican candidate is ex-
pected to become president and slash the
budget of the National Science Foundation
or National Institutes of Health, then universi-
ties might develop relations with private
foundations and industry partnerships as a
means to buffer research and student training
from these resource constraints.
5. The final buffering strategy involves adjust-
ing scale. Here, the firm changes the scale
of its technical core in response to informa-
tion provided by forecasting, or for other rea-
sons. A good example of this occurs when
firms downsize programs, or when school
districts get rid of performing arts and for-
eign languages but retain a focus on math
and science. It is a drastic move, but it does
not involve changing the nature of the techni-
cal core, rather just its size.
In addition to buffering the technological core
from the environment, an organization can protect
itself via bridging strategies. The goal of bridg-
ing strategies is to shape dependence relations in
the environment. One can do this by negotiating
with other firms, by selectively exchanging certain
resources with them, by pooling resources across
them (or partially absorbing other firms), or by per-
forming mergers and totally absorbing other firms.
These are all increasingly greater efforts at bridg-
ing. Let’s look at examples of each in turn.
The most minor bridging efforts, or rather pre-
bridging efforts, arise in negotiation. The least
costly means is to negotiate with other firms and
evoke normative coordination – here behavior is
regulated by common informal expectations that
reduce uncertainty. In Pfeffer and Salancik’s work
(1978:147-151) they give a nice story of a teacher
union relating their demands to a school board: the
union gives a list of six demands, the first five of
which concern the quality of education (smaller
class sizes, more preparation time, etc.), and the
last concerns their salary. The school board ap-
proves 1-5, but not 6, since they regard the last
one to be a private demand cloaked in socially le-
gitimate trappings.
The norm evoked here is one of informal expec-
tations about trust and honesty. The manage-
ment’s job is to note where normative constraints
affect dependence relations, noting whether they
are beneficial, and if not, to seek ways to change
them via persuasion. And that’s what happened
when the school board rejected the teacher’s 6th de-
mand. Unfortunately, normative coordination
does not always work, and free-riding and oppor-
tunism can “burn” an organization (e.g., one as-
sumes that teachers will not strike during school
year, but that does not always happen). Hence, ad-
ditional bridging efforts are typically sought.
A second pre-bridging tactic is to bargain.
Here the manager uses a family of tactics to ward
off impending dependence relations. The firms ne-
gotiate and exchange in an attempt to prevent the
resource relation from becoming imbalanced. We
saw this type of bargaining occur in the week on
coalitions, so we can gloss over it here.
More serious forms of bridging involve ex-
change, or the mutual giving up of autonomy for
an exchange of resources. Firms can do this
through contracting. There, the firm attempts to
reduce uncertainty by coordinating their future be-
havior in limited, specific ways. They define the
rules of inter-organizational contact and exchange.
Negotiated contracts are an excellent way to ac-
quire greater certainty in environmental relations.
For example, it does not hurt to have routine nego-
tiation with teacher unions about their contracts so
as to avoid strikes.
Another, form of exchange can arise via the
creation of interlocking directorates. Here, mem-
bers of competing organizations are given a posi-
tion within the central organization that oversees
them (e.g., a board of directors). By being on each
other’s boards, the firms trade away their sover-
eignty in exchange for some mutual support. By
119
giving external members a role, the organization
accomplishes the partial co-optation of an external
organization’s interests as their own, but also gives
up some of its control. A focal organization may
then become more effective in an environment be-
cause they have coopted external members that
might have control over resources central to its
functioning.
For example, we had a student write up a case
on Stanford’s Committee of Undergraduate Educa-
tion when it was formed several years back (Pope
2006). The committee was trying to reform the un-
dergraduate curriculum and it encountered a good
deal of resistance from the environment and stake-
holders. In response, the committee was organ-
ized via a “Noah’s Ark” model where they secured
representatives from all the environmental stake-
holder organizations: 1 undergraduate from the stu-
dent council, 1 graduate students from the student
council, etc. This opened up representation but
also co-opted their dissent in the process. The ad-
ministration gave up some control for greater effec-
tiveness in the environment of vocal stakeholders.
Another form of resource exchange can arise
in hierarchical contracts. These are contracts de-
veloped to manage dependencies via conditional
clauses evoking hierarchical mechanisms to han-
dle disputes. It is a contract that preserves and de-
fines the rights of parties in case some problem of
contingency arises. For example, it can be a
clause for subcontracts ensuring full pay if the sub-
contractor does not come through. These are more
complete and detailed exchanges or developed con-
tracts.
A more extensive means of bridging with
other firms can entail the pooling of resources
across them. One means of accomplishing this is
to engage in a joint venture. Here, two or more or-
ganizations create a new organization in order to
pursue a common purpose. For example, two pri-
vate schools pool their resources to create a day-
care center to serve teachers and their children,
thereby reducing the uncertainty of teacher attri-
tion / retention.
Firms can also enter strategic alliances as a
means of pooling resources. These are agreements
between two or more organizations to pursue joint
objectives through the coordination of activities or
sharing of resources. For example, Berkeley and
Stanford have a courtesy program where students
can take courses at one another’s university.
Last, firms can join associations and cartels.
Cartels entail more pooling and loss of autonomy,
but they are also rare. Cartels like OPEC go above
and beyond informal norms, and have actual
means of sanctioning members for not following
their decrees – they effectively act as a block of or-
ganizations. Notably, cartels are illegal in the
United States.
Producer
Supplier Supplier
Figure 7.2 Horizontal and Vertical Mergers
(Source - http://commons.wikimedia.org/wiki/File:Horizontal_%28PSF%29.png/)
Now firms also can perform a complete pool-
ing of resources – or total absorption through
mergers. This can arise in several forms. First,
the firms can perform a vertical merger. Here, the
firm extends control over exchanges vital to its op-
eration. Hence, a high school would merge with a
middle school, or a manufacturer / producer would
buy out a supplier to get control and to create cer-
tainty of supply. Firms can also perform horizon-
tal mergers. They can accomplish this by taking
over their competition, thereby reducing uncer-
tainty and increasing organizational power in their
exchange relations. An example of this would be
when one high school takes over another one so
that it can benefit from economies of scale and
pool resources. This actually arises sometimes in
120
rural areas of the United States where a township
high school is created as a merger of several
smaller rural high schools. Last, one can engage
in diversification. This is a method for decreasing
dependence by acquiring entirely different types of
businesses. For example, I once observed a high
school that took over a nonprofit dedicated to art.
It became a museum and a school! I also saw a
school that expanded into a private day care as
well. Therefore, a firm can merge all its resources
in several ways to bring itself greater autonomy
and control over resources in the environment.
That is a lot of managerial strategies! They
move from simple negotiation, to exchanges, to
pooling and partial absorption, to complete merg-
ers. I think it helps at this point to take a step back
and ask what are the “general” managerial strate-
gies one can take away from the resource depend-
ence approach? I think there are two basic pre-
scriptions. The first general strategy is to avoid re-
source dependence on other firms. This can be
done by using buffering strategies like stockpiling,
and engaging in long-term contracts that buffer
your output. You can also try and change the legal
rules and set regulations so as to manage competi-
tive markets. It also makes sense to diversify, and
to find substitutable exchanges (backups). A sec-
ond strategy is to break your firm’s dependence on
other firms (and to possibly create their depend-
ence on you!). Here you can use secrecy, restrict
information, begin an anti-trust suit, co-opt the con-
trolling firm, acquire control over the input of the
controlling organization (via something like a verti-
cal merger), and set up rules of regulation.
Forms of Dependence and Theory Limitations
So you have two general approaches, and a
variety of particular managerial strategies you can
use to work your firm’s resource relations in the
environment. Can we predict certain forms of de-
pendence will arise if some of these strategies are
used over others? Scholars like Richard Scott
think so (2003:118-119). He predicts that certain
managerial strategies will result in certain resource
dependence relations. For example, some firms
tend to assume a symbiotic interdependence – this
occurs when two or more kinds of organizations
exchange different resources. This can give rise to
power differences if the resources exchanged are
not of equal importance and value (A\[B). An
example of this might be subcontracting – where
money is exchanged for expertise. Such symbiotic
dependence (from moderate to extreme – see Scott
page 212) corresponds with normative coordina-
tion, contracts and their clauses (hierarchical con-
tracts); as well as joint ventures and vertical merg-
ers.
Another form of dependence is commensalis-
tic or competitive. This occurs when two or more
organizations compete for the resources of a third
party (A[C\B). This is often resolved by differ-
entiation (one specializes and becomes a supplier,
so there is division of labor and interdependence).
An example of this might arise when multiple con-
sulting firms compete for the same contract. Ac-
cording to Scott, competitive dependence arises
under normative coordination, co-optation and the
forming of interlocking boards of directors, trade
associations, joint ventures, and horizontal merg-
ers (where competitors merge).
Just like all the other theories we review in
this textbook, resource dependence theory is not a
perfect theory and it has certain shortcomings. Re-
source dependence theory assumes all organiza-
tions are more or less similar. They acquire re-
sources in an uncertain world and are staffed by
boundedly rational managers who seek to optimize
both their own and the organization’s interests.
But is that accurate? Do some organizations live
outside the issues of resource dependence? (e.g.,
rich ones?)
What does certainty and uncertainty mean
for resource dependence theory? Is dependence
on social resources and knowledge less clear than
dependence on money and materials? Resource
dependence theory is purely resource and
exchange-based, and it assumes there is clarity of
value and importance. Unfortunately, the value of
a resource is often unclear until well after the fact.
Moreover, meaning-making / sense-making are
lost on resource dependence theory. All tasks are
related to efficiency and effectiveness. But what
happened to culture and mission? Normative coor-
121
dination is not thoroughly described in resource
dependence theory and we find stronger characteri-
zations in theories of organizational culture.
Last, all of these dependencies are described
in pair-wise fashion. What about the larger net-
work? Can the larger network pattern define op-
portunities and constraints? Can the network de-
fine norms and pressures better than relations of
dependence?
Case: The Near Merger of Northwestern and
the University of Chicago
In what follows, we will describe a case
where two universities tried to perform a merger
and failed. In the process of relating the case, we
will review the main features of resource depend-
ence theory and see how they apply to the case. In
this manner, we hope you will get a better sense
for how to apply the theory and recognize its
strengths and limitations. The case we will relate
was written by a historian, Sarah Barnes. She
gives a nice account of the failed 1933 merger be-
tween the University of Chicago and Northwestern
University – or what might have been the world’s
first “super-university”. The merger effort arose
during the great depression when both universities
were undergoing financial difficulties. In many
ways, the two universities were competitors in the
city of Chicago for students, recognition, funding,
and so on. Northwestern was situated on the north
side of Chicago in a bucolic area overviewing
Lake Michigan. It was a large undergraduate insti-
tution that mostly recruited locally and it placed a
strong emphasis on applied programs like Journal-
ism and Medicine. Like I said, Northwestern is in
a bucolic setting. Very pretty, and the students
seem to have lots of fun, even today.
In contrast, on the south side of Chicago in
an urban neighborhood was the University of Chi-
cago, a large graduate institution with an elite, na-
tional reputation and a strong emphasis on the pur-
suit of truth and theory. Now the University of
Chicago is where I studied, and my recollection of
the place (even in the 1990s) was that it still was a
leading graduate school, and a very serious intellec-
tual place; a wonderful place to learn, but often
very somber. Back in 1933, the contrast between
these institutions was quite stark. Northwestern
had tax exempt status, Chicago did not; Northwest-
ern had a safe neighborhood, Chicago did not; Chi-
cago had prestige and reputation, Northwestern
did not; Chicago was innovative, Northwestern
was not. Chicago was international, Northwestern
was local. Chicago was theoretical, Northwestern
was applied. Together, the two could benefit from
each other’s strengths and lose their weaknesses.
In addition, the potential merger had some
financial benefits. Merging would save each uni-
versity $1.7M in annual upkeep and better econo-
mies of scale. And both institutions seemed to rec-
ognize this, and the negotiation moved swim-
mingly along until they broadened representation
on Northwestern’s review panel so as to begin vet-
ting the merger with larger constituents. Alumni
and resistant groups were now included, and they
saw things as too rushed. When the two schools
got down to details, the merger began to unravel:
Chicago wanted to keep its college and under-
graduate program, so that would still compete with
Northwestern University’s program; and neither
wanted to lose their medical school or education
school.
The merger also fell apart because a key pro-
ponent on the Northwestern University board of
trustees died. Also, when the Northwestern Uni-
versity review panel expanded, damaging news
and gossip leaked into the press upsetting alumni.
The gossip was to the effect that the merger was
“already decided”, that it was a “takeover”, that it
was a “last ditch effort by Hutchins to save his
“failed” presidency”; that “NW would lose it’s
identity”, etc. The discourse was partisan and both
social support and public focus on the mutual gain
fell asunder.
So what can resource dependence theory tell
us about this case? Let’s briefly review resource
dependence theory again. When does resource de-
pendence theory apply? It has relevance to a case
when there are focal organizations interested in de-
creasing competition, increasing autonomy, in-
creasing power, and (possibly) increasing effi-
ciency. The main mode of organizing action is to
122
Figure 7.3 Images of Northwestern and University of Chicago
(Source - Clockwise starting at “Northwestern University”); http://commons.wikimedia.org/wiki/File:Wikipedia_Education_Program_Northwestern_University_logo.svg;
http://commons.wikimedia.org/wiki/File:University_of_Chicago_biting_chimera.jpg; http://commons.wikimedia.org/wiki/File:University_of_Chicago_antique_postcard.jpg;
http://commons.wikimedia.org/wiki/File:Hutchinson_Hall%2C_University_of_Chicago.jpg/; http://commons.wikimedia.org/wiki/File:Northwestern_University%2C_ivy.JPG)

Case: Merger of scan the environment for resource opportunities and threats, attempt to
strike favorable bargains so as to minimize dependence and maximize
Northwestern autonomy / certainty. So far, this seems to capture Northwestern Univer-
University and the sity and the University of Chicago some.
Resource dependence theory also characterizes organizational ele-
University of ments in certain ways. The technology (or what brings about changes in
Chicago. dependence), is focused on external adaptations in order to increase auton-
omy and/or decrease dependence (see management). The participants are
focal organizations and the organizations they have resource interdepend-
ence with. The goal of a firm is survival through external adaptation, and
this is accomplished by establishing certain relations that place the focal
organization in control or with greater autonomy. The social structure fo-
cuses on inter-organizational relations, and the effort is to manage stan-
dard operating procedures and to perform bargaining / politics on these
relations. And finally, the environment is central. The focus is on ex-
change partners and external relations more than internal dynamics. All
of these characterizations of organizational elements also seem applicable
to our case.

123
 Last, a manager guided by resource depend-
ence theory would perform some buffering strate-
gies, like stockpiling resources, leveling with ad-
vertisements, forecasting where their needs will
be, and adjusting the scale of their core technol-
ogy. They will also bridge with other firms to
bring security to the organization within a competi-
tive environment. The bridging strategies they
will use can entail negotiation and long-term con-
tracts, partial absorption and sharing of resources,
such as in forming joint ventures and alliances, or
total absorptions via company mergers. Here too
we see aspects of merger, co-optation, adjustment
of scale in the case.
So let’s apply resource dependence theory to
the case. The Chicago-Northwestern merger is
clearly a case where the environment is uncertain
and problematic for both universities. It is also a
case where the two organizations explore a hori-
zontal merger (or in secrecy, an effort to co-opt)
between competitors. In theory, the merger would
entail some buffering, where each university down-
sizes their core technology losing their worst pro-
grams but keeping their best, But then they com-
bine in a complementary form that would have an
improved economy of scale. The merger would
have made for an unparalleled “super-university".
One can only image what it could have been by
combining the strengths of the two campuses!
So why didn’t it happen? Does resource de-
pendence theory give us an explanation? Let’s ap-
ply our concepts and elaborate the theory’s applica-
tion to each school and see. For Northwestern, the
proposed technology of organizational change was
the merger and how it might increase economies
of scale (making the university more efficient and
autonomous) and minimize some of the problems
related to the great depression. The larger size of
the combined university could also lead to in-
creased diversification, thereby increasing auton-
omy.
The participants mentioned on the Northwest-
ern side were Walter Scott, the board of trustees,
outside consultants, faculty, alumni, and the press.
The goal of Northwestern was to become an ideal
university, where they increased their positioning
and quality of education via improving their ap-
plied programs in professional and community
practice. The social structure was such that under-
graduate programs were more valued than gradu-
ate programs. The network of supporters centered
on president Scott and a key Board of Trustee
member, but then opponents emerged in the
School of Education, the Medical School, and
their College of Liberal Arts – all of whom wanted
to get a fair deal from the merger. Other stakehold-
ers enter later due to press leaks. These are
alumni, and they are mostly opposed. The deeper
belief structure at Northwestern sought to promote
service, social pragmatism, and utilitarianism.
These were in stark contrast with the University of
Chicago, as you will see next. The environment in
which Northwestern found itself was one of a ma-
jor economic downturn hurting all aspects of the
university.
Let’s next look at the University of Chicago.
Chicago, like Northwestern, saw the merger as a
means of increasing economies of scale, making
the university more efficient and autonomous, and
minimizing some of the problems related to the
great depression. The larger size of the combined
university would also lead to increased diversifica-
tion, thereby increasing the university’s autonomy
in the environment. The participants at Chicago
were Robert Hutchins, Chicago’s board of trus-
tees, an outside consultant, faculty, alumni, and the
press. Chicago’s goal, like Northwestern’s, was to
develop an ideal university. But here the goal was
to increase the sustainability of the university by
increasing the quality of education via the pursuit
of theory and truth. Moreover, Chicago had an
elite focus instead of an applied one. Chicago’s
mission was also more developed and frequently
voiced by the charismatic president Hutchins.
The social structure and values of Chicago
were quite different from Northwestern. Hutchins
was a strong leader, so it was a more centralized
decision structure. In addition, Chicago valued
graduate training far more than undergraduate
training. Last, its professed beliefs rested in the
pursuit of theory and truth, and an idealization of
the “Great Books”. Northwestern, on the other
hand, viewed Chicago as an Easterner funded
(Rockefeller) school led by elitist, idealist
124
 Resource Dependence, Chicago-Northwestern Merger (1933):
Summary/Basic Argument -- The resource dependence perspective suggests that organizations seek to avoid dependence and uncertainty.
When does it apply?
Resource Dependence Theory (RDT)
Key Elements
Technology External adaptations in order to increase autonomy
(what brings about and/or decrease dependence (see management).
changes in dependence)
Participants Focal organization and other organizations with
resource interdependence.
Goals Goal is organizational survival through external
adaptation (for certainty and autonomy).
Social Structure Formal roles, standard operating procedures, inter-
organizational bargaining / politics.
(note: coalition approach emphasizes individuals and
interests. Here, the organization is the main actor
and exchanges are with other organizations.)
Environment Key component of the perspective. Exchange
partners and external relations more salient than
internal dynamics; Bridging more relevant than
buffering.
Management Strategies Buffering: protecting technical core from
environmental threats (coding, stockpiling, leveling,
forecasting and adjusting scale).
Bridging: security of entire organization with relation
to the environment. Total absorption via merger
(vertical, horizontal, and diversification), partial
absorption (cooptation [vertical or horizontal],
interlocks, joint ventures, strategic alliances,
associations)
125
Northwestern University
Merger would increase economies of scale (making
the university more efficient and autonomous) and
minimize some of the problems related to economic
cycles. The larger size also leads to increased
diversification –thereby increasing autonomy.
Walter Scott
Increase the sustainability of the university, educate
and train citizens.
Undergraduate and graduate programs.
Evanston Campus, Downtown Campus, Trustees,
Deans, Alumni, Students.
Coalitions/Opponents: School of Education, Medical
School, and College of Liberal Arts.
Cognitive / Normative: Service, Dewey pragmatism,
utilitarianism.
Major economic downturn hurting all aspects of the
university. Supposedly, economic pressures were
greater for Northwestern than for Chicago.
Influence of the media/press,
Horizontal merger
University of Chicago
Merger would increase economies of scale (making
the university more efficient and autonomous) and
minimize some of the problems related to economic
cycles. The larger size also leads to increased
diversification – thereby increasing autonomy
Robert Hutchins
Increase the sustainability of the university, educate
and train citizens
Undergraduate and graduate programs.
Trustees, Deans, Alumni, Students.
Cognitive / Normative: Theory/Truth, Idealism and
“Great Books”
Major economic downturn hurting all aspects of the
university.
Influence of the media/press
Horizontal merger
(Hutchins). The fact that its goals clearly aligned
with its practices and beliefs, served to form a rela-
tively integrated university culture at Chicago.
The environment for Chicago was much like that
for Northwestern. Chicago was experiencing ma-
jor economic woes that hurt all aspects of the uni-
versity. However, these economic pressures were
supposedly greater for Northwestern than for Chi-
cago.
In sum, simply identifying the organizational
elements and how they are characterized in the
case reveals how the two organizations differed.
They had very different social structures and
goals, and Chicago was slightly less financially de-
pendent on the environment than NW.
Let’s consider the different managerial con-
cerns these two schools had. For Northwestern
there was much to be gained from the horizontal
merger, but also some to lose. There were certain
resources it wanted to retain. It wanted to retain
the tax break it got (a buffer) as part of its charter.
It was willing to lose its graduate programs if it
could retain its applied professional schools and
undergraduate program. In exchange it would get
an elite graduate program and international pres-
tige. In addition, it would co-opt its regional com-
petition for students, faculty, funding, etc.
Chicago on the other hand wanted the bene-
fit of Northwestern’s tax break. But it was not
very willing to lose its professional programs and
undergraduate college. It wanted to keep its
school of education, medical school and college–
Chicago was working for an edge! In some re-
gards, Chicago saw the merger as an opportunity
to move its less desirable programs off-site (ap-
plied programs). Last, it saw this as a chance to
co-opt its competition and form a world-leading
super-university.
Resource dependence theory would approach
this case with a focus on the different levels of de-
pendence. And it would cite those levels as a rea-
son for Chicago’s more aggressive approach and
the merger failure. It would note that Chicago
tried to change the rules of the merger toward a
more asymmetric contract and that Northwestern
saw this as a violation of normative coordination.
Other theories seem to help with the details of this
case. The internal workings of each school’s decid-
ing bodies are better characterized by coalition the-
ory. There we can see how the build-up to a con-
tract and merger required a good deal of political
wrangling. Also, the death of a key player at
Northwestern seems central, at least as presented
by Barnes. Moreover, coalition theory can help
make sense of all the camps for and against the
merger at either school. So coalition theory may
help explain how the internal mobilization efforts
fell apart while resource dependence theory helps
explain why the two universities approached the
merger differently and incompatibly for a merger.
However, mergers are often somewhat asym-
metric, so the issue becomes how asymmetry got
in the way. My sense is that neither resource de-
pendence theory nor coalition theory are well-
tuned to the deeper “cultural” differences in the
two universities that likely played a huge role.
The distinctive, highly valued cultures of each uni-
versity made it imperative for the merger to pro-
ceed in an equal form or long term contract even
though Chicago may have had the greater resource
advantage. Moreover, Chicago had a more pro-
nounced and integrated intellectual culture at that
time, and it may have made Hutchins and the Chi-
cago camp over-value their notion of a university
and make them approach the merger more as a
takeover than a pooled effort. In this manner, the
two sides never came to an agreement.
126
 Summar y Table of Resource Dependence Theory (RDT)

Organizational Learning (OL) Organizational Culture Resource Dependence Theory (RDT)

When does it Exists when there are clear feedback loops, adaptations, When the cognitive and normative aspects of social structure Exists when there is a focal actor interested in decreasing dependence,
apply? memory, and support of actor-expertise / adaptations of are of concern and seem to guide organizational decisions increasing autonomy, increasing power, and (possibly) increasing
rules to local reality. (sense-making) and outcomes. efficiency.
Preferences and goals are unclear except in relation to dependence.

Summary or Acknowledges routines, but focuses on practices within Actors seek expression and fulfillment of identity, and Focal organization with input/output concerns that cannot be resolved
Basic them that enable their continual adaptation and change organizational culture is the medium for such without considering the environment.
Argument to fit reality – i.e., practices reflecting organizational expression/sense-making. For the most part, organizations are considered unitary actors (some of
intelligence. the struggles/internal divisions are minimized) in order to highlight the
interactions with suppliers and clients.

Key Organizational Elements

Technology Internal adaptation, or where actors alter routines for the Matching, sense-making / meaning-making, or where actors External adaptations in order to increase autonomy and/or decrease
(how solutions better and fit reality (knowledge). seek to express beliefs, norms, and values via a variety of dependence (see management). Comply / adapt, avoid / manage.
get decided) practices and externalize them in artifacts depicting shared
understandings / notions of appropriateness.
Participants Members of organization doing work / SOP’s Actors within the organization, and those salient to meaning- Focal organization and other organizations with resource
making. interdependence,
Goals Application problems – pattern recognition not there (no Create intrinsic motivation (sense of fulfillment), and Goal is organizational survival through external adaptation (certainty
(what probs to fit). remove differentiation / cynicism in most cases. and autonomy).
resolve)
Social Informal, lateral relations, communication, negotiation, Deep structure composes the elements of culture – themes Formal roles, standard operating procedures, inter-organizational
Structure & collective improv. Actor identities (demand) (beliefs & norms), their expression via practices (rituals, bargaining / politics.
important. Network of practice (professional identity / etc), and their manifestation or expression in artifacts (note: coalition approach emphasizes individuals and interests. Here,
reach) & community of practice (cohesive group). (reports, mission statements, etc). the organization is the main actor and exchanges are with other
organizations.)

Environment Source of inter-organizational knowledge / tricks / Many elements of culture have origins from outside, and Key component of the perspective. Exchange partners and external
transfers. they are transported in, then translated to the local culture. relations more salient than internal dynamics;
Bridging more relevant than buffering.

Dominant Action = result of local actors collaborative search (trial Action = result of deep structure or culture that is generated Action = scan environment for resource opportunities and threats,
Pattern of & error / transfer) and adapting rule to situation. in the organization, but which is mediated by the member’s attempt to strike favorable bargains so as to minimize dependence and
Inference relation to it. maximize autonomy / certainty.

Management Find ways to create lateral ties among workers so
Strategies “knowledge” is passed / transferred more readily /
quickly (if possible, quickly), create means to
organizational memory of what works. Create applied,
social learning experiences with means to retaining and
transferring expertise. Want communication, collective
improvisation, practice and knowledge sharing to arise.
Find ways to confer ideology and lead others to identify with
it (using a variety of practices and artifacts), but don’t make
it so explicit / fanatical that cynicism emerges. Give room
for autonomy and self-expression so distancing is
unnecessary, and encourage members to generate a culture
of their own (~org learning culture NE to Tech culture which
is top-down engineered).
Buffering: protecting technical core from environmental threats
(coding, stockpiling, leveling, forecasting and adjusting scale).
Bridging: security of entire organization with relation to the
environment. Total absorption via merger (vertical, horizontal, and
diversification), partial absorption (cooptation [vertical or horizontal],
interlocks, joint ventures, strategic alliances, associations)

127
References
Barnes, Sarah V. 1999. “A Lost Opportunity in
American Education? The Proposal to Merge
the University of Chicago and Northwestern
University.” American Journal of Education,
Vol. 107, No. 4:289-320.
Davis, Gerald F. and Walter W. Powell. 1992.
Selection from “Organization-Environment Re-
lations” (pp. 315-326). In Handbook of Indus-
trial and Organizational Psychology, Vol 3 (2nd
ed.). Eds. Marvin D. Dunnette and Leaetta M
Hough. Palo Alto, CA: Consulting Psycholo-
gists.
4:453-473 (Resource dependence view of how
power is established within universities).
Scott, Richard. 2003 (5th ed). “Resource De-
pendence” (pp. 118-119) and “Managing Task
Environments” (pp. 197-212) of Organiza-
tions: Rational, Natural and Open Systems, 5th
Edition, Englewood Cliffs, NJ: Prentice-Hall.
Thompson, James D. 2003 (1967). Organiza-
tions in action: Social science bases of adminis-
trative theory. New Brunswick, NJL Transac-
tion Books.

Pfeffer, Jeffrey and Gerald Salancik, 1974. "Or-

ganizational decision making as a political proc-
ess: The case of a University budget," Adminis-
trative Science Quarterly, 19: 135-51.

Pfeffer, Jeffrey and Gerry Salancik. 2003

(1978). The External Control of Organizations:
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& Row.

Pope, Chris and Daniel McFarland “The Com-

mission on Undergraduate Education.” Stanford
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Salancik, Gerald R. and Jeffrey Pfeffer. 1974.

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128
8
Network Forms of
Organization
Figure 8.1
Global Trade Network
(Source - .http://commons.wikimedia.org/wiki/File:b/b9/TheProductSpace.png)
Social
 Network
 Perspec1ve
 on
 Organiza1ons of behavior are over-socialized, and relate social
In this chapter, we will describe how organi-
zation’s researchers look at social networks within
organizations. In addition, we will describe how
some theorists contend there is a network form of
organization that is distinct from hierarchical or-
ganizations and markets. So we will relate two
perspectives: a purely analytic one that describes
networks within organizations, and a theoretical
one concerning a prescribed form of inter-
organizational association that can result in better
outputs.
Let’s start with the social network perspec-
tive. The social network perspective embraces the
notion of social embeddedness as related by Mark
Granovetter (1985). He argues that, on the one
hand, economics and market accounts of behavior
are under-socialized: actors behave as if their ac-
tions are unfettered by social contexts. On the
other hand, sociologists and institutional accounts
actions as socially deterministic and devoid of
choice. He posits the notion of embeddedness as a
middle ground, where social action is embedded in
transactional networks. This embedding applies
even to economic transactions in markets. It is
within those structures that we decide and act in
intentional ways.
The image at the start of the chapter is a
global trade network and the related products or
proximate products. Notably, it is not random.
Some products are far more related to others, sug-
gesting the transactions are socially patterned and
embedded in a structure. This structure is often
the focus on the network analyst – they seek to un-
derstand context of association in which actors are
embedded, and from that, they learn how it con-
strains and enables actor decisions. The social net-
work analyst studies embeddedness by focusing
on the social structure within the firm, and/or the
web of relations across many firms in the environ-
130
 Figure 8.2 Network and Structure
(Source - http://commons.wikimedia.org/wiki/File:ProductSpaceMST.png, http://commons.wikimedia.org/wiki/File:ProductSpaceFDSL.png )
ment. These contexts of association differ in pat-
tern and represent different contexts for action.
Where an organizational actor is located can also
differ, affording the manager and firm different op-
portunities and constraints on their action.
The first network image in Figure 8.2 shows
a network that looks like a spanning tree and it has
a lot of reach. You will note that the actors do not
have many interconnections and that there are key
bottlenecks or cut-points in the network that could
undermine the transfer of resources. If we took
certain players out the network would fall apart.
In the second network, we see some dense hubs of
interconnected actors and there we could pull sev-
eral players out without concern for the network’s
persistence. We also see actors on the periphery
who seem to be well out of the way of core transac-
tions. Each of these positions represents a differ-
ent context for action and information. Where you
are located matters. Opportunities and constraints
change for an actor or firm depending on their loca-
tion. Social network approaches confront ques-
tions about network form and positioning.
Networks of association not only influence
social action, they are the result of decisions.
Hence, social structures and networked environ-
ments are dynamic and evolving. They change!
Social network scholars have only just begun to
develop tools to help us understand how to engi-
neer and develop different social structures within
and between firms. In figure 8.3 we see a set of
ties that grow more interconnected and eventually
form quasi independent groups of association.
In this chapter, we will present to you some
basic concepts used by social network scholars
studying organizations (for review, see Kilduff and
Tsai; Borgatti). In so doing, I hope you come to
see it as a distinct empirical approach that you can
possibly apply in the organizations you participate
within.
A network analyst typically asks and answers
a series of questions when they study a firm. First
– they ask about the unit of analysis and the bound-
ary of a network. They try to define what the net-
work is and where it begins and ends. Many net-
work analysts will focus on the individuals within
a firm and how they associate. However, it is not
always possible to study everyone in a firm. For
example, when studying schools, network analysts
may only study the teachers and students within a
classroom or school. As such, they recognize natu-
ral boundaries to the core work environment, but
they will forgo studying support staff, counselors
and parents. The same occurs when the analyst
studies a firm. They may focus only on managers
and employees who are in the building or a particu-
lar division, and they will ignore the clients, sup-
port staff, etc. In these cases of exclusion, the ana-
lyst is defining a nominal boundary to the organiza-
tion, and it is important they consider whether that
131

Figure 8.3 Growth of Ties
(Source - http://commons.wikimedia.org/wiki/File:Network_self-organization_stages.png)
boundary is sensible given the phenomena they
want to study. For example, a focus on teachers at
the exclusion of students may be an acceptable
boundary to define if the concern is with how man-
agers exchange information on instruction and
pedagogy. If you think managers learn most of
their pedagogy from students telling them what
other teachers do, then it could be a problem for
your study and the conclusions you draw.
Analysts also look at larger units of analysis
– like sets of firms and their relations. Here they
study a field of organizations and the transactions
they mutually recognize as most relevant to their
firm’s functioning. For example, in Powell’s 2005
paper in the American Journal of Sociology, he
looked at the field of biotechnology and included
in his sample universities, biotech companies,
banks, venture capital firms, and government grant-
ing agencies that were all co-partnering on patents,
sharing commerce relations, transferring experts,
and so on. As such, his work tries to capture the
boundary around an entire organizational field as
seen by those participants. That is often hard to
They change!
!  Stage 1
!  Stage 2
!  Stage 3
do, so many analysts will focus on one type of
firm and their core transactions and ignore others –
for example, there have been ample studies of ven-
ture capital firms and their networks of co-
partnering on inventions.
Next the analysts ask (often implicitly)
“what is the unit of time?” When does the network
begin and end? At issue here is the temporal
boundary to the social structure in question. Most
confront the issue of temporal boundaries by con-
sidering which relationships are most important to
the organization. Are they transactions on a discus-
sion forum; are they exchanges done each quarter
of the year; are they yearly contracts that have rela-
tive permanence? And then they have to ask dur-
ing which time period will they study the firm?
Will they look at exchanges occurring only in the
first week of a new technology being rolled out,
the span of a project (e.g., this whole course), or
over multiple years? (see Figure 8.4)
The unit of time issue matters since it has im-
plications for how transactions aggregate into dif-
ferent patterns. Take the simple case of a class-
132
Figure 8.4 Aggregations of classroom interactions by unit of time
(Source: Bender-de Moll and McFarland)
room. If we look at interactions by the minute,
we’ll see sequences of dyadic or pair-wise ex-
changes. If we look at interactions aggregated
over 5 minutes, we see the network structure
change from one activity (of say lecture) to an-
other (of say groupwork). And if we aggregate all
transactions across 35 minutes, we start to see the
general interactions of the classroom as a central
tendency of association. Hence, your unit of time
presumes different notions of social structure –
from the structure of momentary interactions, to
activities and practices, to social norms. As an ana-
lyst, you need to ask yourself if you are trying to
understand the structure of micro-routines, larger
tasks, or group norms, and from that you can de-
cide the unit of time to adopt. Once a social net-
work analyst has a sense of where and when impor-
tant relations occur and when and where the net-
work begins and ends, they can start to study the
quality of relations and analyze the network.
There are many kinds of transactions that oc-
cur within and between firms. A good analyst will
go to the heart of the matter. They will listen to
the client’s concerns and seek out the most rele-
vant types of transaction. These relations are typi-
cally observed behaviors or they are ones the sub-
jects perceive. Observed relations can be identi-
fied in company records, observations and even
reports. Perceived relations are typically reported
by the subjects and require surveys or interviews.
Clearly, the focus on perceived relations implies
that worker perceptions of their relations matter
for organizational behavior. The focus on ob-
served behavior assumes that one type of associa-
tion may presage another and influence outcomes.
The quality of a tie need not only be defined
by the content of interactions or the type of associa-
tion. It can also be defined by its form, or
strength. Strong ties are generally considered to
be influential ties. When your close friends pres-
sure you, it has greater influence on you than
when a total stranger pressures you. Strong ties
entail frequent interaction, positive liking or affect
(typically mutual!), and they have a history to
them. In network research, we characterize strong
ties as having bonding capital or a cohesive pull
133
 Figure 8.5 University Faculty Network
(Source - McFarland unpublished research)
on people that guides their action, and we fre-
quently refer to these relations as ones of friend-
ship, mutual support, and liking. In contrast, weak
ties are more infrequent, casual interactions be-
tween acquaintances. Whereas strong ties have
bonding capital and bring local persons into
greater contact, weak ties have bridging capital,
and typically bring distant persons into contact
across groups.
In certain regards, these two types of associa-
tion reflect the ties had in a COP and a NOP’s that
Organizational Learning theory relates. Social net-
work research has identified a consistent set of
mechanisms that form interpersonal relations in
firms and other settings. Most of these findings
concern strong ties but they afford analysts and
managers some sense for how tie creation could be
facilitated, so I want to relate them here.
People naturally form close ties when they
are in proximity to one another (contact opportu-
nity is key!) or when they are similar. In the latter,
case, we associate by homophily, or as the saying
goes – “birds of a feather flock together”. We also
associate by means of exchange and rational
choices concerning them. We engage in reciproc-
ity too. Many years ago anthropologists found
that gift giving induces a sense of obligated recip-
rocation across societies. Therefore, when you
meet new people, make a kind gesture and it is re-
ciprocated more often than not! Other theories
like status-attainment suggest persons seek out in-
terpersonal advantages and dominance (so weak
ties tend to be rank-ordered). And then we have a
theory of social balance, where persons seek con-
sistency in their relationships more generally: for
example, most of us feel at unease when our
friends befriend our enemy. We have to either
sever our tie, or they have to make my enemy their
enemy if we’re to stay friends (for review see Dah-
lander and McFarland 2013).
Last, an under-emphasized mechanism of tie
formation concerns practices and identities. In
134
most organizational contexts we cue routines, and
they oblige us to assume different interaction roles
(listener, hearer, inquisitor, speaker, coauthor, etc).
The same goes for cued identities – we frequently
cue notions of a storied tie and what that entails.
For example, when I make kind gestures of friend-
ship, we assume that entails reciprocation, fre-
quent contact, supportive interactions, and so on.
When I evoke the identity of professor, that cues
other expected role-relations and their interactions.
Hence, all of these micro-mechansisms have been
studied and related to tie formation, and they sug-
gest pathways to tie creation within organizations.
So we have multiple types of networks and a
variety of mechanisms have been found to gener-
ate them. What about our positioning within these
networks? Social Network scholars love to study
the positioning of actors in networks because it is
not just the overall form of the network that de-
fines action potentials, but it is also your location
within them that does. After all, it is a very differ-
ent situation to be a central actor in a centralized
network than a central actor in a fractured one.
When network analysts speak of positions
they often refer to the notion of centrality. Central-
ity can refer to positions of prominence or to posi-
tions of mediation and brokerage (there are other
notions of central positioning, but we will limit it
to these for this course [see Kilduff and Tsai for
review]). In the second network image of this
chapter (“Network and Structure”), you can see
the prominent persons with many ties and the pe-
ripheral ones with few ties. But then there are indi-
viduals who are on the path of others and if we
took them out the network would fall apart. These
are key mediators between different parts of the
organization. Identifying these central players can
be useful to a firm and especially when it comes to
information flows and bottlenecks.
Another type of network position is more
group-based and concerns the location of hubs of
interconnectivity. When looking at networks, ana-
lysts frequently try to identify these sets of actors
and clusters of ties since they reflect locations in
the network where conformity and social influence
likely occurs. They are also spaces of redundant
information. Clusters and groups of intercon-
nected actors are important to the study of firm so-
cial structures, because they often influence firm
outputs and behavior. I will show you more of this
in the next lecture.
Thus far, we have described organizations as
webs of transaction and actors as occupying differ-
ent positions or groups. This can be complicated
further if we consider that social realities are such
that organizational actors are actually embedded in
multiple networks. This is where it both gets more
interesting and more complex. Take the example
of trade associations. In most fields of business,
trade associations assume a position central to in-
formation exchange but they are peripheral to the
networks exchanging financial resources. As
such, they can persuade other organizations via the
use of information as a resource, but they cannot
enforce other firms to conform because they lack
hard financial resources.
Within firms, it is a similar situation. Let’s
look at faculty and their relations in a west coast
research university from 1993-2000 (see figure
and key above). This school has around 1500 fac-
ulty ranging in status. Some are clinical faculty
engaged in the hospital and patient care; some are
assistant professors; and others are tenured faculty.
Also, these faculty come from different divisions:
some come from the humanities, others social sci-
ences, law and education, natural sciences, earth
sciences, the physical sciences and engineering,
and medicine.
Figure 8.6 Coauthoring among Faculty
(Source - McFarland unpublished research)
Now let’s impose the network of collabora-
tions on these actors. In particular, let’s look at
where coauthoring of publications happen. They
135
happen mostly in medicine, the hard sciences and
engineering. Notably they collaborate more
within those fields than between them, but there is
a good deal of crossover. By contrast, social scien-
tists and humanists mostly publish alone.
Figure 8.7 Co-granting among Faculty
(Source - McFarland unpublished research)
Now let’s look at grant collaborations. No-
tice the network shifts and we get a second hub of
dense collaboration within engineering. But
again, there is clear clustering and some inter-field
collaboration across engineering and medicine.
Figure 8.8 Co-Advising Students among Faculty
(Source - McFarland unpublished research)
Now let’s look at student training and how
faculty work together to provide that. Here we see
faculty who are linked when they co-advise doc-
toral students. Notice how the network disappears
over medicine and forms over the social sciences
and humanities. And notice how the collaborating
medical faculty are tenured (pink triangles).
So what do we learn from this? We learn
that each field is embedded in multiple types of ac-
tivities and networks of collaboration, but they as-
sume different positions across them, and this
likely results in greater cumulative advantages to
each field. The medical faculty collaborate on pub-
lications and grants; the social science and humani-
ties faculty collaborate over student training – they
also publish and write occasional grants, but it’s
not a point of collaboration. Last, engineers and
scientists collaborate in everything they do.
Moreover, they frequently interact with medicine.
Hence, we see a differentiated collaboration
structure. The implication is that the social sci-
ences and humanities mostly transfer knowledge
via mutual efforts at training students, while medi-
cine does it mostly over research (and probably
postdocs!). And yet other fields are high-speed
thoroughfares for knowledge transfer via collabora-
tion in everything – so engineering is very much a
linchpin in this university bringing together high
powered domains of research and training.
136
Social Networks and Organizations
This part of the chapter introduces you fur-
ther to the social network perspective on organiza-
tions, but it elaborates how networks influence or-
ganizational behavior and outcomes, and it de-
scribes ways organizations can create different net-
work patterns and positioning. When we study the
effects of networks on organizational behavior, we
view social relations and actor positioning as an
independent variable shaping outcomes – we con-
sider whether people influence one another and dif-
fuse their motivations through their friendships, or
if being in key locations of the network have cer-
tain returns or advantages for the worker and the
firm. When we consider network formation, we
look at the network as an outcome or as a depend-
ent variable. Here we want to know the factors
that lead persons to form relations and factors that
lead a network to assume a particular shape (and
perhaps even a pattern you as a manager desire!).
So let’s look at these using examples. First,
let’s consider how relations influence behavior –
or what we call peer influence. The general argu-
ment is that the people we associate with influence
us, and they lead us to act in ways we wouldn’t
normally act if we were on our own. In organiza-
tions research, these studies often focus on proc-
esses of social diffusion and the adoption of organ-
izational innovations. Some research studies,
whether collaborating with productive colleagues,
increases your productivity (does a particular men-
toring program have solid returns?).
In most of these studies, researchers find
close ties are a great means to diffusing attitudes
and behaviors. At the inter-organizational level,
scholars find that the adoption of organizational
innovations often flows through associations like
interlocking boards of directors. For example, a
string of papers found that the use of poison pills
in corporate takeovers was an organizational inno-
vation spread via interlocking boards of director-
ates. The poison pill – for those of you wondering
– was a strategy firms would use to prevent take-
overs in the 1980’s and 1990’s – it was a way of
making the firm seem like an expensive, low-
profit gamble, so not worth taking over.
At the intra-organizational level Rawlings
and McFarland studied how faculty productivity
diffuses through collaboration networks (Rawlings
and McFarland 2011). They found that a univer-
sity improves its grant record by getting successful
grant-seekers to collaborate with novice grant-
seekers. Such collaborations improved application
rates, success rates, and the amounts awarded.
The diffusion of expertise was even greater when
these collaborations were repeated more than
once, thereby ensuring novices learned how to get
grants on their own and with others in the univer-
sity. By contrast, persons who did not collaborate
struggled to win awards.
In other work, the conduit of influence is not
a strong tie, but a weak one. Granovetter has writ-
ten some seminal work on social networks, and in
particular he has made a strong case for the impor-
tance and usefulness of weak ties (1974). In his
research on job seeking, he found that most people
learn about a job and acquire it through weak ties
and indirect ties (friends of friends) rather than
their close friends. He argues this occurs because
weak ties often bridge groups and bring more
unique information. Persons relying on strong ties
and cliques mostly found redundant information.
Hence, the person with weak ties was more able to
access knowledge about jobs.
Strong and weak ties are often characterized
as bonding and bridging forms of social capital –
or types of association that bring social advan-
tages. Strong ties and bonding capital generate so-
cial control and conformity as well as socialization
or diffusion, while weak ties and bridging capital
often extend a person’s reach into pools of useful
information. Strong and weak ties imply the crea-
tion of certain network configurations and network
positions. Hence, we want to turn to positional ef-
fects next.
A common finding within organizations is
that persons occupying certain positions have an
advantage, like access to recognition and informa-
tion, and this enables the occupant to be successful
in their career. The same is said of inter-
organizational networks. Organizations assuming
prominent and brokerage positions tend to survive,
137
grow and have greater control and influence on the
field of organizations they are embedded in.
David Krackhardt offers us a nice illustrative
example of the effects of network positioning on
firm behavior and outcomes (1992). He describes
the case of a technology firm that is subject to a
unionization effort. According to Krackhardt, the
unionization effort fails because union proponents
do not co-opt the informal leaders of the strong tie
networks. Via social network surveys, Krackhardt
shows that the union recruits persons peripheral to
both advice and friendship networks at the firm.
His analyses also demonstrate that the firm’s lead-
ers were in a precarious position, as they too were
somewhat peripheral to the firm. As such, the un-
ion missed an opportunity when they failed to re-
cruit Chris, everybody’s favorite guy. And in
many ways the leadership of the firm (Steve) lucks
out at the union’s poorly targeted recruitment ef-
forts.
We find Krackhardt’s case to be simple and
elegant. His methods are simple: he uses inter-
views, surveys, and observational records to retell
the story of how a unionization effort failed. He
first describes the organizational chart of who re-
ports to whom and identifies the collective bargain-
ing unit the union tries to establish. Then he goes
on to show how the key union proponents are nei-
ther central to the advice network of experts nor to
the friendship network of trusted relations. They
neither co-opted the experts nor the popular indi-
viduals in attempting to create a bargaining unit.
Had they known to check the network and co-opt
Chris and his close friends, then they might have
received the social support they needed to success-
fully unionize the firm.
Krackhardt’s case focuses on the effects of
positioning. What about cliques or social groups
and their effects on workers? Long ago in 1939,
Rothlisberger and Dickson studied a bank-wiring
room where workers essentially created circuits.
Rothlisberger and Dickson found that the friend-
ship groups of these workers altered the rates of
their work output and normed them so that they
stayed within a particular output level that worked
for the set of friends. Subsequent scholars have
remarked on how peer groups or clusters of strong
tied individuals can be a strong force in organiza-
tions influencing their outcomes.
We see this in our own work on American
high schools and their classrooms. In those set-
tings youth act with their friends in mind. In most
classrooms, youth form friendship groups or
cliques and conform their behavior to them. One
example is a high school English composition
class McFarland observed as a graduate student. It
was composed of 11th and 12th grade students,
equally well equipped to read and comprehend the
course material concerning William Shakespeare’s
written works. The teacher, Sophia, liked to en-
courage dialogue and frequently called on stu-
dents. Nonetheless, the students formed clusters
of association based on gender, race and age, and
these groups were rank-ordered within grades. As
such, there was a popular core group and a hanger-
on group, and this arose for each grade. Interest-
ingly, the core 11th grade group and the core 12th
grade group did not compete on the same stages.
Instead they specialized in distinct conversational
arenas and topics – the seniors dominated the pub-
lic stage of academic discussions and the juniors
dominated the backstage of social discussions.
In the following matrix you can see the
friendship relations during the semester in which
they were observed. Their groupings were identi-
fied using network analytics tools and they break
down into 4 clusters. The ties can be read as row-
column relations, or from-to relations. Hence, the
value of 1 from 16 to 15 and an “.” from 15 to 16
suggests that 15 thought she was friends with 16,
but 16 did not reciprocate that sentiment.
Notably, most of the groups are homophilous
by grade, gender, and race – so they follow the say-
ing, “birds of feather flock together.” Moreover,
many have reciprocated ties (more than chance).
While it is not shown, it is also the case that many
friends sit by one another. Therefore, propinquity
is also in effect. In the matrix you can see the
smaller secondary peer groups within each grade –
you can see they “hang on” or look up to the core
group in the off diagonal relations spanning the
cliques. These secondary cliques want to be
friends with the larger core clique, but it is not re-
138
 Figure 8.9 Matrix of Friendships in a High School English Class
(source - McFarland unpublished research)
ciprocated. Hence, there is a degree of rank or-
dered clustering in each class.
We can render these relations into a network
image where the y axis is the prominence or popu-
larity of individuals. The shaded circles reflect the
general boundaries of each clique. Notably we see
the two grades as somewhat disconnected and
each having a core clique with a hanger on clique.
In other analyses I tested whether observed interac-
tion patterns conform to these cliques over and
above seating and homophily, and they strongly
do. For ease of interpretation, I will superimpose
the observed behaviors and interactions on these
groups. From doing so we learn a few things.
First, we learn that most of the interaction is di-
rected within the cliques. Second, we notice the
cliques specialize their behavior.
Here I use red to denote where task or aca-
demically focused interactions emanate. I render
the red bolder where the rates and density of such
interaction are higher. Clearly the senior core
dominates such interaction (and the core clique in
either grade). Next I use blue to denote where so-
cial or non-academic interactions emanate (like
play, joking around, etc). I render the blue bolder
where the rates and density of such interaction are
higher. Here the junior core dominates such inter-
action (and the core clique in either grade). A
139
Hierarchy and Clique Structure for English Class (source - McFarland unpublished research
slough of statistics can accompany these images
and further the argument. However, the point for
this chapter is more conceptual and schematic –
the structure of the informal network and its
cliques strongly guide behaviors. Moreover, the
cliques arise from a variety of tie formation mecha-
nisms of homophily, reciprocity, status-seeking
and even an effort at specialization (so as to avoid
competition). So the sum of it is that it is not just
single relations that influence workers and their
firms, but also network positioning and groups!
But what of network formation? In the begin-
ning, we spoke of how analysts often view net-
works as an outcome or as having a desired struc-
ture that managers want to achieve. How do we
accomplish and engineer different structures of as-
sociation? In work on high school adolescent net-
works, we find they vary in macro-structure from
school to school and classroom to classroom.
Some of these settings entail hierarchical worlds
like the first image, and others are heavily segre-
gated and clustered like the second. Nevertheless,
friendship networks are all shaped by the same
sorts of tie formation mechanisms – homophily,
propinquity, reciprocity and hierarchicalization.
This raises a conundrum? If the same micro-
mechanisms apply to every friendship network,
then how is it their patterns vary?
The potential answers are interesting. It
turns out that certain types of ties usually corre-
140
spond with a type of network form or pattern. In
the case of our schools, the ties are friendships and
friendships tend to be reciprocated and local – so
they accent clustering. And this closure and reci-
procity of ties happens to be the strongest feature
driving high school friendship network formation.
By contrast, if the ties were weak, then it is likely
the structure would entail more spanning trees,
rank ordering and fewer groups. Acquaintance ties
have greater imbalance and looseness to them, and
enable different network patterns to arise.
In work on high schools, we find that the
friendship networks vary from school to school be-
cause the organizational context amplifies and
dampens the salience of certain micro-
mechanisms. What this means is that the composi-
tion of participants and the utilized organizational
rules moderate natural bases of association. Take
the case of a large heterogeneous population (of
say multiple equally present races), and one where
contact is by choice (meaning the students are not
sorted into ability groups by the school), we find
the pattern of association is highly segregated by
homophily. In large schools with no organiza-
tional sorting and lots of choice, there tend to arise
rank ordered cliques. The only time we see ran-
dom, dense ties of association are when organiza-
tions presort the populations and place members
into small interactive settings. We also see more
random association in highly interactive team set-
tings like classrooms where students rotate
through different task groups.
Once analysts have a good description of a
network, its key influences outcomes, and the key
mechanisms that drive it to assume certain pat-
terns, they can begin to prescribe all sorts of treat-
ments. We hope many of you infer what those
might be from what has been covered in this chap-
ter thus far. Nonetheless, we can tell you what
many firms will want. They will want to facilitate
the creation of efficient network patterns. For ex-
ample, many will want interactive, dense networks
of positive, work-related collaborations (as op-
posed to sociable ones!). And they will want them
to span groups so good ideas can travel around the
firm. Many companies will also want to forge
teams composed of differently skilled persons who
will rely on each other’s strengths (as an organic
whole greater than the sum of their parts) to make
a product or solve a complex problem.
In addition to facilitating the creation of
ideal network forms, companies will also want the
analyst to perform network correctives or to solve
coordination problems. In schools we have many
instances of this occurring when students assume
positions or form groups that drive behaviors in
negative directions. For example, in many class-
rooms certain kids dominate and take up all the
teacher’s time and attention, thereby making
achievement games less equal. To offset this, re-
searchers have suggested positional treatments. To
offset unequal access, the tasks are designed to in-
volve decentralized formats like group work so
more people can talk, and then they call for differ-
entiated roles so everyone has a job to do. This
type of treatment equalizes status and renders par-
ticipation more active and even. Another problem
in schools concerns group norms and peer influ-
ence through cliques. To offset this, scholars sug-
gest propinquity changes – such as rotating groups
and seating assignments.
These are clearly simple examples, but they
convey cleanly how it’s feasible to both facilitate
the emergence of certain network forms, and to re-
direct them in different directions.
Network Forms of Organization
To this point, we have discussed a social net-
work perspective on organizations. For the rest of
this chapter, we will relate network organization as
a distinct theory of organizing, or how organiza-
tions coordinate networks or partnerships so as to
improve the delivery of a service.
In the last chapter, we discussed resource de-
pendence theory and described how its theory con-
cerned a firm’s power-dependence relations in the
environment. This chapter, a variety of networks
are described in the readings, and if we inspect
them a little closer, we see they are built up by
some of the bridging efforts discussed last week in
resource dependence theory: joint ventures, asso-
ciations, interlocking boards of directors, strategic
alliances, and partnerships.
141
!  Resource Dependence
"  Focal Organization, Dyadic
Exchange
Figure 8.10 RDT and Network Interpretations
For example, in this chapter, several authors
describe project-based networks or issue-networks
where the effort is to organize around a specific
project or to work together to push a single issue.
If you recall, the last chapter on resource depend-
ence theory discussed how this arose in pairs of
firms through joint ventures.
In this chapter, we discuss professional net-
works and trade associations, as well as interlock-
ing boards of directors that bring firms into greater
communication with one another. In resource de-
pendence theory, these were seen as a means of co-
opting other firms and sharing resources like infor-
mation.
In this chapter, we discuss Smith and Wohl-
stetter description of organizations as forming a
group affiliation, or where sets of organizations
form a family and work together voluntarily
(2001). We also review some of Goldsmith and
Eggers work where they discuss external partner-
ing, such as when governmental agencies contract
out particular tasks to private companies and non-
profits in belief that coordinating providers will en-
!  Network Organization
"  Broader context of
relationships
able government agencies to serve citizens more
efficiently (2004). In resource dependence theory
there were pair-wise efforts like this called strate-
gic alliances or agreements, and they were per-
formed to secure and /or prevent advantages or to
pool resources and work together.
It is important to note that the sorts of part-
nerships described in network forms of organiza-
tion are not mergers where total absorption of one
firm into another occurs. Instead, they are partial
absorptions and strategic alliances. Nevertheless,
the point here is that many of the readings refer-
enced in this chapter describe networks formed by
bridging efforts that resource dependence theory
discussed. Nonetheless, the focus shifts from pair-
wise relations to the entire network. At issue for
network organization is how to coordinate and
manage organizations that handle different facets
of provision.
If we had to put a finger on one key differ-
ence between resource dependence theory and net-
work organization, we would say an important one
is their unit of focus. Resource dependence theory
142
considers the egocentric view of an organization
and its immediate relations. By contrast, network
organizations consider the global, socio-centric
view of both direct and indirect relationships. Net-
work forms of organization see the network as con-
straining and enabling action; and that the wider
network of organizations is a source of stability
and change for the focal organization. Work by
Davis and Powell (1992:334-341) describes the dif-
ference between resource dependence theory and
network organizations as follows: resource depend-
ence theory views a traffic jam of cars from your
own car, while network organization views the traf-
fic jam from a helicopter. From which perspective
do you get the best understanding of your car’s
movement?
If we schematize this (see prior page), we
can see resource dependence theory’s view of a
firm in the far image. The direct, egocentric net-
work is in focus. In contrast, network organization
looks at the broader array of indirect ties beyond
the focal firm. And depending on how broadly
one looks into that network, the situation can
change. Here, it is from one of being peripheral to
a group, to one of brokering groups.
One can also find similarities between net-
work organization and coalition theory. If you re-
call, coalitions were like an interest network or a
temporary alliance. By contrast, network forms of
organizing reflect a persistent structural property
or a particular coordination pattern that is main-
tained over time. In short, the network form of or-
ganization is neither a coalition nor a resource de-
pendence set.
Network Organization even has similarities
with organizational learning theory’s description
of communities of practice and networks of prac-
tice. For organizational learning the focus was on
practice and the individual relations between par-
ticipants employing these practices. Each cluster
resembles a “community” wherein discussions of
practice occurred. If we stopped there, each group
would learn their own optimal solution, or local
optima. The linkages across communities reflect
the “network of practice” that enables the transfer
of solutions across groups, and thereby facilitates
their learning a global optima. As such, organiza-
tional learning focuses on individual actors and
their relations within and between organizations.
By contrast, network organization focuses on
organizations as the unit of analysis and discusses
the patterns of interconnections across firms – or
the interorganizational network. Moreover, it con-
siders multiple types of relations across firms. So
network organization has some similarity to prior
theories, but it also differs. Let's look more
closely at how organizational theorists have re-
lated the details of this theory.
An article by Borgatti and Foster (2003) re-
lates a brief history of network organization. They
argue that at the turn of the 20th century, network
organization was a fashionable description for re-
petitive exchanges among semi-autonomous or-
ganizations relying on trust and embedded social
relations to protect their transactions and to lower
costs. At the time, proponents of network organiza-
tion argued that markets and hierarchical struc-
tures had become inefficient as commerce grew
more global, hyper-competitive, turbulent and tech-
nologically dynamic. In their stead rose a network
form of organization that balanced the flexibility
of markets with the predictability and stability of
hierarchy – and this brought intelligence, flexibil-
ity, and speed of response to organizations adopt-
ing the model. Network organizations had more
enduring and diffuse connections than did mar-
kets, and they had more reciprocal and egalitarian
arrangements than hierarchies (Scott 2003:282).
As such, they were a sort of middle ground, dis-
tinct from market and hierarchical forms of organ-
izing. The network form of organization entailed
interdependent firms that competed successfully
with larger corporations. Network organization
had become possible because many organizations
had become increasingly specialized and informa-
tion technologies (phone, fax, email, teleconferenc-
ing, computing, etc.) made it feasible for them to
coordinate delivery of services.
Woody Powell was one of the first to de-
scribe network organization as an intermediary
form between hierarchies and markets, and he
elaborated its distinct logic of exchange (1990).
Powell argues that network organizations are “nei-
ther market, nor hierarchy”. They entail more en-
143
 Key Factors Hierarchy Network Market

Normative basis Employment Complementary Contract – property

relationship strengths rights
Means of Routines Relational Prices
communication
Mode of conflict Administrative fiat - Norms of reciprocity Haggling – resort to
resolution supervision courts
Degree of flexibility Low Medium High

Amount of Medium to high Medium to high Low

commitment

Tone of climate Formal, Bureaucratic Open-ended, mutual Precision and/or

benefits suspicion
Actor preferences Dependent Interdependent Independent

Networked Organizations: Neither Hierarchy nor Markets (Adapted from Powell 1990: 300)

during and diffuse connections than markets but
more reciprocal and egalitarian arrangements than
hierarchies.
Let’s look at an adapted table from Powell’s
1990 article where these forms of organizing are
compared. I have reordered and slightly edited the
table for ease of presentation here. Powell goes
through a variety of organizational features and
processes and contrasts them for each type. For
example, we all recall what a hierarchical form of
organization is: it is a centralized organizational
chart with levels of reporting that winnow down
like a pyramid to the top. In these systems, the nor-
mative basis of association is an employment rela-
tion (reporting); the means of communicating en-
tail established routines; conflict is resolved by
administrative-oversight; there is little flexibility
in procedures; worker commitment to the firm is
medium to high; the tone of the climate is formal
and bureaucratic and actor preferences are depend-
ent on the firm and its centralized actors.
At the opposite spectrum is a market form of
organization where associations are guided by for-
mal contracts and transactions; where the means of
communication are prices; where conflict is re-
solved by bargaining and haggling; where flexibil-
ity is high, commitment is low (everyone is out for
themselves without constraint!), and where the
tone is based on precision and suspicion of compe-
tition and actor preferences are independent of
each other – just as one would expect in a free mar-
ket. Many scholars in economics view organiza-
tional fields in this way, and they have models fol-
lowing these logics.
Between these two poles is the network form
of organization. It has characteristics that distin-
guish it from market and hierarchical forms of or-
ganization. Through network organization, firms
seek out complementary strengths in forming col-
laborations, they communicate through their net-
work of relationships, and they resolve conflicts
via norms of reciprocity. In network organizations
flexibility is moderate, as the actors are con-

144
 Customized Response Modular Response Routine Response

Internal

Internal

Internal
External External External

Best at…
Solving ambiguous
problems that need
innovative solutions
(recall COP and NOP).
Solving complex Solving familiar
problems where problems with known
components are know responses (recall OP).
but the sequence of the
solution is not.

Figure 8.11 Network Forms of Organizing in Cross (adaptation from Cross et al 2005)

strained by their pre-existent ties, but they are not
more fully determined as in a hierarchical organiza-
tion. Participants of network organization experi-
ence moderate to high levels of commitment, they
find the climate to be one where mutual benefits
are sought, and where most firm preferences are
interdependent, if not complementary.
Different forms of network organization are
feasible, and each form can address different kinds
of problems. Cross, Liedtka, and Weiss (2005)
have a nice article describing different network
forms of organization and the sorts of problems
they are best suited for. They discuss networks
within and between firms, but I think you can
imagine sets of firms, even small firms, forming
similar patterns of collaboration so as to compete
with larger firms adopting this sort of internal pat-
terning.
The first is a core-periphery structure where
there are dense internal ties and extensions into the
environment for novel information. These net-
works are like those proposed in the theory of or-
ganizational learning. There, a central hub can
process and transfer information and the external
ties reach out into the environment. This type of
network is arguably well-suited to addressing am-
biguous problems in need of innovative solutions
and finding ways to implement them in local condi-
tions. One can imagine a network of organizations
arranged in a similar way to address ambiguous
problems.
The second form of network has linked
cliques that afford a modular response to prob-
lems. Here, a complex problem can be broken
into components addressed by each unit or cluster,
where knowledge is shared. In this format, prob-
lems can be dealt with in a sequence of clusters.
Again, a set of organizations can arrange their rela-
tions in this manner to do the same.
The final network is a simple chain format,
and there the network organization can deal with
familiar problems with known responses – it is a

145
Figure 8.12 Golden Gate National Recreation Area (GGNRA) " " "
(Source: http://commons.wikimedia.org/wiki/File:Map_of_Golden_Gate_National_Recreation_Area.png; http://commons.wikimedia.org/wiki/
File:Golden_Gate_Bridge_from_Marin_Headlands_1.jpg)

146
 Figure 8.13 Manhattan Project " "
(Source - http://commons.wikimedia.org/wiki/File:Y12_Calutron_Operators.jpg; http://
commons.wikimedia.org/wiki/File:Manhattan_Project_emblem.png)
format you might see in a streamlined organiza-
tional process model where efficiency is an issue.
Now clearly, the first two forms are more in
line with what scholars mean by network organiza-
tion. However, it is helpful to consider the fact
that even between the first two there is some vari-
ance in form that might influence coordination and
delivery.
Case: US Governmental Agencies Utilizing Net-
work Forms of Organization
In addition to Powell’s theoretical exposition
on network organization (1990), we have Gold-
smith and Eggers applied look at network organiz-
ing (2004). Goldsmith and Eggers discuss US gov-
ernment agencies again, but I think you will find
this sort of network organization relevant to many
other parts of the world. And perhaps they are an
especially salient form of organization for markets
at the margin, such as alliance networks on envi-
ronmental sustainability. Note that when I say
“markets at the margin” I mean that most firms see
environmental issues as secondary to their main
interest in profit and survival. As such, this is mi-
nor interest where other firms like a government
agency or lab is trying to foster a network that fa-
cilitates change on this issue in firms.
In the United States, all too often the agen-
cies adopting network forms of organization are
ones that have fewer resources and work to be-
come more efficient. Or they are agencies that
find themselves unable to perform the task re-
quired or they want to distance themselves from
the work they need performed. As such, the
agency coordinates the web of service providers or
they hire a coordinator.
Many US government agencies have adopted
the network form of organization. Government
agencies contract out more and more tasks to pri-
vate companies (for and not-for-profit forms) in
the belief that competition among providers will
increase efficiency. Today, public agencies find
themselves working in a world of partnerships and
networks (Goldsmith and Eggers 2004). They
form alliances that include mixtures of agencies,
large and small organizations, and so on. This sort
of network form of organization is seen as a viable
147
alternative to large-scale corporations and hierar-
chical public bureaucracies. Goldsmith and Eg-
gers describe how government agencies hire con-
tractors and they hire subcontractors in an effort to
provide a service. In those instances, the agency
integrates and coordinates the web. But in other
instances, the government agency either wants
more distance with the service, or they find a third
party provider can coordinate better. Here, there
forms a slightly different structure.
So government organizations find them-
selves working in a context of partnerships and alli-
ances. In short, they are engaged in networks of
smaller and larger organizations that span public
and private sectors, and this is widely seen as an
alternative form of organizing in comparison to
large-scale corporations and public bureaucracies.
Many of you can probably relate a variety of
examples of network forms of organizing in your
respective industries and parts of the world. I will
give you a few examples. Goldsmith and Eggers
describe the Golden Gate National Recreation
Area (see Figure 8.12), and how it heavily relies
on partners to take care of the parks and their serv-
ices. Only 18% of park services rely on forest
service employees – the rest relies on partners.
We can also consider the Iraq War as an ex-
ample where firms like Bechtel and Halliburton
were contractors that coordinated a variety of serv-
ices and worked on the “reconstruction” effort.
Now I do not know the details of this operation
and how it went, but in terms of network organiza-
tion, it is an interesting case. One could arguably
believe that there was little local Iraqi trust for the
United States agencies. Is that why contracting
firms were used? And even then, was their much
trust to make the network form of organizing help-
ful? And again, I have to plead ignorance here,
but I think it interesting to ponder how the net-
work form of organizing was applied and how it
performed in such a context.
A final example for the network form of or-
ganizing is the Manhattan Project (Figure 8.13).
Here, over a dozen universities and a network of
scientists, engineers, military agencies and service
providers were brought together to create the
atomic bomb. To many, the project was such a suc-
cess that they now see it as a network form they
want to repeat in other areas of knowledge crea-
tion. So for example, we are often asked to study
interdisciplinary and transdisciplinary projects and
centers that bring together a heterogeneous set of
individuals and ask them to learn from one another
and create new ideas they never would form if
they stayed in their respective disciplinary silos.
The model of organizing is very much a network
form. And many see it as a potentially powerful
one for organizations engaged in today’s knowl-
edge economy.
Why do network forms of organization like
this come about? In chapter 1 of their text, Gold-
smith and Eggers relate a few reasons why govern-
ments use network organization, but we can ex-
tend it to firms more generally (2004). The first
reason is that a firm lacks the capacity to provide a
service and that it must rely on other firms. For
the government, this means the use of for profit
and non-profit firms as contracts and subcontracts.
The second reason is to provide more integrated
services. Outsourcing alone is not enough. It
merely creates 4 subcontractors and narrow chan-
nels to a service that would have existed via 4 gov-
ernment agencies anyway. Network organization
calls upon agencies and subcontractors to join-up
or partner horizontally and vertically so as to pro-
vide more integrated services: a one stop shopping
experience instead of a disparate 4-stop one. A
third reason is the digital revolution and techno-
logical capacity. Technology has made external
partnering far more viable. Companies can share
scheduling information on production, demand,
shipments, transactions, etc. All sorts of informa-
tion can be shared by digital means and often in-
stantaneously, making a variety of partnerships
across small, specialized firms feasible. A final
reason for the emergence and expanded relevance
of network organization is demand. Citizens today
want more options and choices, and they have be-
come less tolerant of mediocre service. In a net-
work organization, there are multiple contracts and
subcontractors, many of whom compete to meet
demand and win consumer choices.
Goldsmith and Eggers contend that the net-
work form of organization has certain advantages
148
for government agencies (2004): The first is that it
enables experimentation by allowing agencies to
explore wider sets of alternatives of service provi-
sion. The second is that the government can focus
more on management and delivery by outsourcing
tasks to the best providers and experts. Network
organization also increases managerial flexibility.
The government agency often finds it can provide
services more quickly and change the nature of
service by drawing on multiple resource providers.
Last, network organization is a decentralized, fluid
form and the autonomy of allied organizations en-
ables citizens to play a greater role in decision-
making. Network organizations listen and react
more quickly to citizens and consumers than do
large hierarchical firms.
A core feature of network organization is the
creation and maintenance of partnerships. You can
find this in chapter 5 of Goldsmith and Eggers, but
we think it helps to consider factors of partnership
formation and splitting because it is a central
means of successfully forging and undermining
network organization.
For networked organizations, partnerships
are healthy and sustained when the organizations
address discrete functions: either the discrete func-
tions an agency needs to address, or the discrete
functions a firm needs to address in order to keep
itself alive. Also, the firms need to cooperate on
matters outside their core business. So one firm
will coordinate and align with another in a divi-
sion of labor each needs from the other, but not the
same labor they both produce. That is, they do not
want to compete and they need to regard one an-
other as differentiated collaborators, or as role-
complements in the provision of services. Firms
can sustain healthy collaborations when they are
open and trusting with information and they lack a
history of competition – if there is any sense of
competition or lack of trust, the collaboration will
disintegrate. Last, it is important that the firms in-
volved do not regard the information in the current
collaboration as proprietary or to see it as putting
them in a disadvantage with one another later.
Managing Network Forms of Organization
Managing a network of organizations is not
easy. There are a variety of things you can do to
make network organization work better for you
and your clients. First, you need to weigh partners
carefully! You want trusted collaborators that can
assume role-complements with one another. As
such, each pair becomes the “ying” for the other’s
“yang”, and vice versa. You do not want a net-
work composed of directly competing firms or it
will be undermined. As a network manager, you
must think about the larger network structure and
how it can be integrated. How can the larger net-
work of alliances work so as to afford a suite of
services that encourage firms to join up or across,
and that clients will want to utilize. Next, go
deep! Try and align the goals and cultures of these
firms so they value collaboration, trust and open-
ness. If you can forge these beliefs and values,
then it’s likely their surface relations will manifest
as healthy, complementary partnerships. Develop-
ing the capacity for group processing is also impor-
tant. Here, the network manager needs to listen to
other firms and include them, but somehow still
move the network forward on the interests every-
one shares. In addition, the network manager
needs to focus partners on their discrete functions
(so there is no internal competition) and then coor-
dinate their activities. The manager needs to en-
sure there is no direct competition between compa-
nies in the network of provision.
Network organization also responds well to
shared information on performance. Since the
functions are differentiated and action distributed,
it helps to let other parts of the network know
what the others are doing and how their coordina-
tion relates to performance. As such, open access
and discussion of performance data is frequently
beneficial to the manager and firms in the net-
work.
All the features related thus far build trust,
but there are a few other things one can do to build
trust and manage relations. An obvious one is to
bring out into open any initial contention. Another
is to create a joint governance structure and shared
decision making that spans partners. As such, eve-
149
ryone has a stake and a responsibility in decisions
so the network holds and proceeds.
Again, network management is not easy. Of-
ten, one finds they are constantly managing rela-
tions and the network as a whole in ways akin to a
coalition. However, the network is more stable if
done right: where firms regard one another as com-
plements to one another and that in the whole they
form a system of service provision that is superior
to what they can do on their own. Such an arrange-
ment extends well beyond a single decision, and
toward the repetition of many.
Summary of Network Forms of Organization
So let’s summarize what we know about the
theory of network organization. The first question
to ask is when does it apply? Does it apply if I am
looking at a particular decision among individual
workers? Probably not so well. But it does seem
well suited to studying the wider context of organ-
izational relations and how they influence the or-
ganization’s behavior and survival.
As for the general summary or argument, I
suppose we can attempt a caricature: Organiza-
tions focus on network relations, positions, and the
larger context in developing strategy and deciding
their behavior. Multiple types of networks are fea-
sible (trust, exchange, etc.) and they can guide re-
sultant firm behaviors. If we consider how the or-
ganizational elements are typically related we also
get a sense for where the theory focuses and where
its concern rests. For example, the participants in
this case are organizational stakeholders engaged
in the network of organizations or which are poten-
tial partners.
The goals of an organization attempting to
create a network organization are to deliver a serv-
ice via collaborations and outsourcing aspects not
central to its technological core. The technology
by which the network organization forms is link-
ing, coordinating, allying firms in order to deliver
a service. It entails outsourcing, subcontracting
and partnering in order to focus on the core tech-
nology. The social structure then consists of com-
munication and coordination relations and the posi-
tions and roles therefrom. The network as a whole
and its pattern influences the organization’s output
and performance. Undergirding the network is a
norm of trust (not competition) that allows the in-
terdependent organizations to work together. Last,
the environment – network organizations extend
well into the environment. In fact, its focus is on
inter-organizational relations in the environment.
So the array of elements and their characteri-
zations are distinctive. If we consider the domi-
nant pattern of inference or means of organiza-
tional action, we learn further how it differs from
other theories presented in this course. Organiza-
tions trying to accomplish network organization
identify complementary strengths, form alliances,
establish collaborative norms, create opportunities
for open-ended mutual benefits, and outsource sec-
ondary tasks – all to survive and create a positive
network environment through which firms can
complement one another’s needs and delivers a
service.
And last, how can one manage a network
form of organization? You can manage it by de-
signing the network in a way that selects partners
wisely so their values and efforts complement and
align with one another. You establish frequent, in-
formal, active communication channels with the
involved organizations. You coordinate member
activities by preventing internal competition be-
tween collaborators, by creating access to shared
information in the network, by forming a shared
decision-making structure, and by getting partici-
pating firms to focus on their distinctive functions
and the coordination across them. Last, you estab-
lish a norm of collaboration and reciprocity in the
network. In this manner, you create a distributed
organization in the environment. Instead of hous-
ing divisions and functions within a single firm, it
is rendered into a network form in the environ-
ment. And this accomplishment requires a distinc-
tive set of managerial approaches and efforts to
make it work.
150
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9
Neoinstitutional Theory

(Source: http://commons.wikimedia.org/wiki/File:Young_Afghan_girls_inside_the_classroom_of_Aliabad_School-2012.jpg;
http://commons.wikimedia.org/wiki/File:Newells_classroom.jpg/; http://commons.wikimedia.org/wiki/File:Classroom_in_India.jpg;
http://commons.wikimedia.org/wiki/File:BMS_classrooms.jpg; http://commons.wikimedia.org/wiki/File:Ashs-learning-common-miro.jpg))
Neoinstitutional Theory
In this chapter, we will continue our discus-
sion of organizations as open-systems whose sur-
vival depends on their relation with the environ-
ment. In particular, we will discuss one of the pre-
vailing organizational theories stemming from soci-
ology, called “neoinstitutional theory.” In oversim-
plified terms, one can think of neoinstitutional the-
ory as arguing that an organization’s survival de-
pends on its fit with the cultural environment.
That is, a firm’s success depends on whether it
adopts structures that are deemed rational and le-
gitimate in the external environment; that the firm
mirrors environmental beliefs about what a legiti-
mate organization of that type should look like.
Neoinstitutional theory has always been one of the
harder theories for students to fully grasp, so we
have organized the chapter to be a little repetitive.
We will discuss many of the core concepts twice
and relate them in different ways so you get a bet-
ter sense for what this theory conveys.
Introduction to Neoinstitutional Theory
Neoinstitutional theory tries to explain insti-
tutional isomorphism, or how the same organiza-
tional forms develop, spread, and become legiti-
mated in one sphere of activity after another. The
theory tries to explain how and why spheres of ac-
tivity, like organizational fields of biotechnology
or education, are composed of organizations that
look more alike than they differ. Let’s take the ex-
ample of the organizational field of education:
why do most schools and classrooms look the
same? We recall talking with one of the founders
of neoinstitutional theory, John Meyer, and he re-
counted his travels all over the world visiting
schools and classrooms. He described how he had
visited typical American schools; poor sub-
Saharan villages with classes taught outside in
ground indentations without chairs and tables;
how he had seen religious fundamentalist schools
in Saudi Arabia where boys and girls were taught
separately; and even wealthy Western schools with
computer tablets in every hand. In spite of the dif-
ferent locations and cultural distances traversed,
all had enough similarities that one knew right
away what kind of organization it was, and what
scripts were being referenced -- they were all
school classrooms!
In many regards, all these settings conform
to widely held institutional beliefs about what
schooling entails. These beliefs and conceptions
are cultural-cognitive controls, or deep social
structures in the environment. As Richard Scott
relates, they are “sets of beliefs developed in so-
cial interaction, provide models, schema, and
guidelines for governing and guiding behavior in
social situations” (Scott 2003:119).
Institutional controls are practiced in several
forms (Scott 1995:34-45). An explicit form of in-
stitutional control is practiced through regulations
or regulatory institutions. These constrain behav-
ior through rules or laws and behavioral induce-
ments like incentives and punishments. A second,
deeply ingrained institutional control is normative.
Normative controls guide what we should or
should not do, or how we should and should not
appear. In great part, these are informal rules and
guidelines, but they are just as influential on organ-
izational behavior as laws and regulations. Last,
there are institutions that run very deep and these
are cognitive beliefs. Scott argues that compliance
with cognitive institutions occurs in many circum-
stances because other types of behavior are incon-
ceivable. Cognitive beliefs are naturalized, taken
for granted ways of doing things, such as routines
and activities (Scott 1995:40-45).
In many instances, these institutions are lay-
ered on top of each other in reinforcing ways like
an onion. But in some instances they conflict and
segments in the environment adhere to one set
over another. As such, the cultural environment
can be varied. Organizations typically respond by
building that external complexity into their inter-
nal, formal structure, however.
We always find it easiest to distinguish the
three forms of institutions with the example of a
sport. We are going to take the game of soccer
and describe how these three institutional controls
can be layered so as to make the performance of
153

Different contexts of
soccer activity "
(Sources: http://commons.wikimedia.org/wiki/
File:StateLibQld_1_194039_Shot_for_goal_duri
ng_a_soccer_match_in_Brisbane
%2C_ca._1937.jpg/; http://
commons.wikimedia.org/wiki/
File:Uz_vs_Jap_2009-Free_kick_%28before
%29.JPG; http://commons.wikimedia.org/wiki/
File:Israel_v_Brazil_1.jpg/; http://
commons.wikimedia.org/wiki/
File:Defense.gov_photo_essay_100503-
F-3745E-376.jpg)
soccer games relatively the same and recognizable.
What are the regulatory controls of soccer? Those are the rulebooks
and rules of soccer, as well as the referees acting as agents to enforce
them. Penalties are incurred for violating the rules in this case.
What about normative controls? The norms of soccer characterize
our notions of better and worse players, better and worse sportsmanship,
and so on. Norms lead players to act in certain styles within the tacit ac-
tivities and routines they enact.
What is a cognitive or deeper form of institutional control? Cogni-
tive institutions are taken-for-granted routines. For soccer, these entail
the activity of soccer itself. It is inconceivable that someone would ap-
proach the game of soccer using a different activity schema and roles of
say basketball. The enactment of a soccer game is taken for granted and
persons engage in it unquestionably. If they do not, everyone gets upset:
norms and regulations are violated. And we find this cognitive layer
when we go to different contexts of soccer play. Regardless of whether it
is a game in 1937, a playground game, or even one on a beach, all of
them share a family of resemblance in their routine such that we regard
them as soccer.
So multiple institutions can control behavior and render them into
scripted forms that are deemed legitimate and ideal. For any organization
their actions might be driven by taken for granted routines and activities,
norms and expectations of best practices and players, and explicit surface
regulations catching violations. John Meyer, Brian Rowan, Paul DiMag-
154
gio and Walter Powell were some of the first neoin-
stitutional theorists, and we rely heavily on their
ideas in our summary of the neoinstitutional ap-
proach (Meyer and Rowan 1977, 1978; Dimaggio
and Powell 1983). They wrote about how organi-
zations look alike because there are processes lead-
ing firms to adopt many of the same institutional
controls. In particular, they stressed the important
role of particular rationalizing agents who gener-
ate these institutional controls or ritual classifica-
tions. These agents were governmental units, pro-
fessional groups and associations, universities, and
even public opinion. The classifications they pro-
pose are Scott’s aforementioned cultural-cognitive
categories, normative beliefs, and regulatory poli-
cies and laws. The basic idea is that scientists and
professionals increasingly work at the world-
system level holding international conferences, is-
suing statements, providing recipes and policies
for reforming and rationalizing one sphere of activ-
ity after another (from health standards, to human
rights, to education).
Going back to the conversation with Meyer,
we remember him saying that in spite of the im-
mense cultural differences of nations – from being
socially liberal Western societies, to orthodox Mus-
lim ones, to remote cultures in poor regions of de-
veloping countries -- they all seemed intent on
adopting topics taught in Western schools and the
progressive forms of pedagogy espoused by their
educational professionals. All the schools had
similar subjects; they used many of the same in-
structional formats; and they all seemed intent on
improving themselves by emulating pedagogy
deemed legitimate by various professional associa-
tions, non-profits, and other rationalizing agents.
Meyer argued this was happening because rational-
izing agents proposed the classifications and typifi-
cations, and that they were regarded as rational
and legitimate even if their returns to efficiency
were not fully established in each case (or even at
all).
In sum, from the neoinstitutional vantage
point, organizational survival and success are con-
tingent on integrating institutional beliefs (or ritual
classifications) from the environment that are be-
lieved to be signals of legitimacy. In most cases,
institutions are legitimated when they are widely
held and believed to be rational.
Comparing Resource Dependence Theory, Net-
work Theory, and Neoinstitutional Theory
Now that you have an initial sense for neoin-
stitutional theory, let us contrast it with theories
discussed previously. In particular, we think it
helps to compare neoinstitutional theory to prior
open system views and to prior cultural arguments
since they are the most relevant. As you recall, re-
source dependence theory offers strategies thought
to be effective in exchange environments. In con-
trast, neo-institutionalism offers strategies thought
to be effective in environments replete with institu-
tionalized beliefs about organizations and their ap-
pearances. There is a shift here in how firms view
and respond to their environment: from a logic of
consequence (resource dependence theory) to a
logic of appropriateness (neoinstitutional theory).
Neoinstitutional theory argues that organizations
survive and succeed in their surrounding environ-
ment by not only accomplishing economic fitness
and efficiency, but from accomplishing a social
and cultural fit with the environment.
You saw us remark in a past chapter about
Disney and its various theme parks. Disney’s ef-
forts actually reflect neoinstitutional arguments
about cultural fit to some extent. Disneyland in
the USA has a particular feel, a particular food
menu, and other features that are not easily
plopped down in another cultural context. In the
case of Euro-Disney, the company needed to take
into account the beliefs of the local environment,
and adjust its for-profit model and American
theme-park script to local views. The end result is
a different version and feel of the Disney theme
park: so less junk-food, less shopping mall and
main street appearances, and more old-world
charm.
Let’s compare and contrast facets of resource
dependence theory with neoisntitutional theory so
you have a better sense of their differences. A lot
of the concepts we are going to introduce may
155
 Resource Dependence Neoinstitutional
Unit of Organizations with resource Organizational fields
Analysis dependencies

Change Coordination of resources Greater homogeneity of field

(greater interdependence and as rational myths spread
stability over time…)

seem foreign at first, but do not worry, we will come back to them again
in the chapter so you get a richer understanding.
Resource If we consider each theory, we can view them on a variety of dimen-
dependence theory sions (see table above). The first is their unit of analysis. Resource de-
pendence theory is primarily focused on resource dependence relations
and neoinstitutional that an organization has with other firms. Neoinstitutional theory is con-
theory compared. cerned with entire organizational fields, or domains of activity where the
firms are aware of one another as relevant to that domain. Both theories
focus on the environment, but they target slightly different things in it: re-
source relations for one and cultural matching for the other. They see
change differently as well. Resource dependence theory argues there is a
movement toward greater coordination of resources, or greater interde-
pendence and stability over time, while neoinstitutional theory sees a pro-
gression toward greater homogenization as legitimate classification
schemes spread. These changes are promulgated by different processes.
In resource dependence theory, the managers try to minimize their own
firm’s dependence on others while they increase the dependence others
have on them. By contrast, neoinstitutional theory generates change via
institutional isomorphism – where each organization’s effort to survive
and secure resources leads them to fall in line with external cultural pres-
sures and rationalized myths on what a legitimate firm should look like or
what an ideal product should be.
Each theory also offers a distinctive view of an organization’s struc-
ture: one that is characterized by dependence relations, and one whose for-

156
mal structures and classifications are radically de-
coupled from the technical core (this is the concept
of loose coupling, and we will discuss it at length
later). Last the theories espouse distinctive organ-
izational needs. Resource dependence theory says
firms need resources and autonomy for survival;
neoinstitutional theory says firms need environ-
mental legitimacy so as to secure resources and sur-
vive.
Theories from other chapters can also be con-
trasted with neoinstitutional theory. Research on
networks falls somewhere in between resource de-
pendence theory and neoinstitutional theory, with
some scholars working to align network research
with neoinstitutionalism. The diffusion of particu-
lar formal structures, appearances, reforms and/or
practices through networks is a way these two lit-
eratures interrelate. However, cultural scripts,
norms, and ideas are not easy to locate in net-
works. In some ways neoinstitutional theory
aligns with the notion of standard operating proce-
dures and organizational culture, but neoinstitu-
tional theory places much more emphasis on
taken-for-granted norms or “ways of doing busi-
ness” instead of formalized rules and codebooks
for behavior. Moreover, neoinstitutional theory ab-
stracts away from focal organizations to the field
level, taking organizational culture to a “macro”
level.
Features of neoinstitutionalism
Now that we have a general sense for neoin-
stitutional theory and how it compares to previous
theories in the course, we can begin to delve more
deeply into its core concepts. At this point in the
chapter, we will draw on a couple additional pri-
mary sources. In particular, we want to discuss the
basic ideas presented in the 1977 piece by Meyer
and Rowan, "Institutionalized Organizations: For-
mal Structure as Myth and Ceremony", and the
1983 paper by Dimaggio and Powell, “The Iron
Cage Revisited.” As we go along, we are going to
draw out examples on schools as an application
since both Meyer and Rowan’s 1978 paper and
Mary Metz 1989 paper do a terrific job of provid-
ing us concrete examples of how neoinstitutional
theory applies in those settings.
The seminal article for neoinstitutional the-
ory is Meyer and Rowan’s 1977 paper. In that pa-
per, the general argument is that, independent of
the drive for efficiency, organizations ceremoni-
ally incorporate institutions into their formal struc-
ture that are believed to be rational. By doing this,
organizations gain legitimacy and secure social re-
sources from the environment. The institutions
they incorporate are things like regulations and pro-
cedures, classifications, rules, and practices. Note
that I said that these institutions are incorporated
because they are “believed to be rational”. The
adopted practices and formal structures are called
“rational myths”, or legitimated institutions we
adopt on the assumption they are rational, but we
do not investigate whether they really improve effi-
ciency or not. They are taken for granted as such.
They are believed to be rational.
These institutions are built into society as
typifications and ritual classifications. For exam-
ple, we believe educational institutions are more
legitimate when they have buildings, classrooms
with chairs, lectures, student-teacher roles, mathe-
matics and other core subject matter, credentials,
and so on. These roles, classifications and rules
are ceremonially applied much like we enact a
script and adopt appearances in various ritual cere-
monies. The ceremonial adoption of such appear-
ances is done on the basis of belief. They are
myths because we believe they are legitimate
forms to use (we take them for granted as natural)
and we view them as rational myths because we
think they help the organization function better
without actually investigating their relation to effi-
cacy.
In order to survive in modern societal envi-
ronments, organizations must be regarded as legiti-
mate, and this legitimacy is accomplished by main-
taining ceremonial conformity. Organizations
look their part in an ongoing script or play for that
type of organization. Hence, their formal struc-
tures are organized to reflect the rational myths lo-
cated in the external environment. This confor-
mity leads organizational fields to have organiza-
tions that look more alike than they look different.
157
 The key point here is that organizations
adopt institutional rules as rationalized myths.
They are rationalized because they are impersonal
prescriptions identified in a rule-like way as the
appropriate means to pursue various goals. They
are myths because we adopt them on faith or in a
taken-for-granted way. We believe they are ra-
tional constructs, but we seldom look deeply at
whether they are efficient or if other constructs
would work better. We are limited problem solv-
ers who adopt rationalized myths. We use short-
hand logics encoded in the environment. The effi-
ciency and efficacy of standard operating proce-
dures and organizational structures is presumed on
the basis of their wide adoption and / or the en-
dorsement by professionals like Stanford academ-
ics. As such, the sources of legitimation vary from
public opinion, ideologies, regulatory structures,
certification and accreditation bodies, professional
norms, credentials and government requirements.
Where do rationalized myths come from?
What are their origins? They arise in a context of
dense, complex networks (e.g., in the context of
modernization); and they arise in an effort to make
“rational” decisions where there is much ambigu-
ity and uncertainty. Rational myths and the reli-
ance on rationalizing agents are a short-hand
means to deciding. They diffuse through net-
works, and they are passed because the practices
are believed to be rationally effective. Rational-
ized myths are used because leaders within each
organization want their firm to have legitimacy in
the wider environment: Whereas, resource depend-
ence theory saw this arising from the creation of
resource demand (so the manager built greater ex-
ternal dependence on their organization), neoinsti-
tutional theory seeks to create demand by mirror-
ing institutional rationalized myths in society. By
looking like the “real deal,” or like an exemplar,
they garner attention and resources from the envi-
ronment.
This notion of a rationalized myth can ex-
tend to organizational products. Take car advertis-
ing as an example. When creating the idea of
what a good car is, advertisers project appearances
of the firm and its products as if they exhibit exter-
nally legitimate, rational myths. For example, con-
sider a Jaguar. It is a nice looking car, but what
makes you think it’s legitimate? Is it the car’s per-
formance? Sure - perhaps. A neoinstitutional ad
would trumpet various awards regardless of what
they are for (safety or speed?). Such awards are
rationalizing agents, and claims to any award are
great. A good example of this can be seen with
movie reviews in newspapers. Many of us recall
looking up movie listings in the paper and seeing
reviews. In many cases, the critics giving a new
movie good reviews are unknown, so they give the
movie the appearance of legitimacy when it likely
is not.
Figure 9.1 Jaguar and a Car Award
(Source -
http://commons.wikimedia.org/wiki/File:Volt_MT_COTY_WAS_2011_835.JPG/;
http://commons.wikimedia.org/wiki/File:Jaguar_XKR_-_Flickr_-_The_Car_Spy_%2819
%29.jpg/)
Case: Real Schools
In many regards, the article on “Real
Schools” by Mary Metz gives you a clearer exam-
ple of rationalized myths using the case of educa-
tional organizations(1989). In her paper she de-
scribes how educational organizations symboli-
cally code their structures to resemble beliefs
about real school that are held in the institutional
environment. She thinks this is why American
high schools all look the same on the surface in
spite of being really different internally. They
look the same and plod along in spite of having dif-
ferences in content and output. Metz describes
symbolic coding as arising when organizations
adopt a common script. The script is like that of a
158
play, and educational organizations play the part of
a “real school”.
These organizations engage in rituals or cere-
monial performances by looking their part in the
play when interacting with the environment:
Hence – “real schools” have buildings, class-
rooms, desks and chairs, etc. They have age-
graded students, undifferentiated teacher roles, de-
partment chairs, principals, and various other staff.
They have differentiated course subjects, whose
scope and sequence are recognizable to colleges
and employers. They have familiar technologies
like lessons, many of the same tasks (lecture, reci-
tation, seatwork, etc); textbooks, computers and
blackboards. They have coded time into school
days, school weeks, quarters / semesters and
school years. They use many of the same symbols
of ranking and completion like grades, test scores,
and credentials, many of which are used as ritual
classifications by external organizations.
All of these features are typifications that we
recognize and expect a school to have. We take
these features for granted, and we place confi-
dence in them as being normal and rational with-
out much inspection of their efficacy! In short, edu-
cational organizations put on a play, or the appear-
ance of “real school”, in spite of some kids failing.
The script serves symbolic purposes more than
technical ones. The same can be said of universi-
ties and their development. Over the last 100
years or more, universities have grown increas-
ingly common, and their forms increasingly iso-
morphic. New universities quickly adopt courses,
subject matters, departments, credentialed employ-
ees, and other ceremonial features of leading uni-
versities as rationalized myths of what a good uni-
versity should be. University structures have
grown increasingly complex over time as they try
to appeal to different segments of the institutional
environment. Consider what new universities, like
Qatar University, look like. Do they adopt dra-
matic shifts in ceremonial features or do they mir-
ror exemplary universities?
How are rationalized myths sustained if they
aren’t efficient or optimal (Logic of confidence)?
The formal structure of many organizations is
adopted like a sacred ritual. Rituals are like mar-
riage rites, where people adopt a range of appear-
ances and go through a series of scripted actions
so they resemble husband and wife, or they trans-
form into such an embodiment. When we say an
organization reflects ritual classifications we mean
it displays appearances so as to embody a ratified
organizational identity considered legitimate in the
environment. To maintain the ritual and the plausi-
bility of legitimacy, the organization presumes a
chain of confidences and adopts an assortment of
face-saving efforts to preserve this myth.
Here are a few of the face-saving efforts
used to preserve these myths. The first is avoid-
ance. Avoidance is maximized when units are seg-
mented so interaction across units is minimized.
In this manner one unit cannot see into another
and question their contents. The second is discre-
tion. Discretion is maximized when inspection is
minimized and participants are cloaked in profes-
sional, credentialed authority. By placing trust in
teachers, we give them discretion and let their pro-
fession act as rationalizing agents. Last is the as-
sumption of integrity. Here, organizations often
engage in ritual performances and their appear-
ances have integrity, and this sentiment allows
them to overlook problems and label them as
anomalies.
In education, there exist a sequence of confi-
dences that are never fully inspected: The state has
confidence in the district; the district in school; the
school in the teacher; and the teacher deserves con-
fidence due to their degree and the program’s ac-
creditation. The accrediting agency doesn’t in-
spect the teaching and skill of the graduate, but
has confidence in the college administrators, fac-
ulty, and the courses offered. These people in turn
have confidence in the teachers training them to
label certain courses as “history” without carefully
inspecting them. So it is a system of confidences
(Meyer and Rowan 1978:207-8).
Loose coupling
The sequence of confidences is greatly sus-
tained by a structural adaptation called “loose cou-
pling”. Organizations may all come to look alike
159
in terms of their formal or ceremonial aspects, but
that does not mean their actual internal practice
and activity are the same. Many organizations de-
couple their formal structure from technical activi-
ties and outcomes. But why?
Decoupling occurs in schools for several rea-
sons: First, decoupling protects the formal struc-
ture from uncertainties of the technical core (buff-
ering). There is much uncertainty in how curric-
ula are delivered and received, and measuring their
effect is difficult. All too often inspection creates
doubts about the legitimacy of instruction, and we
lack clear working alternatives. Second, decou-
pling enables the organization to adapt to inconsis-
tent and conflicting institutionalized rules (flexibil-
ity). The plurality of environmental pressures can
put conflicted demands on an organization. By dif-
ferentiation and isolation, the firm can forgo coor-
dination and avoid incompatibilities and inconsis-
tencies. So for example, segmenting special educa-
tion apart, the use of tracking and streaming, and
the formation of departments, are all means of
making an educational organization appear ra-
tional, but also of segmenting content inspection
(e.g., think of what accreditation efforts entail -
mostly counting of surface features and the pres-
ence of labels). Third, decoupling enables partici-
pants to avoid inspection, and this avoidance is a
display of trust and confidence. As such, decou-
pling contributes to the logic of confidence and in-
creases the commitment of internal participants (re-
sponsibility is pushed onto teachers and teacher
professionalism). Last, a great deal of the value in
education has little to do with the efficiency of in-
structional activities. It is not so much about learn-
ing per expended dollar, as much as value residing
in the ceremonial enactments of schooling that are
regarded relatively equivocal: buildings, teachers,
books, topics, accreditation, classrooms, desks,
and so on are all valued. By decoupling formal
structures and categories from core practices and
activities, uncertainty about the effectiveness of rit-
ual categories is reduced (Ibid:206).
Why does loose coupling arise in the US edu-
cation system? And what other systems might it
occur in? Decentralization tends to co-occur with
decoupling. The US education system is decentral-
ized and relies on resources from local populations
(e.g., school boards, counties, mayors, etc.). In
contrast, other countries have a centralized struc-
ture with examinations and a clear inspection sys-
tem that ensures conformity in activity. In the US,
exams are privatized and not universal. A national
system would define almost all of the kids from
some communities as successful or as failures.
This is dangerous for a system that depends on le-
gitimating itself in and obtaining resources from
local populations (Ibid:205). Local control de-
professionalizes administrators but professional-
izes the teachers. Hence, American schools have
weak administrators who struggle to drive through
educational reforms.
In sum, neoinstitutional theory argues that
organizations succeed in the environment by en-
gaging in symbolic coding, or the adoption of ra-
tionalized myths about structures that rely on a
logic of confidence. Then they decouple their for-
mal structure from the actual internal activities and
performance. This affords them greater flexibility
and buffers the technical core and internal work-
ings of instruction from the likely conflicted con-
cerns of the external environment. Decoupling
and the logic of confidence enable managers and
employees to do their work without close inspec-
tion.
Then why adopt the formal rules and struc-
tures when observation or inspection are not all
that relevant? Is the adherence to rational myths
helpful in some way? Organizations need legiti-
macy in their environment to survive. Inde-
pendent of material needs, organizations need to
look like a real organization and at least appear to
behave like a real organization. The creation of
and adherence to prevailing rational myths pro-
vides organizations with many resources.
Again, let’s take the case of schools to flesh
this out: Credentials, classifications and categories
of schooling constitute a language that facilitates
exchange across organizations and with the envi-
ronment. Funds are frequently allocated in a cate-
gorical fashion – e.g., vocational education, spe-
cial education, elementary school, high school, etc.
Having them in place makes such transfer feasible.
The system of ritual classifications can be ex-
160
Figure 9.2 Organizational Field
4/4eAGC_key_technology_alliances.JPGAGC_key_technology_alliances.JPG)
ploited in order to gain prestige (e.g., you can hire
prestigious faculty, incorporate “innovative” pro-
grams and then see your ranking and resources in-
crease). Organizations rely on the ritual classifica-
tions to provide internal order. Actors derive iden-
tities from the socially derived categories of educa-
tion.
In many ways, this is a managerial proscrip-
tion. If you attempt the above, you will conform
to the institutional environment and reap rewards
from it. By incorporating externally defined teach-
ers, curricula, and students into their formal struc-
ture, schools stay legitimate and get the necessary
funds and participant involvement so they can op-
erate. In short, the rewards for adherence are the
increased ability to mobilize social resources for
organizational purposes.
Organiza(onal
 Fields
 and
 Isomorphism ers, resource and product consumers, regulatory
The second theory paper we want to discuss
is that of Dimaggio and Powell’s “Iron Cage Revis-
ited” (1983). What is great about this article is
that it shows how neoinstitutional theory relates to
(Source - http://commons.wikimedia.org/wiki/File:
both resource dependence theory and population
ecology (which is a final theory we will cover in
chapter 10). In addition, the articles describe a va-
riety of bridging tactics leading organizations to
resemble one another in form.
Dimagio and Powell’s big question is why
do so many organizations look the same? Why is
there a progression from a diverse set of organiza-
tional forms to a homogeneous set? Dimaggio and
Powell focus on organizational fields and how or-
ganizations within them grow isomorphic. Nota-
bly, this is the same question Metz’s case on real
schools asks -- how come schools look so similar?
Let’s first define the concept of an organiza-
tional field since it describes the bin in which the
process of organizational homogenization arises.
Organizational fields are composed of “organiza-
tions that, in the aggregate, constitute a recognized
area of institutional life; for example, key suppli-
agencies, and other organizations that produce
similar services or products (Dimaggio and Powell
1983:148).” Here is an example of what might be
regarded to be an institutional field of technology.
161
 How does a field like this form? The process
of field definition, or structuring, consists of 4
parts: First, there is an increase in interaction
among the members; second, greater inter-
organizational patterns of hierarchy and coalitions
among them; third, an increase in information load
to contend with; and fourth the development of mu-
tual awareness among the members.
Within these fields, how does organizational
homogenization arise? The process is one where
one unit of a population comes to resemble others.
Neoinstitutional theorists call this “isomorphism”.
In usual parlance, isomorphism can be expressed
in various ways. Visually you can think of it as
mirroring or when buildings assume the same
form or appearance. But it also has more of a
mathematical or even geometrical expression. No-
tice the 1, 2, 3, 4 have the same pattern of associa-
tion as 5, 6, 7, 8. Same for a-d and g-j. They are
structurally equivalent sets and substitutable.
Figure 9.3 Graphs and Isomorphism
(Source - http://commons.wikimedia.org/wiki/File:Graph_isomorphism_b.svg/;
http://commons.wikimedia.org/wiki/File:Graph_isomorphism_a.svg/)
For neoinstitutional theory, these appearances can
decouple from function, so perhaps the next image
helps even more. It is of an orchid whose flower
mimics a bee. By showing appearances of one
sort, it attracts resources – pollen. Now, none of
these are perfect similes, but hopefully they give
you a better sense of what is meant by isomor-
phism.
Figure 9.4 Orchid and Mimetic Isomophism
(Source -
http://commons.wikimedia.org/wiki/File:Bee_Orchid_%28Ophrys_apifera%29_-_geograp
h.org.uk_-_1362149.jpg)
Dimaggio and Powell describe multiple proc-
esses by which isomorphism arises. The first proc-
ess is one they call competitive isomorphism. In
these instances, certain forms of organizing do not
survive because they are sub-optimal and because
decision makers learn appropriate responses and
adapt their organizations so they survive. Dimag-
gio and Powell suggest this occurs in fields where
open competition exists. We will discuss this form
more next week when we discuss population ecol-
ogy as our final organizational theory in the
course.
The second form is institutional isomor-
phism. This is the core process within neoinstitu-
tional theory: here organizations do not just com-
pete for resources and customers but for political
power and institutional legitimacy. The concept of
institutional isomorphism is useful for understand-
ing the politics and ceremony that pervade modern
organizational life (Ibid:150).
Powell and Dimaggio describe three forms
of institutional isomorphism:
1. Coercive forms of institutional isomorphism
most closely resemble those observed in de-
pendence relations as discussed in resource
dependence theory. Here a dependent firm is
subject to political influence. This coercive
influence results from both informal and for-
mal pressures exerted by other organizations
upon which a focal organization is depend-
ent, and by societal cultural expectations
162
 within which the organization functions
(Ibid:150). The firm is coerced to conform
and this leads them to follow and adopt or-
ganizational forms of the organizations they
depend upon.
2. Mimetic institutional isomorphism is differ-
ent from coercive isomorphism. Mimetic iso-
morphism is a standard response to uncer-
tainty and ambiguity. When ambiguity
arises, organizations model themselves on
other organizations, and particularly those
perceived as legitimate / successful. Hence,
the mimetic process here is one driven by the
focal organization and their effort to secure
resources. Hence, many universities do as
Stanford does, not from certainty about effi-
ciency, but because in a context of ambiguity
and uncertainty, they can rise through the
ranks by looking more like a leading institu-
tion.
3. Normative forms are different yet again from
both coercion and mimesis. Here, isomor-
phism is associated with professionalism.
Professionalism is defined as “the collective
struggle of members of an occupation to de-
fine the conditions and methods of their
work, to control the production of producers,
and to establish a cognitive base and legitima-
tion for their occupational autonomy
(Ibid:152).” Rather than direct coercion or
imitation, the firms in these instances try to
fit in and mirror professional norms from
which they draw legitimacy.
Two aspects are key here: the emphasis on
formal education credentials, and the development
of professional networks via associations. These
create pools of individuals who are relatively the
same and substitutable. As such, professionaliza-
tion enables normative forms of isomorphism and
renders firms relatively similar in terms of who
they hire, what tools they use, and so on.
The theoretical features of neo-institutional
theory can be summed up to this point. The theory
argues that firms buffer themselves from the envi-
ronment by symbolic coding of their formal struc-
ture. As such, new universities adopt many of the
same subjects and departments that established uni-
versities have. In this manner, their formal struc-
ture fits ceremonial classifications, and the con-
structs are supported by a logic of confidence that
extends throughout society. The labels are as-
sumed rational because rationalizing agents sup-
port them: e.g., confidence in elite universities and
their accreditation. Further buffering the core ac-
tivities of the firms is the process of loose cou-
pling, where the formal structures and codings of
the firm are distinct and unrelated to the actual
work activity. By segmenting them apart, the firm
exudes rational competence and cultural fit, but
does not allow them to be inspected with relation
to actual activity. This decoupling enables the
firm to run on trust and not have to confront the
potentially unsolvable issues of what works best
and why.
Firms also bridge in the environment, but here
it is mostly done through networks. Dimaggio and
Powell argue that these networks of association
lead to isomorphism via several routes. The first
entails political pressure as we learned about in re-
source dependence theory. The second entails mi-
metic behavior where firms look to exemplars and
peers so as to imitate what seems to work well or
is legitimate (i.e., trendy). Last, firms respond to
pressures of professional networks, like profes-
sional norms and standards on how to assess and
consider their firm’s performance. All of these
bridging efforts render the firm more institutional-
ized and legitimate in the cultural environment in
which it is found. And this in turn draws in social
resources and continues the firm’s survival.
Management and Critique of the Neoinstitu-
tional Approach
In the remainder of this chapter, we will fo-
cus more on management, discuss some cases of
strategic manipulation of institutional environ-
ments, and then critique the neoinstitutional ap-
proach.
163
Management of Cognitive Structures
Given the above, how do we manage a firm
using neoinstitutional theory? Oliver describes a
series of strategic responses organizations can take
to their institutional environments (1991): such as
acquiescing, compromising, avoiding, defying, and
manipulating. Implicit in the approach is some
sense of how integrated, differentiated and ambigu-
ous the surrounding institutional environment is –
that affords some sense as to which strategic re-
sponse may be most successful.
Acquiescing is the most common one de-
scribed in the literature of neoinstitutional theory.
There, a firm merely adopts and aligns with the in-
stitutional environment as if it is natural to do so.
This makes a lot of sense if there is consensus in
the environment, or if the firm appeals to certain
niche institutions and beliefs. Compromising is dif-
ferent and entails balancing differentiated de-
mands and negotiating with institutional represen-
tatives. This typically occurs in conflicted and dif-
ferentiated environments where one must play one
perspective off another. Avoidance can be accom-
plished via buffering strategies like loose coupling
since it prevents careful inspection. In a way, this
move is akin to disguising the firm and using
smoke and mirror tactics to distract. Decoupling
is used when institutional rules conflict with techni-
cal requirements (ritual features are not appropri-
ate for outcomes), or when the institutional envi-
ronments are themselves in conflict. In these in-
stances, decoupling helps a firm – an open system
firm – avoid confronting internal or external incon-
sistencies. By contrast, coupling and alignment
across ritual classifications and technical output
can occur when organizations are centralized and
rewarded for technical performance. Or when the
institutional environment is focused on certain is-
sues and dependence is highest there. So for exam-
ple, the use of accountability in schooling now cre-
ates a more focused coupling.
Oliver also mentions how firms can defy or
resist their institutional environments by adopting
norms and interests different from the surrounding
environment and the imposing regulations on it.
In most cases, the firms doing this lose. Last, or-
ganizations can co-opt and manipulate institu-
tional environments in an effort to improve bar-
gaining power. This is often done by developing
symbolic linkages with sources of power – so
many of the bridging efforts of isomorphism apply
here of coercion, mimesis, and norming.
In sum, the manager must find ways to align
the institutional environment, or to find ways to
help the organization wind its way through con-
flicting institutions in the environment. To do this,
they often conform and adjust their ritual classifica-
tions and outward appearances, and they buffer
their technical practice via decoupling. Or they
manipulate the situation by playing to the myths in
the environment. Therefore, managers can hire
planners and economists to waste time ratifying
plans already made; or hire human relations profes-
sionals to deflect blame from conflicts. I think we
can go further in this regard and discuss how mar-
keting and advertising are used to receive endorse-
ments and support from the environment. I want
to turn next to framing and framing wars as a case
for this.
Case Interlude: Framing Wars
Framing better captures strategic aspects of
cultural mirroring and fit since it is all about cul-
tural alignment efforts. Recently, there were a se-
ries of scholarly and media articles concerning the
framing wars in politics (Lakoff 2011; Bai 2005)
and debates about intelligent design (Wilgoren
2005; Anonymous 2005). Both framing wars de-
scribe how organizations and their leaders manipu-
late narratives and meanings so as to better align
with the national consciousness or even segments
of the environment. The beauty of framing is that
it captures both aspects of this tension – strategy
and cognition.
Back in 2004, we had a presidential election
between John Kerry and George Bush. They both
had stances on a variety of issues, but wanted to
legitimate themselves with voters and secure the
popular election. Bush won and linguistic experts
like George Lakoff argue that he won because his
strategists framed positions in a way that resonated
more with the voters (Lakoff 2011; Bai 2005). Or
164
 Figure 9.5 Framing Wars in Politics and Religion (Kerry, Lakoff, Bush)"
(Source - http://commons.wikimedia.org/wiki/File:John_Kerry_headshot_with_US_flag.jpg/; http://commons.wikimedia.org/wiki/File:Pop%21Tech_2008_-
_George_Lakoff.jpg/;http://commons.wikimedia.org/wiki/File:GeorgeWBush.jpg/)
as we might say, the Republicans framed their posi-
tions in a way that resonated with deeply ingrained
rational myths. Lakoff makes it clear that the is-
sue here is not about finding “the right words” –
these conceptions or “grand metaphors” do not
just suddenly emerge, and the right words will not
suddenly change the national taken-for-granted un-
derstandings of the world around us. They must
resonate with beliefs and arguments many of us
hold.
As such Bush related he was against “partial-
birth abortion” (not “intact dilation extraction of a
fetus”). Note how the label highlights the contra-
diction between birth and abortion. Bush also said
he was for “exploring for energy”, not “oil drill-
ing” and “fracking” which are seen as potentially
damaging. He was also for “tax relief”, not “tax
cuts for the rich” which is seen as unfair. So by
reframing their policies in ways that make them
appeal to and resonate with deeply held beliefs –
even if inaccurate -- seems to work. Now the
Democrats have gotten wise to this and have their
own set of framings like “tax cuts for the rich”,
“Wallstreet Bailouts”, etc.
In the United States we also have seemingly
perennial debates about what to teach in our
schools. Given the nation is partially formed on
puritanical immigrants, there are subsections of
the population that are fundamentalist Christians
and they sometimes take a literal view of the Bible
and regard evolutionary theory as lacking and an
affront to their beliefs. They would much rather
see Creationism be taught in schools and for stu-
dents to learn that the Bible says the universe is
3000 years old.
What is interesting about this controversy is
how framing plays a part. Here again, religious
conservatives have successfully found ways to
frame their arguments so they resonate more fully
in the environment. In fact, the most common re-
frain in the debates about intelligent design is
“teach the controversy”. Given education and sci-
ence rest on teaching and exploring evidence
through debates, the pressure to “teach the contro-
versy” seems appealing on its surface. It is just
that evolutionary scholars, biologists and most edu-
cated people think there is no “controversy” to be-
gin with. So the use of wording to resonate with
165
commonly held rational myths serves to under-
mine the efforts of rational agents like professors,
universities, natural science fields and medical pro-
fessionals. What I am trying to suggest is that we
can use rhetoric to manipulate opinions and to se-
cure social resources from the environment – we
just need to find interesting ways to appeal to ra-
tional myths!
Figure 9.6 Symbols of Evolution and Creationism
(Source - http://commons.wikimedia.org/wiki/File:Darwin_fish_ROF.svg/;
http://commons.wikimedia.org/wiki/File:Ichthus2.svg/)
Critique
 of
 Neoins(tu(onal
 Theory organizational theories apply and help explain
Neoinstitutional theory, like all theories, is
not perfect and it is prone to critique. Most read-
ers regard neoinstitutional theory as describing
over-socialized and passive human actors. As
such, power and parochial interests get slighted by
neoinstitutional theory. What matters is the exter-
nal environment and mirroring rational myths.
Many argue that neoinstitutional theory has gone
too far in the direction of cognition and shared un-
derstandings of modernity, thereby trivializing poli-
tics and power. The framing literature provides a
potential means forward and around these critiques
but it is currently empirically underdeveloped.
Some criticize the neoinstitutional approach as af-
fording mostly “negative” evidence. By this, crit-
ics mean that neoinstitutional theory mostly identi-
fies weakness in other theories instead of revealing
direct evidence of its own claims. However, this is
easier in theory than in practice.
Demonstrating the diffusion of cognitive
scripts and conceptual frames (grand metaphors) is
much easier to do ex post and through proxies than
through ex ante prediction or the direct measure-
ment of institutional variables. The theory has in-
tuitive appeal and we can identify cases where dif-
fusion and isomorphism occur, but it is hard to dis-
tinguish processes of normative and mimetic iso-
morphism and to identify the features being ho-
mogenized. Neoinstitutional theory is one of the
most vibrant theories of organization, however,
and many scholars are working hard at developing
it further empirically.
Case: 2011 NBA Lockout
One of the most popular sports leagues in the
United States, if not worldwide, is the National
Basketball Association, or NBA. Back in 2011,
this league experienced a crisis and the NBA play-
ers were locked out from playing. The NBA lock-
out is a case about organizational crisis, how it
arises, and how it is managed. In what follows,
we’ll describe the case highlighting different
goals, participants, relationships, tasks, and envi-
ronmental factors. We’ll then explore how several
what happened.
For die-hard fans, the NBA offers some of
the most riveting gameplay, stellar athleticism, and
sought after celebrity players of any sport. Unlike
other professional sports that market to fans and
supporters based on their loyalty to a particular
team from a region or city, the NBA emphasizes
marketing their celebrity players. As a result, most
of the revenue generated for teams and their own-
ers is from a small, elite group of celebrity basket-
ball players. Teams based in larger cities have a
much larger media market to profit from; thus,
these teams disproportionally attract the best play-
ers with larger salaries and more valuable endorse-
ments. The NBA has used a collective bargaining
agreement (CBA) to create a fairer system to man-
166
age team-to-team, player and league, and player
and team relationships.
Figure 9.7 NBA Game
(Source:
http://upload.wikimedia.org/wikipedia/commons/0/09/2008_NBA_Finals_%E2%80%93_
Game_2.jpg)
For the purposes of this case, there are multi-
ple sets of participants: the owners and the NBA,
the players, and the NBPA (National Basketball
Players Association). In 2011, twenty-nine differ-
ent individual owners or ownership groups owned
the NBA’s thirty teams. While these individual
owners are among the wealthiest people in Amer-
ica, those who own teams in mid-level to small
markets frequently lose money operating their
teams (e.g., the eight teams in Charlotte, Indiana,
Minnesota, Memphis, Milwaukee, New Orleans,
Portland, Sacramento, and Utah). The NBA
claims that is lost $340 million (USD) in operating
costs in the 2009-2010 season, and that it would
lose at least $300 million (USD) in 2011. By con-
trast, the larger market teams like Miami, Los An-
geles, and New York consistently turn large profits
each year. Regardless, each team owner is repre-
sented equally in the NBA and is responsible to
put the needs of the league, as a collective group,
over their own gain, if necessary.
The Commissioner of the NBA is the leader
and spokesperson for the NBA and is given am-
biguously defined and wide-reaching powers over
the league. As per the league’s constitution, the
Commissioner “shall serve as the Chief Executive
Officer of the League and shall be charged with
protecting the integrity of the game of professional
basketball and preserving public confidence in the
league,” and is responsible, “for the general super-
vision and direction of all business and affairs of
the League and shall have all such powers as may
be necessary or appropriate to fulfill this responsi-
bility.” Just like other professional sports leagues,
they are also responsible for personally handling
issues of player misconduct, enforcing league
rules, and are given broad discretion in making de-
cisions that are in the “best interest” of the NBA.
While the Commissioner might appear to play an
intermediary role between the players and the own-
ers, the team owners elect the Commissioner.
Thus, the Commissioner is seen more as a negotia-
tor with the players who serve the owners’ finan-
cial interests. In other words, while the relation-
ship between players and the Commissioner and
team-owners is more like employer-employee, the
relationship between the Commissioner and the
team owners is more like a partnership.
Basketball players are as financially diverse
as the team owners. They are paid widely varying
salaries based on their level of talent and market-
ability. For instance, while “superstar” players are
paid almost $27 million per year (USD), the aver-
age salary is $5.15 million (USD). Attracting “su-
perstar” players becomes a burden for mid-sized
market teams, but a much easier investment for
larger-sized market teams. Further complicating
matters, player’s contracts with the NBA are seen
as “guaranteed deals.” In other words, the team’s
obligations to the player must be met regardless of
injury or poor athletic performance. Thus, hiring
players, even “superstars,” can be a risky invest-
ment, possibly crippling a team’s competitiveness
for the length of the contract. Furthermore, teams
suffer little recourse to keep players they scouted,
drafted, and signed to “rookie” contracts. As a re-
sult, basketball players formed their own union,
National Basketball Players’ Association (NBPA),
167
represented by lawyer Billy Hunter and President
Derek Fisher, point guard for the Los Angeles Lak-
ers. Unions have collective bargaining rights that
allow them to negotiate the best “deal” for their
members (i.e., basketball players) for every collec-
tive bargaining agreement (CBA). While part of a
union, players can pursue their own interests. For
instance, “superstar” players with significant en-
dorsement deals are less incentivized to cave-in on
objectionable deals than players who make signifi-
cantly less.
Figure 9.8 Derek Fisher
(Source:
http://upload.wikimedia.org/wikipedia/commons/7/70/Derek_Fisher_2009_cropped.jpg)
The NBA ratified a new CBA nine days be-
fore the previous version of the CBA was set to ex-
pire in 2006. The media applauded the renewal,
since it averted the NBA shutting down at that
time. The new CBA outlined the percent of basket-
ball related income (BRI) that went to players and
to owners; a soft cap on players’ salaries with a lux-
ury tax; and financial regulations that governed the
way players and owners interacted. The CBA also
allowed for either players or owners to opt out in
2011, requiring restarting negotiations from
scratch. However, in 2006, the eight small-market
teams mentioned previously sent a letter to the
Commissioner, David Stern, demanding a solution
between the financial disparity between them and
large-market teams. Tensions grew as rumors
spread that owners would opt out and not negoti-
ate a new CBA as the deadline approached. On
July 1, 2011, rumors came to fruition as owners
opted out of the old CBA and “locked out” the
players, threatening to cancel the 2011-2012 NBA
season. As a result, the players were not allowed
to collect their paychecks or represent the NBA in
any way.
Figure 9.9 NBA Commissioner David Stern
(Source:
http://commons.wikimedia.org/wiki/File:David_Stern_at_Fortune_Brainstorm_TECH_20
12.jpg)
There were many points of contention between
players and owners, but perhaps the most pressing
was the basketball related income (BRI). Owners
argued that they would not agree to a split that
would award them less than 50% of BRI, instead
of the current level of 43%. Another issue was the
“luxury tax,” or the rate at which teams spent
above the salary cap, which is redistributed to
teams that were below the cap. Small-market team
owners argued that the tax helped to maintain a
competitive balance with teams in larger markets.
Other owners believed that the luxury tax in the
2006 CBA would not deter large-market teams
from pouching “superstar” players. Players by-
and-large opposed any move to increase the luxury
168
 Neo-institutional Theory
Goals
Maintain legitimacy of their
respective organization: the
NBA or the NBPA.
Key Actors
NBPA; the media; the fans;
the NBA.
Social Structure
Social perception of NPBA
and the NBA.
Technology (for change) Legitimacy vis-à-vis social
media and TV.
Environment
Organizational field
comprising the NBPA, the
media, the NBA, etc.
Resource Dependency Theory
Secure resources during
negotiations to leverage their
argument; resources are $,
sentiment and media coverage.
Television stations; NBPA;
the NBA; lawyers in
negotiations.
Dependencies on resources –
CBA; media exposure either
through social media or
through TV.
The CBA and the
negotiations.
The NBPA and the NBA
interacting in negotiations;
affected by the media and
fans.

tax, since it deterred owners from spending more on contracts. Finally,

other disputes included base salaries for rookies and increasing the mini-
Organizational
mum age to play in the NBA from 19 to 20.
elements of the 2011 The sense of urgency amongst the owners and players was high, as
NBA Lockout Case. the upcoming season was under threat of being completely cancelled.
NBPA and team owners met for multiple meetings between August and
October to reach some sort of agreement that would ensure the survival
of the upcoming season. However, these talks ended in continued dead-
lock. For example, players were willing to take a cut in their salaries on
the condition that owners agreed to budge on altering the salary cap. How-
ever, rifts were emerging amongst the owners, some of whom refused to
compromise. Small-market team owners were among the most hard-lined
negotiators, who viewed any compromise with the NBPA as a threat to
the viability of their franchises.
Negotiations were at a stalemate and its ramifications quickly came
to fruition as little progress was made, resulting in a cascade of cancella-
tions that threatened the entire season. The preseason training camp,
which would have started on October 3rd, was cancelled and soon thereaf-
ter the entire preseason was cancelled as well. Despite the foreboding out-
look amongst many observers for the upcoming season, the NBPA and
team owners were optimistic that an 82 game season was still in the
cards. One last-ditch effort to avoid canceling any games for the season
was to bring in a third party mediator, George Cohen from the Federal
Mediation and Conciliation Services. While he was successful at reaching

169
“tentative agreements” on smaller issues, his ef-
forts had failed. On October 28th, Stern cancelled
the first games of the season through November
30th.
With the cancellation of the early part of the
upcoming season, the media took note of rifts that
were not just splitting the owners, but the players
as well. While some players were willing to negoti-
ate, others took a much more hard-lined approach.
Reaching consensus as a unified bloc amongst the
players proved to be increasingly difficult. One of
the most contentious decisions being considered
by players was to decertify the NBPA as a union,
allowing the more hard-lined players to collec-
tively enter into a class-action lawsuit against the
team owners. Once again, Cohen, the NBPA, and
the team owners failed to reach any consensus in
November, resulting in games cancelled through
December 15th. As a result, the NBPA was
changed into a trade association and several
groups of players filled antitrust lawsuits in Cali-
fornia and in Minnesota federal courts, arguing
that the NBA lockout was an illegal group boycott
on the part of the owners and the commissioner.
Finally, on November 26th, team owners and
players reached a tentative deal after 15 hours of
negotiations. The NBPA reverted back to its union
status, allowing for players to streamline further
negotiations with team owners on minor issues,
like the age limit for draft players. Players and
owners ratified the final deal on December 8th and
the season officially started after 161 days of lock-
out. Among the various settlements included allow-
ing teams a one-time waiver for one player from
the salary cap, a BRI of 51.1% for the season, and
a 49-to-51 distribution in future years.
Neoinstitutional Theory
Neo-institutional theory posits that, “organi-
zations compete not just for resources, but for po-
litical power and institutional legitimacy, for social
as well as economic fitness (DiMaggio and Powell
1983).” The NBA needed to appear “legitimate” as
a sports league in its organizational field, or “sets
of organizations that, in the aggregate, constitute a
recognized area of institutional life; key suppliers,
resource and product consumers, regulatory agen-
cies, and other organizations that produce similar
services or products (Ibid).” These include, but are
not limited to, diverse organizations such as the
NBPA, the team owners, TV stations, sponsors,
other professional sports leagues, and the NBA,
itself. Neo-institutional theory helps to explain the
interactions of the NBPA, team owners, and the
Commissioner with the organizational field, and
the way they tried to leverage support and use it to
promote their goals.
Neo-institutional theory offers a way to un-
pack one of the most important aspects of the 2011
lockout, namely the bargaining power that various
actors could muster through the support of the me-
dia and fans. While the NBPA and owners were
locked in tough negotiations, the media and fans
were in an uproar. For fans, the lockout was the
squabbling of very wealthy players and team own-
ers about how they can make even more money
off fans. For fans, the NBA represented an enter-
tainment enterprise, whereas players and team
owners viewed it as a business. Fans didn’t see
players fighting for better contracts or higher,
softer salary caps, but instead saw greedy “celebri-
ties” vying for more. Fans didn’t see mid-sized
team owners that were losing money, but instead
saw millionaires arguing about how they can have
more excessive wealth. Thus, the NBA was at risk
of losing its “legitimacy” as a functioning sports
league.
Neo-institutional theory heavily emphasizes
organizational “legitimacy,” which partially ex-
plains how players and owners vied for the sympa-
thies of fans and the media as a means for leverage
in negotiations. Team owners and the NBPA could
garner significant “legitimacy” in the negotiations
if they had the media or the fans on their side,
which would be “proof” of holding the correct po-
sition. Since the lockout started with the owners,
the players had a starting point, launching a “let us
play” movement on Twitter, a micro-blogging so-
cial media site. NBPA president Derek Fisher
urged players to “tweet” about the lockout via
their Twitter accounts, “to remind the fans that this
is not our choice and we would like to go back to
work and play the game they love to support.”
Players quickly took to their accounts and propa-
170
gated the “let us play” message and fan support for
the players’ position grew. As a result, players felt
that they could take stronger positions with their
negotiations with team owners. Juxtaposed, own-
ers avoided the social media limelight altogether.
Instead, team owners turned to TV as their media
of choice. Since TV stations shared business rela-
tionships with team owners, owners were able to
steer TV media coverage of the lockout to empha-
size their side of the story. Thus, so long as both
sides were seen as greedy and selfish, neither
could claim that their position was any more “le-
gitimate.”
Neo-institutional theory also sheds some
light on the pressures facing the NBA Commis-
sioner, David Stern. The NBA needed to appear a
“legitimate” sports league within its organizational
field. Stern had to both maintain the “face-value”
of the NBA while managing the tenuous negotia-
tions between team owners and the NBPA to re-
start the season as soon as possible. He was well
aware of the media coverage that painted all actors
as greedy, selfish and power-hungry. Stern be-
lieved that the current coverage did not reflect the
actual, intricate nature of the negotiations. Thus,
Stern tried to get the media to reduce its coverage
of the “lockout” to undo the damage done to the
NBA’s reputation.
Resource Dependence Theory
Resource dependence theory demonstrates
why the BRI was the most pressing issue dividing
the NBA, NBPA, and the owners, and how the
NBA was finally able to end its lockout once the
distribution of the BRI between owners and play-
ers was resolved. Resource dependency theory ar-
gues that organizations operate in uncertain envi-
ronments and compete to control limited re-
sources. An organization’s dependency for any par-
ticular resource is predicated on the resource’s im-
portance; the degree of influence an organization
might have on the resource; and how concentrated
the resource is (Davis and Powell 1992). When ap-
plying resource dependency theory to the NBA
“lockout,” one of the most important aspects dur-
ing the 2011 season the theory addresses is the
BRI, or basketball related income. BRI was one of
the most contentious points amongst the team own-
ers, the NBPA, and the NBA. They identified the
BRI as the most important issue for the long-term
survival of the NBA. NBPA president Derrick
Fisher emphasized this throughout the lockout not-
ing, “there are a great deal of ramifications [for
how BRI is distributed] for years to come.” The
NBPA and team owners were positioning to deter-
mine who would have a greater influence as to
how the BRI would be distributed. So much so
that team owners and the NBA were willing to can-
cel games and even an entire season to have more
say over the BRI. On the other hand, players were
just as ready to forgo games to retain their current
level of influence on the BRI. Before the CBA ex-
pired in 2011, players had a 57% share of BRI.
Small-market team owners were concerned as to
how much uncertainty and dependence they had
with only 43% share of BRI.
Resource dependence theory also highlights
techniques to manage organizational uncertainty,
namely employing tactics like “bridging” and
“buffering” to reduce environmental uncertainty,
increase organizational autonomy, and to increase
an organization’s overall chance at survival. Re-
source dependence theory further elaborates that in
response to these uncertainties, management
within organizations employ various “buffering”
and “bridging” tactics to bolster their chances of
survival, reduce the uncertainty in the environ-
ment, and increase their autonomy (Scott 2003).
Managers use “buffering” strategies to protect an
organization’s control over its resources from envi-
ronmental threads. On the other hand, managers
use “bridging” techniques to secure access to re-
sources in the external environment that are criti-
cal to an organization’s survival (Scott 2003). In
the case of the lockout, all of the three major ac-
tors were dependent on each other. The negotia-
tions between them represent a “bridging” tactic,
since negotiations are centered on how a change in
the concentration of BRI would impact the sur-
vival and dependence of each actor. The players,
in the end, did decrease their share of the BRI, but
they also maintained a share that preserved their
autonomy and allowed them to continue to earn
high salaries. As a result, the lockout came to an
171
end, in spite of the fact that some details of the
CBA were not finalized.
Conclusion
Combining the neo-institutional and resource
dependency perspectives allows us to view the
NBA lockout in a more holistic manner. Moreo-
ver, in applying these theories to the NBA Lock-
out, we can see how they can be more generally
applied to other, similar cases. The political maneu-
vering of the ownership groups and bargaining tac-
tics used by each side as an established deadline
came and went can be more generally applied to
other collective bargaining cases involving for-
profit businesses in which the incentive for agree-
ing to terms increases over time. Two sides fight-
ing for public opinion and media support in order
to gain legitimacy for their position is similar to
the legislative process in which bickering political
parties use polling data as mandates for political
action. Finally, while it may seem like two sides
are fighting over a number of terms during negotia-
tions, it could be the case that consensus on a sin-
gle issue can bring opposing sides together. This
can also be seen in politics. When politicians argue
over many small parts of a bill, they reach consen-
sus on the central issue and the items on the periph-
ery fall in line.
Case Challenges for Neoinstitutionalism?
There are certain trends in educational institu-
tions that seem to counter neoinstitutional argu-
ments. So let’s consider them for a moment.
No Child Left Behind - Recoupling
An interesting paradox in education right
now involves No Child Left Behind (NCLB) and
similar educational policies that strongly rely on
inspection and accountability. On the one hand,
NCLB increases inspection so much that it chal-
lenges the notion of loose coupling in education.
It forces teachers to conform, and it places greater
power and responsibility in administrators. At the
same time, the reform creates greater pressure for
conformity to a particular myth of the “Real
School” and the appropriate elements a school
should reflect. The ritual categories are more fo-
cused, innovation in methodology is minimized,
and conformity is imposed by a testing regime.
Hence, test scores developed by rationalizing
agents like testing services and academics become
standard-bearers. The test scores indicate whether
one school is successful and another is not. Teach-
ers then teach to the test, and in some cases even
cheat to sustain appearances of adhering to the ra-
tionalized myth. But is there a clear sense of what
works better? What kind of learning is more effi-
cient and desirable? Yes there is a sense of this –
but it is conveyed through the lens of a test.
Interestingly, the Bryk article discussed ear-
lier could be interpreted as strategic management
based on recoupling. Changes in the regulatory
environment led to strategic responses like those
described by Bryk and we saw the system con-
form, but it was not clear it had become more effi-
cient and successful than before. Moreover, teach-
ers felt deprofesionalized and their motivation be-
gan to wane. So it is not clear whether recoupling
and centralization render organizations any less re-
liant on rationalized myths. They just seem to fo-
cus them on certain standard bearers more than oth-
ers. Ambiguity and uncertainty remain and only
one facet of the institutional environment (the cur-
rently dominant one) is linked.
Massive Open Online Courses - MOOCs
Another conundrum for neoinstitutional the-
ory is the creation of massive open online courses
(or MOOCs) and what they mean for the organiza-
tion of universities. Could MOOCs threaten the
rationalized myths upon which the modern univer-
sity is constructed? Does Coursera challenge the
common script and neoinstitutional conceptions of
organizational fields like education? How? Why
might MOOCs lack environmental legitimacy?
How do MOOCs challenge myths of schooling
and question the legitimacy of higher education in-
stitutions?
What will MOOCs do to community col-
leges, University of Phoenix, and to actual class-
room experiences? What if superstar teachers can
effectively convey material and students learn it
172
almost as well as in person, but at a fraction of the ety of social resources. The formal structure of an
cost? What if Coursera and other platforms offer a organization incorporates an environmental theory
degree and it is just as effective and valued as an of the organization’s activity. This theory must
actual credentialed, university degree? What give the appearance of being rational and func-
might happen? The whole societal apparatus tional. The prevailing environmental theories and
seeks credentials as standardized language by categories are taken-for-granted understandings of
which exchanges can be made across institutions. organizing: “Organizational actors must therefore
With Coursera, success is not a scarce commodity! take into account both what they are doing, and
People who cannot get into Stanford can poten- the appearances of what they are doing (Meyer
tially get the same credential and accomplish the and Rowan 1978:109).” In order to accommodate
same course. Does it mean the credential is illegiti- appearance and reality, appearances are decoupled
mate? The market would be flooded with people from actual activity. We must find planners and
who have the same skills since Coursera has room economists to waste their time ratifying plans al-
for far more people. As a result, they would give ready made; they must hire human relations profes-
employers little room to hire some and not others. sional to deflect blame from conflicts; etc, etc.
Who would do the janitorial work if everyone is
overqualified? Who would stand out as being able
to do complex tasks? What if the credential is as-
sociated with tons of variance? Is it less legiti-
mate? MOOCs raise a lot of questions about legiti-
macy for one of our most central societal institu-
tions and the rationalized myths it rests upon.
There has been much written about MOOCs
online, and there is much to be recommended.
However, one recent article seems to do a little
more research than most, and I can recommend it
to students in this course (Grossman 2013).
Summary – New Institutional Theory

The basic question neoinstitutional theory

asks is why do organizations within a field adopt
the same (or similar) formal structures? This simi-
larity arises because organizations want to be legiti-
mate in their environment, and to do this they
structure themselves to reflect prevailing rational
myths on what that type of organization should
look like. Because of this, organizations within a
domain often come to resemble one another in ap-
pearance, and in spite of their being distinct in
terms of performance and actual activity. While
many courses are labeled “algebra class,” we
know the actual instruction, content covered, and
learning that occurs across them can radically dif-
fer.
So what gives? Organizations must be legiti-
mate in their environment in order to receive a vari-

173
References
Anonymous. “Intelligent Design Rears its Head.”
The Economist, July 28, 2005.
Bai, Matt. “The Framing Wars.” New York Times
Magazine, July 17, 2005 (pp. 1-8).
Davis, Gerald F. and Walter W. Powell. 1992. A
selection from “Organization-Environment Rela-
tions” (pp. 342, 354-365). In Handbook of Indus-
trial and Organizational Psychology, Vol 3 (2nd
ed.). Eds. Marvin D. Dunnette and Leaetta M
Hough. Palo Alto, CA: Consulting Psychologists.
DiMaggio, P. & W. Powell. 1983. "The Iron Cage
Revisited: Institutional Isomorphism and Collec-
tive Rationality in Organizational Fields." Ameri-
can Sociological Review 48:147-160.
Grossman, Robert J. 2013. “Are Massive Open On-
line Courses in Your Future?” HR Magazine, pp
30-36. August, 2013.
Lakoff, George. 2011. Don't Think of an Elephant!
Know Your Values and Frame the Debate. Chelsea
Green Publishing.
Metz, Mary Haywood. 1989. “Real School: A Uni-
versal Drama Amid Disparate Experience.” Poli-
tics of Education Association Yearbook
1989:75-91.
Meyer, John and Brian Rowan. 1977. "Institution-
alized Organizations: Formal Structure as Myth
and Ceremony." American Journal of Sociology
83:340-363
Meyer, John W. and Brian Rowan. [1978] 2004.
“The Structure of Educational Organizations.” Pp.
201-212 in Schools and Society: A Sociological
Approach to Education. Eds. Jeanne Ballantine
and Joan Spade. Canada: Wadsworth.
Oliver, Christine. 1991. “Strategic Responses to
Institutional Processes.” The Academy of Manage-
ment Review, 16(1):145-179.
Scott, W. Richard, 1995. Institutions and Organiza-
tions. Sage.
Scott, Richard. 2003 (5th ed). “Institutional The-
ory” (pp. 119-120) and “Managing Institutional En-
vironments” (pp. 213-220) of Organizations: Ra-
tional, Natural and Open Systems, 5th Edition,
Englewood Cliffs, NJ: Prentice-Hall.
Wilgoren, Jodi. 2005. “Politicized Scholars Put
Evolution on the Defensive.” New York Times,
August 21, 2005.
NBA Lockout Case Endnotes:
Special thanks to Jake Franklin, Ian Fisher,
Hatim Rahman, and Shawn Koval for permission
to adapt their unpublished work into the case pre-
sented here.
http://aol.sportingnews.com/nba/feed/2010-10/nba
-labor/story/david-stern-says-nba-will-lose-300-mi
llion-this-season
http://blog.techprognosis.com/wp-content/uploads/
2011/05/NBA_Constitution.pdf
http://www.nba.com/2011/news/features/steve_asc
hburner/08/19/average-salary/index.html, and
http://www.cbssports.com/mcc/blogs/entry/227484
84/31436616
http://espn.go.com/blog/truehoop/post/_/id/32834/
how-small-market-owners-took-control
In the 2012-2013 basketball season, the Lak-
ers were the team with the highest payroll at
$100,000,000. The Rockets were the team with the
lowest payroll, at just under $48,000,000. In 2012-
13, the salary cap was set at $58,000,000, which
means the Lakers pay a tax on every dollar they
spend over $58 million, with those funds redistrib-
uted to the rest of the league.
http://hoopshype.com/salaries.htm
http://www.sheridanhoops.com/2011/10/03/nba-lo
ckout-update-3/
174
Summary Table of Organizational Culture, Resource Dependence Theory (RDT), Network Organization, and Neoinstitutional Theory (NIT)
Organizational Culture
When does it Exists when the cognitive and normative aspects of
apply? social structure are of concern and seem to guide
organizational decisions (sense-making) and
outcomes.
Summary or Actors seek expression and fulfillment of identity,
Basic and organizational culture is the medium for such
Argument expression/sense-making.
Key Organizational Elements
Technology Matching, sense-making / meaning-making, or
(how solutions where actors seek to express beliefs, norms, and
get decided) values via a variety of practices and externalize
them in artifacts depicting shared understandings /
notions of appropriateness.
Participants Actors within the organization, and those salient to
meaning-making.
Goals Create intrinsic motivation (sense of fulfillment),
(what probs to and remove differentiation / cynicism in most cases.
resolve)
Social Deep structure composes the elements of culture –
Structure themes (beliefs & norms), their expression via
practices (rituals, etc), and their manifestation or
expression in artifacts (reports, mission statements,
etc).
Environment Many elements of culture have origins from outside,
and they are transported in, then translated to the
local culture.
Dominant Action = result of deep structure or culture that is
Pattern of generated in the organization, but which is mediated
Inference by the member’s relation to it.
Management Find ways to confer ideology and lead others to
Strategies identify with it (using a variety of practices and
artifacts), but don’t make it so explicit / fanatical
that cynicism emerges. Give room for autonomy
and self-expression so distancing is unnecessary,
and encourage members to generate a culture of
their own (~org learning culture NE to Tech culture
which is top-down engineered).
Resource Dependence Theory (RDT)
Exists when there is a focal actor interested in
decreasing dependence, increasing autonomy,
increasing power, and (possibly) increasing efficiency.
Preferences and goals are unclear except in relation to
dependence.
Focal organization with input/output concerns that
cannot be resolved without considering the
environment.
For the most part, organizations are considered unitary
actors (some of the struggles/internal divisions are
minimized) in order to highlight the interactions with
suppliers and clients.
External adaptations in order to increase autonomy
and/or decrease dependence (see management).
Focal organization and other organizations with
resource interdependence,
Goal is organizational survival through external
adaptation (for certainty and autonomy).
Formal roles, standard operating procedures, inter-
organizational bargaining / politics.
(note: coalition approach emphasizes individuals and
interests. Here, the organization is the main actor and
exchanges are with other organizations.)
Key component of the perspective. Exchange partners
and external relations more salient than internal
dynamics;
Bridging more relevant than buffering.
Action = Scan environment for resource opportunities
and threats, attempt to strike favorable bargains so as to
minimize dependence and maximize autonomy /
certainty.
Buffering: protecting technical core from environmental
threats (coding, stockpiling, leveling, forecasting and
adjusting scale).
Bridging: security of entire organization with relation to
the environment. Total absorption via merger (vertical,
horizontal, and diversification), partial absorption
(cooptation [vertical or horizontal], interlocks, joint
ventures, strategic alliances, associations)
Network Organization
When the wider context of organizational relations
influences organizational behavior and survival.
Organizations focus on network relations,
positions, and larger context in developing
strategy. Multiple types of networks are feasible
and they can guide resultant exchanges.
Linking / coordinating /allying in order to deliver
service and outsourcing / subcontracting /
partnering in order to focus on core technology.
All stakeholders in an organizational field.
Goal is delivery of service via collaboration and
outsourcing aspects not central to technological
core..
Formal and informal roles, relations, and
communication channels. Patterns of relations
influence behaviors. Deep structure consists of
values and beliefs in sharing, communication, and
collaboration (trust).
Boundaries no longer clear. Networks apply to
within and between firm relations.
Action = identify complementary strengths, form
alliances, establish collaborative/reciprocal norms,
create open-ended mutual benefits where possible,
outsource secondary tasks (to focus on core) – all
for survival and creation of positive network
environment that delivers service.
Design network to deliver service (select partners
and alliances wisely for aligned values / goals);
establish informal, active communication
channels; coordinate member activities (group
processing skills – align members culturally,
remove internal competition, create open
information, form joint governance/shared
decision making, and get them to focus on discrete
functions / coordination of actual tasks); reinforce
norms of collaboration and reciprocity.
Neoinstitutional Theory
Exists when the level of analysis is a field (not a focal
actor) and the focus is on conformity to cultural scripts
and/or normative constraints on action. Unlike
organizational culture, social structure is based at least
as much on external environment as on internal
dynamics.
Organizations in a field conform to cultural norms to
insure survival and to reduce ambiguity. Legitimacy is
a key “resource” and legitimacy can come at the
expense of organizational efficiency. Professionals and
the nation-state carry the modern cultural recipes and
influence the translation of these elements into the org
context.
External adaptations in order to fit the environment and
insure survival. Professionals provide expertise and
consult to organizations.
Organizations in a field, professionals, and the nation-
state.
Organizational survival through alignment with the
environment.
Formal structure conforms to the environment. Often,
the technical core is radically decoupled from
institutionally defined org structure (loose coupling).
The logic of confidence makes inspection less
necessary, and practice may be very different from
“ceremonial” classifications or structures.
Cultural legitimacy and resources. Legitimacy in the
environment necessary for survival.
Action = Organizations in a field conforming to
normative and regulative environments; the process can
be strategic and planned or cognitive and taken-for-
granted.
Buffering: Symbolic coding (systematizing and
classifying); Decoupling organizational elements (loose
coupling).
Bridging: Institutional Isomorphism (external pressures
via rationalized myths) occurs in effort to acquire
legitimacy. Three forms of isomorphism are coercive,
mimetic, normative
10
Organizational Ecology

Source: http://commons.wikimedia.org/wiki/File:Selection.svg
Ecological Conceptions of Organizations
In this chapter we continue our study of or-
ganizations as open systems whose survival and
success depends on their reaction to the environ-
ment. We introduce a 10th and final theory called
“Population Ecology”. There is a long history of
work that applies biological and natural selection
metaphors to organizations (Scott 2003:117; Davis
and Powell 1992:342-354), let alone to the study
of society.
• Karl Weick (1979) is an organizations scholar
who described variation, selection, and retention
processes within human organizations and on an
organizational community level.
• Arthur Stinchcombe talks of firm founding and
retention in epochs (1965).
• Richard Nelson and Sidney Winter (1982) offer
an evolutionary account of how firms and indus-
tries change over time. They regard organiza-
tions as strings of SOPS’s, which they view as
the genetic makeup of an organization. Firms
experience random mutation and recombination
in their tasks that lead some to outcompete and
survive (i.e., selection and retention).
• And then there are the main theorists we will fo-
cus on this week: Mike Hannan, John Freeman
and Glenn Carroll (Hannan and Freeman 1977,
1989; Carroll 1981, 1984). They take this meta-
phor and understanding of organizational popula-
tions to a new level in their construction of popu-
lation ecology theory.
Population Ecology
Population ecology begins with several ques-
tions: Why are there so many kinds of organiza-
tions? What explains the diversity of organiza-
tions? Where do different organizational forms
come from? Notice these questions are the inverse
of neo-institutional theory, which asks, why are or-
ganizations so similar and stable?
Population ecology focuses on organizational
change and explains it as the result of environ-
mental forces acting on populations of organiza-
tions. It argues that social, economic, and political
conditions affect the relative abundance and diver-
sity of organizations and accounts for their chang-
ing composition over time (Hannan and Freeman,
1977). Population ecology is a theory about “Dar-
winian selection” in populations of organizations
(Carroll and Hannan, 1995).
Now that we have a general sense for popula-
tion ecology, let’s look more carefully at its core
concepts. A core concept of organizational ecol-
ogy concerns the definition of a population. If you
recall, neoinstitutional theory had an elaborate defi-
nition of organizational fields, and population ecol-
ogy’s notion of a population is similar, albeit with
less emphasis on self-awareness, and more empha-
sis on regional boundaries and competition.
A population of organizations is composed of
a class of organizations facing similar environ-
mental vulnerabilities and sharing the same inter-
nal form (technical core). This shared “internal
form” is a consistent blueprint for action or pat-
tern of activity. As such, it is akin to how Nelson
and Winter view SOP’s and tasks. And “shared en-
vironmental vulnerabilities” refer to external sets
of relations and dependencies an organization has
in the environment. Last, the population is
bounded within a common system, whether by a
geographical (region), political (nation), or eco-
nomic (market) boundary. Examples of a popula-
tion could be financial institutions in Seattle, or
car dealerships in Houston, or now with the digital
era, an entire industry like the beer industry and
the niche of micro-brewing.
Environmental Niche
Thus far, we have defined populations of or-
ganizations. Population ecology contends that the
environment can be partitioned into different kinds
of resource spaces where distinct populations of
firms can persist. They call these environmental
niches. Organizational ecologists describe two
types of environmental niches: fundamental and
177
 Bear Realized Niche!

Bear Fundamental Niche!

realized. In biology, a fundamental niche is where a species of animal is

able to live and survive, and the realized niche is where the organism actu-
Figure 10.1 Example
ally lives. For example, an animal might be able to live within the entire
of Fundamental and forest, but because of human encroachment and noise, it might only live
Realized Niches "" in a small area of the forest. As such, the entire forest is a fundamental
(Source - http://commons.wikimedia.org/wiki/
niche and the realized niche is the small part of the forest the animal actu-
File:NAMAP.jpg) ally lives. With that in mind, let’s consider a simple example of bears in
the United States. The fundamental niche for bears is very broad. But
most of their realized niche is in the Northern United States.
For organizations, a fundamental niche refers to a region of the re-
source space in which an organization can persist in the absence of com-
petition. Examples of this might be entertainment, health, education, or
beverage industries. The realized niche is the subset of the fundamental
niche in which an organization can sustain itself in the presence of given
competitors. Examples of a realized niche might be music, dance, and
movies within the entertainment industry, or beer, wine, and soda in the
beverage industry.
The realized niche-width refers to the resource space a species of
firm gets that is not used by another species of firms. Hence, in the beer
industry, micro-brewing companies may find themselves in a partitioned
resource space where they can survive in spite of huge brewers like Bud-
weiser (Carroll and Swaminathan 2000). Likewise, in education, there
may be a city where there are private schools, public charters, public mag-

178
nets, and traditional public schools. Each city may
afford a resource space in which only so many of
each type of school can survive before it competes
with others.
Process of Ecological Change
Environments are constantly changing, and
new organizations emerge to meet these
changes. As such, a healthy population has some
diversity (note how this relates to the concept of
variation in evolutionary theory). However, socie-
ties have limited carrying capacities for organiza-
tions. Therefore, in equilibrium, the surviving
populations of firms occupy a niche wherein or-
ganizations are isomorphic and fit the environment
(note how this relates to the concepts of selection
and retention in evolutionary theory). Firms that
deviate in form are eliminated as unfit. So we
have three features by which populations of organi-
zations change – variation, selection and retention
- and they all reflect concepts in evolutionary the-
ory (e.g., speciation and natural selection).
According to population ecology, new organ-
izational forms emerge all the time to cope with
perceived needs in the environment. Organiza-
tional variation is due to mutation (random gene-
change or accidental new ideas), recombination of
existing forms (mix and match old ideas together),
and cross-over of forms. In biology, a cross-over
case arises in chromosomes, but for organizations
it occurs when one idea is taken from one domain
and imported to another – of say a biology meta-
phor of evolution being applied and extended for
use in conceptions of organizations.
In animals we see species vary within niches.
For example, there is variation in biodiversity. Be-
low is an image of fungi from Saskatchewan, but
you can imagine the same for butterflies, birds, ro-
dents, etc. In the same way, one can also imagine
variation in financial firms.
Figure 10.2 Variation in Fungi
(Source - http://commons.wikimedia.org/wiki/File:Fungi_of_Saskatchewan.JPG
Now some organizational forms suit the envi-
ronment more than others and they survive. The
survivors are reliable and accountable (or favored
by selection). Population ecologists typically ob-
serve the selection of an organizational form as the
reproduction rate of an organizational form. Nota-
bly, organizational variation and selection does not
have to be optimal (e.g., the best mutation takes
off) nor Lamarckian (i.e., traits passed down from
predecessor organizations that enabled adapta-
tion). The fit is more like that of satisficing de-
scribed in chapter 2. An organizational form is se-
lected, survives, and spreads if its form fits
(among a variety that would work) and takes off.
Ultimately, some organizational forms are se-
lected, reproduced and institutionalized as rela-
tively permanent (e.g., Governments, schools,
franchises, etc). In biology we see these as ani-
mals that have a strong fit and reproduction rate –
like Mallard Ducks, Starlings, and so on. Those
are birds that proliferate across the world.
Organizational ecologists identify retention
through a focus on the rates of organizational
founding and death. In the case of organizations,
we can observe this process of variation, selection
and retention in action when we consider the retail
industry in the United States. The environment
has greatly changed over the last 100 years. In the
1940’s and 50’s stores like Woolworth were com-
179

Retention of
organizational forms
-- From Woolworth to
Wal-Mart to Amazon
(Source - http://commons.wikimedia.org/wiki/
File:Woolworth-kassel.JPG; http://
commons.wikimedia.org/wiki/
File:Walmart_exterior.jpg; http://
commons.wikimedia.org/wiki/File:Amazon.com-
Logo.svg)
mon in the United States. These eventually gave way to another retail
firm, Walmart, and that spread and became common in the 1980’s. To-
day, the environment continues to change, and a retailer like Amazon.com
has taken hold. In each era, the fundamental niche remains, but a new
form of organization rises, out-competes the others, gets selected, prolifer-
ates, and is retained.
Structural Inertia
To this point, we have discussed populations, environmental niches
and processes of ecological change. Another key concept in organiza-
tional ecology concerns structural inertia (Hannan and Freeman 1977,
1977a; Hannan and Carroll 1995). Contrary to contingency theorists and
natural system views related earlier in the quarter, organizational ecolo-
gists contend organizations are inert, and at best slow to adapt and
change. There are a variety of pressures in place to make organizational
change difficult. Both internal and external constraints are at work: Inter-
nal constraints are things like investments in equipment, information lim-
its, intra-organizational politics, and the institutionalization of organiza-
tional routines. All of these are “sunk costs” placed in internal technolo-
gies and social structures that make it hard to adapt them to new circum-
stances. External constraints are barriers to entry and exit, and legiti-
macy concerns. Inertia is often associated with organizational age since
many of these constraints build up over time, making it harder and harder
180
for a firm to adapt. Core organizational character-
istics of mission, goals, forms of authority, core
technology, and market strategy are hardest to
change.
The implication of all this? Well, the greater
the inertia, the less an organization can adapt and
the more important environmental selection be-
comes. Instead of adapting, most firms die when
the environment changes. Therefore, the main dy-
namic of organizational change is the birth of new
organizations and the death of old ones. If you
want to change a niche, you need a new, better or-
ganizational form that can outcompete those firms
already present.
Population ecology studies the birth of new
organizational forms (diversification) and the
death of old ones. It asks, how do prevailing so-
cial conditions determine what organizational
forms are founded and their rate of founding? It
also asks the converse, how do social conditions
determine what organizational forms die and their
rate of death? We will cut to the conclusion a bit:
in most instances, volatile times encourage the
birth of new organizational forms, and this frees
resources for organizational founding.
A variety of sub-theories arise from organiza-
tional ecology to account for firm births and
deaths. One common theory in organizational ecol-
ogy is called density dependence (Hannan and
Freeman 1989). The theory of density depend-
ence argues that there is a curvilinear function
where social processes of legitimization founds
firms and competition culls their numbers. In low
density – or in a sparsely populated niche - the den-
sity dependence model predicts that the legitimiza-
tion process will dominate to increase the organiza-
tional founding rate and decrease the mortality
rate. At high levels of density – or in a heavily
populated niche-, competition will dominate, lead-
ing to low founding rates and high mortality rates.
The inverted U curve shows x=#foundings and
y=population density. Legitimacy refers to the
taken-for-grantedness of an organizational form:
The more legitimate the form, (1) the easier it is to
acquire resources, and the (2) mortality rate de-
creases. Competition refers to organizational
forms that seek the same limited resources in a
niche. When there are fewer resources to go
around, competition grows intense, so (1) the
founding rate drops, (2) and the mortality rate in-
creases. As such, competition is inversely related
to population density.
Figure 10.3 Density and Founding Rate
Organizational ecology has a second theory of
firm death, called the liability of newness and it
concerns age-dependence and survival (Hannan
and Freeman 1989). The main idea of this theory
is that new organizations most likely fail since
their internal structure and external dependence re-
lations are not well elaborated and established.
This happens because, internally, the members
must learn the new roles and relations that a new
organizational form requires, and it prevents them
from getting down to business (i.e., focusing on
input to output flows). Externally, they lack the
legitimacy and stable relations older firms have,
making it difficult for them to attract support.
Hence, with age comes a greater chance of sur-
vival. This is confounded with size, and many ar-
gue that is the deciding factor -- a demographic
trait determines organizational survival.
The liability of newness also applies to times
of crisis. In these periods, many organizations try
to change internally. When this happens the inter-
nal structure no longer reflects the firm’s accumu-
lated history, and it is robbed of prior survival
value. Changes in the core features of an organiza-
181
tion, like its mission and values, are more problem-
atic and therefore help explain organizational
death – something population ecology is keen to
explain. In contrast, changes in short-run strate-
gies and peripheral features are more consistent
with adaptive perspectives of organizations.
A third theory about firm survival and death is
called niche theory (Hannan and Freeman 1989).
Here the general idea is that different environ-
mental conditions favor specialist and generalist
organizational forms. A specialist firm is one that
focuses on a particular technology and takes the
risk of maximizing their exploitation of an environ-
ment, fully realizing it could change. A generalist
firm is one that exploits multiple environments
(niches) at lower levels so it has greater security in
the face of environmental change.
For example, in the wine-industry, mass pro-
duction firms like Gallo produce wines like bur-
gundy, chablis, claret, madeira, port, rhine, sherry
and tokay, named from geographic regions. In
many instances, they generate jug wines or lower
quality versions of these wines at a much lower
cost. Generalist production accounts for the bulk
of wine sales. In contrast, a specialist firm in the
wine industry is a farm winery that produces varie-
tal wines, named on the basis a specific grape, and
labeled with appellation of origin (Carroll and
Swaminathan 2000).
There are several theories on how niches fa-
vor specialists and generalists. One is called niche
width theory and it was posited by Hannan and
Freeman in 1977. Niche-width theory focuses on
2 aspects of environmental variability to explain
differential survival of specialists and generalists.
In my earlier discussion of ecological processes, I
described how populations of organizations can oc-
cupy the same niche (or the same domain of
unique environmental resources) and depend upon
identical environmental resources. If two popula-
tions of organizations occupy the same niche
while differing in some organizational characteris-
tic, the population with the less fit environmental
characteristic will be eliminated. Generalist and
specialist organizations respond to environments
differently however. Generalist organizations
have slack. They draw on different resources or
realized niches so they can survive changes in one
environment. In contrast, specialist organizations
are leaner and try to exploit resources of a single
environment, or realized niche.
Generalist firms are not optimally suited for
any single situation. As such, a wide fundamental
niche with many realized niches favors the general-
ist. A firm that spans 2 or more different parts of
the environment (i.e., a generalist) will be able to
respond to the environment regardless of what the
environment is doing. However, it incurs a cost
for covering a wider portion of the environment.
Therefore, generalist firms benefit from wide
niches and unstable markets because they have di-
versified their efforts and can handle volatility.
Specialist firms are suited to a narrow realized
niche. A narrow niche has resources suited to a
small range of products and therefore favors spe-
cialists. Specialists succeed in narrow niches and
stable markets. In these contexts, they can exploit
their fit with a realized niche and ignore other
niches. In an environment that is stable, general-
ists cannot compete with specialists because spe-
cialists maximize their share of the market and do
not have to pay an overhead cost. They can better
fit special interests, while generalists are ready to
address changes in environmental interests should
one niche grow in size over another.
A second type of niche-width theory calls into
question whether generalist or specialist firms suc-
ceed more in unstable environments. But the the-
ory really has to do with the level of change and
variation one focuses upon. As such, niche-effects
on specialist and generalist survival depend on
whether one regards environmental variation as
fine or coarse-grained.
On the surface, it makes sense that stable envi-
ronments encourage specialist organizations, and
that unstable environments lead to the mushroom-
ing of generalist organizations. But Hannan and
Freeman argue this is not true for all cases.
Whether generalists or specialists are favored by
environmental change is determined by a combina-
tion of the “distance” between two kinds of firms
(how specialized / general a firm currently is), and
the “grain” of environmental variations.
182
 Figure 10.4 Topology of Normal and Abnormal Market
(Source - http://commons.wikimedia.org/wiki/File:Topology_of_US_market_before_and_after_transition.jpg )
• Fine-grained variation: Fine-grained variations
have a typically short duration, compared to the
lifetime of the organization.
• Coarse-grained variation: Coarse-grained varia-
tions refer to long-term changes (e.g., a change
in the political structure of the country, or the
passing of certain laws).
When environmental changes are rapid and
fine-grained, it is better to become a specialist.
When environmental changes are rapid and
coarse-grained, it is preferred to be a generalist be-
cause specialists may not survive long enough if
they incrementally shift to the optimal state. And
here is where the distance between types plays in –
if you are a specialist firm that is far from being a
generalist, then fine-grained variation probably
will not get you to survive in an environment un-
dergoing rapid coarse-grained change.
Let’s consider a brief example. In developing
this text, we tried hard to find you visuals that can
demonstrate the core ideas and concepts, but we
are always limited to what we can find on the crea-
tive commons. In searching around we found
some images where analysts tried to identify struc-
tural changes in the stock market that reveal where
it was susceptible to systematic collapse. What
was interesting was that they found stable, normal
market behavior to entail strong residual correla-
tions and the stocks were correlated in a seg-
mented fashion. Two figures show this. The first
is of a clustered network diagram, representing
stocks that are highly correlated. Notably in times
of normal market behavior, there is differentiation
and. The second figure illustrates change in correla-
tions across stocks, and here again, you see a
switch from segmentation to an undifferentiated
set of correlations. In effect, the normal market is
like a realized niche space, or narrow niches where
specialists can win.
In the case of an abnormal market, we see the
stocks suddenly have very strong correlations
across the board, and they lose their correlation
183
Figure 10.5 Stock
Correlations During
Normal and
Abnormal Market
Phases "" " "
(source - http://commons.wikimedia.org/wiki/
File:Dynamics_of_US_stock_market_correlations.
jpg)

with residuals. This means there is a great deal of volatility and interde-
pendence. In this instance, we have an environment where realized
niches collide and firms compete for resources and here the specialists
will die off if the niche does not fit them and generalists will survive to
see another day. Now the details in this are not so important. What we
want you to get is an image, or a conceptual representation you can hold
onto so as to understand the theory, that is all.
A third type of niche-theory is called resource partitioning theory,
advanced by Carroll (1985). This theory describes niche-width dynamics
to explain the differential survival capabilities of specialists and general-
ists. Prior formulations argue for fitness to a set, and predicts that for a
given population one optimal strategy exists. In contrast, Carroll pro-
poses that competition among large generalist organizations to occupy the
center of the market frees resources at the periphery that can be used by
small specialist firms without engaging in direct competition with the gen-

184
eralists. Swaminthan has a paper on how this oc-
curs in wine (2001) and Carroll describes how it
occurs for beer (Carroll and Swaminathan 2000).
As you can imagine in both industries there are
generalist and specialist firms: for wine Robert
Mondavi is a generalist, and then farm wineries
like the one up the road here called “Page Mill” is
a specialist. And for beer, Anheiser Busch is a gen-
eralist and our local beers, Anchor-Steam, Red
Seal Ale, etc., are specialist micro-brews focused
on varietals.
Figure 10.6 Generalist and Specialist Beers
(Source - http://commons.wikimedia.org/wiki/File:Budweiser2.jpg
http://commons.wikimedia.org/wiki/2/21/SFBayAreaMicrobeers.jpg)
Carroll and Swaminthan both find that a
crowding of generalists in the market creates op-
portunities for specialists. So Budweiser, Coors,
Heineken, Miller, etc, are all generalist beer com-
panies that compete, and they create room for
micro-brews to emerge and survive. The same oc-
curs for wine. You have Robert Mondavi, Gallo,
Sutter Home, Woodbridge, and all the other mass
produced wineries competing and opening up farm
winery production. Both papers find a growth in
these specialist firms over the last 2 decades.
Carroll and Swaminthan argue that the compe-
tition between generalists and opening up of mar-
ket space for specialists is a process of resource-
partitioning. Distinct mechanisms give rise to the
specialists in these circumstances. The first mecha-
nisms is a process of customization. The argument
here is that small firms are more flexible and can
customize their products to particular consumer
tastes. In contrast, large firms are slow and unable
to adapt quickly to changing tastes. But this cre-
ates a second issue of identity. Who you are mat-
ters. That is, even though major brewers can copy
the technical aspect of microbreweries, they would
not be as successful because they are not independ-
ently owned businesses.
In this case, it seems to matter greatly who
you are and not what you can do. Consumers pur-
chase identities and seek customized products.
Swaminthan and Carroll conjecture why (2000,
2001):
• Consumers put great faith in small producers to
make quality products.
• Consumers might be reacting to mass society
and its production techniques.
• Consumers may be purchasing as a form of self-
expression.
• They may see their purchase as a forum for
status generation and expression.
So with a glut of general brews and wines, there
arises specialty markets for quality. And these
market-segments seem to thrive on customization
and identity.
On the surface, resource-partitioning theory
seems to counter density dependence. For exam-
ple, density dependence argues that with greater
density, legitimacy becomes less salient and com-
petition decides firm fates. In contrast, resource
partitioning argues the environment is partitioned
-- competitive culling exists for the generalists, but
in this environment, specialists can thrive and ap-
peal to quality and identity. This occurs because,
the generalists are trying to appeal to the largest
realized niche within the fundamental niche.
Hence, recourse partitioning helps explain how
density dependence can hold for the main industry,
but then there are smaller niches wherein legiti-
macy mechanisms can still apply (markets at the
margin).
One question that remains unclear is whether
generalist firms can eventually figure out a micro-
brew and farm-wine product so as to win over cus-
tomers. For example, Robert Mondavi and Miller
185
Beer have developed wines and beers that chal-
lenge the quality of specialist wines and beers.
Such products have won critical acclaim, and this
has enabled generalist firms to operate in both gen-
eralist and specialist segments.
Summary of Theory
In sum, population ecology concerns popula-
tions of organizations and it considers environ-
mental features that drive firm birth and death.
Let’s quickly summarize the main points. Organi-
zational ecology assumes an open system perspec-
tive, which regards the environment as inseparable
from the birth and death of an organization.
For organizational ecologists, organizations
do not catch up with environmental change (inter-
nal adaptation is uncommon [organizational learn-
ing is a myth?!]), and the mechanism of organiza-
tional change is organizational selection (birth and
death). Much like Stinchcombe argued in 1965,
an organization’s form is pretty constant, and con-
sistency is the result of the founder’s imprint, sunk
costs in internal and external relations, and the
process of selection. If two populations of organi-
zations occupy the same niche while differing in
some organizational characteristic, the organiza-
tions likely will not adapt very fast, and the popula-
tion with the less fit environmental characteristic
will be eliminated.
The diversity of organizational forms is iso-
morphic to the diversity of environments. In equi-
librium, each environment has only one organiza-
tional form: the one that adapted to the demands of
the environment (this is the idea of a realized
niche). Each unit in the environment faces the
same environmental constraints, and hence, it has
to have the same organizational structure to sur-
vive. Isomorphism results from selection. Here,
the environment selects only those organizations
that fit the environment.
Resource dependency theory, contingency the-
ory, and neoinstitutional theory are all about how
organizations adapt to their environment. Popula-
tion ecology explores the relationships of organiza-
tions to their environment from a selection perspec-
tive. Compared to the others, the population eco-
logical view is more ‘environmentally determinis-
tic’.
Management
Now that you have a good sense of the theory,
how might a manager apply it? In many regards, I
see population ecology as a theory of forecasting.
Here you have a theory at the population or indus-
try level, and you can use that to ascertain the envi-
ronment. What potential does your firm have for
survival? Given the stability of organizational
forms, it is frequently hard to change a firm, un-
less it is small. So managers of organizational
ecology focus outside the firm.
The main focus is on trying to find an environ-
mental niche where the firm can reasonably sur-
vive. This means the manager considers the popu-
lation of firms they are part of. Who do they com-
pete with? What technology do they share with
others? And what resources do they rely on?
Then they ask what is the composition of these
firms and how do they differ? Are some general-
ists doing many things and are others specialists
that focus on one thing? How similar or different
are they from your firm? Do they rely on the same
resources? Then one looks around and asks how
many of these firms can the niche hold? And how
fast is the environment changing? Are the changes
rapid and coarse-grained or slow and fine-grained?
All of this information will inform you as to
whether your specialist or generalist firm can sur-
vive. It should inform you about where your key
competition resides. And as you consider the com-
petition, you may come to see the resource space
partitioned, and that some forms of competition
between other firms can create opportunities for a
small specialist.
Finally, you will consider your firm’s history,
identity and liability of newness, recognizing that
legitimacy may work for you in certain circum-
stances (e.g., resource partitioned markets, slow
stable ones with room for specialists), and out-
competing other firms (exploitation) in others
(e.g., fast paced, volatile markets). And in general,
186
you will know it may be better to start over and re-
invent than to adapt.
Criticisms and Limitations of Population Ecology
As with all the theories presented, organiza-
tional ecology has certain limitations and can
be critiqued. Perhaps the most common criticism
is that the population ecology perspective is so en-
vironmentally deterministic that there is a loss of
human agency (Baum 1996; Davis and Powell
1992; Hannan and Freeman 1989). Adaptation
and decision making are after-the-fact considera-
tions for population ecology when the reality of
managers seems different.
Another critique is that the concept of popula-
tion density assumes all organizational members
are equivalent. In terms of measuring competi-
tion, for example, not all organizations are equally
competitive. Some firms are huge and others are
small. Therefore the number is questionable in the
instantiation of competition.
In terms of density dependence, the term den-
sity refers to an absolute number. This could be
misleading since populations vary in size, so a den-
sity of 100 firms in a small population could be a
large number, while in a huge population 100
could be low. What might be more useful is a rela-
tive, normalized notion of density. An environ-
ment of that size is more dense than usual, may be
a better comparison.
Population ecology also neglects the role of
globalization and technology in linking different
populations. A variety of complications arise in
terms of niche definition with the advent of the
internet and telecommunications. How can the
size of a population or resource space be deter-
mined in this case? Is it fair to call Seattle finan-
cial firms a niche? Also, what happens when a
firm is a generalist in the local market but they are
a specialist in the global market because of differ-
ent cultural definitions and tastes?
Case: Linda Renzulli and Charter Schools
So now that we have described the theory and
highlighted some potential trouble-spots, let’s con-
sider an application. Renzulli’s work does an ac-
tual empirical study of charter schools and when
they are proposed (2005). In effect, the question
focuses on how this new organizational form of
schooling (charter schooling) has come about and
by what factors. It is a nice piece in that it com-
pares several theories on organizational environ-
ments such as resource dependence theory, neoin-
stitutional theory and population ecology. Her spe-
cific question is -- Why have charter school appli-
cations grown?
Now if you drive by a charter school there is
nothing especially noticeable about them. For
those of you who may not know, charter schools
are publicly funded, primary and secondary
schools in the United States that are not subject to
the same rules and regulations as typical public
schools. They are expected to produce certain re-
sults, as laid out in their “charter”, and they are at-
tended by choice as an alternative to other public
schools. If a charter is over-prescribed, attendance
is allotted by a lottery. Charter schools vary.
Some offer a curriculum that specializes in a par-
ticular field (e.g., math, arts, or vocation), others
offer a general curriculum and attempt to be more
efficient, cost-effective and outperform usual pub-
lic schools (e.g., KIPP schools - “Knowledge Is
Power Program”). Last, all charter schools are
open to inspection and accountability through stan-
dardized testing.
Again, Renzulli asks what theory explains the
growth in charter school applications? In a way,
her answer helps future educational entrepreneur
know where he or she should consider opening a
new charter school! To answer the question, she
assesses resource-dependence, neo-institutional,
and population ecology arguments. She renders
her analysis a “horse-race” between proxy charac-
teristics for each theory.
For resource dependence theory, she tests
whether they arise in districts that give enough
money to open a charter school. This is measured
187
by the instructional expenditure per student that a
new charter school would get.
For neoinstitutional theory, she assesses
whether there are social / political pressures to
open a charter school. She measures this via legis-
lative / union pressure (stronger versus weaker leg-
islation in the state concerning charter schools);
age of founding legislation (charter law exposure);
and number of administrators in a district.
For population ecology she looks at local com-
petition (as proxied by density-dependence in the
# of district charters), state legitimation (# charters
in state), and niche promotion (which she meas-
ures as the # private secular schools since those
will promote the demand for charter schools for
the poor).
Her results suggest that “educational organiza-
tional environments are indeed key in the process
of generating charter school applications. She
finds strong evidence in support of population ecol-
ogy: e.g., nonreligious private schools increase the
submission of charter school applications (niche
promotion), while the density of extant charter
schools in local districts (or saturation, in general)
decreases the submission of applications (i.e., com-
petition). She also finds some evidence for neoin-
stitutional theory and resource dependence theory
explanations -- local political environments, solid
funding, and legislative support induce the applica-
tion for a charter.
So you are an educational entrepreneur –
where do you open a charter? Open it in state with
many charters, a neighborhood with many secular
private schools, and a district with few competi-
tors (e.g., few catholic schools). Make sure the dis-
trict is top-heavy with administrators, that laws are
in place to support charters, and that student expen-
ditures are high.

188
 Summary Table of Network Organization, and Neoinstitutional Theory (NIT), and Population Ecology
Network Organization
When does it When the wider context of organizational relations influences
apply? organizational behavior and survival.
Summary or Organizations focus on network relations, positions, and larger
Basic context in developing strategy. Multiple types of networks are
Argument feasible and they can guide resultant exchanges.
Technology Linking / coordinating /allying in order to deliver service and
(how solutions outsourcing / subcontracting / partnering in order to focus on core
get decided) technology.
Participants All stakeholders in an organizational field.
Goals Goal is delivery of service via collaboration and outsourcing
(what probs to aspects not central to technological core..
resolve)
Social Formal and informal roles, relations, and communication
Structure channels. Patterns of relations influence behaviors. Deep
structure consists of values and beliefs in sharing,
communication, and collaboration (trust).
Environment Boundaries no longer clear. Networks apply to within and
between firm relations.
Dominant Action = identify complementary strengths, form alliances,
Pattern of establish collaborative/reciprocal norms, create open-ended
Inference mutual benefits where possible, outsource secondary tasks (to
focus on core) – all for survival and creation of positive network
environment that delivers service.
Management Design network to deliver service (select partners and alliances
Strategies wisely for aligned values / goals); establish informal, active
communication channels; coordinate member activities (group
processing skills – align members culturally, remove internal
competition, create open information, form joint
governance/shared decision making, and get them to focus on
discrete functions / coordination of actual tasks); reinforce norms
of collaboration and reciprocity.
189
Neoinstitutional Theory
Exists when the level of analysis is a field (not a focal actor) and the focus
is on conformity to cultural scripts and/or normative constraints on action.
Unlike organizational culture, social structure is based at least as much on
external environment as on internal dynamics.
Organizations in a field conform to cultural norms to insure survival and
to reduce ambiguity. Legitimacy is a key “resource” and legitimacy can
come at the expense of organizational efficiency. Professionals and the
nation-state carry the modern cultural recipes and influence the translation
of these elements into the org context.
External adaptations in order to fit the environment and insure survival.
Professionals provide expertise and consult to organizations.
Organizations in a field, professionals, and the nation-state.
Organizational survival through alignment with the environment.
Formal structure conforms to the environment. Often, the technical core
is radically decoupled from institutionally defined org structure (loose
coupling). The logic of confidence makes inspection less necessary, and
practice may be very different from “ceremonial” classifications or
structures.
Cultural legitimacy and resources. Legitimacy in the environment
necessary for survival.
Action = Organizations in a field conforming to normative and regulative
environments; the process can be strategic and planned or cognitive and
taken-for-granted.
Buffering: Symbolic coding (systematizing and classifying); Decoupling
organizational elements (loose coupling).
Bridging: Institutional Isomorphism (external pressures via rationalized
myths) occurs in effort to acquire legitimacy. Three forms of
isomorphism are coercive, mimetic, normative
Population Ecology
Exists when the level of analysis is an organizational population (not a focal
actor) and the focus is on the variation, birth, survival, death of organizational
forms. Unlike organizational learning, the core structure of organizations is seen
as following structural inertia and therefore unable to adapt much internally.
Adaptation occurs at the population level as firms are selected on the basis of their
static structural forms that mutate (randomly) with each new founding.
Organizations in a population vary in times of change / volatility / crisis, and then
form niches of isomorphic fitting organizations that establish environmental
equilibrium. Variations come in the form of mutations & recombination of forms,
and then they are replicated until carrying capacity and population needs met.
External selection in order to fit the environment and insure survival. Population
composition and niche density / carrying capacities determine selection.
Organizations in a population. Within a population, organizations with same form
(pattern of activity) and resource dependencies in the environment occupy market
niches.
Organizational survival through environmental fit.
Core structure of firm is harder to change – inertia present making very stable,
hence selection, not adaptation decides organizational fate. Core structure consists
of SOP’s, mission, goals, values, etc.
Key feature is environment: Relations of dependence, population composition
(generalists vs specialists; density / carrying capacity), rate of change (coarse or
fine grained), and combinations there from.
Action = Organizations in a population competing to fit an organizational niche
(set of other orgs engaged in same form of activity and relations of
interdependence) and become isomorphic with others in it.
Internal management of core doesn’t really apply, but peripheral changes (short-
run strategy) are not inconsistent with theory. Instead, main effort is to be
competitively isomorphic in organizational niches. Organizations can succeed by
recognizing their fit with an environment – what population you are in, what the
composition is, what change is occurring, and then whether is makes sense to
adopt a generalist or specialist orientation. Also consider own orgs history and if
your changes will evoke liability of newness. Also consider if your founding
entailed too much of an innovation so that you don’t fit a niche (and will die).
References
Baum, J. A. C. 1996. “Organizational ecology”
Handbook of Organization Studies, eds., S.
Clegg, C. Hardy, and W. Nord (London: Sage, pp.
77-114).
Carroll, G.R. 1981. “Dynamics of Organizational
Expansion in National Systems of Education.”
American Sociological Review 46, 5:585-599.
Carroll, G.R. 1984. “Organizational ecology,” An-
nual Review of Sociology, 10: 71-93.
Carroll, G.R. 1981. “Dynamics of Organizational
Expansion in National Systems of Education.”
American Sociological Review 46, 5:585-599.
Carroll, Glenn R. and Anand Swaminathan.
2000. "Why the Microbrewery Movement? Or-
ganizational Dynamics of Resource Partitioning
in the U.S. Brewing Industry." American Journal
of Sociology 106, 715-762.
Davis, Gerald F. and Walter W. Powell. 1992. A
selection from “Organization-Environment Rela-
tions” (pp. 342-354). In Handbook of Industrial
and Organizational Psychology, Vol 3 (2nd ed.).
Eds. Marvin D. Dunnette and Leaetta M Hough.
Palo Alto, CA: Consulting Psychologists.
Gray, Virginia and David Lowery. 1996. The
Population Ecology of Interest Representation.
Ann Arbor: University of Michigan Press (applies
pop ecol to interest groups and their influence on
the legislative / policy-making process – nice com-
parison with Hula).
Hannan, Michael T. and John Freeman 1977.
"The population ecology of organizations," Ameri-
can Journal of Sociology, 82: 929-64.
Hannan, Michael T. and John Freeman. 1977a.
"The population ecology of organizations." Pp.
176-200 in Sociology of Organizations, Oscar
Grusky and George Miller eds..
Hannan, M.T. and J. Freeman. 1989. Organiza-
tional Ecology. Cambridge, MA: Harvard Univer-
sity Press.
Hannan, Michael T., and Glenn R. Carroll 1995.
“An introduction to organizational ecology.” In
Organizations in Industry. Oxford University
Press, pp. 17-31.
Nelson, Richard and Winter, Sydney. 1982. An
Evolutionary Theory of Economic Change. Belk-
nap Press of Harvard University Press.
Renzulli, Linda. 2005. "Organizational Environ-
ments and the Emergence of Charter Schools in
the United States." Sociology of Education 78: 1-
26.
Stinchcombe, A. L. (1965). "Social Structure and
Organizations". In March, J. G. Handbook of Or-
ganizations. Chicago: Rand McNally & Co.
pp. 142–193.
Swaminathan, Anand. 2001. “Resource Partition-
ing and the Evolution of Specialist Organizations:
The Role of Location and Identity in the U.S.
Wine Industry.” The Academy of Management
Journal 44, 6:1169-1185.
Weick, Karl.1979. The Social Psychology of Or-
ganizing (Topics in Social Psychology Series).
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11
Summary of Theories

EN
VIR
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ON
EN

ME
NM

NT
ORGANIZATION)
RO

)
VI
EN

Social)Structures)

Technology) Goals)

)
EN

T
Par6cipants)
EN
VI

M
RO

O N
NM

V I R
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Figure. Features of an Organization

(adapted from Leavitt 1965: 1145; Scott 2003:18)
Summary of Theories
If you consider this text for a moment, you
will realize that you have come a very long way.
You were introduced to something called organiza-
tions and their behavior. You were given a wide
array of cases to study – from governmental or-
ganizations, lobbying groups, technology compa-
nies, classrooms, high schools, school districts, uni-
versities, reform movements, online educational
courses, multi-player online games, and national
policies.
• Magnet school reform (Metz)
• Cuban Missile Crisis (Allison)
• Chicago public school reforms (Bryk, Shipps)
• Hurricane Katrina
• Milwaukee parental choice plan (Quinn, Witte)
• Lobbyists (Hula)
• School desegregation efforts (Weiner)
• Legislative efforts – NCLB (Kingdon)
• Academic senates (Birnbaum)
• Xerox machine workers (Suchman)
• World of Warcraft (Seeley-Brown)
• Learning communities (Louise, Kruse,
Leithwood)
• Tech (Kunda)
• Ozco (Martin & Meyerson)
• University of Chicago-Northwestern merger
(Barnes)
• Attempted Union Strike – Silicon Systems
(Krackhardt)
• Classroom and school networks (McFarland)
• National park service (Eggers & Goldsmith)
• Charter school networks (Smith & Wohlstetter)
• Schools and High Schools (Metz, Meyer-
Rowan)
• Intelligent design and teaching of evolution de-
bate (NY Times)
• Presidential platforms (Bai)
• Massive Open Online Courses (MOOC)
• U.S. microbrewery (Carroll)
• Wine industry (Swaminathan)
• Charter School movement (Renzulli)
You were given a variety of organizational
features to consider – the environment, social
structure (behavioral, normative, and cognitive),
participants, technology, and goals. And these af-
ford you a language and checklist by which to con-
sider the complexity of organizations more deeply.
You were also given a variety of theories by
which to consider how those features work to-
gether. These conceptions of organizations re-
flected rational systems (Scott 2003), where ad-
ministrators made rational decisions in ideal
means-end ways, in realistic boundedly rational
ways of satisficing, and even in rule-matching
manners of duty driven behavior. We then devel-
oped more natural system views of how firms
acted like an organism with many internal contin-
gencies. We observed how firms often followed
organizational processes and rules, how others
only coordinated when they had performed politi-
cal wrangling and formed coalitions, and yet oth-
ers seemed to follow an anarchic process of flows
into and out of meetings. We also came to view
firms as self-reflective, learning organizations and
as potentially putting in place a social structure
that could sustain that form of association. With
organizational culture we dug deeper into norma-
tive and cognitive principles guiding action and
we learned that firms had their own ethos and
styles, which greatly shaped the members’ experi-
ences.
The past few chapters we looked at organiza-
tions as open systems and extended our focus into
the environment and how it influences firm behav-
ior and survival. With resource dependence theory
we focused on dependence relations between
firms; with network forms of organization we
looked at the larger arrangements and patterns of
coordinated actions; with neo-institutionalism we
looked at the deep structures and cultures in the en-
vironment and how firms succeed by mirroring
them; and with population ecology we looked a
hard forms of environmental determinism and natu-
ral selection due to inter-firm competition.
We went from micro level agents driving an
organization as a unified actor; to meso-level
groups of persons being coordinated by rules, poli-
tics, meanings and feedbacks (or sense-making);
to macro-level environments where resource con-
straints, network contexts of reciprocity and trust,
192
and sociopolitical patterns of belief impinge upon
the organization. We went from micro to macro,
and from rational to natural to open system concep-
tions.
Along the way, you were given manage-
ment prescriptions. Each theory saw the world
in certain ways, as being driven by certain facets –
and this suggested a variety of maneuvers by
which organizational creation, change, and stabil-
ity could be accomplished. In some cases, it was
the resources in the environment, in others it was
the beliefs and contexts of relations. In other
cases, the internal dynamics of the firm or school
mattered more: whether people bought into the
company’s goals and rituals; and if they did not,
how they could be persuaded or how a decision
could be made anyway. You also learned how
these hard fought lessons of organizing could be
remembered or forgotten, how they could be har-
nessed toward a learning organization. In my
mind, you have a real toolkit now to be serious re-
searchers and managers. You just need to consider
how these “frames” or perspective apply, when,
and why.
For any particular case that we have covered,
it is likely we will want to apply multiple theo-
ries. Are there ways we can combine our applica-
tion of these theories? One way of considering
this is to ask how they vary. Some clearly are
more ideal than real so perhaps better suited to
planning than implementation. Similarly, some
are more limited in scope and focus on decision
moments and administration, while others concern
the organizational context and conditions of deci-
sions. Some presume an internal capacity to
change and adapt (i.e., organizational learning, re-
source dependency theory) while others are deter-
ministic matching efforts (neoinstitutional, popula-
tion ecology). Some are more focused on deep
structures and culture (neoinstitutional, organiza-
tional culture) while others rest at the surface (re-
source dependence theory, population ecology, ra-
tional actor models).
As a manager and analyst, you can combine
theories in various ways. In some instances you
may want to apply them in a (1) staged manner,
such that some theories best apply to the planning
stage (rational actor) and other apply more to the
implementation stage (coalitions).
In other cases, you may find the theories embed
nicely with one another due to their different
scopes. For example, micro theories rational deci-
sion making may fit within a natural system view
of the organization. And meso-theories may fit
within larger macro ones focused on the environ-
ment (open).
Many of theories seem to have some semblance
with our logics of appropriateness and conse-
quence. As such, they can be applied in a differen-
tiated fashion. We have theories that concern the
logic of appropriateness, sense-making, and cul-
ture; and we have theories that concern the logic
of consequence, notions of efficiency and resource
allocations, and mean-end calculations.
Last, many of the presented theories are indus-
try relevant. You can guess which theories might
apply more to certain industries
• Finance = consequence-based theories of ra-
tional actor, resource dependence, and popula-
tion ecology.
• Knowledge = organized anarchy, organizational
learning, organizational culture, neo-institutional
theory.
• Politics = bureaucratic politics, coalition theory,
resource-dependence theory, and network forms
of organization.
• Bureaucracy = organizational process and rule-
following,
In summary, there are at least four master nar-
ratives or schemas by which you can utilize the
theoretical tools in your toolkit. I suspect you can
generate more – and that is what is nice about hav-
ing theories as tools. You can rearrange their use
in myriad ways to great effect and become a mas-
ter analyst and manager!
193
 Summary Table of Five Theories to Date:
Rational Actor (RA)
When does it apply? Exists when there is a unified
actor with consistent
preferences, lots of information,
and clear goals (and time
calculate).
Summary or Basic Argument Unitary actor or team that
confronts a problem, assesses
objectives (goals) with regard to
it, identifies options, the
consequences of said options,
and then chooses option that
minimizes costs.
Variant: Bounded rationality
and satisficing. Recognize
imperfect info, ambiguity, and
select first satisfactory option
(good enough).
Technology (how solutions get decided) Maximization of options
(solutions).
Participants Unified team or actor
Goals Goals are defined in regard to
(what probs to resolve) problem.
Social Structure Formal roles, hierarchical.
Environment Not salient except as
influencing consequences of
options.
Organizational Process (OP) /
Limited Problem Solver (LPS)
Exists when the decision is guided
by a logic of appropriateness –
matching problem to actors with
procedures for handling it (routine-
process focus).
Dividing up problem, coordinating
/ activating organizational actors
who have special capacities /
SOP’s for parts of problem,
conducting sequential attention to
objectives (localized searches until
problems resolved). Action guided
by processes / available routines.
Matching identity and SOP’s
(solutions) / programs / repertoires
to problem.
Organizational positions
Objectives – compliance to SOP’s,
match with problem parts.
Actors in hierarchical
organizational positions. Cue
sequential routines that accomplish
task or solve problem by routines
available (supply issue).
NA
Coalitions /
Bureaucratic Politics (BP)
Exists when there are multiple
actors with inconsistent preferences
and identities, and none of whom
can go it alone without assistance
of others.
Focus on the players occupying
various positions; their parochial
interests (their conceptions of
problems and solutions); their
resources (expertise, money,
people) and stakes in game; and
bargaining processes between them
that establish agreements /
coalitions.
Bargaining, or playing the game
(within its rules), or political
maneuvering.
Players in positions
Parochial priorities, goals/interests,
stakes / stands.
Coalitions – enemy/friend
Deadlines and wider array of
stakeholders.
Organized Anarchies /
Garbage Can (GC)
Exists when solutions are unclear,
participants turn over, and
preferences/identities are inconsistent.
Focus on choice arenas (when choice
opportunities / windows arise); the
distinct and decoupled streams of
problems, solutions, and participants;
and their access rules to the arena
(whether structural or timed).
Confluence of multiple streams, such
that solution is connected to problems
and enough actor-energy to see it
through.
Participant stream shaped by political /
career cycles & unplanned departures.
Problems stream determined by public
opinion, prominence / vocalness of
problems in firm, etc.
Access rules – segmented, hierarchical,
or democratic.
Deadlines and other choice arenas (e.g.,
decision in current arena may be means
of access to another choice arena…)

Dominant Pattern of Inference
Management Strategies
Action = Maximization of
means to ends.
Know alternatives and their
consequences for the shared
goal, and select wisely. Improve
information and analysis.
Management by consequences.
Action = output close to prior
output (path dependence), cueing
of SOP’s appropriate to problem.
Know SOP’s, what problems they
go with (matching), and who cues
them. Improve rules and matching
with problems. Management by
rules.
Action = result of political
bargaining.
Bargain with players (log-roll,
horse-trade, hinder opposition’s
coalition formation, etc). Learn
others’ interests / weaknesses so
you know how to manipulate and
win. Direct management of
relations via bargaining.
Action / decision = result of streams
collision in choice arena.
Time when your solution is raised (to
coincide with right participants and
cycle of problems) to maximize energy;
abandon entangled initiatives; know
how to overload system for policies you
detest; and generate choice opportunities
that work to your interests
(access/timing). Indirect managing of
situations.

194
 Summar y Table of Resource Dependence Theory (RDT)

Organizational Learning (OL) Organizational Culture Resource Dependence Theory (RDT)

When does it Exists when there are clear feedback loops, adaptations, When the cognitive and normative aspects of social structure Exists when there is a focal actor interested in decreasing dependence,
apply? memory, and support of actor-expertise / adaptations of are of concern and seem to guide organizational decisions increasing autonomy, increasing power, and (possibly) increasing
rules to local reality. (sense-making) and outcomes. efficiency.
Preferences and goals are unclear except in relation to dependence.

Summary or Acknowledges routines, but focuses on practices within Actors seek expression and fulfillment of identity, and Focal organization with input/output concerns that cannot be resolved
Basic them that enable their continual adaptation and change organizational culture is the medium for such without considering the environment.
Argument to fit reality – i.e., practices reflecting organizational expression/sense-making. For the most part, organizations are considered unitary actors (some of
intelligence. the struggles/internal divisions are minimized) in order to highlight the
interactions with suppliers and clients.

Key Organizational Elements

Technology Internal adaptation, or where actors alter routines for the Matching, sense-making / meaning-making, or where actors External adaptations in order to increase autonomy and/or decrease
(how solutions better and fit reality (knowledge). seek to express beliefs, norms, and values via a variety of dependence (see management). Comply / adapt, avoid / manage.
get decided) practices and externalize them in artifacts depicting shared
understandings / notions of appropriateness.
Participants Members of organization doing work / SOP’s Actors within the organization, and those salient to meaning- Focal organization and other organizations with resource
making. interdependence,
Goals Application problems – pattern recognition not there (no Create intrinsic motivation (sense of fulfillment), and Goal is organizational survival through external adaptation (certainty
(what probs to fit). remove differentiation / cynicism in most cases. and autonomy).
resolve)
Social Informal, lateral relations, communication, negotiation, Deep structure composes the elements of culture – themes Formal roles, standard operating procedures, inter-organizational
Structure & collective improv. Actor identities (demand) (beliefs & norms), their expression via practices (rituals, bargaining / politics.
important. Network of practice (professional identity / etc), and their manifestation or expression in artifacts (note: coalition approach emphasizes individuals and interests. Here,
reach) & community of practice (cohesive group). (reports, mission statements, etc). the organization is the main actor and exchanges are with other
organizations.)

Environment Source of inter-organizational knowledge / tricks / Many elements of culture have origins from outside, and Key component of the perspective. Exchange partners and external
transfers. they are transported in, then translated to the local culture. relations more salient than internal dynamics;
Bridging more relevant than buffering.

Dominant Action = result of local actors collaborative search (trial Action = result of deep structure or culture that is generated Action = scan environment for resource opportunities and threats,
Pattern of & error / transfer) and adapting rule to situation. in the organization, but which is mediated by the member’s attempt to strike favorable bargains so as to minimize dependence and
Inference relation to it. maximize autonomy / certainty.

Management Find ways to create lateral ties among workers so
Strategies “knowledge” is passed / transferred more readily /
quickly (if possible, quickly), create means to
organizational memory of what works. Create applied,
social learning experiences with means to retaining and
transferring expertise. Want communication, collective
improvisation, practice and knowledge sharing to arise.
Find ways to confer ideology and lead others to identify with
it (using a variety of practices and artifacts), but don’t make
it so explicit / fanatical that cynicism emerges. Give room
for autonomy and self-expression so distancing is
unnecessary, and encourage members to generate a culture
of their own (~org learning culture NE to Tech culture which
is top-down engineered).
Buffering: protecting technical core from environmental threats
(coding, stockpiling, leveling, forecasting and adjusting scale).
Bridging: security of entire organization with relation to the
environment. Total absorption via merger (vertical, horizontal, and
diversification), partial absorption (cooptation [vertical or horizontal],
interlocks, joint ventures, strategic alliances, associations)

195
 Summary Table of Network Organization, and Neoinstitutional Theory (NIT), and Population Ecology
Network Organization
When does it When the wider context of organizational relations influences
apply? organizational behavior and survival.
Summary or Organizations focus on network relations, positions, and larger
Basic context in developing strategy. Multiple types of networks are
Argument feasible and they can guide resultant exchanges.
Technology Linking / coordinating /allying in order to deliver service and
(how solutions outsourcing / subcontracting / partnering in order to focus on core
get decided) technology.
Participants All stakeholders in an organizational field.
Goals Goal is delivery of service via collaboration and outsourcing
(what probs to aspects not central to technological core..
resolve)
Social Formal and informal roles, relations, and communication
Structure channels. Patterns of relations influence behaviors. Deep
structure consists of values and beliefs in sharing,
communication, and collaboration (trust).
Environment Boundaries no longer clear. Networks apply to within and
between firm relations.
Dominant Action = identify complementary strengths, form alliances,
Pattern of establish collaborative/reciprocal norms, create open-ended
Inference mutual benefits where possible, outsource secondary tasks (to
focus on core) – all for survival and creation of positive network
environment that delivers service.
Management Design network to deliver service (select partners and alliances
Strategies wisely for aligned values / goals); establish informal, active
communication channels; coordinate member activities (group
processing skills – align members culturally, remove internal
competition, create open information, form joint
governance/shared decision making, and get them to focus on
discrete functions / coordination of actual tasks); reinforce norms
of collaboration and reciprocity.
196
Neoinstitutional Theory
Exists when the level of analysis is a field (not a focal actor) and the focus
is on conformity to cultural scripts and/or normative constraints on action.
Unlike organizational culture, social structure is based at least as much on
external environment as on internal dynamics.
Organizations in a field conform to cultural norms to insure survival and
to reduce ambiguity. Legitimacy is a key “resource” and legitimacy can
come at the expense of organizational efficiency. Professionals and the
nation-state carry the modern cultural recipes and influence the translation
of these elements into the org context.
External adaptations in order to fit the environment and insure survival.
Professionals provide expertise and consult to organizations.
Organizations in a field, professionals, and the nation-state.
Organizational survival through alignment with the environment.
Formal structure conforms to the environment. Often, the technical core
is radically decoupled from institutionally defined org structure (loose
coupling). The logic of confidence makes inspection less necessary, and
practice may be very different from “ceremonial” classifications or
structures.
Cultural legitimacy and resources. Legitimacy in the environment
necessary for survival.
Action = Organizations in a field conforming to normative and regulative
environments; the process can be strategic and planned or cognitive and
taken-for-granted.
Buffering: Symbolic coding (systematizing and classifying); Decoupling
organizational elements (loose coupling).
Bridging: Institutional Isomorphism (external pressures via rationalized
myths) occurs in effort to acquire legitimacy. Three forms of
isomorphism are coercive, mimetic, normative
Population Ecology
Exists when the level of analysis is an organizational population (not a focal
actor) and the focus is on the variation, birth, survival, death of organizational
forms. Unlike organizational learning, the core structure of organizations is seen
as following structural inertia and therefore unable to adapt much internally.
Adaptation occurs at the population level as firms are selected on the basis of their
static structural forms that mutate (randomly) with each new founding.
Organizations in a population vary in times of change / volatility / crisis, and then
form niches of isomorphic fitting organizations that establish environmental
equilibrium. Variations come in the form of mutations & recombination of forms,
and then they are replicated until carrying capacity and population needs met.
External selection in order to fit the environment and insure survival. Population
composition and niche density / carrying capacities determine selection.
Organizations in a population. Within a population, organizations with same form
(pattern of activity) and resource dependencies in the environment occupy market
niches.
Organizational survival through environmental fit.
Core structure of firm is harder to change – inertia present making very stable,
hence selection, not adaptation decides organizational fate. Core structure consists
of SOP’s, mission, goals, values, etc.
Key feature is environment: Relations of dependence, population composition
(generalists vs specialists; density / carrying capacity), rate of change (coarse or
fine grained), and combinations there from.
Action = Organizations in a population competing to fit an organizational niche
(set of other orgs engaged in same form of activity and relations of
interdependence) and become isomorphic with others in it.
Internal management of core doesn’t really apply, but peripheral changes (short-
run strategy) are not inconsistent with theory. Instead, main effort is to be
competitively isomorphic in organizational niches. Organizations can succeed by
recognizing their fit with an environment – what population you are in, what the
composition is, what change is occurring, and then whether is makes sense to
adopt a generalist or specialist orientation. Also consider own orgs history and if
your changes will evoke liability of newness. Also consider if your founding
entailed too much of an innovation so that you don’t fit a niche (and will die).
 Summary'Figure'of'Eleven'Organizational'Theories'

! Deep! ! ! ! ! ! ! ! ! Surface!
(cognitive!/!implicit)!! ! !!!!!!!!(normative)! ! ! !!!(regulative/explicit)!

Organizational!
Process! Rational!Actor!
Satisficing! (Utility)!
(matching)!
!!!!!!!!!!(Administrative!Unit)!

Short<term!
RATIONAL!
!Micro!

!
!

!
!!!!!!!
!

Coalition!Theory!
!!!!!!!!!!!

!
!!

Organized!Anarchy!
!
(multiple!actors)!

!
!
!

Organizational!

!
Learning!
Meso! !
!!!!!!!!!!!!!!!!!!!NATURAL! !

!
!

!
Organizational!
!

Culture!
(organizational)!

!
!
!

!
!
!

Resource!

!
!
Dependence!
!
!
!

Network!!
Organization!

!
!
!
!
!

Organizational!
Neoinstitutional!
!
Ecology!
Theory!
(inter<organizational)!
!
!

Long<term!
!!!!!!!!!Macro!
!!!!!!!!!!!!!!!OPEN!

!
!

!
Figure 11.1 Summary diagram of organizational theories -- scope and analytic depth
Index

Allison, Graham, 17-18, 21, 23, 50-51 Cuban Missile Crisis, 22-28

Argote, Linda, 80 Framing Wars, 163-165

Bargaining model, see bureaucratic politics model Government Policy, 63-65

Barnes, Sarah, 122 Hurricane Katrina, 40-42

Birnbaum, Robert, 61 Massive Open Online Courses (MOOCs),

Borgatti, Stephen, 131, 142
Bounded rationality, 18, 20, 121, 192
Brown, John Seely, 80
Bryk, Anthony, 29, 33, 166
166
Milwaukee Voucher Program, 53
No Child Left Behind, 65-69, 165
Northwestern University and University of
Chicago Merger, 122-126

Bureaucratic politics model, 21, 26-27, 32, 35-36, Real Schools, 157-160
46-57, 104, 194
San Francisco Unified School District, 66-70
Caro, Robert, 52
US Government Agencies, 144-148
Carroll, Glenn, 177, 184-186
World of Warcraft, 92
Cases
Xerox, 82-83
Adams Avenue School, 10-15
Coalitions, 50, 52-54
Agassiz and Okanagon, 89-92
Coalition theory, 21, 32, 35-36, 46-57, 104, 114,
Charter Schools, 187-188 192, 194

Chicago Public School Reforms, 29-37 Cohen, Michael, 60

cxcviii
Contingency theory, 116, 194 Exchange model, 51-53

Cross, R., 144 Exploitation, 88

Culture (organizational), 97-114, 114-115, 156, Exploration, 89

192, 195;
Force model, 51
artifacts, 99
Foster, P.C., 142
authority, 105-106
Freeman, John, 177
content themes, 100
Garbage Can Theory, see organized anarchy
formal, 99
Geertz, Clifford, 104
individual reactions to, 107-110
Goals, 6-8, 30-31, 89-92, 125, 127, 168, 189, 192,
informal, 99 194-196

jargon, 100 Goldsmith, Stephen, 141, 144, 146-148

physical arrangements, 100 Granovetter, Mark, 130, 136

practices, 98-99 Hannan, Michael, 177

rituals, 99-100, 106-107 Hula, Kevin, 50, 52-55

stories, 100 Kilduff, Martin, 131

Cultural paradigms, 101-103, 105 Kingdon, John, 62, 70-72

Davis, Gerald, 142 Krackhardt, David, 137

Dickson, William, 137 Kruse, Sharon, 88, 91-92

DiMaggio, Paul, 153, 156, 160-162 Kunda, Gideon, 97, 104-114, 115

Duguid, Paul, 80 Lakoff, Goerge, 163-164

Eggers, William, 141, 144, 146-148 Learning (organizational), 89-93, 104, 114-115,
142, 192, 195;
Emerson, Richard, 53
communities of practice, 85-86, 133, 142
Environment, 3, 4, 6, 8, 30-31, 33, 89-92, 114,
116, 125, 127, 165, 168, 177, 186-187, 189, 192, encouragement of, 83-84
194-196
learning curves, 84-85

cxcix
networks of practice, 86-87, 133, 142 Decoupling, see loose coupling

practices, 82-83, 98 Isomorphism, 152, 161-162

Learning traps, 88 Loose coupling, 158-160, 162, 166-167

Leavitt, Harold, 6 Normative control, 152

Liedtka, Jeanne, 144 Organizational fields, 160, 171

Logic of appropriateness, 17, 20-21, 25-26, 28 Rationalized myths, 154, 156-158

Logic of consequence, see rational actor approach Regulatory control, 152

Louis, Karen, 88, 91-92 Network organization, 114, 130-150, 156, 162,
192, 196;
Management approaches, 47-48, 52-53, 55-56, 65-
66, 84, 89, 118-121, 148, 162-163, 168, 186-187, Hierarchical structure, 142-144
193-196
Homophily, 133, 137-140
March, James, 17, 20-21, 49-51, 60, 80, 88
Market structure, 142-144
Martin, Joanne, 98, 100-104, 106
Peer influence, 136
McFarland, Daniel, 136
Positioning, 133-134, 139
Meaning-making, 61, 121
Propinquity, 137, 139
Memory (organizational), 83, 85
Reciprocity, 133, 137, 139
Metz, Mary, 10-15, 156-157, 160
Ties, 133, 140
Meyer, John, 152-153, 156
Oliver, Christine, 163
Meyerson, Debra, 98, 100-104, 106
Olsen, Johan, 60
Natural systems, 9, 17, 115, 192
Open systems, 9, 114, 177, 186, 192
Nelson, Richard, 177
Organization
Neoinstitutional theory, 114, 152-169, 177, 186,
192, 196; Classes of theories of, 9

Ceremonial performances, 158 Definition, 2

Cognitive control, 152 Elements of, 6

cc
 Examples, 2-3
Problems faced by, 5
Organizational process model, 17, 25-26, 28, 32,
34-35, 46-48, 50, 81, 115, 192, 194
Rational actor approach, 17-20, 24-25, 28, 32, 34-
35, 46-48, 50, 194
Rational choice theory, see rational actor approach
Rational systems, 9, 17, 192

Organized anarchy, 21, 59-76, 79, 104, 192, 194; Rawlings, Craig, 136

and access structures, 63 Reform, 3-4, 10

and flight, 63 Renzulli, Linda, 187-188

and oversight, 63 Resource dependency theory, 114-128, 140, 142,

154-156, 160, 186, 192, 195;
Orr, Julian, 80
Bridging strategies, 119-121, 141, 160, 162
Participants, 6, 8, 30-31, 89-92, 125, 127, 168,
189, 192, 194-196 Buffering strategies, 118, 162

Pfeffer, Jeffrey, 116, 119 Rothlisberger, F.J., 137

Population ecology, 160, 176-190, 196; Routines, see standard operating procedures

Density dependence, 181, 187 Rowan, Brian, 153, 156

Environmental niche, 179-180 Rule following, see logic of appropriateness

Liability of newness, 181 Salancik, Gerald, 116, 119

Mutation, 180 Satisficing, 20, 179, 192

Niche theory, 182-183 Scott, Richard, 2, 6, 9, 17, 114, 121, 152, 154

Population, 177 Sectors, 3

Recombination, 177 Sensemaking, see meaning-making

Retention, 177 Shipps, Dorothy, 29

Selection, 177, 186 Simon, Herbert, 20

Structural inertia, 180-181 Size of organizations, 3

Variation, 177, 182-183 Smith, Andrew, 141

Powell, Walter, 131, 142-144, 154, 156, 160-162 Social embeddedness, 130

cci
Social exchange theory, 53

Social structure, 2-4, 6-8, 30-31, 33, 89-92, 125,

127, 168, 189, 192, 194-196

Standard operating procedures, 26, 81, 115, 156,

177

Stinchcombe, Arthur, 177, 186

Suchman, Lucy, 80

Swaminathan, Anand, 185

Technology, 6-8, 30-31, 33, 89-92, 125, 127, 168,

189, 192, 194-196

Thompson, James, 116

Tsai, Wenpin, 131

Weick, Karl, 21, 61, 177

Weiner, Stephen, 66

Weiss, L., 144

Winter, Sidney, 177

Wohlstetter, Priscilla, 141

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