Review

Reviewed Work(s): Organization and Environment: Managing Differentiation and

Integration. by Paul R. Lawrence and Jay W. Lorsch
Review by: Richard H. Hall
Source: Administrative Science Quarterly , Jun., 1968, Vol. 13, No. 1 (Jun., 1968), pp.
180-186
Published by: Sage Publications, Inc. on behalf of the Johnson Graduate School of
Management, Cornell University

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 180 ADMINISTRATIVE SCIENCE QUARTERLY

a change of such magnitude as this could be accomplished without

carefully accounting for ramifications in the wider organization is to
deny important, well-documented realities of organizational life.
To summarize my reactions to this book: I think that Porter and
Lawler's work has made important empirical and theoretical contribu-
tions to the subject of how managerial job attitudes (especially those
regarding pay) are related to effort and performance. A significant
part of industrial psychology has been enriched by this investigation.
The step from these findings to the organizational changes implied
by several of them, however, is longer and more complex than the
theory or suggestions presented in the book have indicated.

CLAYTON P. ALDERFER
Assistant Professor of Administration
Graduate School of Business and
Public Administration
Cornell University

Organization and Environment: Managing Differentiation and Inte-

gration. By Paul R. Lawrence and Jay W. Lorsch. Boston: Divi-
sion of Research, Graduate School of Business Administration,
Harvard University, 1967. 279 pp. $6.50.

It is a rare occasion when a book which is designated by the authors

as one directed to administrators proves interesting and even exciting
to the research-oriented scholar. This is the case with this book,
however, which this reviewer believes will make an important contri-
bution to organizational theory. Since he cannot speak directly for
practitioners, the impact on practitioners themselves is not as predict-
able, but one would hope that it would be read and heeded.
The basic question analyzed in this work is: What kind of organiza-
tion does it take to deal with various economic and market conditions?
This basic question sets the tone for the entire work. This tone implies
the contention which is made and supported throughout the book that
there is not one best form of organization even for those organizations
in the industrial segment of the organizational world. In support of
this contention, the authors amass solid evidence which not only fits
with their own conclusions, but also falls squarely within the concerns
of much of contemporary organizational theory.
The authors use a small number of concepts which are carefully, but
not exactly, measured in developing their argument. They first of all
note that differentiation is an important distinguishing characteristic

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 BOOK REVIEWS 181

of organizations. The organization is divided into parts that perform

different functions, such as sales, research, or production. To this
standard concept they add the often overlooked point that such
differentiation by function includes differences in attitudes and be-
havior on the part of the members of the differentiated departments.
These differences include orientations toward particular goals for the
departments, varied time perspectives, differing emphases on interper-
sonal skills, and the type and extent of formalization of the structure.
Departments can and do vary, therefore, in terms of what they
actually do and in terms of their members' approach to their work.
With differentiation comes the obvious problem of integration, the
second major concept used. Integration in this case means the quality
of the state of collaboration which exists among departments that are
required to achieve unity of effort because of environmental demands.
Such collaboration can be achieved through hierarchical control, com-
mittees, simple scheduling, special departments specifically estab-
lished to facilitate integration, or interaction outside of official
channels. Such integration requires interpersonal skills appropriate to
the situation.
It is at this point that the authors note that their two major con-
cepts-differentiation and integration-are basically antagonistic to
each other. The more differentiated an organization, the more diffi-
cult it is to achieve integration. Differentiated organizations will
inevitably be conflict laden. The resolution of conflict thus becomes
a major organizational task.
It is also at this point that the concept of environment is introduced.
For the purposes of this analysis, environment refers to the demands
placed upon differing segments of the organization from outside the
organization. These demands are in the form of technical and eco-
nomic conditions to which the organizational segments must respond.
The environment affects the organization through the rate of techno-
logical change in the product and the processes which have to be taken
into account in the development, production, and sales functions. The
environment also enters the picture through the variations in strength
and stability of demands for the organization's output. As will be noted
below this is a limited approach to environmental factors. Nevertheless,
as the authors demonstrate, these environmental pressures affect both
the structure and operations of the organizations involved.
To this relatively simple conceptual model is added solid empirical
evidence which provides clear support for the model. The evidence
comes from questionnaire and interview data from ten organizations

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 182 ADMINISTRATIVE SCIENCE QUARTERLY

in three different industries. Information on the differentiation and

integration issue is derived from the responses of top and middle man-
agement to the questionnaire and interview items. The state of
environmental pressures is determined through interviews with top
executives. In both cases those who are in the best position to know
about the issues are used as expert respondents. The data-gathering
instruments are presented in detail in a complete appendix.
Six of the organizations are in the plastics industry. These organi-
zations serve as the basis for most of the analysis. This industry faces
a diverse environment in terms of the market served. Its products and
processes also undergo rapid change as demands and developments
provide a constant input of change-inducing factors. The basic
departments in each of these organizations are production, sales, ap-
plied research, and fundamental research. Evidence from the organi-
zations indicates that the departments are differentiated from each
other according to the environmental pressures faced and along the
dimensions of differentiation which are considered (goals, time per-
spective, etc.).
The important finding here is that the most effective organizations
exhibited the greatest degree of differentiation. Each department is
oriented toward its own function. Effectiveness is determined by
standard economic and market measures, a procedure which might not
satisfy researchers concerned with other forms of effectiveness, but
which at the same time is probably the best procedure available. These
more effective organizations thus face more severe integration prob-
lems. They are more successful in their integrative efforts in spite of
the problems.
Their effectiveness in the face of high differentiation is explained
by their successful conflict resolution. The analysis of the conflict
resolution process is another major contribution of this research. The
authors do not suggest that there is one best form of such resolution.
Rather, they provide evidence that conflict resolution processes vary
according to the specific conflict situations which are faced in a par-
ticular form of organization. In the case of the highly-differentiated
plastics industry organizations, integration is achieved by departments
or individuals who are in a position and have the knowledge available
to work with the departments involved in conflict situations. In this
case, the position is at a relatively low level in the managerial hierarchy,
rather than at the top of the organization. This lower position is
necessary because of the specific knowledge required to deal with
the departments and issues involved. Another important consideration

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 BOOK REVIEWS 183

is that the integrating department or individuals are equidistant be-

tween the conflicting departments in terms of their orientations on the
time, goal, interpersonal, and structural orientations. This middle
position does not lead to effective resolution through simple compro-
mise, but rather through direct confrontations between the conflicting
parties. Conflict resolution in this setting thus becomes a process
whereby the parties thrash out their differences in the open with the
assistance of integrators who understand both of their positions.
These interpretations from one industrial setting are strengthened
by the addition of data from two other industries. Two organizations
in the standardized container industry and two in the food processing
industry complete the organizational sample for the study. The con-
tainer industry is characterized by a stable environment with demands
simply for prompt delivery of a standardized product. In this industry
there is less interdepartmental differentiation. At the same time, con-
flicts which do arise in the integrative process are resolved at the top
of the organization in contrast to the pattern in the plastics setting.
In the container industry those at the top of the organization have
greater knowledge because of the stable environment and the lack of
differentiation between organizational segments. The authors suggest
that in organizations like the container firms, decentralization of in-
fluence would be harmful.
The food processing firms generally fall between the plastics and
container firms in terms of the extent of their differentiation and the
integration problems faced. The central thesis of the book is thus
strongly supported by the evidence amassed. An effective organiza-
tional form for one organization is not necessarily that for another.
The nature of the task being performed and the environmental condi-
tions faced must be considered when an organization is being shaped.
Effectiveness is not achieved through following one organizational
model.
The findings of this study confirm much of what is being said and
written about organizations today. The authors note that studies by
Burns and Stalker, Woodward, Udy, and Leavitt, among others, suggest
the same general argument. Perrow's recent suggestions regarding a
framework for organizational analysis are directly in line with the
findings of this study.' Organizational theory is thus happily moving
away from the search for the one best model.

1Charles Perrow, A Framework for the Comparative Analysis of Complex Or-

ganizations, American Sociological Review, 32 (April 1967), 194-208.

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 184 ADMINISTRATIVE SCIENCE QUARTERLY

An interesting facet of the theoretical discussion involves the long-

standing non-dialogue between advocates of the "classical" and "human
relations" theories of organizations. The authors essentially say that
neither approach is correct based on the considerations discussed
above. In adopting what is essentially a sociology of knowledge stance
in regard to these theories, the authors note that the developers of the
classical approach themselves had backgrounds in organizations with
very stable environments. Their one best way to organize is appropriate
in such organizations, as the case of the container firm attests. The
human relations school, on the other hand, emerged during a period
of uncertainty in the environment and from individuals whose own
experience was in organizations which faced uncertainty. Their one
best way to organize similarly is appropriate under certain conditions.
Thus neither approach is refuted, but neither is accepted in the manner
which is customary.
While no single organizational model is advocated, the authors do
suggest that the environment itself will probably shift toward less
certainty and more complexity. This should lead to a greater propor-
tion of organizations following the highly differentiated model if they
are to maximize their effectiveness. The growing importance of re-
search and development in most areas of industry suggests that such
differentiation is already occurring. The "wave of the future" will
probably be toward organizations more like the plastic firms than the
container firms. This wave, however, will not cover the total organi-
zational surface.
This generally impressive work is marred by several shortcomings,
probably as inherent a condition as the conflict in organizations itself.
The first such shortcoming is in the manner in which the concept of
environment is handled. The authors do not make the distinction
between the organization and its environment clear. On the one hand,
it is pressure from the market. On the other, it is the state of the tech-
nological art. If an organization is a bounded entity, the points of
entrance of environmental pressures should be made more explicit. If
the organization is an open system, then the strength and direction of
inputs from the total environment should be considered. The authors
provide no information on the mechanisms by which these environ-
mental influences enter the organization. This problem is not, of
course, limited to just this study. While this work does take the
idea of environmental influences out of the realm of discussion and
into the realm of research, they have not solved the problem of con-

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 BOOK REVIEWS 185

ceptualization and measurement. While it seems reasonable that

differentiation is a consequence of environmental influences, this
reviewer is unconvinced by the data presented that other factors
might not also be operative. The differentiated plastics firms, for
example, could be highly differentiated simply because of the kinds
of people hired into the different departments of the firms in the
industry. While this is itself an environmental factor and may not
be a very plausible argument, the concept of environmental pressures
as used in this study is not as precise as it should be. The ideas seem
reasonable, but their demonstration is not yet at a desirable level.
The lack of clarity in regard to the environment issue is related to
another shortcoming of the study. While the authors deliberately and
correctly choose to concentrate on only a few variables, they essen-
tially ignore the possibility that others may enter the system and
affect their findings. Other environmental pressures, original differ-
ences in structure among the organizations studied, historical factors,
and intra-industry variations in orientation and practice are largely
ignored. While no single study can control for all possible intervening
influences, the authors should at least have given greater consideration
to the possible influence of other factors.
The final criticism is that the authors do not attempt to generalize
their findings beyond the industrial sphere. While this criticism is
unfair since the authors state that they do not wish to do so and the
data are only from industry, the implications of the findings and
interpretations thereof appear to be of real significance for all organi-
zations and all organizational analysts. Since the organizations studied
did vary according to environmental pressures and responded dif-
ferentially to these pressures, the same kinds of reactions for non-
industrial organizations could at least be predicted. While the burden
of demonstrating the relevance of these findings for other organiza-
tional forms is not on the authors, it is their responsibility to push
organizational theory forward. This they have done admirably within
one segment of the total. They should have attempted the next
step, also.
One would hope that studies such as this would end forever the
advocacy of particular organizational models at the expense of all
other approaches. The findings clearly suggest that there is no one best
way to organize for maximum effectiveness. As the total society moves
in the direction of greater emphasis on technological development
and new markets emerge as strong environmental influences, a shift

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 186 ADMINISTRATIVE SCIENCE QUARTERLY

toward the more differentiated organizational model can be predicted.

While this model proves to be effective in the present circumstances,
it cannot be taken as the model for the future. Changes in the environ-
ment and within organizations undoubtedly will lead to new ways to
organize for effectiveness.

RICHARD H. HALL
Associate Professor of Sociology
University of Minnesota

The Structure of Human Decisions. By David W. Miller and Martin

K. Starr. Englewood Cliffs, N.J.: Prentice-Hall, Inc. 179 pp. $2.95.

This book provides a good, non-quantitative introduction to; the

elementary concepts of decision theory. It is written for the business
manager or student anxious to apply some logical analysis to the
solution of actual decision problems. The authors attempt to teach
the reader "how to recognize the appropriate classification for a
decision problem, and how to approach problems of each class in
accord with present theory." Further evidence on the intended purpose
of the book is found in the sentence beginning Chapter 6: "Let us
presume that the manager has been convinced by the preceding five
chapters and that he is now prepared to put decision theory to the test
of practice."
The social scientist desiring an introduction to decision theory, or led
on by the title (a more descriptive title would have been Managerial
Decision Theory), will be disappointed. In addition to skimming over
many interesting theoretical issues (for example, ethically neutral
events), the authors provide few references to the more advanced
theoretical works (although most of the major ones are mentioned
once). More seriously, there is no discussion of, or even reference to,
any of the empirical studies performed in this area.
The authors at times, though, do seem to write to both the prac-
tically oriented manager and the theoretically oriented social sci-
entist. For example, they give a brief account of the controversy
between an objective and a subjective interpretation of probability.
However, the manager is likely to feel that such subtleties have little
relevance for his decision problems, while the social scientist would
require a more thorough discussion. If the authors are in fact directing
their book to a managerial audience, and the quotes given above
suggest that they are, then they could more profitably have adopted a

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