1071 Authors name

Vita Contemplativa

Following the Scientific Method:

How I Became a Committed
Functionalist and Positivist
Lex Donaldson

Abstract

Lex Donaldson I summarize my view of organization theory and then explain how it developed over
Australian my life. I stress that it arose gradually from a series of empirical tests, so that my views
Graduate School are based on good reasons, despite being in some ways unconventional. Early
of Management,
Sydney, Australia
influences upon me include the non-conformist climate of my school days and the
empirical ethos at the University of Aston. I have long been interested in the creation
of social science. This has been informed by the philosophy of science, which
emphasizes the centrality of theory and its empirical testing. My early work in the
Aston programme laid the basis for commitment to functionalism and generalization.
The vociferous rejection of this style of research by ideologically oriented critics led
me to defend it, both theoretically and philosophically. My later work on strategy and
structure led me to reject strategic choice and embrace situational determinism.
I analysed these and other research topics as being within structural contingency theory.
I also used this theory frequently in my business school teaching. In the USA, newer
theories arose, which, collectively, fragmented organizational theory. I critiqued these
theories, and this fragmentation. Moreover, I became convinced that contingency
theory in its classic variant is more correct than newer variants, and offered detailed
argumentation. My empirical research also found that crises of low performance
triggered adaptive structural change. From that, I created organizational portfolio
theory, which draws upon finance to explain performance fluctuations and the resultant
organizational change and lack of change. More recently, I offered an integrated
statement of structural contingency theory and ideas for its future development
theoretically and methodologically.

Keywords: functionalism, positivism, contingency theory, structure, organizations,

science

I have steadfastly argued for positivism and functionalism, for a long period
of time. In part, this stems from a lifelong commitment to taking a scientific
approach to the study of organizations. However, some of my views have
Organization
Studies
emerged piecemeal over many years. I have been aware of many different
26(7): 1071–1088 views, and only gradually settled for my present views, as a result of a long
ISSN 0170–8406 and laborious process of considering the theories and empirical evidence.
Copyright © 2005
SAGE Publications
Similarly, my views have also become ‘more extreme’ over time, in the sense
(London, that they have departed more from the mainstream. While some basis for
Thousand Oaks, this was laid early in my life, much has come about gradually as a result
CA & New Delhi)
of this same consideration of the theories and evidence.

www.egosnet.org/os DOI: 10.1177/0170840605053542

1072 Organization Studies 26(7)

I will briefly present my theoretical position and then explain how it arose,
by telling the story of my intellectual life.

How I View Organizations

My view of organizations is positivist in several senses. It is a general theory

of organizations, which holds across many different kinds of organizations
and in many different settings (Donaldson 1996a). The methods used to test
the theory include scientific methods such as quantification and controlling
for extraneous causes. The theory is also positivist in the sense that the
causal processes are conceived of as operating deterministically, with many
of them involving objective forces that place pressures on the organization
(Donaldson 1996a, 1997a). It is also positivist in that material factors play a
role, e.g. organizational size, being the number of organizational members
(Donaldson 1996a).
My view of organizations is functionalist (Donaldson 1996a) in that
organizations are created and maintained primarily because of their instru-
mental benefits: that is, they enable tasks to be accomplished that an individual
alone cannot (Donaldson 1985a). Similarly, organizations have an organiza-
tional structure because this is necessary to coordinate the work of their
members to achieve task accomplishment (Donaldson 1985a). Some structures
produce greater organizational performance, and so organizations tend to adopt
those structures. Organizational managers are under environmental pressure
from competitors, owners and so on, to increase the performance of their
organizations, and they also tend to want to do so, as stewardship theory states
(Donaldson 1990a). Higher performance results from fitting structures to the
contingencies, such as size, strategy, innovation and uncertainty (Donaldson
2001). Managers and their organizations tend to act rationally, by choosing
structures that fit the contingencies, so their choices are determined by the
contingencies (Donaldson 1996a). Hence, contingency change drives structural
change. The adaptation of structures to contingencies occurs across different
countries and so generalizes (Donaldson 1996a).
However, organizations may remain in misfit for some time, until perfor-
mance drops to crisis levels (Donaldson 2001). This results from managerial
rationality being bounded, i.e. imperfect, reflecting limited managerial
knowledge (Donaldson 1999). The functionality of organizations is therefore
also imperfect, leaving scope for improvement through better knowledge
being provided to managers through research and education (Donaldson
1985a).
The theory is one of disequilibrium (Donaldson 2001). The higher perfor-
mance enjoyed by organizations in fit gives them surplus resources.
Organizations tend to use these surplus resources to expand, thereby increasing
the level of some of their contingency variables, e.g. size, while also retaining
their existing structure, and so organizations move into misfit of structure to
contingency.
Donaldson: Following the Scientific Method 1073

School Days

At my non-denominational Protestant state schools, it was impressed on us

that we should always say what we believed to be the truth, even if it
contradicted others or went against the norm or led us to suffer. The values
imparted were that one had to follow duty and serve one’s fellow human
beings. This required hard work and self-control. We were also trained to be
critical, for example about what we read in the newspapers, to see through
propaganda, self-interest and falsehood. This spirit of scepticism was rampant
in the Merseyside community and among my family and friends. There was
a strong sense that many public announcements, especially by those in official
positions, were sanctimonious and hypocritical. Organized religion was
particularly a target of grass-roots critique. Later on, it astounded me to
hear people in universities talk as if ‘being critical’ is something new or only
exists in universities — or only among followers of ‘critical theory’ or
‘postmodernism’.
In my world, during the early 1960s, science had great prestige. There was
a strong Enlightenment sense that the best knowledge was scientific knowl-
edge and this enabled action to be taken to improve the lot of humankind.
Therefore, for my latter years at school, I specialized in mathematics and
physics, which undoubtedly provided me with an enduring role model of
successful science.
Novels that influenced my thinking included science fiction works, by
Huxley and others, of future societies controlled by scientific forces. I recall
one evening arguing with friends about whether people had free will, as
religion said, or were determined, as science said. We all concluded that
human behaviour was completely determined. To deny this inescapable
inference of science seemed to all of us to be wrong, and either muddled or
hypocritical.
In my last years at school, we listened weekly to a series of radio talks on
the philosophy of science. This included a talk by Popper on falsificationism,
and a talk on Kuhn’s paradigms. These philosophers were adamant that
empirical facts always needed to be interpreted through theory.
When I was only about 15, I took out books from the public library by
Eysenck, in which he argued for a decidedly scientific approach to psychology,
refuting as unscientific earlier psychologies such as Freud’s. He explained the
basis of the scientific approach to psychology, including the correlation
coefficient and experiments. I found his writing thrilling, in that it was clear,
definite and aggressive. It made its case rationally, but boldly, tearing down
all doctrines that were shown by science to be false. This kindled in me a desire
to be a part of this scientific movement, freeing us from the influence of old,
false views, and so informing key social policy questions.
One of Eysenck’s points was that science sometimes shows that the natural
world works in an unpleasant or unjust way. For example, a child born with
one disadvantage is more likely to have other disadvantages, so that the fond
idea that all children excel in something is false. This is part of the tough-
mindedness of the scientific view. And it is one of the reasons why science
1074 Organization Studies 26(7)

should strive to be objective and value-free, because value-driven beliefs will

often be beguiling but wrong (Donaldson 1997b).

Undergraduate Degree at the University of Aston

Subsequently, at the University of Aston, I initially specialized in psychology,

but I later switched to sociology, because I found its analyses far more
interesting, being field-based and realistic. Industrial sociology was strong
then. The format of the lectures was what I came to recognize as the British
empirical critique: ‘Well, there is this theory [often American], but in the
study of the women down in the biscuit factory, in reality they ...’ This was
admirable, in that it was both critical and empirical.
In sociology, I was exposed to functionalism. Functionalism is widely used
in the biological sciences, so it seemed reasonable to inquire as to whether
social and organizational structures were shaped by their consequences.
Moreover, by revealing latent functions unknown to participants, functionalist
research was not just telling people what they already knew. The key formu-
lation of functionalism was Merton (1968), in which the function of a structure
was a hypothesis to be investigated empirically. There was disavowal of any
presumption that every structure is functional, and indeed there was the explicit
concept of dysfunctions.
In sociology more generally, a prevailing doctrine was structuralism,
meaning that social interactions recur in patterns, reflecting social facts
about the situations that constrain people, even if they would prefer to do some-
thing else. For example, social stratification meant that people from lower
socio-economic strata are enduringly disadvantaged. And, in organizations,
members are subject to hierarchical subordination and to ‘compliance systems’
(Etzioni 1961). Thus, explanation consists of charting patterns that make
up the social structure and identifying their causes, which lie outside of
individuals. In psychology, I was exposed to the idea that human beings are
relentlessly adapting to their varying environments. These ideas undoubtedly
provided a bedrock of thinking for my later research.
There was also a course on the philosophy of science. This included ideas
that, on a priori philosophical grounds, challenged the notion that there could
be a social science. We read Ayer, Popper, Winch and Wittgenstein. Popper
was a figure much respected throughout British universities in the sixties, and
I greatly enjoyed reading his Open Society and its Enemies, and was much
influenced by it. Again, this was a vigorous and cogent critique that revealed
the unscientific nature of theories such as Marxism, and roundly refuted them.
Thus, I internalized the view that philosophy was to be respected, and that
social science was potentially vulnerable to crushing objections of an a priori
philosophical kind.
At Aston, I had the great good fortune to be taught by David Hickson, who
is an exemplary positivist humanist, and John Child, who is an exemplary
scholar. The prevailing ethos there was liberal and sceptical. No theory should
be either accepted or ruled out a priori; rather they all have the right to be
Donaldson: Following the Scientific Method 1075

included in empirical research, which will show which theories are valid.
Such inclusion also allows synthesis of theories. Thus, far from being
indoctrinated in some particular organizational theory, I was encouraged
towards an eclectic empiricism.
While I was a student, the student revolution of 1968 erupted. Being con-
scious of social injustices and the need to right them through social change,
I became part of the movement. However, for many, the radicalization was
accompanied by a politicization of sociology, which I came to resist. Within
British sociology, there was a faction that rejected notions that sociology was,
or ever could be, a science, or that it should be value-neutral. The faction
tended to see these and other, then mainstream, ideas, such as functionalism
and positivism (particularly in American sociology), as being false and as an
ideology justifying capitalism or pernicious statism. Functionalism was
challenged by what was then called conflict theory. Society was seen as
characterized by conflict between social classes. Functionalist theory was
an ideology of the establishment and conflict theory the ideological weapon
of the insurgents. Thus, conflict theoretical sociologists were partisans for
the oppressed. For them, sociology is the continuation of social struggle
through academic means. This stance became increasingly popular, and many
people who entered British sociology from 1968 onwards saw themselves
as partisans. In contrast, I (along with my peers) saw myself as becoming a
professional social scientist.

Philosophy of Science

At school and university, I developed a view of the philosophy of science that

I have basically held for my life to date, which has guided my research. The
aim of science is to create coherent theories, which have been empirically
validated. Progress involves the overturning of pre-existing theories by
falsifying them. Science involves use of the hypothetico-deductive method:
some of the elements in a theory may not be observable, but observable
implications can be deduced from them. These hypotheses about observables
are tested against the empirical data. An example, used repeatedly in my early
exposure to the philosophy of science, was the bubble chamber experiments
in atomic physics. When a particle shoots out from a nucleus, it leaves a track
of bubbles in a liquid, and, from the trajectory, the scientist infers the nature
of the particle, without actually observing the particle. Thus, one can validate
or falsify a theory without empirically studying all of its processes, some of
which may remain inaccessible. This is why statistical analysis of quantitative
data can be so revealing, even if some processes that are in the theories are
not directly studied.
Knowledge development often takes the form of a contest between two
or more competing theories. By formulating and empirically testing the
hypotheses derived from each theory, one may be able to conclude validly that
one theory is false and the other confirmed. Whereas accuracy is a scientific
virtue, many social science data are not highly accurate, but often they do not
1076 Organization Studies 26(7)

need to be to discriminate between competing theories. The struggle between

competing theories is what gives much of the form and dynamic to a literature.
Policies propounded by pundits, political parties and governments can also
be formalized into theories, whose propositions can be turned into testable
empirical hypotheses. My 1974 PhD thesis was just such an examination, a
programme evaluation of British government policy for higher education.
One of the chapters in the book from my thesis is entitled ‘Policy as Theory’
(Donaldson 1975a). Managerial practices also can be treated as being based
on implicit theories whose hypotheses can be tested empirically. My earliest
social science research was a study of job enrichment in Phillips Electrical
Limited (Donaldson 1975b). In such ways, academic research has social
relevance. A commentator has written that I see organizational theory as a
policy science (Reed 1989), which is a correct view of my position. I have
wanted research to develop knowledge that is useful and speaks to managerial
and social concerns (Donaldson 1979, 1985a, b, c, 2000, 2002, 2003a,
Donaldson and Hilmer 1998, Hilmer and Donaldson 1996).

Entering Academia

My decision to become an academic was prompted by my deep interest in

social science, and by my desire for a job in which I would be autonomous
and free to express my views without having to be subservient to a hierarchy.
After being a student, I was employed as a researcher. Initially, I researched
higher education policy. In so doing, I wrote my first published article
(Donaldson 1971). I spent much time poring over the data and comparing their
patterns with those implied by the prevailing government policy. I was very
hesitant about making any statement that went beyond just reporting the data.
I would attempt a theoretical interpretation, only to think: ‘I can’t say that; it
is not allowable under scientific method.’ So I would cross out the statement
and then try a much more cautious one. Then I’d think that I was missing the
theoretical significance of the finding, and so I’d try a less cautious statement.
This process went on for a long time. Gradually I felt I had made a theoretical
interpretation of the data that was reasonable, in the sense of according with
scientific principles. While the process had been painstakingly slow, learning
had occurred, so that in writing subsequent articles I could more quickly make
the judgments about what theoretical interpretation is reasonable.
Next, I moved to London Business School (LBS), to the Organisational
Behaviour Research Group, headed by Derek Pugh. The Aston study had found
in Birmingham a relationship between organizational size and organizational
structure. At LBS, John Child had run a large-scale replication study of
organizations in England and Wales. As I entered his office, I saw computer
printouts stacked everywhere. John said something like: ‘The replication
has come out pretty much in support of the original Aston study, with size
being important.’ It seemed to me that I was truly standing in a social scientific
institute: here were data, results, statistics, replication tests and patterns that
generalized across samples and locales.
Donaldson: Following the Scientific Method 1077

Under the leadership of Malcolm Warner, we applied the Aston method

to the organizational structures of trade unions (i.e. labour unions) and
professional associations. Many of the relationships found in other Aston
programme studies held (Donaldson and Warner 1974a). Moreover, we
extended the framework by adding variables that tapped the democratic
aspects of these organizations and were able to interpret the findings in a
theoretically meaningful way (Donaldson and Warner 1974b). We were
contributing incrementally to the building of an empirically validated general
theory of organizational structure (Donaldson and Warner 1976), which
seemed a satisfactory development within the mantle of social science.
However, my first presentation of our findings at a conference proved
stormy. The research was vehemently attacked, with one speaker becoming
passionately hostile, belittling and dismissive. The root of the dispute was the
view of sociology-as-ideology. To the critics, this functionalist, quantitative
research aped science and was ideologically pernicious — especially being
a study of unions conducted in a business school. This was the first time I was
publicly on the receiving end of the ideologically based critique. The criti-
cisms were highly emotional. This was not cautious scientific interchange; it
was political diatribe. At subsequent conferences and inter-university
colloquia, I listened to this style of invective being delivered against me and
others. During the seventies, these kinds of vitriolic attacks at conferences on
social scientific research became so strong that some good researchers were
cowed and stayed away.
I had sympathy for societal change towards socialist democracy. However,
I also believed that not all knowledge was politicized, in that organizational
research was not perpetuating capitalism and could inform democratic,
working-class or governmental organizations. A key reason is that issues such
as how to organize more effectively to attain organizational goals are value-
neutral. It is this technical nature of administrative knowledge that allows
organizational theory research not to be an ideology justifying the status quo
(Donaldson 1985a). Therefore organizational theory research should not be
overthrown as part of ‘combating bourgeois ideology’.
One type of argument that was used a lot by the ideological critics was a
priori philosophical argument. They freely bandied about words like ‘under-
lying philosophical assumptions’, ‘epistemology’, ‘Kuhnian paradigms’,
‘incommensurability’, ‘meaningfulness’, ‘reification’ and ‘behaviouristic
correlations’. Many academics and students quailed before these verbal
pyrotechnics, or were in awe of those who uttered them. In contrast, I readily
found flaws in their arguments. I could deal with these philosophically based
objections, because my grounding in philosophy, though rudimentary, was
at least a match for many of the critics. Many of them were too used to
winning by bamboozling their targets, but I was not so easily fazed, and came
back at them.
The more I was involved in these interchanges, defending social science
and its practitioners against the sociology-as-ideology brigade, the more
I found that the critics’ arguments were wrong or weak. Thus I felt that I was
becoming adept at rebutting them. However, despite their weak rational
1078 Organization Studies 26(7)

foundations, it also became obvious that some social scientists just could not
stand up to these critics in public brawls. They were good men and women,
but they lacked the philosophical or other foundations, or they emotionally
disliked the conflict. In contrast, I felt that I had the capacity to take on the
volatile critics. The emotional part of this capacity came from my background
values and from traits inherited from my mother. At the intellectual level,
I was acting out the Popperian mission of wrestling with the ideologues, in
order to build social science. I have continued to defend the philosophical basis
of the scientific study of organizations (Donaldson 1985a, 1992, 2003b, c ,d).
As I worked on the analysis and write-up of the union data, I was repeatedly
comparing different competing theories to see which best accorded with the
empirical evidence. For instance, I concluded that the relationship between
organizational size and organizational specialization was real, and not some
artefact or emanation of ‘abstracted empiricism’ (as critics sometimes labelled
Aston-type research). Not only were the respondents in small unions telling
us that they had few specialists, but their head office was a modest house, so
we could see that there really were no specialists there. Thus, the coding of
low specialization was valid. One hypothesis at a time, I gradually eliminated
plausible rival theories and converged on the theoretical interpretation in the
published articles. This is an incremental, little-by-little approach, which
proceeds over quite a time and involves a lot of hard work.
Because of the intellectual foment against functionalism, positivism and
determinism, and in favour of conflict or human choice theories, there was
pressure on Astonian and other quantitative researchers to interpret their
correlations in ways that accommodated the conflict/choice theories. John
Child published a paper that criticized the Aston theory and methods quite
strongly, and advocated instead the strategic choice position, which was a
combination of the systems and actor theories. I was shocked as I read the
working paper, because it undermined the rationale of the Astonian approach.
This article (Child 1972) became one of the most cited of the Aston programme
articles from the 1970s, is well known internationally, and helped create a
move away from quantitative, scientific methods in British organizational
studies.
Thus, in the 1970s, an ongoing issue was the relationship between statics
and dynamics, in that there were substantial cross-sectional correlations
between contingencies and structural variables, but some theorists argued
strongly that change was created by humans conflicting and exercising choice.
By the early 1970s, my position was pluralistic, in that I believed that func-
tionalist systemic causality operated whereby organizations adapted to their
environment, but that there was also a substantial realm of choice in which
actors (e.g. managers) made decisions, shaped by their perceptions, oriented
towards their valued ends and entailing political processes of conflict and
power. Thus organizational behaviour was both systemic and deterministic
on the one hand, and also individualistic and voluntaristic on the other. Both
systems theory and social action theories were correct. Derek Pugh conceded
in seminars that they both might account for about 50 per cent of the variance.
Similarly, in a publication in 1982, debating against Schreyogg’s critique of
Donaldson: Following the Scientific Method 1079

contingency theory, I wrote that there were relationships between contin-

gencies and structure, but that the changes were more random, reflecting
conflict–choice processes (Donaldson 1982a).
At LBS I worked on various issues (Donaldson 1975a; Donaldson and
Lynn 1976), mostly within the Aston programme, including the dimension-
ality of organizational structure (Donaldson 1975c) and the relationship of
structure with technology (Donaldson 1976). Zwerman (1970) had published
a US study that replicated Woodward’s (1965) findings that technology was
the key. I read through the book quickly and accepted his argument. However,
I then prepared an internal memorandum for my colleagues and felt that
I should include some tables that clearly showed the replication. However,
as I unpacked his findings and reassembled them in tables, using Woodward’s
format, it became strikingly obvious that Zwerman had not replicated
Woodward’s relationship between fit of structure-to-technology and perfor-
mance. I then went on to write a paper that compared the Zwerman and two
Astonian studies, and found that none of the Woodwardian relationships were
replicated consistently by them all. The paper was very much a Popperian
falsification of a then major organizational theory.
I submitted it to the Journal of Management Studies, but heard nothing for
over a year. Eventually, a new editor wrote to say that, when he had taken
over from his predecessor, in the office had discovered my paper, which had
fallen down behind a cabinet! Upon its publication it caused something of
a stir, with another journal, Omega, publishing an editorial commentary on
it (Eilon 1977), which was followed in a later edition by correspondence
from various researchers: Charles Baker, John B. Chapman, John Donaldson,
David J. Hickson, Tom Kynaston Reeves and Leonard Sayles (Baker et
al.1978; also Donaldson 1978).

Core Academic Career

I moved to the Australian Graduate School of Management in 1977. Because,

over the years, I had to teach organizational structure many times, my mind
was focused on the contingency theory research: how its ideas come together
in a coherent way, and its validity. Publicly arguing for a model undoubtedly
motivates one to attend to its validity and increases one’s commitment to it.
In 1978 I reflected on my intellectual life and laid out a strategy for the future.
I was aware that I had gradually evolved a set of beliefs of the contingency
theory type, which involved functionalism and positivism. I realized that this
was contested and that I was well equipped to argue for this position, and that
such arguments would be distinctive and of interest to a broad audience because
they addressed fundamental issues. Moreover, I was conscious that, of my ten
publications at that time, the one that had caused the most interest was the
critique of Woodward, rather than the more constructive and incrementalist
contributions. I saw that, making critical statements about core parts of
the literature played to my strengths and led to contributions valued by the
academic community.
1080 Organization Studies 26(7)

I had been interested in working in the USA and, at about this time, visited
a university there. I was struck that many of its academics felt oppressed by
hierarchy. To get tenure, they had to have the right publications, which meant
writing things that pleased certain editors and reviewers. Just one too few
journal acceptances led to denial of tenure. At a ‘social party’ in the home of
one professor, I watched as the very formally attired academics and their
spouses lined up and shook the hand of a senior university official — the
woman who had just denied tenure to one of their colleagues. She passed
along the line like royalty. Afterwards, the academics gasped and wiped their
sweating palms. These people were not living the life of academic freedom;
they were living a life of academic serfdom. Since I had tenure in Australia,
I decided to stay there, so I could enjoy the freedom to write what I wished.
Also, by publishing my main statements in books, I could avoid censoring
by the journal editors.
I started writing a paper that was a rebuttal of the criticisms of contin-
gency theory made by the Marxian left and the strategic choice position. As
soon as I began writing, the ideas and words poured forth rapidly, and I soon
realized I was writing my first Popperian-style book, which was exhilarating.
This book became In Defence of Organization Theory, published in 1985. In
it I sought to provide an intellectual defence of functionalism, positivism,
contingency theory and quantitative, comparative research methods. There
have been discussions about my defence (Aldrich et al. 1988), but no cogent
rebuttal (Donaldson 1988). My main concern was to defend these theories
and methods from dismissal, by arguing that they had validity. While I made
criticisms of rival approaches, I did not deny them a place. Thus I did not
assert one ‘paradigm’ to the exclusion of others. A commentator has classified
me as an ‘integrationist’ (Reed 1985), which is a correct view of my position
(Donaldson 1998). Simultaneously, I was also pursuing, at a more detailed
level, the type of research that I was defending.
By late 1970s, a series of studies had been published that provided
comparative, quantitative evidence that Chandler’s (1962) ‘strategy leads to
structure’ thesis replicated and generalized. However, Aston researchers
tended to be sceptical about Chandler’s thesis, because of his use of the case
method, which was seen as the old, flawed method that Aston was replacing.
The newer studies were an improvement, in that they made extensive quanti-
tative comparisons, but they used no, or only rudimentary, statistics, and did
not test hypotheses in the way required by their functionalist theory. I suspected
that much in the patterns of their cross-tabulations could be explained by
chance. Therefore, I set out to conduct a secondary re-analysis, thinking that
I would refute the Chandler thesis, as I had done Woodward’s. However, as
I tested the hypotheses one by one, they each came out in support of Chandler’s
thesis. They also failed to support the would-be post-Chandlerians, such
as institutional, strategic choice and transaction cost economics theories.
I gradually came to believe in the soundness of his original thesis, and in the
1980s I published a series of articles reporting these findings (Donaldson
1982b, c, 1984, 1986a, b, 1987).
In examining the strategy–structure issue, my method, of course, was to
deduce from the theory the implied hypotheses. First, I had to define which
Donaldson: Following the Scientific Method 1081

structures fitted each strategy and which were misfits. Having operationalized
fit in this way, I then tested its effect on subsequent financial performance.
Prior work tended either not to measure fit, or failed to find an effect on
performance. Yet, clearly the fit–performance link was the key to the whole
functionalist explanation of why strategy led to structure. I found that, indeed,
fit led to higher performance, thereby supporting the key idea of functionalism
(Donaldson 1987). I could then test the other hypotheses implied by Chandler’s
strategy–structure thesis. In so doing, I was testing structural contingency
theory for a major contingency — strategy — and its corresponding aspect
of structure, functional versus multidivisional.
Corporations moved into misfit through diversifying, that is, by increasing
their level of the diversification contingency variable (Donaldson 1987).
Consequently, they suffered performance loss while they remained in misfit.
They then moved from misfit to fit, by changing structure, typically by
adopting the multidivisional structure (Donaldson 1984, 1987). Hence, the
overall process was that diversification caused divisionalization. Raised to a
higher level of abstraction, these results showed that early contingency theory
was right in arguing that contingency change leads to adaptive structural
change, because organizations suffer performance loss while in misfit.
Rival theories were shown to be false. For instance, the institutional theory
explanation of divisionalization, as being a mere fad in the 1960s, was
falsified. Corporations adopting the divisional structure in that decade were
actually moving into fit, and so their divisionalization was rational adaptation
rather than mere fad (Donaldson 1987). A problem with many institutional
theory explanations is that they groundlessly dismiss the explanation that
structures are adopted to raise performance, without actually measuring
performance, and so they are unable to show that there is no performance
benefit. Here, when performance is measured, it reveals benefit from adopting
the divisional structure after having diversified, and thus a rational motive for
divisionalizing. To test fairly for the presence of performance benefits, it is
necessary to follow the functionalist programme of examining the conse-
quences of structures, and, more particularly, to follow the contingency
programme of looking for the positive performance consequences of fit
between structure and contingency. Thus, disputed theories of organization
were evaluated through empirical testing.
Throughout the years, the Aston programme of research into organizational
structure continued, in country after country, revealing that the basic relation-
ships held, especially between size and bureaucracy (Miller 1987). This
attested to the generalizability of the relationship between the size contingency
and organizational structure. However, it also supported the functionalist
interpretation. If organizations whose size was increasing became more
bureaucratic in order to maintain effectiveness, then one would expect to find
size and bureaucracy connected in every study, which was what emerged. Thus
the size–bureaucracy relationship was another set of compelling empirical
findings that helped shape my convictions about organizational theory.
My 1985 book was mostly debating against the Marxian, conflict and
subjectivist critics of systems-type organizational theory, who are mainly to
be found in Europe, Australia and other countries. America was different, and
1082 Organization Studies 26(7)

yet home to several other theories that also challenged contingency theory,
so I subsequently published American Anti-management Theories of Organi-
zation: A Critique of Paradigm Proliferation (Donaldson 1995a). In this book,
I made a critique of the major US theories: population ecology, institutional
theory, resource dependence theory and organizational economics (i.e. agency
theory and transaction cost theory). I closely examined them and found many
problems of coherence and contradiction by empirical evidence. A major
scientific problem was their treatment of prior work, such as Aston or
Chandler. Scientifically, one expected a careful assessment and an attempt to
build upon what these earlier research programmes had established, or to give
a refutation argued in detail. However, these newer US theories were
advanced with only superficial consideration of prior work — or none at all!
Many of the statements made by the newer theories were known to be wrong
from previous contingency-type research. Overall, they put organization
theory in a poor condition, in that it lacked cumulation and was fragmented
into disparate streams. There was no integrated model of the organization that
provided an intellectual achievement for the discipline, or could be used to
advise managers (despite the vast sums expended on research).
Privately, some American colleagues confided to me that the field was in a
mess, but no one wanted publicly to take on the protagonists of the new
theories, who were prominent and in powerful positions. I saw that this was a
task that I could and should do. During the 1990s I gave seminars and
conference presentations in the USA, laying out my critique, touring the leading
US universities to criticize openly their eminent professors (sometimes they
were backed up by a whole room full of their students and colleagues). These
sessions were electric, to say the least. On one occasion it erupted into a
rancorous debate late at night in a restaurant overlooking San Francisco Bay.
I closed that 1995 book by taking the empirically validated parts of each
of the theories and synthesizing them into an integrated model (Donaldson
1995a). The book achieved prominence, as I expected it would, because it
deals highly critically with central theoretical contributions. It has been used
by doctoral students in programmes such as at Harvard and Wharton, so this
may help to influence future generations.
Then, in 1996, I published the book that lays out the detailed case for
the functionalist, positivist, structural contingency theory: For Positivist
Organization Theory: Proving the Hard Core (Donaldson 1996a). By a
careful consideration of the theory and empirical evidence, I showed why this
is sounder than other views that sought to supplant or correct contingency
theory (for a much briefer statement see Donaldson 1996b). These erroneous
views include organizational politics and, in ways, organizational configura-
tions (Donaldson 1996a). The book also shows in detail that strategic choice
theory fails theoretically and empirically, because contingences strongly
determine structure, with little influence left to choice unconstrained by the
contingency imperatives. Thus there is no need to leap to a different paradigm
to deal with change. The statics and dynamics of organizations are both
subsumable under the same organizational theory, and it is the functionalist,
positivist systems theory.
Donaldson: Following the Scientific Method 1083

I have always been aware of Popper’s view that theory development is a

process of bold conjecture, and I had long wanted to try that. I have been
interested to hear colleagues in finance talk about their research. They are
very strongly committed to taking a scientific approach. Using their concepts
of risk and portfolio, I developed organizational portfolio theory. This theory
predicts when adaptive organizational change will occur and when it will not.
The theory is presented in Performance-Driven Organizational Change: The
Organizational Portfolio (1999). Its starting point was that my empirical
research found that crises of low performance triggered adaptive structural
change (again supporting Chandler), so this deserved to have its implications
developed in an extended theory.
Returning to the dominant US theories, agency theory achieved consid-
erable popularity among academics, yet has a dark and unsavoury view of
managers, which, although deserved by some high-profile cases (e.g. Tyco),
may be undeserved by the typical manager. While there is argument and
evidence supporting the manager as the agent of agency theory, there is other
argument and evidence — overlooked by agency theory — of the manager
as being responsible and pro-organizational, which I term stewardship
theory (Donaldson 1990a, b). An empirical test by James H. Davis and me
showed that stewardship theory was confirmed and agency theory discon-
firmed (Donaldson and Davis 1991, 1993). Stewardship theory is clearly an
extremely positive and, in that sense, one-sided view of managers, and its
utility is as a corrective against agency theory. The truth is undoubtedly some
kind of synthesis and, with colleagues, I have tried to offer a more integrated
model of the contingency type (Davis et al. 1997). However, consideration
of the underlying contingencies leads me to the view that the average manager
is more steward than agent. As ever, a major concern here has been to
conserve important prior achievements in organizational theory.
Miner’s (2003) survey of organizational behaviour (OB) found that out of
73 OB theories, structural contingency theory ranked at about the mean on
importance. Various authors have identified different contingency factors
(Donaldson 1995b). I came to the view that strategy, size, innovation and
uncertainty are among the main contingency factors. For all of these, there is
a common framework in which they can be subsumed: fit of structure to
contingency leads to higher performance. Moreover, change processes tend
to take the form of changing the contingency, which creates misfit, and then
changing the structure to regain fit. These commonalities mean that there is
a contingency theory of organizational structure, rather than just disparate
contingency theories.
In 2001, I detailed much of my view of contingency theory in The
Contingency Theory of Organizations. I argued that the contingency literature
contains two main strands, which I termed bureaucracy theory and organic
theory. These are at some points in conflict, and so I integrated them into one
theory. I emphasized the key theoretical role of fit and performance, being
the crucial relationship that produces the correlations between the contin-
gencies and the structural variables. I suggested how bureaucracy theory
could be reformulated to make it more functionalist, by depicting the role of
1084 Organization Studies 26(7)

fit and performance within it (Donaldson 2001). I also reviewed literature

on the effect of fit on performance, and discussed methods for ascertaining
the effect of fit on performance. Thus I have sought to defend, clarify and
synthesize structural contingency theory.
In my reflections upon structural contingency theory, however, I have come
to see deficiencies in some aspects of its existing formulation. The main one
is the traditional conceptualization of the relationship between fit and perfor-
mance, which may require revision, for some major contingency factors. The
conventional view is iso-performance, where ‘iso’ means ‘equal’: any fit to
a contingency variable produces equally high performance as any other fit to
that same contingency. For example, the fit of low organizational formaliza-
tion to small organizational size produces the same performance as the fit of
high organizational formalization to large organizational size. A problem is:
why should any organization bother to increase its size and formalization
if there is no performance gain? To avoid this difficulty, we can replace iso-
performance by the concept of hetero-performance, which states that: fit to
higher levels of the contingency variable produces greater performance than
fit to lower levels of the contingency variable (Donaldson 2001). For example,
the fit of high organizational formalization to large organizational size
produces greater performance than the fit of low organizational formalization
to small organizational size. This means that organizations have an incentive
to increase their size contingency and their structural formalization. Thus
hetero-performance provides a theory that explains why there are wide
empirical variations between organizations in their levels on contingency and
structural variables.
Thus, my theoretical views have gradually changed over time to become
less ambivalent and more certain. And they have changed to become more
functionalist, more determinist, more organizationally rational, more general-
izing and more seeing contingency and performance as drivers of structural
shifts. These changes have moved me away from the mainstream and more
towards what some might see as an extreme. Yet, they have been prompted
by a careful process of weighing the theoretical arguments and the empirical
evidence. Thus, scientific method, rather than some organizational theory,
has played the role of the overarching master framework. This is consistent
with the ethos of my early student days at Aston: that all theories stand or fall
by their empirical test.

The Future

What is the future prospect for scientifically based organizational studies?

Some British organizational researchers have rejected positivism and embraced
qualitative case studies, but this has failed to produce generalizable knowledge,
and so has had little impact on the world literature. The number of ‘anti-
scientists’ may have grown in Europe and shows some slight increase in the
USA. However, there has been a great increase in the number of organiza-
tional researchers worldwide in the past thirty years, and many of them are
 Donaldson: Following the Scientific Method 1085

oriented towards general theory construction and quantitative analysis. There

has been a rise in the standard of this kind of research in the published
literature. Regrettably, the proliferation of paradigms (Donaldson 1995a) has
hampered the rapid development of organization studies. And the overall
process has not been the rational one of different viewpoints being resolved
through detailed discussion leading to consensus. However, researchers who
persist with a theory are able to make cumulating contributions. In particular,
there is a continuing stream of research into the effect on organizational
performance of the fit of structure to the contingencies (see Donaldson 2001,
chapter 8). These can benefit in the future from increased use of psychometric
methods to reveal stronger and theoretically clearer patterns (Hunter and
Schmidt 2004). Hence, organization studies can contribute knowledge about
organizational performance, some of which is not already known by organi-
zational members (Priem and Rosenstein 2000). The future for organization
studies is one in which succeeding generations can continue to make progress,
by keeping the science in social science.

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Lex Donaldson Lex Donaldson is Professor of Organizational Design in the Australian Graduate
School of Management, which is a joint venture of the Universities of New South
Wales and Sydney. He has a BSc (1968) from the University of Aston, Birmingham,
England, and a PhD (1974) from the University of London. Lex has been a visitor at
the universities of Aston, Iowa, London, Maryland, Northwestern and Stanford. His
current interests are organizational theory, organizational structure and corporate
governance. He is presently working on a new theory of organizations.
Address: Australian Graduate School of Management, Universities of New South
Wales, UNSW Sydney, NSW 2052, Australia.
E-mail: lexd@agsm.edu.au