Stanford University Faculty

"During the 1980s, widespread dissatisfaction with America’s schools gave rise to a powerful movement for educational change, and the nation’s political institutions responded with aggressive reforms. Chubb and Moe argue that these reforms are destined to fail because they do not get to the root of the problem. The fundamental causes of poor academic performance, they claim, are not to be found in the schools, but rather in the institutions of direct democratic control by which the schools have traditionally been governed. Reformers fail to solve the problem-when the institutions ARE the problem. The authors recommend a new system of public education, built around parent-student choice and school competition, that would promote school autonomy—thus providing a firm foundation for genuine school improvement and superior student achievement."

"In a fundamental sense, Alchian's theory of economic organizations is different from those of Coase or Simon. He disavows an explicit model of individual choice... and... offers a system-level explanation of organizational emergence, structure, and survival that is largely independent of decision making at the micro level... Yet it is precisely this independence of a distinct model of choice that ultimately renders it compatible with the individualistic theories of both Coase and Simon...."

"The concept of "niche," initially borrowed by biologists from early social science, plays a central role in ecological theory... The niche... consists of all those combinations of resource levels at which the population can survive and reproduce itself."

"Entrepreneurs often are organizational products... The capital required, human resources, space, information, permits and licenses are all provided, perhaps grudgingly, by existing organizations."

"Hannan and Freeman examine the ecology of organizations by exploring the competition for resources and by trying to account for rates of entry and exit and for the diversity of organizational forms. They show that the destinies of organizations are determined more by impersonal forces than by the intervention of individuals by the intervention of individuals."

"Until the mid-1970s, the prominent approach in organization and management theory emphasized adaptive change in organizations. In this view, as environments change, leaders or dominant coalitions in organizations alter appropriate organizational features to realign their fit to environmental demands.. Since then, an approach to studying organizational change that places more emphasis on environmental selection processes, introduced at about that time (Aldrich and Pfeffer 1976; Hannan and Freeman 1977; Aldrich 1979; McKelvey 1982), has become increasingly influential. The stream of research on ecological perspectives of organizational change has generated tremendous excitement, controversy and debate in the community of organization and management theory scholars. Inspired by the question, Why are there so many kinds of organizations?"

"Freeman’s early research focused on organizational politics and the variations among organizations in the ratios of managers and supervisors to the rest of the work force. Freeman’s empirical studies revealed that organizations in decline have higher “administrative intensity” than similar-sized growing organizations because staffing decisions are made by managers, who might be expected to favor their close associates. The pattern came to be known as the “Freeman effect” and became a staple of macro-organization theory."

"Hannan and Freeman examine the ecology of organizations by exploring the competition for resources and by trying to account for rates of entry and exit and for the diversity of organizational forms. They show that the destinies of organizations are determined more by impersonal forces than by the intervention of individuals by the intervention of individuals."

"A population ecology perspective on organization-environment relations is proposed as an alternative to the dominant adaptation perspective. The strength of inertial pressures on organizational structure suggests the application of models that depend on competition and selection in populations of organizations. Several such models, as well as issues arising in attempts to apply them to the organization-environment problem, are discussed."

"Once standards of procedures and the allocation of tasks and authority become the subject of normative agreements, the cost of change greatly increased. Normative agreements constrain adaptation in at least two ways. First, they provide a justification and an organizing principle for those elements that wish to resist reorganization (i.e. they can resist in terms of a shared principle). Second, normative agreements preclude the serious consideration of many alternative responses."

"Legitimacy constraints also emanate from the environment. Any legitimacy an organization has been able to generate constitutes an asset in manipulating the environment. To the extent that adaptation (e.g., eliminating undergraduate instruction in public universities) violates the legitimacy claims, it incurs considerable costs. So external legitimacy considerations also tend to limit adaptation."

"We argue that in order to deal with the various inertial pressures the adaptation perspective must be supplemented with a selection orientation. We consider first two broad issues that are preliminary to ecological modelling. The first concerns appropriate units of analysis. Typical analyses of the relation of organizations to environments take the point of view of a single organization facing an environment."

"For wide classes of organizations there are very strong inertial pressures on structure arising from both internal arrangements (for example, internal politics) and from the environment (for example, public legitimation of organizational activity). To claim otherwise is to ignore the most obvious feature of organizational life. Failing churches do not become retail stores nor do firms transform themselves into churches."

"A system with greater organizational diversity has a higher probability of having in hand some form that does a reasonably satisfactory job of dealing with the changed environmental conditions. Adaptation in such a system means reallocating resources from one type of existing organization to another, either by command or by market mechanisms, rather than trying to identify and create appropriate organizational forms."

"Natural selection, as it is actually used in evolutionary population biology, serves mainly as an optimization process. In fact, the reasoning that underlies much evolutionary biology often strikes social scientists as strongly reminiscent of neoclassical economics."

"Inertial pressures prevent most organizations from radically changing strategies and structures."

"The existing literature usually stresses the capacity of organizations to learn about and adapt to uncertain, changing environments. We think this emphasis is misplaced. The most important issues about the applicability of evolutionary-ecological theories to organizations concern the timing of changes. Learning and adjusting structure enhance the chance of survival only if the speed of response is commensurate with the temporal patterns of relevant environments."

"[In the early 1900s, ecologists Alfred Lotka and ] independently proposed models of populations dynamics that incorporate effects of competition between populations."

"Organizational design often focuses on structural alternatives such as matrix, decentralization, and divisionalization. However, control variables (e.g., reward structures, task characteristics, and information systems) offer a more flexible approach. The purpose of this paper is to explore these control variables for organizational design. This is accomplished by integration and testing of two perspectives, organization theory and economics, notably agency theory. The resulting hypotheses link task characteristics, information systems, and business uncertainty to behavior vs. outcome based control strategy. These hypothesized linkages are examined empirically in a field study of the compensation practices for retail salespeople in 54 stores. The findings are that task programmability is strongly related to the choice of compensation package. The amount of behavioral measurement, the cost of measuring outcomes, and the uncertainty of the business also affect compensation. The findings have management implications for the design of compensation and reward packages, performance evaluation systems, and control systems, in general. Such systems should explicitly consider the task, the information system in place to measure performance, and the riskiness of the business. More programmed tasks require behavior based controls while less programmed tasks require more elaborate information systems or outcome based controls."

"Recent organizational approaches to control (e.g., Ouchi 1979) suggest two underlying control strategies. On the one hand, control can be accomplished through performance evaluation. Performance evaluation refers to the cybernetic process of monitoring and rewarding performance. This strategy emphasizes the information aspects of control. Namely, to what degree can the various aspects of performance be assessed? Alternatively, control can be achieved by minimizing the divergence of preferences among organizational members. That is, members cooperate in the achievement of organizational goals because the members understand and have internalized these goals. This strategy emphasizes people policies such as selection, training, and socialization."

"Agency theory is an important, yet controversial, theory. This paper reviews agency theory, its contributions to organization theory, and the extant empirical work and develops testable propositions. The conclusions are that agency theory (a) offers unique insight into information systems, outcome uncertainty, incentives, and risk and (b) is an empirically valid perspective, particularly when coupled with complementary perspectives. The principal recommendation is to incorporate an agency perspective in studies of the many problems having a cooperative structure."

"We struggle to manage complexity every day. We follow intricate diets to lose weight, juggle multiple remotes to operate our home entertainment systems, face proliferating data at the office, and hack through thickets of regulation at tax time. But complexity isn’t destiny. Sull and Eisenhardt argue there’s a better way: By developing a few simple yet effective rules, you can tackle even the most complex problems."

"Without this form of social technology, the industrialized countries of the West could not have reached the heights of extravagance, wealth and pollution that they currently enjoy."

"Normal Accidents contributed key concepts to a set of intellectual developments in the 1980s that revolutionized the conception of safety and risk. It made the case for examining technological failures as the product of highly interacting systems, and highlighted organizational and management factors as the main causes of failures. Technological disasters could no longer be ascribed to isolated equipment malfunction, operator error or acts of God... Perrow concluded that the failure at Three Mile Island was a consequence of the system's immense complexity. Such modern high-risk systems, he realized, were prone to failures however well they were managed. It was inevitable that they would eventually suffer what he termed a 'normal accident'. Therefore, he suggested, we might do better to contemplate a radical redesign, or if that was not possible, to abandon such technology entirely."

"If one has heard of Charles Perrow, it is usually in connection with the book Complex Organizations. While this monograph provides an excellent overview of various schools of organizational thought, it deals only marginally with Perrow's own theories. The scholarship that focuses solely on his conception of organization, however, is far less known and well received for a number of reasons. Perrow is an organizational sociologist working in a field dominated by management theorists and economists whose scholarship revolves around human relations and econometric models - approaches Perrow largely reject."

"It takes just the right combination of circumstances to produce a catastrophe, just as it takes the right combination of inevitable errors to produce an accident."

"Organizational theorists, at least since the pioneering work of Burns and Stalker, 1961 and Joan Woodward, 1965 and others in what came to be called the contingency school, have recognized that centralization is appropriate for organizations with routine tasks, and decentralization for those with nonroutine tasks. For an early statement see Perrow 1967, and Lawrence and Lorch, 1967."

"Engineers speak of a “control loop,” in which the “man in the loop” is the problematical element. This is the human component in a series of sequentially interacting pieces of equipment that control or adjust a function. But when the pilot is suddenly and unexpectedly brought into the control loop (in other words, participates in decision making) as a result of (inevitable) equipment failure, he is disoriented. Long periods of passive monitoring make one unprepared to act in emergencies. The sudden appearance of several alarms, all there for safety reasons, leads to disorientation."

"The nuclear power industry, for example, lacks a strong union, has random public victims with delayed effects, has no safety board that is independent of licensing and regulatory functions, and does not see an immediate effect on its profits if safety flags (though a far more severe incentive exists to avoid a catastrophic accident which could shut down the industry)"

"Most normal accidents have a significant degree of incomprehensibility."

"The essence of the normal accident [is] the interaction of multiple failures that are not in a direct operational sequence."

"As an organizational sociologist, I was interested in the system characteristics of large accidents, but the discipline also made me aware of the organizational genesis of male-made disasters."

"I consider all large organizations troublesome, including governmental and nonprofit organizations. They concentrate power in the hands of their top management; the larger the organization, the greater the power being concentrated. There are degrees of concentration of course, and some large organizations are so disorganized that they lose much of their potential power. But size is generally correlated with these kinds of power: By deciding where to locate they determine economic opportunities for some communities and deny it to others. Their hiring decisions affect the life chances of people, and can, unless checked, favor religious, ethnic, racial, and political affiliations. As consumers of resources, they can favor certain producers over others, and not necessarily on the grounds of “efficiency.” They can mobilize political resources to insure favored treatment better than small organizations."

"American society today is shaped not nearly as much by vast open spaces as it is by vast, bureaucratic organizations. Over half the working population toils away at enterprises with 500 or more employees--up from zero percent in 1800. Is this institutional immensity the logical outcome of technological forces in an all-efficient market, as some have argued?"

"This article [entitled A framework for the comparative analysis of organizations], was one of three independent statements in 1967 of what came to be called "contingency theory." It held that the structure of an organization depends upon (is ‘contingent’ upon) the kind of task performed, rather than upon some universal principles that apply to all organizations. The notion was in the wind at the time."

"It [a power based model of organization] sees organizations a intentional human constructions but not necessarily rational systems guided by official goals; as bargaining areas rather than cooperative systems; as systems of power rather than coercive institutions reflecting cultural norms, and as resources for other organizations and groups rather than closed systems. If we define organizations, then, as intentional human constructions wherein people and groups within and without the organization compete for outputs of interest them under conditions of unequal power, we have posed the issue of effectiveness quite differently"

"I once believed that if organizations had a better fit between their technology and their structure, they would be more efficient and thus more profitable."

"The hundreds of scientific studies of this phenomenon come to one general conclusion: Leadership is highly variable or "contingent" upon a large variety of important variables such as nature of task, size of the group, length of time the group has existed, type of personnel within the group and their relationships with each other, and amount of pressure the group is under. It docs not seem likely that we'll be able to devise a way to select the best leader for a particular situation. Even if we could, that situation would probably change in a short time and thus would require a somewhat different type of leader."

"The burning cry in all organizations is for “good leadership,” but we have learned that beyond a threshold level of adequacy it is extremely difficult to know what good leadership is."

"Another discipline began to intrude upon the confident work and increasingly elaborate models of the human relations theorists (largely social psychologists) and the uneasy toying with bureaucracy of the "structionalists" (largely sociologists). Both tended to study economic organizations. A few, like Philip Selznick, were noting conflict and differences in goals (perhaps because he was studying a public agency, the Tennessee Valley Authority), but most ignored conflict or treated it as a pathological manifestation of breakdowns in communication or the ego trips of unreconstructed managers."

"Then the works of Max Weber, first translated from the German in the 1940s — he wrote around 1910, incredibly — began to find their way into social science thought. At first, with his celebration of the efficiency of bureaucracy, he was received with only reluctant respect, and even with hostility. All writers were against bureaucracy. But it turned out, surprisingly, that managers were not. When asked, they acknowledged that they preferred clear lines of communication, clear specifications of authority and responsibility, and clear knowledge of whom they were responsible to. They were as wont to say "there ought to be a rule about this," as to say "there are too many rules around here," as wont to say "next week we've got to get organized," as to say "there is too much red tape." Gradually, studies began to show that bureaucratic organizations could change faster than non-bureaucratic ones, and that morale could be higher where there was clear evidence of bureaucracy."

"From the beginning, the forces of light and the forces of darkness have polarized the field of organizational analysis, and the struggle has been protracted and inconclusive. The forces of darkness have been represented by the mechanical school of organizational theory — those who treat the organization as a machine. This school characterizes organizations in terms o£ such things as:"

"As with all theories, we can learn something from agency theory and transaction-costs economics, since they emphasize something others hide. But as with all theories, they also distort; in fact, I will argue that their distortions outweigh the value of what they highlight."

"The Basic Argument In its simplest form, the argument goes like this: when the tasks people perform are well understood, predictable, routine, and repetitive, a bureaucratic structure is the most efficient. Things can be "programmed," to use March and Simon's term. Where tasks are not well understood, generally because the 'raw material' that each person works on is poorly understood and possibly reactive, recalcitrant or self activating. the tasks are non-routine. Such units or organizations are difficult to bureaucratize."

"Since organizations are established to do something, to perform work directed to some end, all organizations have goals – some implied, some explicit."

"The vast proportion of the activity in organizations goes on without personal directives and supervision – and even without written rules – and sometimes in permitted violation of the rules."

"It [the human relations school ] lacks empirical support and conceptual clarity, and it fails to grapple with the realities of authoritarian control in organizations and the true status of the subordinate"

"People in these fields no longer agree that such things as norms, values, and personality really exist or account for much; these concepts may only give a false sense of order to a world that both the academic and the person in the street desperately want to order. Sociology, too, is having some difficulty swallowing the simple, obvious proposition that attitudes predict behavior. (The proposition that morale predicts productivity is just one specification of this.)"

"Barnard comes close to joining Roethlisberger and Dickson in their assumption that management behavior is mainly rational and workers' behavior nonrational."

"Particularism means that irrelevant criteria like e.g. only relatives of the boss have a chance at top positions, in contrast to universalistic criteria like e.g. competences is all that counts, are employed in choosing employees... The particularistic criteria are likely to be negatively related to performance."