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Rational, Natural and Open Systems Perspectives www.irpublicpolicy.ir Organizations and Organizing Rational, Natural, and Open System Perspectives W. Richard Scott Stanford University Gerald F.Davis University of Michigan ROUTLEDGE Routledge Taylor & Francis Group LONDON AND NEW YORK www.irpublicpolicy.ir First published 2007 by Pearson Education, Inc. Published 2016 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN 711 Third Avenue, New York, NY, 10017, USA Routledge is an imprint of the Taylor & Francis Group, an informa business Copyright © 2007 Taylor & Francis. All rights reserved All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. $SFEJUTBOEBDLOPXMFEHNFOUTCPSSPXFEGSPNPUIFSTPVSDFTBOESFQSPEVDFE XJUI QFSNJTTJPO JOUIJTUFYUCPPLBQQFBSPOBQQSPQSJBUFQBHFXJUIJOUFYU ISBN: 9780131958937 (pb k) Cover Design: Indigo Studio Library of Congress Cataloging-in-Publication Data Scott, W. Richard. Organizations and organizing : rational, natural, and open systems perspectives / W. Richard Scott, Gerald F. Davis.—1st ed. p. cm. Rev. of: Organizations / W. Richard Scott. 5th ed. 2003. Includes bibliographical references and index. ISBN 0-13-195893-3 1. Organizational sociology. I. Davis, Gerald F. (Gerald Fredrick), 1961– II. Scott, W. Richard. Organizations. III. Title. HM786.S3846 2007 302.3'5—dc22 2006025219 www.irpublicpolicy.ir Again, for Jennifer, Elliot, and Sydney And now for Ben and Gracie www.irpublicpolicy.ir This page is intentionally left blank www.irpublicpolicy.ir Contents Preface, ix 1 The Subject Is Organizations; The Verb is Organizing, 1 The Importance of Organizations, 2 Organizations as an Area of Study, 8 Common and Divergent Interests, 11 The Elements of Organizations, 19 Defining the Concept of Organization, 27 Summary, 33 2 Organizations as Rational Systems, 35 The Defining Characteristics, 36 Selected Schools, 40 Summary and Tentative Conclusions, 56 3 Organizations as Natural Systems, 59 Basic versus Distinctive Characteristics, 59 Selected Schools, 64 Summary and Tentative Conclusions, 83 4 Organizations as Open Systems, 87 System Levels, 88 Special Emphases and Insights, 90 v www.irpublicpolicy.ir vi Contents Selected Schools, 98 Summary and Tentative Conclusions, 106 5 Combining Perspectives, Expanding Levels, 107 Attempts at Integration, 108 Glancing Back and Looking Forward, 113 Expanded Levels of Analysis, 115 Theories at the Ecological Level, 120 Concluding Comment, 122 6 Technology and Structure, 124 Organizations as Technical Adaptive Systems, 125 Technology and Structure: Natural System Formulations, 137 Summary, 149 7 Labor and Structure, 151 The Social Boundaries of Organizations, 151 Division of Labor, 158 Labor Markets and Organizational Boundaries, 164 High-Performance Work Organizations, 170 Problems for Participants, 173 Concluding Comments, 181 8 Goals, Power, and Control, 183 Goal Setting in Organizations, 183 Anarchies, Adhocracies, and Learning, 196 Control Systems, 202 Critical and Postmodern Conceptions of Power, 215 Summary, 218 9 The Dyadic Environment of the Organization, 220 Why Are There Organizations, and Where Do They Place Their Boundaries? 221 Transaction Costs and the Origins of Firms, 221 How Do Organizations Manage Their Relations with Other Organizations? 233 www.irpublicpolicy.ir Contents vii Resource Dependence and the Negotiated Environment, 233 Summary, 243 10 Organization of the Environment, 245 How Do New Organizations and New Populations of Organizations Arise, and Why Do They Fail?: Ecological Perspectives, 246 How Are Organizations Shaped by Broader Social-Political-Cultural Processes?: Institutional Perspectives, 258 Summary, 277 11 Networks In and Around Organizations, 278 Introduction: From Metaphor to Method to Worldview, 278 Network Thinking, 279 Interorganizational Networks, 285 Network Forms of Organization, 291 Sectoral and Societal Networks, 301 Summary, 307 12 Strategy, Structure, and Performance: The Sociology of Organizational Strategy, 310 Why Are Organizations in Some Industries More Profitable Than Those in Others? 313 Organizational Performance, 326 Summary, 338 13 The Rise and Transformation of the Corporate Form, 340 Changing Forms of Organizations, 343 Are Organizations Still the Defining Structures of Society? 361 Summary, 367 14 Changing Contours of Organizations and Organization Theory, 368 From Unitary to Multiparadigm, 369 From Monocultural to Multicultural Studies, 374 www.irpublicpolicy.ir viii Contents From Present-centered to Longitudinal and Historical Analysis, 376 From Micro- to Macro Units and Levels of Analysis, 381 From Structure to Process, 384 References, 391 Name Index, 439 Subject Index, 447 www.irpublicpolicy.ir Preface This volume is intended as a successor to Scott’s earlier text, Organizations: Rational, Natural and Open Systems, first published in 1981 and undergoing four revisions—the fifth and last appearing in 2003. As the time approached to consider yet another edition, Scott approached Jerry Davis, a younger col- league but established scholar, to join him in the effort. As we planned the work, we agreed it was important to retain the book’s historical grounding as well as some sense of the progressive evolution of the field over time. The field of organization studies displays a distinctive pattern of past theoretical arguments and research approaches and findings that con- tinues to frame current scholarship. In particular, we agreed that the original scaffolding, emphasizing the interrelation of three somewhat separate strands of work—rational, natural, and open system perspectives—retained its salience and relevance as an organizing device. Thus, the three foundation chapters—Chapters 2, 3, and 4—draw heavily from previous editions of the Scott text. However, as we proceeded to examine developments in the field in the past decade, we found ourselves involved in extensive revisions, delet- ing large chunks of previous material and adding a substantial amount of new. The more we rethought, revised, and rewrote, the more we realized that, rather than simply update an existing text, we were engaged in pro- ducing a substantially new book—a book which incorporates the themes of its predecessor volume but takes them in new and different directions. The title Organizations and Organizing reflects this new emphasis on flexible forms of coordinated action taking place within, around, and among for- mal organizations. Before noting these new directions, let us comment on the continuing features that, we believe, distinguish our own approach from other efforts ix www.irpublicpolicy.ir x Preface to comprehend the field of organization studies. Some of these features follow. • The book continues to be “introductory” without being “elementary.” That is, we assume that readers do not necessarily have previous knowledge of this spe- cific field, but that they are serious about their inquiry into the fundamentals of the study of organizations. • We endeavor, to the extent possible, to provide a judicious and even-handed introduction to the multiple perspectives and modes of work that comprise the field. Critical commentaries are provided, but we try to offer these in an even- handed and constructive manner. • We devote roughly equal time to describing changes in the “real world” of orga- nizations and to changes in theories of organizations, emphasizing, wherever possible, their connections. • Although we endeavor to be inclusive and interdisciplinary in our coverage, our bias continues to favor sociological and institutional approaches, and, with the addition of Davis, economic sociology network approaches, and managerial the- ory and research. • And, while both of us deplore the micro–macro division that permeates our field, we devote most of our own efforts to reviewing the more macro developments. • We recognize the benefits but also point to the problems posed for all who live in an organizational society. Organizations are not just about efficiency and pro- ductivity but also often exhibit pathology and produce inequity. • Finally, we strive to include the full range of organizations, including voluntary and public as well as private firms, and to recognize the valid interests of the full range of affected parties, not simply managers and shareholders, but rank-and- file participants and publics. Along with these continuities, the present volume offers a number of new features: • In addition to surveying how organizations engage with their environments, we devote much attention to the many ways that environments of organizations are themselves becoming more highly organized—in organizational populations, fields, and networks. • We emphasize the emergence of networks within, across, and among organiza- tions, and describe both measures and methods of network analysis as well as recent research on network organizations. • After describing the predominant paradigms for studying organizations, we sur- vey how these are used to understand the links among strategy, structure, and organizational performance. • We offer a broad survey of the changing modes of structuring organizations, from medieval guilds and early industrial organizations to
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