Institutions and Organizations: Early Approaches

1. The Columbia School: Merton’s and Selznick’s Institutional Models

Shortly after selections from Weber’s seminal writings on bureau- cracy were translated into English during the late 1940s, a collection of scholars at Columbia University under the leadership of Robert K.Merton revived interest in bureaucracy and bureaucratization, its sources and consequences for behavior in organizations (Merton, Gray, Hockey, and Selvin 1952).2 It is generally acknowledged that a series of empirical studies of diverse organizations carried out by Merton’s students—by Selznick (1949) of the Tennessee Valley Authority (TVA); Gouldner (1954) of a gypsum plant and mine; Blau (1955) of a federal and a state bureau; and Lipset, Trow, and Coleman (1956) of a typo- graphical union—were instrumental in establishing organizations as a distinctive arena of study for sociologists (see Scott and Davis 2007: 9). Blau, Gouldner, and Lipset and colleagues conducted empirical studies of organizational and institutional construction and change (see Chapter 5), but it was Selznick who developed the most explicit theoretical treatment of institutions and their relation to organizations. We consider his work as it differed from but was influenced by Merton’s own formulation.

Merton: Rules Trump Instrumentalism

As will be described below, Merton’s (1936) early work on “the unanticipated consequences of purposive action” was helpful to Selznick, but his analysis of bureaucratic behavior was even more directly influential. Although Merton (1940/1957: 199) did not employ the term institutionalization in his well-known essay “Bureaucratic Structure and Personality,” he provides a lucid discussion of processes within organizations leading officials to orient their actions around rules even “to the point where primary concern with conformity to the rules interferes with the achievement of the purposes of the organiza- tion.” Merton depicts the multiple forces within bureaucracy producing discipline and orienting officials toward upholding a valued normative order. The strength of these pressures is such that officials are prone to follow the rules to the point of rigidity, formalism, even ritualism. Stimulated by the arguments of Durkheim, Merton (1940/1957) spells out his version of institutional processes within organizations:

There may ensue, in particular vocations and in particular types of organization, the process of sanctification. [T]hrough sentiment-formation, emotional dependence upon bureaucratic symbols and status, and affective involvement in spheres of competence and authority, there develop prerogatives involving attitudes of moral legitimacy which are established as values in their own right, and are no longer viewed as merely technical means for expediting administration. (p. 202)

Selznick: Means Become Infused With Value

The leading early figure in the institutional analysis of organiza- tions was Philip Selznick, whose conception of institutional processes was strongly influenced by Merton’s work.3 His views evolved throughout the corpus of his writings. From his earliest writings, Selznick (1948: 25) was intent on distinguishing between organization as “the structural expression of rational action”—as a mechanistic instrument designed to achieve specified goals—and organization viewed as an adaptive, organic system, affected by the social character- istics of its participants as well as by the varied pressures imposed by its environment. “Organizations,” created as instrumental mechanisms to achieve specific goals, to a variable extent and over time, are trans- formed into “institutions.”

In his earliest formulation, Selznick borrows heavily on Merton’s (1936) analysis of “the unanticipated consequences of purposive social action.” Whereas some consequences of our actions occur as planned, others are unanticipated; social actions are not context-free but con- strained, and their outcomes are shaped by the setting in which they occur. Especially significant are the constraints on action that arise from “commitments enforced by institutionalization. Because orga-nizations are social systems, goals or procedures tend to achieve an established, value-impregnated status. We say that they become insti- tutionalized” (Selznick 1949: 256–257).

In his subsequent work on leadership, Selznick (1957) elaborates his views:

Institutionalization is a process. It is something that happens to an organization over time, reflecting the organization’s own distinc- tive history, the people who have been in it, the groups it embodies and the vested interests they have created, and the way it has adapted to its environment. In what is perhaps its most sig-nificant meaning, “to institutionalize” is to infuse with value beyond the technical requirements of the task at hand. (pp. 16–17; emphasis in original)

As organizations become infused with value, they are no longer regarded as expendable tools; participants want to see that they are preserved. By embodying a particular set of values, the organization acquires a character structure, a distinctive identity. Maintaining the organization is no longer simply an instrumental matter of keeping the machinery working, but becomes a struggle to preserve a set of unique values. A vital role of leadership for Selznick, echoing Chester Barnard’s (1938) influential message in The Functions of the Executive, is to define and defend these values. Clearly, this set of ideas resonates with more recent work on organization culture (e.g., Martin 2002; Schein 1985) and on organization identity (Albert and Whetten 1985; Whetten and Godfrey 1999).

In addition to viewing institutionalization as a process, as some- thing that happens to the organization over time, Selznick also treated institutionalization as a variable: Organizations with more precisely defined goals or with better developed technologies are less subject to institutionalization than those with diffuse goals and weak technolo- gies (Selznick 1957). Organizations vary in susceptibility to and, hence, degree of institutionalization.

Contrasting Selznick’s with Merton’s conception, both emphasized quite similar processes of value commitments to procedures extending beyond instrumental utilities. However, while Selznick focused on commitments distinctive to the developing character of a specific orga- nization, Merton stressed commitments associated with characteristics of bureaucratic (rational-legal) organizations generally. Selznick’s approach calls for depicting a natural history of a specific organization, a description of the processes by which, over time, it develops its distinc- tive structures, capabilities, and liabilities. He himself studied the evo- lution of the TVA, noting how its original structures and goals were transformed over time by the commitments of its participants and the requirements imposed by powerful constituencies in its environment (Selznick 1949; see also Chapter 4). Selznick’s students conducted similar case studies of the transformation of organizational goals, such as occurred in the Women’s Christian Temperance Union (WCTU) (Gusfield 1955), a community college (Clark 1960), a voluntary hospital (Perrow 1961), and the YMCA (Zald and Denton 1963). In all of these studies, the official goals of the organization are shown to differ from— to mask—the “real” objectives, which had been transformed in interac- tion with interests both within and external to the organization. As Perrow (1986: 159) notes, Selznick’s institutional school tends to produce an “expose” view of organizations: Organizations are not the rational creatures they pretend to be but vehicles for embodying (sometimes surreptitious) values.

Another of Selznick’s students, Arthur Stinchcombe (1968), built on Selznick’s formulation, making more explicit the role of agency and power. Stinchcombe defines an institution as “a structure in which powerful people are committed to some value or interest” (p. 107), emphasizing that values are preserved and interests are protected only if those holding them possess and retain power.

Institutionalization connotes stability over time, and Stinchcombe’s analysis attempts to identify the ways in which power holders are able to preserve their power. He asserts: “By selection, socialization, controlling conditions of incumbency, and hero worship, succeeding generations of power-holders tend to regenerate the same institu- tions” (Stinchcombe 1968: 111).

Merton and Selznick laid the basis for a process model of institu- tions. Merton described processes operating in all or most bureaucratic organizations conducing officials toward overconformity, while Selznick focused on processes within particular organizations giving rise to a distinctive set of value commitments. Stinchcombe stressed the role of power and elaborated the mechanisms utilized by powerful actors to perpetuate their interests and commitments.

2. Hughes and the Chicago School

Following in the footsteps of Cooley as well as earlier Chicago sociologists, Thomas and Blumer, Everett Hughes developed an inter- dependent model of rule systems and concerted, situated interaction processes. Deftly defining institutions as an “establishment of relative permanence of a distinctly social sort” (Hughes 1936: 180), he identi- fied their essential elements as “(1) a set of mores or formal rules, or both, which can be fulfilled only by (2) people acting collectively, in established complementary capacities or offices. The first element rep- resents consistency; the second concert or organization” (Hughes 1939: 297).

Hughes insisted that institutions only exist and persist because they are carried forward by interacting individuals: “Institutions exist in the integrated and standardized behavior of individuals” (Hughes 1939: 319). More so than other students of organizations at this time, Hughes emphasized the openness and somewhat indeterminate nature of organizations. He resisted using the term “organization” because of its “implication that some known numbers of people are ‘associated’ or ‘organized’” (Hughes 1962/1971: 54). Instead he preferred the name going concerns: “They occur in many forms, and may be in any stage of having, getting, or losing moral, social, legal, or simply customer approval” (Hughes 1962/1971: 54). In this manner, he anticipated later open-system modes of organizing, highlighting loose-coupling, orga- nized anarchy, and network forms (see Scott and Davis 2007: Chap. 4) as well as the growing fusion of organization and social movement theories (Davis, McAdam, Scott, and Zald 2005).

In a similar vein, he believed that sociologists too often employed the term “institution” as “a great name, one deserved only by those things which embody the highest of human values”; but to do so, he argued, is misguided:

If we close our lists there, we miss the main and more fascinating part of the sociologists’ work, which is to understand how social values and collective arrangements are made and unmade: how things arise and how they change. To make progress with our job, we need to give full and comparative attention to the not- yets, the didn’t quite-make-its, the not quite respectable, the unremarked and the openly “anti” goings-on in our society. (Hughes 1962/1971: 53)

Recent scholars, such as Barley (2008) and Ventresca and Kaghan (2008), see much of value in the work of Hughes and his students and associates. Hughes was among the first institutional scholars connect- ing institutions and organizations that viewed both as “explicitly dynamic” and “grounded in an ecological and evolutionary view of social/economic/organizational stability and change” (Ventresca and Kaghan 2008: 57–58).

Empirical work developing these insights by Hughes and his fol- lowers focused more on occupations—in particular, professions—than on organizations (see, e.g., Abbott 1988; Becker 1982; Freidson 1970; Hughes 1958). However, a number of studies examined “strong” orga- nizational contexts, such as mental hospitals and medical schools (Becker, Geer, Hughes, and Strauss 1961). These studies explored “the microprocesses by which individuals attempt to limit the power of institutions,” identifying “the cracks, the loopholes in social struc- tures” that enable patients, students or other subordinate participants to construct meaningful selves and obtain some freedom even when confronting “total institutions” (Fine and Ducharme 1995: 125, 126; Goffman 1961), such as intense professional training programs or mental hospitals.

3. Parsons’ Institutional Approach

Talcott Parsons applies his general “cultural-institutional” argu- ments to organizations primarily by examining the relation between an organization and its social and cultural environment—the ways in which the value system of an organization is legitimated by its connections to “the main institutional patterns” in “different func- tional contexts” (Parsons 1956/1960a: 20). While in most of his writing, as noted in Chapter 1, Parsons stressed the subjective dimension of institutions whereby individual actors internalize shared norms so that they become the basis for the individual’s action, in his analysis of organizations, he shifts attention to what he terms the objective dimen- sion: “a system of norms defining what the relations of individuals [or organizations] ought to be” (Parsons 1934/1990: 327).

Parsons (1956/1960a: 21) argues that these wider normative struc- tures within societies serve to legitimate the existence of organizations but, “more specifically, they legitimize the main functional patterns of operation which are necessary to implement the values.” Schools, for example, receive legitimacy in a society to the extent that their goals are connected to wider cultural values, such as training and education, and to the degree that they conform in their structures and procedures to established “patterns of operation” specified for educational organiza- tions. Note that in some respects this argument replicates at the orga- nizational level Parsons’ discussion of institutionalization at the individual level since it focuses on the individual unit’s—whether a person’s or an organization’s—orientation to a normative system. Organizations operating in different functional sectors are legiti- mated by differing values, exhibit different adaptive patterns, and are governed by different codes and normative frameworks. Moreover, value systems are stratified within a society such that organizations serving more highly esteemed values are thought to be more legiti- mate, and expected to receive a disproportionate share of societal resources (Parsons 1953).4

Parsons finds yet another use for the concept of institution. He argues that organizations tend to become differentiated vertically into three somewhat distinctive levels or layers: the technical, concerned with production activities; the managerial, concerned with control and coordination activities, procurement of resources, and disposal of products; and the institutional, concerned with relating the organiza- tion to the norms and conventions of the community and society. Every organization is a subsystem of “a wider social system which is the source of the ‘meaning,’ legitimation, or higher-level support which makes the implementation of the organization’s goals possible” (Parsons 1956/1960b: 63–64). Parsons’ typology of organizational levels was subsequently embraced by Thompson (1967/2003) and has been widely employed.5

Unlike Selznick’s formulation, Parsons’ theoretical work on orga- nizations did not stimulate much empirical research. A few students, such as Georgopoulos (1972), employed Parsons’ general conceptual scheme and described the importance of institutional underpinnings for specific types of organizations, but in general Parsons’ insights were not so much built upon as rediscovered by later theorists.

4. Simon and the Carnegie School

Political scientist Herbert Simon developed his theory of admin- istrative behavior to counteract and correct conventional economic theories that made heroic, unreasonable assumptions about individ- ual rationality. Although Simon retained the assumption that value premises (preferences) are beyond the analyst’s purview (are exoge- nous), he challenged the assumption that actors have complete knowledge of means and their consequences. He was among the first theorists to link the limits of individual cognitive capacity with the features of organizational structure. In his classic Administrative Behavior, Simon (1945/1997) described how organizational structures work to simplify and support decision making by individuals in organizations, allowing them to achieve higher levels of consistent, albeit “boundedly rational,” behavior than would otherwise be pos- sible. In accepting organizational membership, individuals are expected to adopt organizational value premises as a guide for their decisions; factual premises—beliefs about means-ends connections— are also commonly supplied, in the form of organizational rules, procedures, and routines (Simon 1945/1997, Ch. 5). Behavior is ratio- nal in organizations because choices are constrained and individuals are guided by rules.

Together with March, Simon developed his arguments concern- ing the ways in which organizations shape the behavior of partici- pants, crafting performance programs to guide routine behavior and search programs to follow when confronting unusual tasks. March and Simon (1958: 141–142) argue that, in many circumstances, “search and choice processes are very much abridged. . . . Most behavior, and particularly most behavior in organizations, is governed by per- formance programs”—preset routines that provide guidance to indi- viduals confronted by recurring demands. Such routines greatly reduce the discretion of most participants so that they make few choices and are circumscribed in the choices they do make. Imposed value assumptions, cognitive frames, rules and routines—these are the ingredients that conduce individuals to behave rationally. Indeed, “the rational individual is, and must be, an organized and institutionalized individual” (Simon 1945/1997: 111).

March and Simon’s arguments, albeit among the earliest, remain among the most influential and clearest statements of the micro features and functions of neoinstitutional forms (see DiMaggio and Powell 1991: 15–26).

Source: Scott Richard (2013), Institutions and Organizations: Ideas, Interests, and Identities, SAGE Publications, Inc; Fourth edition.

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