Parsons (1956) argued that legitimacy was an important concept for understanding organizations and their relationships to their social environments. Parsons noted that since organizations used resources which, presumably, could find alternative uses elsewhere, organizations were continually being assessed on the appropriateness of their activities and the usefulness of their output. In other words” since organizations consumed society’s resources, society evaluated the usefulness and legitimacy of the organization’s activities.
Parsons’s concept raises several questions. Who evaluates the legitimacy of the organization? Who has the right to evaluate organizational legitimacy? Which criteria are to be used in assessing legitimacy? Which organizational activities are to be evaluated, and who chooses them? No answers to these questions apply to all organizations or to the same organization over time. Any interest group, organiza- tion, or individual that is in contact with an organization can, and probably will, evaluate the organization, decide what activities and outputs to assess, and determine the criteria that will be used.
Organizations are not so much concrete social entities as a process of organizing support sufficient to continue existence. When one social actor exchanges a product with another for money, it may be convenient to label the situation as one in which an organization is selling its product to a customer, but the point missed is that the very act itself defines the activity of the organization as one of selling. Estab-]ishing_a coalition large enough to ensure survival is an organization’s most critical activity (‘ March and Simon. 1958 ). The organization as ah entity becomes defined only by that activity. March and Simon (1958) talked about organizations in just these terms. They noted that it was necessary to provide inducements for social actors to participate in organizations. In return for these inducements, participants made con- tributions, and the contributions of some participants became the inducements for others. The organization was the framework, the setting, in which these exchanges of inducements and contributions occurred. Participants would enter and leave the organization depending upon both their assessment of the relative value to be gained by continuing the exchange and the organization’s assessment—the assessment of others in the coalition—of the same issue. An organization, according to this perspective, is viable as long as its available inducements are sufficient to elicit the necessary contributions—in other words, to maintain a viable coalition of support.
Organizing coalitions of support can produce strange alliances. One would not, for instance, expect that one purpose of the United States government was to encourage the manufacture and transportation of narcotics for sale to its citizens. Yet, it has promoted such acts wittingly and unwittingly yyhile achieving support for other activities. This illustration comes from a book by Alfred W. McCoy (1972) whose careful study of the politics of heroin in Southeast Asia suggested that the United States made its unwitting contribution to world drug traffic when it struck a bargain with Charles “Lucky” Luciano. During World War II, Luciano was serving time in a federal penitentiary. In return for release and deportation to Italy, he arranged for the Mafia in Sicily to facilitate the landing of United States troops on the island. The reappearance of Luciano in Italy made the reestablishment of the undergrounds of Italy and France easier. These undergrounds became the main worldwide organization for the distribution of heroin. At the end of the war, the missing ingredient was sufficient production to supply the distribution system. Production of opium was spurred by the French and the Americans during their involvement in Southeast Asia. The French secured the cooperation of the Indochinese hill tribes to enter the fight against the Viet Minh by providing support for the production and transportation of what before was only the occasional cultivation of opium. When the French involvement ended, the amount of heroin on the world market dropped. It increased again when the American involvement increased and similar arrangements were made. To obtain support of the hill people for the war, the heroin was allowed to move, with the transport occasionally provided by American aircraft ( McCoy, 1972 ).
An important dimension, then, of the establishment of coalitions is that there is no requirement for the participants to share vested interests or singular, paramount goals. Anything that justifies a partici- Pant’s involvemejatis-suffisientirQm an organizing point of view. Some organizational theorists have the idea that everyone who participates in an organization must agree to cooperate in the pursuit of the same goals. This is clearly not the case. Organizational participants may come into jhe_c.pahüon whenjthere.is s.om.e-ad.vantage.to-he-gaincd anrl leave when there is no longer any perceived advantage. The gains and costs are defined in terms oftEe individual participants or groups, not in terms agreed upon by all or promulgated by the organization’s management.
Consider again the position taken by Parsons (1956) that legitimacy is necessary for the continued survival of the organization. It should be clear that all members of a society need not agree on the legitimacy of a given organization for it to survive. To survive, the organization need only maintain a coalition of parties who contribute the resources and support „necessary for it to continue its activities, activities which themselves are outcomes desired by the coalition members. And, the coalition of interests participating in an organization at a point in time defines the activities of the organization. When an interest group ceases to participate in the organization, the organization either ceases to exist or, more likely, transforms itself into a different organization engaging in different activities relevant to the remaining interests. Sills (1957) described the transformation of the National Foundation for Infantile Paralysis in a way consistent with our argument. To exist, a charitable organization needs beneficiaries, a cause, a purpose. The National Foundation’s sole purpose was lost when an effective vaccine for polio was discovered. The very effectiveness of Salk’s vaccine diminished the need for the organization. The organization, rather than disappearing, merely located another, related client group—crippled children who suffered from birth defects—and continued anew with this new clientele and coalition participant.
We have described organizations as settings in which groups and individuals with_varvm£interests and preferences come together and engage, in exchanges—in March and Simon’s (1958) terminology, ex- changing contributions for inducements. The difference between these organizational markets of influence and markets in economics is in the extent to which the activities and behaviors exchanged are stable, repeated continually over time. Weick (1969) and Allport (1962) have described the process of organizing as one in which behavior becomes predictable and cyclical— structured. Thibaut and Kelley (1959), with their matrix notation for describing social interaction, proposed an essentially similar framework. Our point is that once established, patterns of interaction are likely tcTperáiST’rfTfor ncTother reason, the persistence of interaction patterns reduces uncertainty for the participants! ~~ ~~
It should be clear that not all coalition participants provide contributions that are equally valued; some are valued more, others less. Those coalition participants who provide behaviors, resources, and capabilities that are most needed or desired by other organizational participants come to have more influence and control over the organi- zation, for one of the inducements received for contributing the most critical resources is the ability to control and direct organizational action. It is in this sense that we subtitled this section “organizations as markets for influence and control.” Coalition participants are continually engaged in a_process of exchange, and as Emerson (1962) and Blau”(1964) have suggested, out of these exchanges and the interdependence created by them emerge differences in power among organizational participants. The power of the participant is a function ofthe dependence ot others in the organization on his contributions, activities, capabilities. Control and influence emerge from the interaction of organizational participants and the valuation of the contributions made and inducements demanded by each.
Source: Pfeffer Jeffrey, Salancik Gerald (2003), The External Control of Organizations: A Resource Dependence Perspective, Stanford Business Books; 1st edition