Internal versus External Perspectives on Organizations

The interest in intraorganizational phenomena is not difficult to under- stand. First, internal processes are the most visible. Walking into any organization, one finds people who are involved in a variety of activities important to the performance of the organization. As Perrow (1970) apdy noted, at first glance, the statement that organizations are, after all, composed of people is patently obvious. The importance of these people to the organization is the logical inference drawn from their very presence. In addition to their visibility, organizational members are also capable of communicating, for they speak the same language as the investigator. They are willing and ready to tell the researcher of their satisfactions and dissatisfactions, their importance to the organization, their feelings toward their work, and their reasons for their decisions. People inside the organization are visible, accessible, and willing to express their opinions. They are a convenient, if not always adequate, research focus.

In addition to convenience, attention to intraorganizational phenomena is fostered by a cognitive bias to attribute causality to the actions of individuals. Research on the behavior of individuals asked to select causative factors suggests that while actors and participants in an event tend to attribute the outcome to situational factors, observers tend to interpret outcomes as the result of the personal motivation and capabilities of the actors (Jones and Nisbett, 1971). The observers of organizations and organizational behavior share this bias. In one recent illustration of this phenomenon (Wolfson and Salancik, 1977), individuals were given the task of controlling an electric car as it traveled over a model track. Unknown to the individuals, their performance was controlled by alterations in the amount of electrical power reaching various sections of the track. All the actual subjects were motivated to do well, but observers tended to see a performer s success as reflecting the amount of effort expended. In fact, it was the result of the experimenter’s manipulation of electricity.

In another experimental illustration of the same phenomenological tendency to attribute outcomes to individuals in organizational settings, Staw (1975) set up separate work groups and randomly chose some of the groups to fail and others to succeed. He then asked members of the groups to rate the cohesiveness, leadership, and other attributes of die group. When the groups succeeded, they perceived high cohesiveness and effective leadership, a finding which suggests one reason why organizational analysts have found positive relationships between organizational performance and styles of leaderhip. Individuals in the organization, aware of their own performance, make the same inferences as-.the. theories—if we are doing well, it must be because we are effectively supervised, we are communicating effectively, etc. That such attributional biases can delude organizational actors as easily as observers was shown in a study by Strickland (1958). He assigned two subordinates to a supervisor and then structured the situation so that the supervisor had to spend more time checking on the work activities of subordinate A than on those of subordinate B. The supervisor was given no prior information about the reliability of either worker, and the performance of each was equal. Following the task, the supervisor was asked to make performance evaluations of the two subordinates. The supervisor evaluated subordinate A as less trustworthy than B and recommended that A be watched more closely. The supervisor, in other words, assigned to supervise one subordinate more than another, came to believe that his supervision was both necessary and accomplished something. When individuals assume an organizational role, they came to believe that their performance of the role is having the intended effect and that this effect justifies the role.

Kelley (1971) perceptively noted that attributions are guided not billy by the desire to be correct, but also to provide a feeling of control over situations. Clearly, by attributing outcomes to individual action, the observer has a theory of behavior that implies how to control outcomes. When one does not like what is going on, the simple solution is to replace the individual or change the activities. When, on the other hand, a model is used which attributes causality to contextual factors, one faces a much more difficult task in altering activities or outcomes. Therefore, the feelings of control that derive from attributing organizational actions to individuals reinforce the perceptual and cognitive biases, tending to produce a consistent, self- reinforcing system of perception and attribution that emphasizes the importance of individual action.

The consequences of such attributional processes for managerial theory and practice are immediately evident. The concept of the omnipotent actor has led to the search for the unique set of ingredients that produces success in organizations. Originally, the quest was for those traits that’ distinguished good from poor leaders (Stogdill, 1948). It was believed that if we could isolate and identify those characteristics which made a difference, we could screen and select those individuals who possessed the requisite qualities, ensuring organizational success. Unfortunately, the characteristics could never be found. The trait approach to leadership was finally abandoned, replaced by the belief that it was not personal qualities that mattered but personal behaviors. The search for the unique set of behaviors that constitute leadership or supervisory activities has been well docu- mented (e.g., Carter, 1953; Halpin and Winer, 1952) and, consistent with the original trait perspective, led to the emergence of prescriptions for more consideration, or less close styles of, supervision. Somewhat more recently, contingency theories have become popular, arguing that the appropriate style of behavior depends on the situation, the personalities of the subordinates, the nature of the task, the power of the leader, and so forth. While the quest for the omnipotent actor has become considerably more sophisticated, management researchers continue to trudge after the ever-shifting rainbow’s end.

The internal perspective tends to consider that problems can be solved by changing elements within the organization, without regard to their,contextual basis. Consider the current problem of motivating workers to engage in menial and boring tasks. The problem seems to be that people are less willing to engage in such work, as evidenced by absenteeism, turnover, and low quality or quantity output. The most common solution advocated for this problem is job redesign, to remove the offending aspects of the tasks (e.g., Hackman and Oldham, 1976). It is a typically internal solution based on the assumption that there is something inherent in the task itself which creates the attitudes of the individual workers, and moreover, that this attitude is some stable characteristic of the individual. Neither assumption is correct. One can create situations experimentally in which persons are induced to do seemingly boring and meaningless tasks for hours. A favorite task requires filling a sheet of graph paper, containing 7000 squares, with random numbers from zero to nine. To make the effort meaningless, the subjects are told that the experimenter will not be able to use their results. Under certain conditions, subjects will express enjoyment in the task and willingly sign up to do it again; while under other conditions, they will label it as unenjoyable (Pallak et al., 1974). The conditions are related to the development of external justification for doing the task in the first place. If a person is induced to do the task with few external constraints or justifications, he tends to find intrinsic features of the task which justify doing it—positive, satisfying reasons. If a person is given considerable external justification for doing the task, he need not attribute interest or enjoyment to the activity, but can explain his behavior by the external constraints. The point is that there are no reactions inherent in an activity. The person, while certainly affected by reality, partially creates interpretations and descriptions of reality.

Why might organizations have problems with worker satisfaction in boring jobs? While the jobs themselves may have something to do with it, it may also be possible that the historical context of the workers and their organizations promotes interpretations of dissatisfaction. The availability of alternative work opportunities, the availability of alternative ways to spend one’s time besides working, such as in recreation, and the presence of increasingly powerful labor unions are all characteristics of the present environment. The first two conditions, availability of other jobs and activities, provide individuals with reasons for not being motivated in any particular job. The existence of strong unions provides them with viable political power for expressing and realizing their desires for economic well-being independent of the organization for which they work. Indeed, if one believes the voluminous experimental literature, the ever-increasing levels of pay, by providing increasing external incentives, made it more and more likely that the workers would infer that their activity resulted from the external incentives rather than from the job itself, and would, therefore, come to see the job as less interesting and desirable.

The Importance of Individuals in Organizations

The basic, important question of how much of the variance in organizational activities or outcomes—is associated with context-and.Jh.ow much with individuals has been infrequently addressed. Pfeifer (1977 ) noted various theoretical reasons for expecting that individuals would have less effect on organizational outcomes than would an organization’s context. First, he argued that both personal and organizational selection processes would lead to similarity among organizational leaders. This means that there is a restriction on the range of skills, characteristics, and behaviors of those likely to achieve positions of importance in organizations. Second, even when a relatively prominent position in the organization has been achieved, the discretion permitted to a given individual is limited. Decisions may require the approval of others in the organization; information used in formulating the decisions comes from others; and persons may be the targets of influence attempts by others in their role set—these social influences further constrain the individual’s discretion. Finally, it is simply the case that many of the. things that affected organizational results are not controlled by organizational participants. In the case of business firms, the economic cycle, tariff and other regulations, and tax policies are either not subject to control by the organization or are controlled only indirectly through persuasion. In school districts, budgets and educational demands, which are largely a function of state legislative action, local economic growth, and demographic factors are largely outside the control of the district administration. Considering all these factors, it is not likely administrators would have a large effect on the outcomes of most organizations.

In a study of 167 companies, Lieberson and O’Connor (1972) attempted to partition variance in sales, profit, and profit margin to the effects of year (economic cycle), industry, company, and finally, administrators. While the estimate of administrative impact varied by industry and was largest in the case of profit margin, the magnitude of the administrative effect was dwarfed by the impact of the organization’s industry and the stable characteristics of a given organization.

Extending this perspective, Salancik and Pfeffer (1977) examined the effects of mayors on city budget categories for a sample of 30 United States cities. These authors found that the mayoral impact was greatest for budget items such as parks and libraries not directly the subject of powerful interest-group demands, but that, in general, the mayor accounted for less than 10 percent of the variation in most city budget expenditures.

The conditions under which there would be more or less administrative effect is an important issue, and the theoretical perspective developed in this book will suggest some answers. But, it is fair to state that, based on the presently available research evidence, there is much less evidence for profound administrative effects than is reflected in the predominance of an internal orientation in the literature on organizations.

Source: Pfeffer Jeffrey, Salancik Gerald (2003), The External Control of Organizations: A Resource Dependence Perspective, Stanford Business Books; 1st edition

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