While balancing conflicting demands will forestall some problems of lost autonomy, perhaps the most effective way of avoiding the constraints of external demands is to..avoid the conditions which demand compliance in the first place. In Chapter Three, we discussed a model of the social control of organizations and presented some conditions which would tend to increase the external control of organizational behavior. At that time, we focused on the situation of interdependence existing between the focal organization and its environment. Now, we turn our attention to the various situational characteristics which facili- tate the exercise of influence. When these characteristics are not present, influence is made difficult. We will review these conditions and how their manipulation helps to maintain organizational autonomy. The conditions deal with the organization’s control over the generation of demands, the determination of satisfaction with demands, and the discretion in the organization’s behavior.
1. Control of Demands
Several of the conditions manipulated by organizations relate to con-trol over .the demands which are likely to be made on an organization. The first of these has to do with the organization’s awareness of demands. While it may seem superfluous to include this condition, awareness of demands by the organization is an important precondi-tion for affecting control and an equally important condition for avoid-ing influence.
Interest groups vary in making their demands known, and organisations vary in the extent to which they find out about the demands. On one level, interest groups may not make demands simply because other demands are being satisfied and the interest group either feels morally compelled not to make a demand or feels that the satisfied demands will be threatened if other claims are made. Thus the Alaskan state government was reluctant to constrain the behavior of the oil companies building the thousand-mile pipeline because of its importance to the Alaskan economy. The builders pumped billions of dollars into the state, which gave them a considerable influence with its policy makers. As the president of the Alaskan State Senate put it, “There’s still the underlying fear that if we assert ourselves too much, well kill the goose that lays the golden egg” (Time, June 2, 1975:18).
Organizations may purposely manipulate the illusion of satisfaction to avoid the open expression of some demands. Patients in a psychiatric hospital may be drugged to reduce their demands on the staff. At the same time, relatives may be told about all the fine therapeutic activity going on. Again, restriction on the availability of information is helpful in using this strategy.
Organizations also may avoid demands by controlling the extent to which interest groups have access to communication channels. Most organizations possess a crew of stoutly protective executive assistants and receptionists whose effect, if not intent, is to route individuals away from their bosses. Another effective mechanism for avoiding demands is actually to convene a meeting to air the demands, but either schedule the meeting for times and places inconvenient for undesired interest groups or pack it with individuals more favorable to the organization. Making the cost of communicating high is a common device for reducing expressions of displeasure. Costs of communication may be high because of uncertainty about where and how to communicate, the necessity of filing special forms or making an appointment, or the necessity of obtaining specialized help in registering one s demands. The cost of litigation, for instance, may stop a dissatisfied person or group from using the courts to force compliance from the focal organization.
Many organizations do not actively attempt to avoid input from „ interest groups. Indeed, many take active steps to determine demands from the environment, through market research and surveys of attitudes among employees, stockholders, customers, and suppliers. The. extent to which organizations encourage or discourage the expression of demands, we would argue, is a function of their resource dependence on those groups. An informal study of the posted office hours of professors in a department in one large state university indicated that those who were known for their research tended, more than others, to post student visiting hours during prime class time and lunch periods (r=.48).
It is usually better to avoid the expression of demands than tot face the necessity of refusing the demands of a potent interest group. Refusal is a much more final, potentially hostile action. Thus, subordi-nates will seldom say, no, outright to their employers—rather, the employees merely avoid the boss so no requests for work can be made.
2. Controlling the Definition of Satisfaction
A second method for managing demands is to define the request as being satisfied. In this situation, the organization controls the satisfaction of its interest groups without losing discretion over its behavior. Many professional groups use a device of this type. State laws that regulate the licensing and practice of medicine explicitly define the treatment of a patient as satisfactory if the physician uses standard medical procedures. The patient with a question about the level of care received confronts a panel of experts who are doctors, like his or her own, to decide whether the care has been adequate or not. More often, people will simply ask their own doctor, who reassures them that everything is going fine.
The professional-client relationship is typical of a very general problem in social influence, the uncertainty of evaluation and judgment. Evaluation is a process of applying some criterion or criteria to an output to determine the fit. When operational measures can be taken, the satisfaction of the criteria may be easy to assess. A British and: French airplane manufacturing joint venture lost potential sales of $20 billion because the plane failed to meet the speed specifications. Speed is an easy criterion to assess. On the other hand, another air- plane, manufactured in Sweden, lost out in the competition because the NATO purchasers did not want to rely on a neutral country to manufacture arms for their arsenals. There are no operational measures for determining the reliability of intentions. Sweden simply lost the argument about its future reliability.
Whenever ambiguity exists either in the statement of criteria or in their application to a particular output, there will exist the possibility of equivocality in interpretation. Both interest groups and the focal organization will have discretion in determining whether a demand is satisfied. The focal organization, thpn, has some control over the in- terpretation of outcomes and may direct its behavior as it wants while contending that the demands have been satisfied. The power to control its own behavior is enhanced to the extent that those making the demands are not well equipped to determine when, or if, they have been met.
Because of equivocality, it is difficult to call an organization’s output into question. Even when its output is questioned, the organization may control the evaluation partly to ensure that support is obtained from the environment. One of the more fascinating attempts to question an organization is the investigation of the effects of television violence. To resolve the hotly debated issue of the effects of televised violence, such as seen on the police and Western shows, on behavior, the Surgeon General of the United States commissioned an expert panel to investigate the question. After thousands of dollars had been spent on research, the Surgeon General’s report made only tentative and limited conclusions, suggesting that children already predisposed to violence may, perhaps, develop more aggressive tendencies, which might produce violent behavior in circumstances which incite to violence. In this case, as in many instances, the government investigative agency found it necessary to relyjan some of the televi- siorTlndustry’s own technical experts. The investigating commission permitted^e””in3usFty7particularly the National Broadcasting Company (NBC), to consult with it on the selection of appropriate panel members. For a number of years, NBC had been conducting a series of studies of its own and knew who would be sympathetic panel members. One of the persons explicitly denied participation, although he requested inclusion, was Albert Bandura, a noted psychologist from Stanford who had repeatedly documented the fact that when children observed films depicting aggression, they tended to imitate the behavior (e.g., Bandura and Walters, 1959).
3. Controlling the formation of Demands
Yet another source of discretion for the focal organization is to actually take part in the formulation of the interest group’s demands. Three ways in which organizations may take part in the creation of the demands to which they must then respond are: (1) professionalization and self-regulation: (2) involvement in setting standards and regulatory policies; and (3) advertising and other merchandising.
This source of organizational power and discretion is made possible by the same condition of uncertainty that makes the determination of satisfaction difficult. As a consequence of uncertainty, we rely on others more knowledgeable to give us advice. The problem of obtaining advice from those who are affected by the person’s actions has been well illustrated. In medicine, there is concern about unnecessary surgery performed by surgeons who find it in their economic self-in- terest. In an article in the Saturday Review, appropriately titled “Never ask a barber if you need a haircut?’’ Daniel Greenberg (1972) noted that the National Aeronautics and Space Administration (NASA), which favored the growth of space-related research and development, attempted to resolve a seemingly technical question by giving the task to Lockheed, a firm in financial trouble, and Mathe- matica, a consulting firm that had previously done work for NASA. The question was whether the space program should be based on reusable shuttles or expendable boosters. The shuttle would take longer to develop and involve greater exploratory research and development, ensuring a longer survival of NASA’s role. Not surprisingly, the shuttle was the answer that emerged from the scientific study.
The, discretion permitted organizations because of an interest group’s reliance on them for their expertise derives partly from the amount of resources that would be required for others to develop similar expertise. When the massive oil spill occurred off the Santa Barbara coast in 1969, the Western Oil and Gas Association contributed to a $250,000 study of the ecological effects. While the validity of the conclusion that the impact was negligible was questioned by a southern California scientist (New York Times, March 22, 1971:1), neither he nor any other interest group could amass the resources necessary to offer equal expertise.
Another way of controlling demands is by controlling the legislative and administrative bodies empowered to define organizational output. Universities, for instance, control demand for courses by setting requirements for student graduation. Banks have come to be major backers of guaranteed student-loan programs, and the movement of personnel between regulatory boards or commissions and the companies being regulated is well known.
A final important mechanism by which organizations gain discretion over the demands they face is through advertising and promotion. Beliefs about products and services are created, and beliefs about the value provided by a given organization and its products are similarly created. While we do not want to review the extensive literature on advertising, it seems that public relations and advertising are methods of controlling the demands of external groups and organizations, though such methods are more indirect and riskier than simply legislating requirements or advising on demands.
4. Factors Affecting Discretion in Behavior
Another set of conditions which can affect the ability of one organization or interest group to influence another derives from the context of the behavior itself. Two important dimensions of the context in which the behavior takes place are the observability, or visibility, of the focal organization’s behavior to the influencing organization and the discretion possessed by both the influencing organization and the focal organization. If the influencing organization is prevented from using its position of power or if the focal organization is prevented from com-plying, no effect will be observed. Similarly, to the extent that the compliance of the focal organization is difficult to observe, effective influence is less likely.
One of the easiest ways to avoid being influenced is not to possess the capacity to comply with the demands being made. Though this may seem obvious, it represents an important source of discretion for organizations. Except in those cases where physical or technological capability does not exist, what can or cannot be done is the result of legal or other social constraints and subject to some uncertainty and differing judgments. Legal constraints forbid certain actions both of influencing organizations and of the organization which is the target of the influence. The existence of those who break the laws, however, suggests that the presence of constraint is not necessarily binding.
Enforcement of legal constraints is selective. For instance, there is some indication that the Federal Trade Commission has most frequently prosecuted smaller firms, frequently engaging in less serious but more easily proven violations of various regulations (Posner, 1969). Other examples of selective enforcement abound. Furthermore, the willingness of organizations to expose themselves to possible prosecution is variable, and Staw and Szwajkowski (1975) have shown that firms operating in less munificent environments are more likely to engage in illegal activities.
The willingness of some organizations to ignore constraints and of other organizations to ignore their violations are only two factors that influence whether sanctions really affect organizational discretion. Equally important is the process by which the constraints are imposed in the first place. The very determination of what is and what is not legitimate or legal is likely to be the result of political processes in which organizations press for rules which benefit their interests. At any time, organizations with power will probably advocate rules which permit them the widest possible use of their power, while those organizations in less powerful positions seek rules that protect them from the more powerful.
A good example of a situation in which the balance of power between organizations was asymmetrical but where no freedom to influence behavior existed is in the area of antitrust law. In the case of Eastman Kodak Company v. Southern Photo Material Company (1927), Kodak, with a virtual monopoly of the photographic film industry, attempted to convince a dealer to sell his business. When the dealer refused, Kodak then refused to sell its supplies to the dealer. Antitrust law compelled Kodak to do business with the dealer. Otherwise, Kodak’s monopoly power would have forced the dealer to sell out or go out of business. Kodak sold to thousands of dealers, but Southern Photo Material could buy only from Kodak. Prohibitions against interorganizational influence are most strictly interpreted when one party’s economic power is overwhelming compared to other social actors, as in the case of manufacturers’ attempts to influence local dealers in setting retail price or in limiting their sales territory (Areeda, 1967).
In addition to legal restrictions on interorganizational influence, important normative social restraints also operate. Perrow (1970) illustrated some of these norms in his discussion of social rules of the game among businesspeople. Perrow described a manufacturer whose plant was destroyed by fire. Competitors volunteered the use of their manufacturing facilities during the off-shifts, while the manufacturer’s were being rebuilt. These norms do not actually serve the immediate self- interest of all the participants. Rather, they function to serve the long- run welfare of the businesses by establishing general norms which limit predatory competitive behavior.
Latitude in the behavior of a focal organization may not exist for several reasons. First, the organization may be completely regulated in the particular area in which influence is being attempted. Railroads, airlines, trucking firms, and electric and telephone utilities are only a few of the lines of business in which the organization itself has relatively little direct control men important service and pricing policies. Attempts to alter the rates charged by public utilities by acting directly on these organizations are likely to be unsuccessful, since rates can be altered only with the approval of the regulatory agency. While the utility may play an active and influential role in the activities of the rate setting commission, it remains the case that the utility cannot unilaterally alter many aspects of its behavior.
Being subjected to pressure without having the ability to respond may expose organizations to a great deal of frustration. Yet, this very lack of decision-making power can operate as a shield against interest- group demands. The attempts at influence are shifted from the organization to its regulators. Those who wish to control the organization must attempt to control the commissions. And the bases of control shift from resources necessary to the organization to those resources which are important to the policy setting commissions.
A second limitation or constraint on the behavior of an organization is the existence of a highly competitive environment. The theory of perfect competition (e.g., Stigler, 1966) states that in the long run, for firms to remain in business, they must operate at the minimum point on their long-run average cost curves and must sell at the price determined in the competitive marketplace. Economic theory also states that these cost curves will be identical across firms, so that each firm will be producing at the same cost and selling at the same price. Their behavior is thus constrained. While these long-run equilibrium conditions presumed to occur given various restrictive assumptions, are admittedly abstractions, it does seem plausible to presume that operating freedom will be less in more competitive markets which affect the latitude of an organization’s behavior when confronted by external influence. Control will be more difficult over firms in competitive environments.
A third form of limitation on the organization’s behavior is powerful influences from other organizations in the environment, where these organizations do not have regulatory control. Tothe extent that the organization’s behavior is already constrained and determined by external demands and influence, behavior can not vary a great deal in response to additional external pressures. The situation may be one in which the organization is constrained beyond what it might otherwise desire or one where it can play various external pressures off against one another. Many organizations claim that union hiring and seniority rules limit their ability to comply with government pressures for affirmative action, while the same companies may later attempt to use integration requirements to bring in nonunion workers and attempt to diminish the union’s power.
5. Visibility of Behaviors and Outcomes
In the research on social influence among individuals, one of the more consistent findings is that public behaviors are more influenceable than private behaviors (Kiesler and Kiesler, 1969). There are any reasons why this might be true. The ability of the actor demanding compliance to apply sanctions against noncompliance is reduced when it is difficult or impossible to monitor that compliance. Furthermore, the publicness of an activity produces a commitment to continue the activity (Salancik, 1977). Thus, if one behaves in one way and that has been observed, to behave in another way would create an inconsistency. For an influencing agent requesting action which is incompatible with prior organizational actions, the fact that the prior action and potential future action are public, limits the compliance. But if prior and future actions are compatible, compliance is more likely. A third reason that visibility of behaviors might affect influence attempts is that actors other than the one attempting influence can view public behaviors and evaluate them and apply their own sanctions. These three factors act, one can see, in opposite directions. The visibility of action so com- pliance can be observed increases the likelihood of influence in public actions. At the same time, commitment to past public actions limits the likelihood of changing activities, and the same public visibility that makes it possible for the influencing agent to observe compliance also means the organization can be assessed by other social actors. In general, if an interest group’s power to apply sanctions is greater than that of all others and past behaviors were private while current activities are public, compliance will be greatest. Least compliance will be observed when past behaviors were public and current behaviors are private.
To be visible, behavior does not have to be directly observed. Very often, activity is not directly observed but inferred from the presence of certain effects. The important thing about visibility for it to constrain behavior is that the social actor thinks the behavior can be observed or inferred from observable outcomes. When behavior and outcomes are not visible, the organization is in a position to be the interpreter of its own actions and effectiveness. Organizations can also be interpreters of outcomes which are themselves visible but which present ambiguities in assessing who is responsible. A bookstore servicing a university campus makes money by selling books to students while, at the same time, not overstocking. To keep overstocking to a minimum, bookstores may order quantities smaller than the expected demand. It is very clear to disgruntled students that they cannot get needed books. But what is not clear is who is responsible. Customer dissatisfaction may be turned away from the bookstore by attributing the problem to professor©who order books late or who have over- ordered in the past. Whatever the truth of the situation, the important point is that the difficulty of observing its behavior places the organization itself in the primary position for interpreting its activities to the various groups.
Many organizations find secrecy a necessary condition for maintaining the discretion required to operate within a set of conflicting demands. The latitude afforded for complying or not complying is important. Not surprisingly, the disclosure of information itself is one of the major sources of conflict between organizations which wish to influence and the organizations which seek to avoid influence and maintain discretion. The inability of regulatory agencies to acquire information about the activities of the organizations which they ostensibly regulate hampers the development and implementation of public policy. One of the greatest difficulties faced in planning energy policy during the early 1970s was that most of the estimates of energy reserves came from the energy companies themselves. Public utilities were given permission to pass along fuel cost increases immediately, without the requirement of going through the regulatory proceedings. Not surprisingly, after the fact it was found that there was evidence of substantial overcharging. Even in the context of normal proceedings, the limited staff of the commissions and their reliance on the regulated firms for virtually all the data permits the regulated organizations additional control over regulatory outcomes. It can be seen why regulation is so desirable. The regulatory commission buffers the organization from influence attempts since the commission ostensibly controls the organizations behavior; yet, because of the information and visibility advantages accruing to the regulated organization, it can actually retain much discretion and influence over regulatory results.
Information control, then, is an important mechanism for both the exercise and the avoidance of influence. One might argue that organic zations will release information when it is in their best interests to do so and will attempt to obtain information that enables them to exercise influence. What information is available about organizational actions is : the outcome of a political process in which social actors, each trying to advance its interests, attempt to acquire or withhold information as it serves their position in the political struggle. While the public interest, confidentiality, and other claims are asserted in the contest over information availability, it must be remembered that these are arguments, and, like all arguments, are used selectively to enhance the interests of, those raising the argument.
Source: Pfeffer Jeffrey, Salancik Gerald (2003), The External Control of Organizations: A Resource Dependence Perspective, Stanford Business Books; 1st edition