American Anti-Management Theories of Organization: A Critique of Paradigm Proliferation.

American Anti-Management Theories of Organization: A Critique of Paradigm Proliferation by Lex Donaldson, 1995 (Cambridge University Press, Cambridge) $29.95, softback, pp. xiv + 263.

A short space can hardly do justice to a volume such as this which undertakes a sweeping critique of the entire field of organisation theory from its broadest level of paradigm development to its underlying assumptions and empirical base. Let me proceed with a brief synopsis, then venture comment on this unusually detailed work. Here, Prof. Donaldson, perhaps academe's most well known advocate of organisational contingency models, has staked a claim to a moral high ground in which the structural contingency theory of organisations is presented as the most useful, correct and positive of paradigms for understanding organisations. Four perspectives generated largely in the US since the 1970s are presented as steps backward in the progress of organisation theory as a scientific endeavour.

The critique of population ecology, institutional theory, resource dependence and organisational economics (transaction costs and agency) runs the gamut A to Z. American academics are seen as too concerned with novelty and careerism to fully investigate the better theory, structural contingency; rather, they seek to develop their own theories, terms and ideas in order to enjoy momentary fame while simultaneously reducing the scientific merit of organisation studies. The attention to inventing terms and models diverts scholars from replicating, testing and filling out the contingency approach which is identified as preceding the others.

American organisation theory is characterised as antimanagement because the four newer models do not present management in a positive light. Rather than striving to make organisations perform better by making structure fit the contingencies facing the organisation, managers in these theories are painted as either having no effective role or of having selfish and aggrandising motives behind their actions.

Donaldson's wide ranging attack is upon the founding assumptions and evidence for each of the four schools of thought. Population ecology, the most distant model from contingency is cited for both its common criticisms and the less well known. After the standard critique of the vague definition of organisational form and its rejection of managers as responding efficaciously to environmental conditions, Donaldson adds the lack of identity between the evolutionary biology metaphor and the Hannan and Freeman (1977) version of ecological theory. He condemns their failure to explain everything about organisational structure, their obsession with birth and death rates of organisations and their failure to test out everything implied by their theory.

The next victim, institutional theory, receives blows for alternative interpretations of data in several studies, some contradictory results, the impossibility that organisational managers might just imitate other organisations without having an efficiency rationale, its antifunctionalist bias and its concern with symbolism instead of efficiency. The remaining theories receive more harsh treatment as they come closer to substituting for structural contingency explanations. The attack is upon data reported in several primary studies, the immorality of positing less than noble motives for some managers, social conscience, the need for a positivist scientific model, and in the resource dependence model, the daring thought that organisations can alter their environments.

The criticisms are so plentiful that some hit the mark, but a substantial portion represent inaccuracy, exaggeration and extreme interpretations. Because of the complexity of the critique, examining its details may be less helpful than an analysis of the underlying values, forms of critique and assumptions of Donaldson's effort.

The four contemporary organisation theories which have appeared in America since the 1970s are being attacked because they represent rejection of structural contingency theory. Donaldson believes contingency theory answers the questions raised by these newer theories and represents a uniting banner under which the scientific study of organisation structure can thrive and provide advice to managers. He attributes the emerging theories to careerism, obsession with novelty, failure to be rational and poor empirical analysis. The motives of the scientists stand impugned and the pluralism of organisation studies condemned.

Does structural contingency explain it all better? Was the proposal of alternative models purely self serving by ambitious American academics? Having been a student of Jim Thompson (whom Donaldson cites as a fundamental contingency theorist), I was nurtured on contingency theory and have no discomfort with its strengths as well as the weaknesses which stimulated alternative theories. The theory's basic premise is that firms will perform better when their structures match the contingencies imposed by their size, technology, environment and several other variables. The managers' role is to adjust the organisation structure until it fits the contingencies.

Though Donaldson mentions Thompson's 1967 Organizations in Action as a fundamental work, he does not elaborate on it in defending contingency models, and has good reason not to do so. Thompson's contingency model is one which anticipates and perhaps requires the creation of the resource dependence theory which Donaldson seeks to discredit. Yes, the environment created contingencies which required structural elaboration from the organisation, but the organisation also developed strategies to manage that environment which included forming coalitions and coopting of outside elements, the same strategies for which Pfeifer and Salancik (1978) are condemned by Donaldson. Thompson even posits that the choice of these tactics for contending with the environment is preference ordered by those involving the least penetration by the outside organisation: the maintenance of autonomy variable of resource dependence theory.

Thompson, attempting to deal with the major breech in contingency models asked how managers make the adjustment to get the `right' fit. Donaldson's contingency theory proposes no model of process; change comes by management reading the contingencies and making adjustments because of good will or commitment to organisational goals. Instead, Thompson argued that the very decisions about these adjustments were contingent upon managers' agreement on goals and complete knowledge of cause and effect. When agreement on intent was lacking, bargaining among managers took place; when causal relations were unclear, judgment was used and when both were uncertain, inspiration became the tool for adjustment. Having introduced uncertainty, and potential disagreement, which are quite natural, the absence of a process theory in contingency explanations becomes a critical shortcoming.

A short jump leads to Pfeffer's models of power and dependence. Those who must exercise judgment or bargain and believe in the correctness of their individual or coalition positions will use power and influence to have their judgments and positions adopted. It is not necessary to posit an evil manager out only for self aggrandising power when that power is a necessary resource for having that manager's judgment accepted in the adaptation process. Whether the strategy is merger or creation of a new budgeting process, power is required in the process of reaching a decision. This is not to deny that some managers may seek power and control for its own sake or to stimulate personal career, but the failure of contingency theory to address the process question begged the positing of alternative theoretical positions. In terms of Donaldson's paradigm proliferation concern, the unanswered research questions of contingency formulations called for further paradigm development.

The enthusiasm with which Donaldson attacks resource dependence theory, contingency's most similar competitor, spills over to some rather extreme forms of argument. For example, resource dependence is criticised for Weick's (1969) idea of an enacted environment. Weick posited a form of post hoc rationalisation in which decisions are justified afterwards by interpreting environmental factors as consistent with the decision reached. To label this idea as implying that resource dependence theorists do not believe in a physical world and fancifully argue that perceptions actually create the environment, is a tactical use of unjustified distortion. The fitting of contingency to structure requires managerial perception as well. That managers follow the classic rational model of organisational decision making is easily challenged; decisions are justified by perceptions of available data.

In his attack on institutionalism, Donaldson argues that there is no evidence that organisations imitate one another to create symbolic legitimacy and thereby improve their operating positions in their task environments. Again, Thompson's version of contingency asked what happens when both goals and causes are unclear or in dispute; inspirational decision making was proposed. His example was the foreign service which operates at the symbolic level on most occasions, training staff in protocol, a symbolic culture of behaviour allowing decisions to be made and actions to be taken when outcomes and goals are unclear. Institutional theory posits that in unclear circumstances under ambiguity or lack of clear norms, imitation is much more than the kindest form of flattery; it becomes the strategy of choice. Institutional theory is not inconsistent with the idea that social conditions explain organisational action, and it does provide an explanation for some of the process dimensions which contingency ignores.

The concept of rationality is itself abused in the analysis. The four models are accused of irrationality, but the attack is based upon either economic rationality alone or Donaldson's personal notion of what is rational. There is no recognition of the emerging idea of social rationality or how social objectives might affect decisions. More critical is the inconsistency in the application of the rationality concept. A defence of Weber's substantive rationality is made when convenient, but had Donaldson applied the same construct to the four alternative models, the irrationality charge would have faded away. Donaldson's meaning of `rationality' remains obscure.

Beyond the idea that contingency's failure to deal with process explanations called forth alternatives, there are other central issues requiring discussion in order to interpret Donaldson's critique. The rhetoric of this volume condemns US organisation theorists for spinning out new paradigms daily in their quest for fame, but the four models dissected here all appeared in the 1970s, a decade after the contingency work cited by Donaldson. Twenty years having passed since the last model worthy of note appeared scarcely suggests that paradigms are popping like spring flowers. Over the past 20 years many scholars have been doing exactly what is required. They test, revise, discover limitations and try using these theories to guide research. Had Prof. Donaldson given more attention to the recent work rather than concentrating on the founding authors, a more enlightening text might have resulted.

The condemnation of these four theories for attributing less than positive or efficacious roles to management is described as an inappropriate position for business school faculty to maintain. This argument runs directly counter to Donaldson's own concern with the scientific integrity of organisational theory as a field. That these theories are too sociological is a fascinating condemnation as the models other than organisational economics were proposed by sociologists or social psychologists. What interest should these social scientists hold? In opposition to this sociology of knowledge critique made by Donaldson, I have argued elsewhere (Stern & Barley 1996) that living in business schools has led US sociologists who inhabit them to an overly narrow and business centred view of organisations.

In spite of the mix of moral philosophy and science coupled with the book's detailed inspection of sentences and data, this work may keep readers interested. There is something to the issue of US organisation theorists focusing on novelty and the invention of new terms. Donaldson lays out the basic premises of each theory well, and the critiques are written with such unequivocality, that those in the field will become instantly emotionally involved. Organisation theorists cannot read this book without finding themselves barbecued, steamed or boiled somewhere among the paradigms.

References

Hannan, M.T. & Freeman, J. 1977, `The population ecology of organizations', American Journal of Sociology, vol. 82, pp. 929-964.

Pfeifer, J. & Salancik, G.R. 1978, The External Control of Organizations: A Resource Dependence Perspective, Harper and Row, New York, NY.

Stern, R.N. & Barley, S.R. 1996, `Organizations and social systems: Organization theory's neglected mandate', Administrative Science Quarterly, vol. 41, pp. 146-162.

Thompson, J.D. 1967, Organizations in Action, McGraw-Hill, New York.

Weick, K.E., 1969, The Social Psychology of Organizing, Addison-Wesley, Reading, MA.

Robert N. Stern Professor of Organisational Behaviour ILR-Cornell University and Visiting Professor School of Management Queensland University of Technology