Organization Theory

Behlül Üsdiken & Hüseyin Leblebici. Handbook of Industrial, Work, and Organizational Psychology. Editor: Neil Anderson, et al,. Sage Publications, 2001.

Organization theory has been a low-consensus field, a feature that became ever more pronounced in the late twentieth century. This chapter traces developments in organization theory over the last 50 years that have culminated in present-day fragmentation in theoretical and epistemological positions. Institutionalization as a separate field dates back to the rapprochement in the 1970s among concerns of earlier practitioner-theorists and sociologically orientated work and the ensuing divide between organization theory and organizational behaviour. The chapter reviews how what appeared like emerging consensus at the time was soon to break down with the advent in North America of influential research programmes rooted in sociology as well as economics. The last two decades also witnessed, primarily in Europe, the increasing popularity of alternative perspectives that challenged one or both of the scientistic and managerialist footings in the field. The chapter concludes by discussing the present state of pluralism in theoretical agendas and offering conjectures for possible futures of the discipline.

Characterizing Organizational Theorizing

The study of organization now has a history of around a hundred years. Although there has been some degree of continuity in central interests and approaches taken to address them, a lot has also changed over this period. What now passes as organizational theorizing (or for that matter, as organization science, organizational analysis, or organization studies) is in many ways different from the concerns and modes of investigating organization and organizations in the former part of the 20th century.

The study of organization went through a major transformation or, to put it perhaps more mildly, took a new direction around the mid-20th century. The redirection took place as a part of the broader move unfolding in American business schools towards bringing science into business studies and education (Locke, 1996). Although pioneering steps in this new direction date back to earlier years, the more wholesale shift came after the late 1950s as a response to dissatisfactions about the state of business education in the USA at the time (Whitley, 1988; Miner, 1997). Broadly put, the turn involved the aspiration to draw upon science and the scientific method in dealing with managerial and business problems. The outcome was the injection of quantitative methods and behavioural sciences into business curricula coupled with an influx of faculty members trained in these fields who brought with them the inclinations and competencies for scientific research (Miner, 1997).

Scientization brought a shift from the experience-based claims and writings of earlier practitioner-theorists (Thompson & McHugh, 1995) on management and organization towards approaches grounded in the scientific method. The way of addressing managerial issues was changing, promising, and bringing, as in other areas of business studies, reputability and power to the field. However, the central concern, that of finding ways of solving problems of organizational functioning efficiently and effectively, by and large remained the same. In a sense, it was a happy marriage at the outset and served to shape the two central footings of the discipline that was emerging in the USA, namely scientism and managerialism.

For organization theory the merging of science and practical problems of management was character forming in a number of important ways, shaping features and strains that have since come to characterize the field, perhaps more so than other areas of business studies. The move towards the natural science model although integrative in one sense, ironically, was potentially divisive in two ways. For one, what scientization did was to distance those who studied managerial problems and those who practised management. Acceptance of ideas and principles put forward by practitioner-theorists had not been without problems either, due both to their universality claims and to interference with managerial prerogatives. With scientization the problem began to aggravate. As in any field that claims to be an applied science the problem of relating to practitioners or the strain between rigour and relevance set in to stay as a major source of concern and debate. Beyond the issue of translation to practice, differing degrees of allegiances were to take hold among those in the academia to the concerns emanating from the two footings of the field, science and the practical problems of management. Secondly, the infusion of science involved turning to other disciplines like psychology, social psychology, and sociology to borrow frameworks, concepts, and methods, as well as importing researchers trained in these areas. It also meant building upon and extending earlier work carried out on organizations within such disciplines. Not only was this reliance on a variety of social sciences character defining, in the sense of organizational theorizing becoming multidiscipline based (March, 1996), but also in breeding substantive dissension emanating from allegiances to different disciplinary traditions.

A tension of this kind emerged as the orientation towards the natural science model paved the way for the institutionalization of ‘organization theory’ as a separate field of study in US business schools (Hinings, 1988) with a redefined narrower domain. The gaining of a separate identity went through a number of stages within the broader tendency, spurred by the scientistic reorientation, towards greater specialization in business studies. Initially, ‘management’ and ‘administrative sciences’ served as umbrella definitions for delimiting boundaries as seen, for example, in the emergence in late 1950s of what were later to become the leading American journals of the field, namely the Administrative Science Quarterly and the Journal of the Academy of Management. The 1960s and 1970s brought in the USA a split between ‘organizational behaviour’ and ‘organization theory’ or between the ‘micro’ and the ‘macro’ in organizational analysis. The advent of the contingency perspective was instrumental in this process of separation as it triggered quantitatively based ‘comparative’ studies of internal design problems, building on the sociological tradition in the field and thus balancing the behavioural orientation that had come to dominate research.

Distancing from the focus on behavioural phenomena within organizations and the resultant confinement to organizational level issues served to narrow down the disciplinary basis of organization theory largely to sociology cast onto the administrative tradition of the earlier practitioner-theorists. Coupled with the increasing influence of the contingency perspective, it also offered towards the latter part of the 1970s the prospect of what may be called a paradigmatic consensus, which could even extend beyond the USA to include research at the time in Europe. The promise was very short lived, however; indeed it was breaking down when some were thinking that it was emerging. Theorizing on organizations was again displaying its low-consensus character, increasingly so after the early 1980s, leading to divisions that have now become much more fundamental.

Proliferation of epistemological and theoretical positions has had to do not only with the relatively more recent developments in the USA but also with increasing scholarly input from other parts of the world. The scientistic revolution had occurred at a time when the USA was emerging as a super power and assuming a leadership role in the West and was looked up to as the epitome of business practice and education. The USA thus became, more so than in the former part of the century, a centre of attraction for learning about business and management leading to the dissemination of US-based institutions, ideas, and practices (Locke, 1996). Although American domination of the field still persists and the flow of theoretical perspectives is to a large degree one-way (Engwall, 1996; Hickson, 1996), there has been greater participation by scholars from other countries accompanied by an increasing number of research outlets with institutional bases outside North America. Greater international input into the field has contributed to the emergence of domain definitions and approaches different from those prevalent in the USA (Üsdiken & Pasadeos, 1995; Collin, Johansson, Svensson & Ulvenblad 1996).

Within the present state of theoretical pluralism in the field the search for and the hope of integration continues, an aspiration on which some believe that there is consensus (e.g., Elsbach, Sutton & Whetten, 1999). The current situation is regarded as a continuing pre-paradigmatic state (e.g., McKinley, Mone & Moon, 1999). For some others, on the other hand, it reflects an inevitable multiparadigmatic condition for the field (e.g., Kaghan & Phillips, 1998). Yet another view is that the present state is nothing but a prerevolutionary crisis (e.g., Hatchuel, 1999). The impending revolution is to eradicate what have been identified above as the two footings of organization theory (scientism and managerialism) as it became institutionalized in the USA as a separate discipline. The aspiration is for a ‘new’ theory of organization that is to be nonpositivist and nonmanagerialist (Watson, 1994).

The present chapter traces the journey of organizational theorizing from the mid-century scientistic turn in the USA to the present day. The next section extends the discussion of the move from earlier dispersed roots towards institutionalization as a separate field in USA in the 1970s. The section to follow considers chronologically parallel developments, primarily in Europe, challenging what was regarded as emerging orthodoxy in the field and paving the way for fundamental divisions that were to strengthen over time. The fourth to the sixth sections review the influential theoretical perspectives that have evolved in the last quarter of the century, that have undoubtedly served to enrich as well as extend the boundaries of the field, but also engendered new and a wider range of allegiances. The final section builds on this review to provide an assessment of the field at the end of the century, to be joined by speculations on what the foreseeable future may hold.

From Dispersed Roots to Institutionalization

The Three Roots: Administrative, Sociological, and Psychological

By the late 1950s there were three strands of work emanating from different concerns and ways of thinking and that made reference to ‘organization’. For one, there was the stream of contributions by practitioner-theorists from both North America (e.g., Mooney & Reiley, 1939) and Europe (e.g., Fayol, 1949; Urwick, 1944) who, broadly put, sought ways of formalizing the design of organizations and developing guidelines for effective managerial action in government and business. Work of this kind, in its own way, not only described the problem of organizing as an element of administration but also laid the foundations of the concern with the structural analysis of organized activity (Guillén, 1994). They did become subject to criticism, however, as the call for a science-based approach to internal design problems began to mount (e.g., Simon, 1947), questioning not only the adequacy of the evidence but also the extent to which they were able to provide practical guidance to managers.

Practitioner-theorists were joined in the 1940s and 1950s by sociologists, mostly from North America, in the structural analysis of organizations. Weber (1947) was brought into organizational analysis both for theory development on formal organizations and empirical investigation of the functioning of bureaucracies. Pioneering case study investigations (Selznick, 1949; Gouldner, 1954; Blau, 1955) evolved in the 1960s into comparative studies which were aimed at contrasting larger numbers of organizations with a view to understanding what shaped their features (Blau, 1974). Complementing these contributions was work that was geared to developing a conception of organizations as social systems. They were extensions of the concerns of another practitioner-theorist, Barnard (1938), with organizations as cooperative systems. Based on systems thinking, a central theme in these analyses was that organizations need to be treated as sociotechnical systems, faced with the problem of adapting to external and internal changes that required integration of the imperatives of technology and social relationships (e.g., Trist & Bamforth, 1951).

Systems thinking was also integrationist in the sense of relating to and serving as a bridge among sociological analyses and the third tradition, concerned primarily with the human element, which had developed from a base in psychology. The birth of industrial psychology was coterminous with scientific management, to be followed by the emergence of the human relations movement in the 1920s, which over the next three decades spurred empirical investigations of various kinds into individual and group behaviour in organizations as well as issues of leadership. Although geared primarily to such concerns, the human relations perspective and the ensuing behaviourist tradition also spoke to issues related to the way organizations were structured. Less hierarchy, participation in decision making, and teamwork were favoured structural arrangements (e.g., Likert, 1961).

Organizational Theorizing from the 1960s in North America and Europe

By the 1960s organization theory in the USA encompassed all these three traditions and was increasingly leaning towards a scientistic orientation, with behaviourist approaches in the forefront drawing upon a longer history of scientific research (Daft, 1980; Porter, 1996). The preoccupation initially was more with ‘management’ as the umbrella term that specified the domain for which there was a search for a general theory. Given the multiplicity of roots and traditions, strains had begun to emerge and concerns were expressed about the possibility of a unified theory (Koontz, 1961). Tensions were apparent, for example, between those that were sceptical about a ‘theory’ of management foreseeing development in the extension of the ‘best practice’ tradition and those that were inclined towards building a body of knowledge that would serve to identify general principles (Whitley, 1988). The latter were also challenged by those who were inclined to see unification coming through science-based approaches and under the framework of systems theory (Wren, 1994). There were also engagements by the more psychologically orientated with the structural-functionalism of the day for their neglect of human actors (e.g., Homans, 1964). Even then ‘the field of “organization theory” appear(ed) so ununified and disorderly’ (Rubenstein & Haberstroh, 1966: 3). (See also Hirsch & Levin, 1999.)

Taking place concurrently was the passage from considering organizing as a subset of managerial functions to a redefinition, as seen in the preceding quotation, by reference to organizations and organization theory, though employed interchangeably with the notion of ‘organizational behaviour’ and still with the explicit concern of ‘helping’ managers. Although there was reference to structural issues, the behaviourist slant was evident, leading, for example, Kassem (1976: 14) to characterize organization theory of the time in the USA as microscopic in approach, organizational psychology based, people and process focused, ideologically conservative, and geared towards practical theories. Kassem’s (1976) intent in this characterization was to provide a contrast with what he observed as the predominant features of organizational theorizing in Europe at the time. For Kassem (1976: 14), European organization theory was macroscopic, drew upon sociology, focused on the organization as a whole, was conflict based, and orientated towards abstract theories. The organizational sociology of Europe was also characterized by diversity (Hofstede & Kassem, 1976) and some of what was produced found resonance in North America because their problematizations and methodologies fitted well with the scientistic tendencies in the latter.

The Micro–Macro Separation and Convergence around the Contingency Framework

Indeed some of these contributions served as pioneers for later strands of theorizing that were to develop in North America. Notable in this respect is the work of Woodward (1958), Burns and Stalker (1961), and the Aston group (e.g., Hickson, Pugh & Pheysey, 1969) as early exemplars of structural-contingency theory and that of Crozier (1964) and Hickson, Hinings, Lee, Schneck and Pennings (1971) on structural analysis of power within organizations. The work of European researchers was accompanied by comparative studies of bureaucracy (e.g., Hall, 1962) and of business firms (e.g., Lawrence & Lorsch, 1967), as well as theoretical treatments (e.g., Thompson, 1967; Perrow, 1970) by American authors, that also portrayed organizational structures as contingent upon factors like size, technology or the external environment. The structural-contingency framework to emerge from these studies, buttressed as it was by systems theory, constituted a sociological open-systems perspective as a companion to the psychological one that had come earlier (Miner, 1990).

The contingency view of organization structure was based on two central themes. One argument was that there was no single best way of organization design. Organizations operated in different kinds of environment and employed different types of technology in carrying out their tasks. Environments varied in the degree of uncertainty and diversity, calling for different internal structural arrangements. So did the nature of tasks or technologies, notably with respect to routineness and interdependence (Perrow, 1970; Thompson, 1967). Organization structures were thus responses to information-processing demands emanating from external and internal conditions. Stable and simpler environments as well as routine technologies led to mechanistic structures characterized by formalization and hierarchy (Burns & Stalker, 1961). Dynamic environments and nonroutine tasks, on the other hand, called for more organic forms, structures that had less formal definitions and relied more on lateral rather than vertical relations. The second central theme of the contingency view complemented its deterministic flavour. Positive contribution of structural arrangements to organizational effectiveness and efficiency depended upon congruence, namely, the fit between conditions and design. Structural-contingency theory was very much in line with the times and owed its label to similar ideas that were being developed in relation to issues like leadership and decision making (Fiedler, 1967; Vroom & Yetton, 1973). Even a broader consensus appeared to be emerging around a contingency view of management (e.g., Kast & Rosenzweig, 1974).

The framework and the puzzles that contingency theory provided spurred in the 1970s larger-scale comparative studies of organization structure that helped to match the methodological orientations and advances of the behaviourist tradition. Coupled with new research agendas that were emerging, like inter-organizational relations and power issues in organizations, the divorce from behavioural concerns was becoming clearer and organization theory was gaining, at least in the USA, a new and narrower definition. The central concerns of this redefined area of specialization were the determinants and outcomes of intra- and inter-organizational design. The managerialist orientation was still there, as was the claim of being science based. The separation was based on disciplinary roots and, thus, on the level of analysis. The search, or hope, that dated back to 1950s, for gaining a separate identity through the fusion between sociology and the earlier practitioner-theorist tradition (Stern & Barley, 1996) was coming true. Not only was there now a new field with redefined boundaries but it would also appear that a consensus was emerging around a dominant paradigm provided by open-systems and contingency thinking. As this was happening, however, the seeds of new tensions and, indeed, fundamental divisions around the purpose and the ways of doing organizational analysis were being thrown mainly on the other side of the Atlantic.

Creeping Tensions

The Early Attacks

Scholarly work in Europe on organizations, with the diversity it contained, produced not only studies in the genre of the Aston group (e.g., Hickson et al., 1969) that served as an important contribution to what was to follow under the label of contingency theory. It was also the source of views that were to challenge the boundaries and building blocks of organization theory, as it was understood in North America.

An early reaction came from Silverman (1970), regarded as seminal, primarily in the north of the English Channel, in what it brought up (Hassard & Parker, 1994). Silverman’s book was a reaction to systems theory and proposed instead an ‘action frame of reference’ that located individual and group action at the centre of organizational analysis. Although Silverman (1970) had more sympathy towards later versions of the human relations perspective and the sociotechnical tradition, he was emphasizing the distinction between action and behaviour, in that the former embodied intentionality and the attachment of subjective meanings. The focus was thus on interactions among people and their everyday experiences in organizations. Silverman was not only critical of the systems approach because it helped to frame organizational issues in managerial terms but his position also involved a rejection of attempts to study causation in social phenomena. Of the central propositions that emanated from a social action perspective the first had to do with the ‘fatal defect’ (Silverman, 1970: 127) of not recognizing that the phenomena social and natural sciences dealt with were fundamentally different. The book engaged with both footings of organization theory, but involved a stronger challenge to its realist basis and, in turn, served as a stimulus for ethnomethodological research to follow.

Yet another ‘critical’ position against what was then becoming to be called ‘mainstream’ or ‘orthodox’ organization theory came from authors who were inspired by Marxian writings. Influential in this respect was Braverman’s book (1974) and his focus on the ‘labour process’, the use of human labour in transforming raw materials into products and services. Organizations were considered as being located in a broader political economy and as instruments for managements to effect the control of labour (Clegg & Dunkerley, 1980).

In Europe the Paradigm Debate Begins

That there were by the end of 1970s at least traces of widely divergent views on organizations and the purpose and ways of theorizing them became strongly registered with the publication of Burrell and Morgan’s (1979) book. With Burrell and Morgan the notion of paradigms and what was later to be called paradigm mentality (Willmott, 1993) entered into organizational analysis. Working from social theory, Burrell and Morgan (1979) specified two dimensions that they defined as ‘sociology of regulation versus change’ and ‘objective versus subjective views of society’. The sociology of regulation was concerned with order, integration, and consensus, whereas that of change dealt with conflict, contradiction, and domination. An objectivist view of society was characterized by ontological and epistemological assumptions that treated the social world very much like natural phenomena. Subjectivism, on the other hand, reflected an opposing tradition in that the social could only be understood in terms of the subjective meanings attached by those involved. By juxtaposing these two dimensions, four ‘paradigms’ of social theorizing were identified, namely, functionalist, interpretive, radical humanist, and radical structuralist, that in turn informed organizational analyses. Functionalism, with its concern for regulation and objectivist basis, was thought to provide the dominant framework, the orthodoxy, for organization theorizing. The other three were challengers and differed from functionalism either due to emphasis on change (radical structuralism) or assumptions about social science (interpretive sociology) or in terms of both dimensions (radical humanism). Not only did Burrell and Morgan (1979) attempt to portray differences by articulating on the different traditions and their extensions in organization theory but also argued powerfully against the possibility of synthesis, as each of the paradigms derived from disparate metatheoretical bases.

These works heralded what was to follow in the next two decades, to a large degree outside the USA, primarily in the UK, some other parts of Europe, and other English speaking countries like Australia and Canada. Political and military language began to set into debates. So as early as the late 1970s Clegg and Dunkerley (1977) were talking about the ‘… style of research whose hegemony is maintained by the pages of the “Administrative Science Quarterly” (p. 2) and proposing ‘to overcome existing organization theory’ (p. 3). Not only were the managerialist and scientistic footings of organization theory being challenged but indeed its identity as a separate discipline. As Hinings (1988: 2) put it, organizational theorizing was ‘reclaimed for sociology’; a convention of labelling the field that still prevails in Europe (Hassard & Parker, 1994; Thoenig, 1998). The criticisms that were raised and the new agendas that were proposed were, and to a large degree continued to be, confined largely to the geographical space delineated above, often being targeted at the work of the Aston group and Donaldson’s (1985) ‘defence’ of the contingency perspective. Despite attempts to expose North America to these ideas (Morgan, 1980; Clegg, 1981), the USA, in particular, remained largely unaffected (Aldrich, 1988; Üsdiken & Pasadeos, 1995) and had only a few alternative offerings of its own (e.g., Weick, 1969; Benson, 1977). The rather quiet separation between organization behaviour and organization theory occurring in the USA at roughly the same time and the resultant confinement of the field to claims to sociological and administrative roots was also serving as a seedbed for diversity, but of a different kind.

American Advances in the Sociological Approach to Organizational Analysis

The latter part of the 1970s marked the emergence in the USA too of new ways of thinking about organizations. Landmark contributions for what were later to become four influential research programmes (resource dependence, institutional theory, population ecology, and transaction cost theory) appeared in this period, leading a prominent author associated with one of these perspectives to proclaim, towards the end of 1980s, contingency theory dead (Carroll, 1988). This judgement has indeed received empirical support (Üsdiken & Pasadeos, 1999). More importantly, these developments have opened up a whole new range of tensions in the relatively tranquil setting in North America, the extent of which, after two decades, has come to be regarded as a threat to the identity of the discipline (Pffefer, 1993, 1997).

With the advent of these newer perspectives, problems, concepts, themes, units of analysis, and methods previously not within the purview of organization theory began to emerge. Even by the early 1980s these novel views were considered as divergent enough to generate discussions on ‘central debates’ (e.g., Astley & Van de Ven, 1983; Hrebiniak & Joyce, 1985) that, incidentally, incorporated only a limited selection of the issues fervently raised in the critical literature reviewed in the previous section. The debates that were engendered by the emergence of the newer perspectives emanated from different positions with regard to the extent of free choice versus determinism in organizational action and the appropriate level of analysis for studying organizations (Astley & Van de Ven, 1983).

The Resource Dependence and External Control Views

The resource dependence perspective (Pfeffer & Salancik, 1978), preliminary versions of which had begun to emerge in the early 1970s built on the external environmental focus in contingency theory, but also drew upon earlier coalitional views (Cyert & March, 1963) and work on intraorganizational power (Hickson et al., 1971). Whilst structural-contingency theory emphasized the consequences of information-processing demands faced by organizations, the resource dependence perspective focused on problems of resource acquisition and the interdependencies that they generated. Organizations confronted not only the problem of adapting to environmental changes but also that of dealing with external demands. Need for resources controlled by external parties generated problems of dependence, outside influence, and threats to autonomy. Organizational action was motivated by finding ways of avoiding, reducing, or altering asymmetric dependencies and developing countervailing power, through, for example, inter-organizational linkages. Another way of dealing with external dependence was through compliance and internal arrangements to better handle environmental contingencies. So what happened and what was or was not done in organizations had to do with external resource exchanges. Power was not only a currency, however, in environmental interactions but also within organizations. Indeed one mechanism through which the external environment impacted organizations was through its effects on the internal distribution of power.

The resource dependence perspective brought fresh ideas and a reworking of some themes that had been around for some time, which in their totality were both a contribution to the separation from organizational behaviour and, at the same time, served as an important challenge to views that had culminated around the structural-contingency approach. It was distinct from organizational behaviour approaches in that it stressed the structural or the context both in terms of external influences and internal phenomena. According to Pfeffer and Salancik (1978), behavioural change, for example, was more likely to be obtained not by individually orientated approaches typically advocated by the organizational behaviour literature but by the redesign of the context. The challenges that it offered to established ways of thinking within the structural-contingency tradition were also significant in various ways, though only tangentially related to the more critical stance emerging at the time to a large degree in Europe.

Perhaps of foremost significance in Pfeffer and Salancik’s (1978) formulation was their extension of the boundaries of organization theory beyond conceptions that were limited to internal problems of structural design. This extension was not entirely new in that it had an affinity with some of the theoretical and empirical work of the 1960s and 1970s that focused on inter-organizational relations with a specific interest in social service delivery systems in the USA (e.g., Van de Ven, 1976; Schmidt & Kochan, 1977). Pfeffer and Salancik’s (1978) resource dependence perspective not only extended these issues to the world of business organizations but also involved conceptualizing the design of external linkages as a central problem and thus a significant matter for organizational analysis. Issues like cooptation, interlocking directorships, interfirm associations, vertical integration, diversification, joint ventures, and mergers were, thus, central concerns, leading critics like Donaldson (1995: 133) to claim still that the resource dependence perspective is ‘strategy theory’ rather than organization theory. Nevertheless, these issues did become important items in the agenda of organization theory, indeed increasingly so over the last decade with greater interest in network forms of organization (Üsdiken & Pasadeos, 1999).

A second important contribution of the resource dependence perspective, again not completely novel in that it drew upon earlier ideas of organizations as coalitions (Cyert & March, 1963), was the framing of a political view. Such a framing served as another challenge to technicist-rationalist and unitary conceptions of organization. Interests and power were at play not only in external linkages but within organizations as well. Although there have been claims that the resource dependence perspective is an offshoot of the antibusiness sentiments of the 1960s (Donaldson, 1995), power and politics are essentially treated as inevitable, indeed as ‘functional’ phenomena, that could serve as mechanisms for facilitating organizational adaptation to environmental conditions. Such a conception did also generate however concerns about how organizations, especially those that are large and powerful, were to be controlled.

With its focus on external constraints and control, the resource dependence perspective also problematized organizational autonomy and discretion, and the role of managements in affecting organizational outcomes. Its primary challenge was to heroic conceptions of management, claiming instead that organizational and managerial discretion was variable. In that sense, the resource dependence perspective was offering a bridge between the determinism of the structural-contingency view of the time and a critical position coming originally from Europe, the notion that there is ‘strategic choice’ (Child, 1972). The structural-contingency theory had a smaller part for managers compared to the earlier views of practitioner-theorists and essentially described a reactive role (Astley & Van de Ven, 1983). Good management was about good diagnostics of the situation and the capability to install and implement structural arrangements that would be appropriate. The strategic choice view, on the other hand, allowed more room for managements as preferences or political considerations were likely to enter into design decisions (Child, 1972). The resource dependence perspective considered a broader spectrum, ranging from very little managerial effects to the discretionary role envisaged by the strategic choice view. Overall, however, according to Pfeffer and Salancik (1978), the possibilities for a discretionary role was limited to managers in relatively few organizations and that, in any case, performance and survival depended largely on the actions of others.

To recapitulate, the resource dependence perspective indeed mounted important challenges to the practitioner-theorist and the scienticized versions of organization theory and served to open up new avenues, but in essence did not diverge from the tenets of the latter version. Pffefer and Salancik (1978) were interested in developing explanatory models of organizational structures and actions, but they were equally concerned with their models serving as prescriptions for managers. Likewise, although there was reference to, for example, enactment processes within organizations, little was attributed to individual differences; the premise being that organizations were confronting an ‘objective reality’ that needed to be interpreted correctly. The managerialist and scientistic orientations of organization theory remained intact.

The New Institutionalism in Organizational Analysis

Although the resource dependence perspective also considered social norms and governmental regulation as environmental factors that needed managing, it was neoinstitutionalist views that brought into organizational analysis the notions of institutional environments and institutionalization with important implications for the causes and consequences of organization structures and actions. Beginning with Meyer and Rowan’s (1977) landmark article the infiltration of institutionalist ideas into organizational analysis, perhaps most significantly, involved a departure from both efficiency-based accounts of contingency theory and power-based explanations of the resource dependence perspective. Put broadly, the institutionalist perspective was built on an ideational view of organizations as opposed to the more materialist conceptions inherent in contingency and resource dependence theories. Organizations were thus viewed not as instruments for achieving ends or for wielding power but as ‘institutions’. The notion of institution refers to ‘structures and activities that provide stability and meaning to social behaviour’ (Scott, 1995: 33) and as Zucker (1977: 728) has pointed out, in a widely quoted statement, ‘institutionalization is both a process and a property variable’. Organizations, according to institutional theory, are located in institutional environments defined as the social and cultural context and themselves produce, embody and can become institutions.

The institutional environment is set conceptually apart from the notion of the technical environment that carries informational and material resources but, very much like the latter, is a source of powerful influence upon organizations. As such the institutionalist view becomes at one with contingency and resource dependence perspectives in ascribing primacy to the external context and portraying a passive image of organizations, though the accent on what matters is different. Formal rules, social norms, and cultural values surrounding organizations serve as influences that generate homogenization, more specifically, within what institutional theorists call ‘organizational fields’ (DiMaggio & Powell, 1983) or ‘societal sectors’ (Scott & Meyer, 1992). The notion of organizational field is central to institutional theory and refers not only to organizations that produce similar products or services but also others that they regularly interact with and that can have impact upon their performance (DiMaggio & Powell, 1983; Scott, 1995). Three sets of mechanisms can be in operation within organizational fields that produce homogenization or, in the language of institutional theory, isomorphism, namely, coercive, normative, and mimetic processes (DiMaggio & Powell, 1983). Coercive isomorphism refers to formal or informal pressures that organizations tend to comply with to avoid legal or social sanctions. The state, in particular, and other regulatory bodies are prime sources of coercive pressures. Organizations respond by conforming to such rules but may also be giving appearances of conformity. Normative pressures derive from norms, values, and beliefs that may have professional or broader societal bases. They may involve either external influence or internalization as ways of producing conformity. Finally, mimetism refers to imitation among organizations within a field, importing practices from others, especially in conditions of uncertainty.

These three ways of conceptualizing institutional effects on organizations constitute, according to Scott (1995), the three pillars of institutional thinking, which he labels as regulative, normative, and cognitive. The three pillars are a source of differentiation within institutional theory but they all refer to processes that can take place without recourse to efficiency considerations. Actually, the regulative can be conceived as involving calculation and thus constituting a theme where institutionalist thinking comes closest to the resource dependence perspective (Scott, 1995; Tolbert & Zucker, 1996). Otherwise, organizational action is not driven by calculation but by concerns for gaining legitimacy and obtaining the support of external parties (Meyer & Rowan, 1977). Indeed, organizations tend to decouple their administrative structure from operational work, the former creating some kind of a facade with features that appear appropriate in view of social and cultural expectations (Meyer & Rowan, 1977). Likewise, structures and practices within organizations could also be decoupled from functional considerations, as they become normatively valued or taken for granted, thus gaining a symbolic and unquestioned character. These arguments have been tempered, however, by distinguishing between organizations that operate under stronger institutional environments as opposed to those where technical and market pressures are more pronounced. This distinction has been accompanied by the claim that institutionalist accounts are likely to be more relevant in contexts where evaluations of organizational effectiveness are more difficult (e.g., Meyer, Scott & Deal, 1992).

Despite such concessions, in substantive terms, institutional theory developed as a challenge to both functionalist and interest-based explanations of organizational phenomena. It also involved some degree of, or perhaps held potential for, deviation from the two central footings of organization theory. The passive view of organizations and the accompanying implicit image of managers as constrained in their reactions were not radically different from the picture offered by the resource dependence or the contingency perspective. However, the institutionalist approach, notably in its earlier stages of development, had a different tenor in that its central concerns were not framed in managerialist terms. Institutionalist work displayed little in the way of offering models that would also serve to help managers in solving problems, except perhaps indirectly by heightening awareness of institutional effects. However, more recent turns towards challenging the passivity of organizations in institutionalist thinking and attempting to accommodate strategic actions against institutional pressures (Oliver, 1991) or exploring diversity and its links to performance (Kondra & Hinings, 1998) may be setting the basis for developing the managerialist potential of the approach (e.g., McKinley, Sanchez & Schick, 1995). Moreover, although not in deed, but rather in promise, neoinstitutionalism in organizational analysis also holds potential for sway towards subjectivism. Indeed, realist and constructivist ontologies have been noted as constituting one of the major fault lines in present-day institutionalist theorizing (Scott, 1995), although more of the research to date has pursued the former line of reasoning and assumptions (Donaldson, 1995). Greater interest more recently in studying the role of human agency in responses to institutional pressures and the construction of institutions (Scott, 1995) is accompanied by calls for employing a broader variety of methodologies without relinquishing the use of more conventional methods (Tolbert & Zucker, 1996). In terms of research practice, institutionalist theory and empirical inquiry continues to remain broadly within the traditional model of science.

Organizational Ecology

An important distinctive feature of the neoinstitutionalist perspective compared to resource dependence and contingency theories has been to extend analysis beyond organizations to a higher level by introducing the notion of organizational field. Population ecology, the third influential research programme emanating in North America in the latter part of the 1970s, has done the same but by focusing on another unit of analysis, namely, populations of organizations. Like contingency, resource dependence and institutionalist views, the population ecology (or as it is often labelled more lately, the organizational ecology) perspective also attributes primacy to environmental factors. In doing so, however, it differs in two key and interrelated respects. First, the population ecology perspective begins with the question, ‘Why are there so many kinds of organizations?’ (Hannan & Freeman, 1977: 936) and proceeds to suggest that diversity portrays itself as the existence of different organizational forms or as the biological analogy would have it, different species. Organizations of the same form at points in time and circumscribed by social or political boundaries (nations, for example) constitute populations. Organizations possessing the same form and thus operating in similar environmental conditions are subject to common forces shaping their shared destiny. Thus there is the need to focus on the population rather than the organization level of analysis. Secondly, change, according to population ecology, occurs not as a result of attempts on the part of individual organizations to adapt but rather through processes of environmental selection operating upon populations.

The central notions and themes of the population ecology perspective derive from these fundamental tenets. Populations are considered as made up of organizations of the same form, in other words, organizations that have similar activities and recourse to similar resources, thus sharing the same portion of the environment or niche. In relatively more specific terms, organizational form refers to the core features of organizations that include mission, forms of authority, basic technology, and marketing strategy (Hannan & Freeman, 1989). Very much like animal and plant life, survival of a particular organizational form or population depends on the availability of resources in the environment. Moreover, populations do not exist in isolation and can have overlapping niches leading to interpopulation competition. So both resource availability and variability and competition can serve as a source of organizational change. Those forms or populations that are fit survive and prosper, while those that are not disappear.

What happens within populations also matters, however, the key elements being density (the number of organizations in a population) and the carrying capacity (the level of resources in the environmental niche), both at particular moments in time. These states are postulated to affect vital rates in populations, namely, the rates of organizational births and deaths, a major preoccupation of empirical work in the population ecology tradition. Research on a variety of business and nonbusiness populations has provided evidence in support of the density-dependence argument in explaining the evolution of populations over time. Density has been argued to affect the processes of legitimation, referring to the acceptance of a particular form without much questioning, and competition for resources, which in turn determine founding and mortality rates. The relationship of population density to both rates is curvilinear but takes different forms. Increasing density leads to higher founding rates due to greater legitimacy that follows but then begins to fall with greater competition induced by higher levels of density and reduced legitimation effects of higher numbers of the same form. Mortality rates follow a U-shaped curve in that they are high in the early stages of population growth due to resource acquisition problems arising from a lack of legitimacy and tend to fall as the form gains increasing legitimation to rise again as intensified competition overrides decreasing legitimacy effects.

Incorporating organizational level variables into the analysis of organizational failures has extended the confinement of the density dependence argument to population level phenomena. Distinction is introduced between organizations with specialist (targeting a narrow range of clientele) and generalist (middle of the road) strategies. Likewise, organizational environments are distinguished in terms of the levels of uncertainty and whether they are fine grained (with smaller scale but frequent variations) or coarse grained (with larger but less frequent variability) (Hannan & Freeman, 1977). These distinctions have brought population ecology nearer to and into a confrontation with the structural contingency theory. Organizational age and size are also considered, leading to claims about the liability (higher degree of vulnerability) due to newness and smallness. Empirical evidence on age and size dependence is sketchy and has led to alternative formulations like liability of adolescence (Bruderl & Schussler, 1990) and obsolescence (Barron, West & Hannan, 1994). They are, however, key ideas for the population ecology perspective, as they are related to the central assumptions of reliability and accountability as guarantors of organizational existence and survival. Reliability refers to consistency in performance and accountability to the capacity of organizations to produce rational justifications for their actions. Age and size are reliability and accountability enhancing and therefore contribute positively to survival chances.

Age and size also enhance structural inertia, the tendency to stay away from or the incapacity to change. The structural inertia theme leads to another set of central claims of the population ecology perspective, that organizations cannot easily engage in adaptive change, and that change, especially in core features, may be survival threatening. Thus, changes at the organizational level have less impact on the organizational panorama than do population level changes through births and deaths (Hannan & Freeman, 1984). Organizations have inertial tendencies because reliability and accountability require stability, repetitiveness and standardization. The structural inertia argument also draws upon other organizational theories, activating power and institutionalization themes. That is also why older and larger organizations are likely to be more inert. There are also differences, the argument goes, between core and peripheral characteristics, the former being essentially resistant to change. Indeed, it is when core features are altered that change may become hazardous, as accrued advantages are being given up and the vulnerability arising from newness sets in again. Thus, although the intentions may be there on the part of managers, change becomes difficult both because of internal and external constraints and because those organizations that do attempt core change may disappear on the way. Therefore significant change at the more aggregate levels comes about from replacement of forms and the emergence of new ones rather than the transformation of individual organizations. These ideas have been most controversial not only because they favour a selection as opposed to the much more common adaptive view of organizational change, but also because they allow little room for purposeful managerial action for creating change of any significance that could improve survival chances of organizations. The empirical evidence behind the structural inertia argument is much less robust than that on the density dependence theme and there are now calls for reconciling selection and adaptation views (Baum, 1996).

In the terms of the two footings of post-1960 organization theory, science and managerialism, the population ecology perspective proved to be the zenith of the scientistic orientation both in its strive for generality and methodological sophistication. Although there have been criticisms of ambiguities in some of the central concepts like organizational form (e.g., Donaldson, 1995), the perspective has moved along a normal science route with repetitive tests of the same theoretical arguments and dealing with new puzzles that arose during the process (Pfeffer, 1993). The thrust, however, has been theoretical. Not only has the perspective been labelled ‘antimanagement’ because of its incapacitated image of managers (Donaldson, 1995), but there has also been little explicit concern during its evolution with the help it can provide to management, other than perhaps sensitizing them to constraints and extraneous influences on their actions. Only more recently can one observe a managerialist turn in attempts to make the perspective more accessible to nontechnical readers (e.g., Carroll & Hannan, 1995) and possibly a concomitant orientation towards further consideration of adaptive possibilities within a selection framework.

The latter part of the 1970s did not only bring the sociologically orientated advances and the accompanying strains that have been reviewed. It also brought at roughly the same time the beginnings of the challenge from an economistic view of organizations. Indeed, as it picked up, the economistic perspective was not only proving to be a challenge to the dominant sociological approach, but began to be perceived as a threat to the identity of the discipline (Pfeffer, 1993, 1997). The discipline was being claimed, this time, for economics.

Economics Turns to Studying Organizations

The economistic view of organizations, or ‘organizational economics’ (the oft-used label nowadays), claims an intellectual heritage that goes back to Coase’s (1937) famous question, ‘Why do firms exist?’, which problematized why not all economic transactions take place within markets and that some are managed within firms. In contrast to conventional neoclassical economics that essentially neglected firms and what happened within them, the neoinstitutional economics which was to develop in the footsteps of Coase involved a turn towards the assumption that the way firms were designed mattered for economic analysis and prediction. This turn was soon to make a powerful impact on both organization theory and strategic management. Of the variety of economics-based perspectives that have been considered under the rubric of ‘organizational economics’ (Barney & Hesterly, 1996), the infiltration of neo-institutionalist economics into organization theory has occurred essentially through two theoretical streams, namely, transaction cost economics and agency theory.

The Transaction Cost Framework

Transaction cost theory, as formalized by Williamson (1975), was built on Coase’s (1937) insightful question but also drew upon behavioural theories of the firm (Simon, 1947; Cyert & March, 1963). The central problem for transaction cost theory is how economic exchanges are governed. The unit of analysis therefore is the transaction, the nature of which and thus the costs that it generates shape the governance mechanism through which it is managed. Markets and hierarchies (or firms) are the two fundamental alternative mechanisms of governance, where the former refers to exchanges taking place among independent actors in the market and the latter to the internalization of the exchange within firm boundaries. Choice of governance mechanism depends on which of the two forms minimize transaction costs incurred to initiate, conclude, and monitor the exchange. Transaction costs exist in the first place because of two essential characteristics of human beings, their bounded rationality and opportunism. With these two assumptions transaction cost theorizing departs from standard neoclassical economic analysis. Humans are not treated as perfectly rational, but only limitedly so because of their information-processing capabilities. The notion of opportunism, on the other hand, goes beyond interest maximization to include malfeasance, not a characteristic attributed to all humans but to some, some of the time, sufficient threat, however, to take safeguarding measures in carrying out exchanges. In combination with these features two sets of conditions, the uncertainty surrounding the exchange (both environmental and behavioural) and the degree of exchange specific investments determine the level of transactions costs. Based on these fundamental ideas, the transaction cost perspective has been employed to address organizational issues like boundary problems and hybrid forms of exchange (e.g., strategic alliances, joint ventures, vertical integration) and internal design (e.g., the multidivisional firm).

Agency Theory

The companion agency theory has been concerned primarily with problems of monitoring within organizations and their relationships with external stakeholders. The central problem of agency theory emanates from the relationship or ‘contract’ between a ‘principal’ who delegates an activity to an ‘agent’ (Jensen & Meckling, 1976). Agency theory essentially shares with the transaction cost perspective the same assumptions about human beings and adds risk aversion as another central human feature. Given these assumptions the potential problems in an agency relationship are twofold. One of these refers to the possibility of divergence between the goals or interests of the principal and the agent and the second to differences in risk preferences (Eisenhardt, 1989). The problem is compounded by information asymmetry in that the principal may have limited information on how the agent is performing and obtaining information to that effect involves costs. To ensure that the interests of principals are served solutions need to be devised to deal with these agency problems. The key concern then is finding the most efficient form of governing the principal—agent relationship. Essentially, the mechanisms available to principals are monitoring and bonding arrangements (Barney & Hesterly, 1996). Monitoring refers to the surveillance of agents and can take the form of behavioural or output control. Bonding, on the other hand, involves incentive arrangements rewarding work in line with the interests of the principal.

As the unit of analysis is the relationship or the contract, agency theory is considered as applicable to a wide range of intra- and inter-organizational phenomena that approximates the situation where one party acts on behalf of another. Indeed, agency theory leads to a conceptualization of organizations not as entities but as a ‘nexus… of contracting relationships’ (Jensen & Meckling, 1976: 310). Although initial work in the agency theory stream began by a focus on the relationships between stockholders and managers (Jensen & Meckling, 1976), over time it has extended to a wider range of phenomena like managerial compensation, board structures, diversification, acquisitions, and vertical integration (Eisenhardt, 1989).

Reactions to the Economistic Intrusion

The penetration of economistic approaches to organizational analysis has met with mixed reactions. Their presentation to and promotion within the field has been accompanied by the emphasis on their revolutionary potential in providing a new and rich theoretical foundation that has been lacking (e.g., Jensen & Meckling, 1976). Positive reactions have noted the new ways of thinking and understanding that have been brought in (e.g., Hesterly, Liebeskind & Zenger, 1990; Eisenhardt, 1989; Carroll, Spiller & Teece, 1999) and the potential for cross-fertilization (Barney & Hesterly, 1996) and complementarity with sociologically orientated perspectives in organization theory (Eisenhardt, 1989; Carroll et al., 1999). Others, however, have found the encroachment of economics troublesome, indeed as flawed (Donaldson, 1995; Ghoshal & Moran, 1996) and even dangerous for the field (Perrow, 1986; Pffefer, 1997). Supporting these concerns, Üsdiken and Pasadeos (1999) have found that in the post-1980 period, empirical work published in two leading US-based journals (Administrative Science Quarterly (ASQ) and Academy of Management Journal (AMJ)) was increasingly informed by theories based on economistic thinking. Indeed, the infusion of economics and the increasing popularity that it appears to enjoy, leading to the kind of predictions that ‘… the end result will be a coalescing of economics and organization theory’ (Hesterly et al., 1990: 416) constitutes now another major strain that revolves around the character and identity that the field has gained, notably in the USA, as it developed, after the settlement in the 1970s, on its sociological and practical roots.

The arguments for distancing from economics rest on a number of premises. For one, there is disenchantment with the degree to which treating organizations as markets (indeed as ‘simply legal fictions’—Jensen & Meckling, 1976: 310), and action as rationally driven and guided by the criterion of economic efficiency offers an adequate basis for understanding and explaining organizational phenomena. Secondly, there have been concerns, albeit in opposing ways, about the managerialism of organizational economics. On the one hand, attention has been drawn to the inherently conservative and one-sided nature of economistic thinking brought into organizational analysis (Perrow, 1986) as well as its conformity with neoliberal ideologies currently in vogue in the international scene (Bugğra & Üsdiken, 1997). Alternatively, there have been strong doubts about the usefulness of transaction cost and agency theories as guides to practice (Ghoshal & Moran, 1996; Nilakant & Rao, 1994). Finally, fears have been expressed because of the ‘imperialistic’ (Hirshleifer, 1986) tendencies of economics and the threat of invasion as it were, especially given the present fragmented state of organization theory (Pfeffer, 1993, 1997).

In a sense the entry of economics can be considered as a further step in the scientization project of organization theory, formal modelling supplementing or replacing ‘informal theories’ in investigating at least some aspects of organizational life (Gibbons, 1999). In a different sense, the strain that has emerged is similar to the tension of some 30 years ago between organizational behaviour and organization theory, drawing, as they did, on psychologically as opposed to sociologically informed views. It is similar as it has to do with disciplinary bases, but also because it has to do with the problem of unit of analysis or the value of studying organizations in their totality (Freeman, 1999). Important as it is, economics has not been the only challenger to more conventional predominantly US-based visions of organization theory as it has developed over the last two decades. Divergence that was even more fundamental was also developing not primarily on home ground but further afield, proliferating by building and adding on or opposing the ‘unorthodox’ or ‘critical’ views of the 1970s.

Advances in Nonpositivist and Nonmanagerialist Directions

As were the newer sociological and economics-orientated approaches influential in shaping the course of organization theory in and dissipating from the USA, so was Burrell and Morgan’s (1979) introduction of the notion of paradigm and their cataloguing of different ways of studying organizations, but much more so outside the USA. Burrell and Morgan (1979) not only provided a framework for locating work that was already emerging and stood in some kind of opposition to what was being shaped at the time as organization theory, but also offered a background for debating paradigms and the possibility of interparadigm dialogue. Together with changes in this period in the international sociopolitical and economic scene and emerging intellectual currents, this was to make theorizing on organizations take, from early 1980s onwards, a very different turn, albeit limited largely to the UK, parts of Europe, and other English-speaking regions.

The Interpretive and Radical Positions

As observed by Willmott (1990) post-Burrell and Morgan (1979) impetus moved initially in two main directions, namely, the ‘interpretive’ and the ‘radical’. Of these the former strand diverged, extending Silverman’s (1970) action frame of reference, in opposing positivist methodology and took the direction of being driven by ethnomethodology and phenomenology. These currents are characterized first by a denial of the existence of organizations as a concrete object, problematizing therefore notions like structure which are typically dealt within organization theory (Burrell & Morgan, 1979; Hassard, 1990). The concern is not with generating generalized theory but ideographic accounts that are geared towards depicting everyday life from the perspective of those who are involved rather than that of an outside observer. The subjectivism of the interpretive approach leads to the focus on the sensuality of and meanings attached to actions and their interpretation by actors. So organizations are conceived not as, or having structures, but rather as processes continuously made or remade by the practices and social constructions of individuals. What their study can offer, through fieldwork, is not theories or explanations but descriptions of ordinary interpretations. Accumulating knowledge would be possible by insights that can be gained through comparisons (Deetz, 1996). Moving beyond earlier ‘landmark’ studies (Hassard, 1990: 101), interpretive work was fuelled with the expanding attention in the 1980s to organizational culture both in more popular managerialist writings and in academic circles (Deetz, 1996). The culturist movement as developed by both these groups involved a shift away from the focus and/or the expectation of effective solutions from the technical and rational towards the symbolic in organizational life. Treatments of culture differed (Smirchich, 1983) and for the interpretively inclined, culture served as a root metaphor; studying culture involved investigating meanings and interpretations that dominated or diverged across the organization (Turner, 1990). Although work in the interpretive tradition has been, for example, in opposition to instrumentalist or harmony-based views of culture found in popular management texts, there has not necessarily been an explicit antimanagerialist position or denial of managerial relevance. What the interpretive approaches essentially took issue with were the realist ontological assumptions and quantitative methodologies prevalent in studies that adhered to the natural science model.

The ‘radical’ in organization studies that was making itself apparent in the 1970s, involved two strands, what Burrell and Morgan (1979) labelled as the ‘structuralist’ and ‘humanist’ versions, though it was the former that was more pronounced in the 1970s and 1980s, as was the distinction. The structuralist critique was essentially based on Marxian thinking, though approaches characterized as radical Weberianism have also constituted a variant (Burrell & Morgan, 1979). Both lines of thinking have been concerned with unravelling managerial strategies of control over productive activity, located as they are within broader structures of power within societies. The radical Weberian variant has focussed on the bureaucratic form of organization as an instrument of domination, the issue of power being a central concern (e.g., Perrow, 1986). The Marxian tradition can be distinguished by a more specific concern with the labour process within capitalist societies and an explicit political agenda. A central premise has been that within the labour process there is a fundamental conflict of interest between management (and owners) and workers. The focus of theorizing and empirical work has therefore been on management control and forms of worker resistance. Earlier formulations have envisaged increasingly tighter control over employees, while later work has been more sensitive to the portfolio of control strategies available to managements and the variations at the organizational level distinguishing, for example, between direct control and commitment generating mechanisms granting more autonomy to workers (Reed, 1992). The labour process theory has also been more lately criticized for being overly rational and formalistic and therefore not being able to accommodate contradictions and choice (Reed, 1990). In any case, radical structuralism, especially its Marxian variant, engaged primarily with what had come to be regarded as the inherent managerialism of organization theory. The latter tended to frame problems and define issues within managerialist terms, whereas the structuralist critique and the knowledge produced thereof was arguably geared towards those that were disadvantaged in organizational relations.

The Marxian approach began to lose its impetus in the 1990s, due both, it would seem, to economic developments in advanced capitalist societies like the retreat of the working class and to the transformation of political and economic orders in Eastern Europe. The humanist version, on the other hand, considered nascent at the time by Burrell and Morgan (1979) has now become the critical voice, the more dominant of the radical positions (Deetz, 1996). For Burrell and Morgan (1979), radical humanism was the most antithetical approach to the functionalism of organization theory, as it stood opposed to both concerns with regulation and objectivism in social science. It was essentially ‘anti-organization’ theory (Burrell & Morgan, 1979: 310). The work representing this line of thinking, now considered under the umbrella term critical, does have affinity to radical structuralism in that its primary engagement is with domination in organizations and society at large. It is, however, distinct in a number of important ways (Alvesson and Deetz, 1996). First, the emphasis is on social constructions, on how they become naturalized and serve to prevent other constructions from being considered. Secondly, addressing the issue of domination and control and critiques of ideology do not only relate to class differences but involve all groups of employees within organizations. Third, as Alvesson and Deetz (1996: 198) put it ‘… critical theory, compared to Marxism, is not anti-management per se’ (emphasis omitted) and can produce managerially useful knowledge. It can do so because, although management is considered as an institutionalized form of domination, a critical view can be sensitizing to the ‘dark’ side of organizational and managerial action. More is on offer, of course, for those who have been ‘objectified’ and who consent by being subjected to constructions favouring certain interests and to distorted communications. In that sense, critical approaches also have a political agenda, indeed very strong in moral and ethical terms, but represent a reformist stance (Deetz, 1996).

The Postmodern Turn

Towards the end of 1980s, the organization literature began to see early examples of the encounter with postmodernism (e.g., Cooper & Burrell, 1988), as yet another way of approaching managerial and organizational phenomena. The primary engagement of the postmodern is with modernity, its ways of organizing and ways of knowing. Modernity as an epoch involved the transition from traditional and preindustrial society to industrial capitalism, generating new institutions and transforming the nature of social relations. With its roots in the Enlightenment, modernism privileged reason and science as the only legitimate and valid means of knowledge production. For the postmodernist, not only has the modernist project, despite significant material advances in developed industrial societies, failed but it has been the source of many ills as it ran its course (Marsden & Townley, 1996). The notion of ‘post-modern’ (with a hyphen; Parker, 1992) has been employed to denote a new epoch, a fundamentally different set of conditions characterized by, for example, globalization, faster change in (particularly information) technology, and increasing differentiation of markets (Hatch, 1997). Postmodernism, however, owes its influence as an approach or philosophy, rather than as a characterization of a new epoch succeeding modernity. As a view (or rather a set of views), it sets itself apart by being against any kind of grand theory (including for example, Marxism), indeed any kind of general theory. Knowing is local and specific, as is knowledge about organizations (Marsden & Townley, 1996). Knowledge and expertise are treated not as neutral, the argument being that claims to expertise serve as tools of domination. Like critical perspectives there is an overall engagement with domination and power differentials and the fundamental premise is again that social reality is a construction. Postmodernism goes beyond critical approaches by turning attention to the role of discourse and language in the social construction process (Deetz, 1996). The postmodern also denies any essential features to humans, claiming that it is the discursive context that shapes identities. As humans are subject to a variety of discourses, especially in contexts where there are, as in present-day conditions, high levels of ambiguity, identities are more likely to be fragmented (Alvesson & Deetz, 1996). Individuals are thus denied the sovereignty and autonomy granted to them in modernist thinking (Willmott, 1994). A relativist position accompanies, in that according to postmodernists there can be no basis for claims to truth or universal criteria for comparing or judging the worth of different knowledge claims (Jackson & Carter, 1991). As the world, and for that matter the world of organizations is seen as text, then there is not much that social science can do and research can only usefully draw upon modes like discourse and rhetorical analysis and literary criticism. Postmodernism also differs from critical perspectives in that there is no political agenda, other than representing the voice of the marginal and the suppressed, and can in its writing become satiric and puzzling (e.g., Alvesson, 1995; Burrell, 1997).

The Search for a ‘New’ Theory of Organization

The views and themes reviewed in this section stand in different ways in stark contrast to those discussed in the previous two. The suggestion is not that they present a uniform picture as they are also divided by many differences. Very much like the perspectives that have come to be regarded from the outside as more conventional, the ‘contra’ views (Marsden & Townley, 1996) have also experienced change as some have lost ground and newer positions have emerged. This becomes apparent, for example, in Deetz’s (1996) revision of the Burrell and Morgan (1979) typology, where Marxian approaches become relegated to a subset of the critical position while space is opened as a new box for the postmodern. What all these, albeit different, views do share, however, is the orientation towards a ‘new’ approach to organization theory (Willmott, 1995; Hassard & Parker, 1994). Although there are different versions of what the ‘new’ can be, very broadly it entails a position that goes against both footings of more conventional US-led organization theorizing, an aspiration for a field of study that can be characterized as nonpositivist and nonmanagerialist (Watson, 1994). Again views vary but there is a largely shared scepticism about the traditional model of science, its claims to universality and value-free analysis as well as its preoccupations with causality, prediction, model testing, and quantitative methodologies. There is also the aspiration to redeem the study of organizational phenomena from narrower managerialist concerns by turning it into a scholarly or rather, an intellectual enterprise that engages with the human, the ethical, the aesthetic, and the spiritual in organizations (e.g., Zald, 1993; Strati, 1999; Tsoukas & Cummings, 1997). There are now claims to a rich and voluminous literature (Alvesson & Deetz, 1996) and to a momentum in these directions that cannot be ignored (Clegg & Hardy, 1996). However, as some proponents would also acknowledge (e.g., Burrell, 1996; Chia, 1995), recent penetration of these ideas and agendas into the core still appears to be not all that different (Üsdiken & Pasadeos, 1999) from what Aldrich (1988) observed over 10 years ago. There does appear to be a sizeably larger group of adherents (Astley, 1985), however, to justify the claim at the beginning of the chapter that these projects represent significant and fundamental divisions on the purpose and conduct of organization studies.

Organization Theory: Its Present and Possible Futures

As the review and the discussion in this chapter must have shown, if there would be one point of agreement among organization scholars of different persuasions it would be around the observation that organization theory is currently in a state of fragmentation, although there would still be disagreement in the way extant pluralism is described let alone how it can be accounted for and what needs to be done about it. This chapter has argued that the divisions at one level are of a more fundamental nature going to the heart of the matter as it were, the identity of the field and what it can (and should) hope to achieve. There are then divergences among neighbouring views within similar orientations, some of which, however, go beyond friendly critiques.

Searching for Ways of Living or Dealing with Pluralism in Organization Theorizing

The reaction to growing pluralism in organization theory over the last two decades was based on two different interpretations and descriptions of what was taking place. On the one hand, there was the description prevalent in Europe, inspired very much by Burrell and Morgan’s (1979) book, recognizing the ‘alternatives’ to what was labelled as functionalist scientistic orthodoxy and identifying the metatheoretical assumptions on how they differed from the latter and from one another. The emphasis on alternatives widened the range of views that were considered as party to fragmentation in the field. What it also did was to encourage questions related to the fundamentals of what was being examined, namely management and organizations, thus contributing to the extension of the boundaries of the field, drawing in and attempting to establish links with social theory and philosophy. The central debate it engendered revolved around the issue of paradigm commensurability. Burrell and Morgan (1979) had offered a strong urge for paradigm closure, the argument being that in order to make their voices heard and establish their legitimacy each programme needed to develop in its own terms. The paradigm closure argument was also based on the premise that the different paradigms relied on different metatheoretical assumptions which made dialogue impossible and precluded the possibility of overarching criteria for assessing relative merits (Astley, 1985; Jackson & Carter, 1991). This argument was later complemented by another version of the multiparadigmatic position suggesting that different paradigms offered a portfolio of partial views and could be used to provide different perspectives on the same organizational phenomena (e.g., Morgan, 1986; Hassard, 1991). Such an approach, however, elicited reactions to the ease it foresaw for researchers in transgressing paradigmatic boundaries. Others (e.g., Willmott, 1990) drew attention to what they saw as contradictions in Burrell and Morgan’s (1979) demarcations and the presence of extant forms of social analysis which were geared explicitly to overcoming dualisms. Indeed, paradigm closure was criticized for allowing ‘oppressive’ organization theory and practice to continue (Willmott, 1990: 60). More lately, milder or middle-of-the road versions of the multiparadigmatic position have also emerged referring to orientations or discourses rather than paradigms (Deetz, 1996; Kaghan & Phillips, 1998). The argument is again that demarcations are likely to be fraught with contradictions and to ignore debates and contentions within similar ways of thinking. Moreover, although rejecting the facility of moving across orientations, there is the claim that organizational analysts often draw upon the resources that are provided by more than one ‘discourse’. There have also been, even within the search for a ‘new’ theory of organization, arguments that there is now a need to move on to a postparadigmatic stage, a call, in fact, for rediscovering organizations after the preoccupation with theory and philosophy in the 1980s (Ackroyd, 1994).

Although there were early and more confined attempts towards classification of organizational perspectives (e.g., Astley & Van de Ven, 1983), it took more than a decade for the kind of debates reviewed above to reach the USA (e.g., Pfeffer, 1993; Canella & Paetzold, 1994; Van Maanen, 1995; Deetz, 1996; Eastman & Bailey, 1998). In parts of these debates and indeed more generally, the reaction in the USA to fragmentation revolved around the question of integration, the typical premise being that organization theory was showing the signs of being in a preparadigmatic stage. Unity was sought, based on the claim that fragmentation would be detrimental to the status of the discipline as well as disadvantaging the field in resource allocations and making it vulnerable to invasion by other more basic disciplines (Pfeffer, 1993). It would also limit the credibility and the capability of the discipline to offer advice to managerial audiences (McKinley & Mone, 1998). Moreover, again typically in the USA the issue of pluralism and debates around differences were confined to contingency, resource dependence, institutional, population ecology, and economistic perspectives (e.g., Carroll et al., 1999; McKinley & Mone, 1998). Debates around other perspectives which pervaded the European, primarily the UK scene, were either ignored or treated as marginal (McKinley et al., 1999). The most heated debates involved the strain between sociologically based post-1970s research programmes and the economistic intrusion (e.g., Barney, 1990; Donaldson, 1990; Gibbons, 1999; Freeman, 1999), especially in view of increasing penetration of latter approaches to organization studies (Üsdiken & Pasadeos, 1999). Otherwise the repeated desire and aspiration was and is towards paradigmatic unity either through a perspective superseding others or through more elitist (Pfeffer, 1993) or ‘democratic’ (McKinley & Mone, 1998) mechanisms of intervention. The more competitive spirit is evident in some of the ecological (e.g., Carroll, 1988) and organizational economics literature (Hesterly et al., 1990). Attempts to synthesize different perspectives have also increasingly become popular as in the case of new labels like institutional ecology to bridge ecological and institutionalist thinking (e.g., Baum & Oliver, 1992). Other examples of searching for areas of compatibility are between institutionalist and transaction cost theories (e.g., Martinez & Dacin, 1999), institutionalism and resource dependence (e.g., Oliver, 1991), and transaction cost theory and all others (Carroll et al., 1999). Üsdiken and Pasadeos’ (1999) have provided evidence supporting these tendencies, showing that empirical papers in ASQ and AMJ in the 1990s compared to the 1980s were more likely to be based on multiple theoretical perspectives. More recently however, a more European-like debate about the purpose and ways of doing organization studies has been gaining currency in the USA too, as seen in the calls for greater tolerance to diversity of views (Van Maanen, 1995) and to normative positions (Wicks & Freeman, 1998; Eastman & Bailey, 1998).

The Relevance Issue

Both of these sets of reactions have also had to contend with the issue of relevance, a concern lurking behind academic studies of organizations since the scientization shift around the 1950s and 1960s in the USA. The last two decades have seen concerns mount with greater market pressures (Van de Ven, 1999) and the expanding competition from alternative producers of knowledge like consultants and consultancies (Abrahamson, 1996). Given the footings of the discipline alluded to since the beginning of the chapter and its location, in particular in the USA, in business schools, has led to couching the issue of relevance in managerialist terms. On the other hand, the theoretical advances made in the interim and the legitimacy that organizational studies has gained over time as a science-based endeavour call for framing research concerns in a theory-driven rather than a problem-centred fashion. Üsdiken and Pasadeos’ (1999) study does corroborate the tension in that the topics investigated in the 1990s show a greater proportion of present-day managerial concerns (like strategic alliances, joint ventures), while there are also indications that more lately there have been increases in studies justified primarily in theoretical terms.

The aspiration for building a ‘new’ theory of organization have not been immune to concerns with or pressures towards relevance either, perhaps with the exception of those with a postmodernist bent. Within the endeavours towards developing the ‘new’ theory however, the notion of relevance gains a broader meaning. It may first have to do with going beyond the bounds of philosophizing and conceptual discussion to testing ideas empirically, a call lately made to critical theorists (Thompson & McHugh, 1995) and even those with a postmodernist inclination (Alvesson & Deetz, 1996). Beyond that, especially for the critically minded theorist the audience is the managed, the oppressed in organizations. Those that are more inclined to portray an aspiration for the ‘new’ theory to penetrate into and perhaps replace present-day mainstream, do not eschew managerial relevance, criticizing purist critical theorists for ignoring managers (Clegg & Hardy, 1996). In fact, one criticism that such a programme would make of the more dominant orientations is that given their scientistic aspirations, they have failed to be managerially relevant.

Relevance for managers of the ‘new’ theory could take one or more of a number of forms. It may be more inclined to inform managers who are more on the oppressed side, the emphasis here being more on managerial resistance and choice in view of totalizing tendencies of organizations (Alvesson & Deetz, 1996). It may also have a broader appeal to all kinds of managers the argument goes, by sensitizing them to experiences of others and to ethical and environmental issues.

Looking to the Future: Organization Theorizing in the Early 21st Century

Given this fragmented state, both in a more fundamental sense and lesser differences within broader metatheoretical orientations, what does then the future hold for organization theory? Two broad conjectures will be offered. One of these concerns what in this chapter have been considered as the two footings of organization theory. As broad tendencies, organization theory is likely to move in the direction of attempting to be managerially more relevant and concurrently there will be some further degree of retreat from the traditional model of science as the way of investigating organizations. This is not to suggest that theory-driven research and empirical work geared towards hypothesis testing will quickly erode. Indeed, Üsdiken and Pasadeos (1999) have shown that the trend identified by Daft (1980) towards greater methodological rigour and sophistication in the 1960s and 1970s in US-based organizational research has continued in the 1980s and 1990s. Theoretical framing supported by hypothesis-testing empirical research now has a strong institutional basis, especially in the USA and in some other countries where it has penetrated and is not likely to give way easily to alternative orientations. There are enough signs, however, that there will be increased institutional and competitive pressures towards being more relevant, coupled with and legitimized by intellectual currents that impute new demands due to changes in ways of organizing and the context in which they are taking place (Van de Ven, 1999). Supporting these conjectures, Üsdiken and Pasadeos (1999) found that in the 1990s work published even in the Administrative Science Quarterly, the major US-based scholarly journal and the bastion, according to some, of positivist organization theory was showing signs of increasingly justified in managerialist terms. Again even in US-based work there are not only calls for drawing upon a richer base like ethics, humanities, arts and music (Wicks & Freeman, 1998; Zald, 1993; Hassard & Holliday, 1998; Meyer, Frost & Weick, 1998), but also indications, as in the invitation in the call for the Academy of Management meeting in the year 2000 for submissions in the form of art and poetry, that alternative forms of presentation are likely to gain increasing legitimacy.

The second conjecture relates to the way present-day fragmentation may unfold given these broad tendencies. The central premise advanced here is that in line with the times and times that lie ahead in the foreseeable future there will be more integration and disintegration occurring at the same time. Integration can be expected along a number of realms and directions. Advances are likely to be made in bridging and building on the complementarities of now competing perspectives within broadly similar orientations and indeed to some degree perhaps across more fundamental divisions. Now important debates around, for example, adaptation versus selection, efficiency versus power, resources versus institutions, agency versus structure would be attracting more research attention and would be prone to new advances. Stronger alliances are likely to foster across regions, primarily between the USA and Europe, now considerably underpinning the fundamental divisions in the field. This is likely to occur as exporting of traditions from the latter to the former increases pace and offers possibilities for expanding partnerships. These alliances would be expected to build upon paradigmatic allegiances and lead over time to more balanced representations in now the more active research producing parts of the world, disseminating in time to other parts. This will serve, on the other hand, to maintain fundamental differences essentially around the way of doing organizational analysis. Indeed, one could also predict that the conduct of organizational analysis would be opening up new tensions as, for example, the formalism of economics increasingly penetrates the field. It is even foreseeable that, like the separation that occurred between organizational behaviour and organization theory some 30 or so years ago, a demarcation between organizational economics and organizational sociology or the subdivisions of the latter may become stronger. It may then, dare one say, become more difficult for ‘organization theory’ to claim a separate identity, apart from a part in management textbooks that continues to include the output of structural contingency theory. It is also foreseeable that a looser ‘integration’, or ‘confederation’ rather, under the rubric of ‘organization studies’ (some may still hope ‘organization science’) can emerge, accompanied by the recognition and the establishment of distinct traditions and disciplinary bases. What this may also bring is, akin to economics and to some degree to organization behaviour, a new division of labour among approaches with respect to their ‘comparative advantage’ to address certain sets of questions. Such a domain allocation does not appear to be in sight, but may well be the only way for a more tranquil coexistence among different viewpoints, at least among those that share metatheoretical assumptions.