COMPLEX ORGANIZATIONSshaped by the contexts or environments in which
they are established, contemporary organizations
reflect the impact of their historical origins in
societies characterized by growing affluence and
conflicts over the control and distribution of wealth.
Organizations come in a bewildering variety of
forms because they have been explicitly designed
to deal with a wide range of problems and because
they have emerged under widely varying environ-
mental conditions.
THE IMPORTANCE OF ORGANIZATIONSWhy are complex organizations important? Or-
ganizations, which produce goods, deliver servic-
es, maintain order, and challenge the established
order are the fundamental building blocks of mod-
ern societies, and the basic vehicles through which
collective action is undertaken. The prominence
of organizations in contemporary society is appar-
ent when we consider some consequences of their
actions.
Organizations coordinate the actions of peo-
ple in pursuit of activities too broad in scope to be
accomplished by individuals alone. Railroads were
the first large corporations in the United States,
arising because small autonomous merchants and
traders could not effectively coordinate the pas-
sage of long-distance shipments. In the twentieth
century, the production of mass-market consump-
tion goods, such as automobiles and electric appli-
ances, was made possible by the rise of large,
vertically integrated manufacturing firms. Similar-
ly, in the public sector, the implementation of
government social policies has necessitated the
development of large government agencies that
process thousands of cases on a universalistic,
impersonal basis.
The concentration of power in organizations
contributes not only to the attainment of large-
scale goals in modern societies, but also to some
major social problems. When organizations focus
on attaining specific goals, such as making profits
for shareholders, they may neglect the side effects
or externalities of their actions. Examples include
air and water pollution and the careless disposal of
unwanted hazardous materials by large manufac-
turers. The manufacture of unsafe consumer prod-
ucts and instances of large-scale fraud and collu-
sion also illustrate the capacity of organizations to
do harm as well as good.
Increasingly, major tasks in society are ad-
dressed not by single organizations but instead
by networks of interdependent organizations.
Interorganizational arrangements pool the efforts
of numerous specialized organizations in pursuit
of a common end. For example, automobiles are
produced in vertical production networks centered
on assemblers that maintain ongoing relationships
with multiple tiers of suppliers responsible for the
manufacture and delivery of components. Howev-
er, in the industrial districts of northern Italy,
textile production occurs within horizontal produc-
tion networks consisting of small and specialized
firms that employ flexible machinery and tempo-
rarily cooperate with one another for particular
projects. Cooperation enables them to adapt to
changing market demands and to learn from one
another. Likewise, services for the severely mental-
ly ill are delivered by independent but interrelated
agencies providing specific medical and social servic-
es. Many large-scale motion pictures are produced
not by self-contained studios, but rather by combi-
nations of producers, directors, cinematographers,
and other personnel assembled only for the dura-
tion of a particular project. Ongoing arrange-
ments involving hospitals, doctors, and university
laboratories have been created by the National
Cancer Institute to coordinate cancer research
and treatment. As these examples demonstrate,
interorganizational arrangements give organiza-
tions the flexibility to address the unique features
of specific cases, while avoiding the rigidities some-
times found in very large organizations.DEFINITIONS OF ORGANIZATIONSWhat are complex organizations? A simple defini-
tion is that organizations are goal-directed, bounda-
ry-maintaining, socially-constructed systems of hu-
man activity. Some definitions add other criteria,
such as deliberateness of design, the existence of
status structures, patterned understandings be-
tween participants, orientation to an environment,
possession of a technical system for accomplishing
tasks, and substitutability of personnel (Scott 1998).Goal orientation and deliberate design of ac-
tivity systems are distinctive features discriminat-
ing between organizations and other collectivities,
such as families and small groups. Organizations
are purposive systems in which members behave
as if they are committed to the organization’s