Encyclopedia of Sociology

COMPLEX ORGANIZATIONS

Age and size are the strongest predictors of
how long an organization will survive. Young or-
ganizations disband at a substantially higher rate
than older ones; a conservative estimate is that
only half of new organizations survive more than
five years. Internally, new organizations depend
upon the cooperation of strangers who must be
taught new routines, some of which are unique to
particular organizations (Stinchcombe 1965). Ex-
ternally, new organizations must penetrate niches
in potentially hostile environments, overcoming
competitors and establishing their legitimacy with
potential members, customers, suppliers, and oth-
ers. Survival beyond infancy is easier when an
organization adopts a form that has already been
institutionalized and is widely regarded as legiti-
mate and proper (Zucker 1988). Population ecolo-
gists have given special attention to the density of
an organizational form—the number of organiza-
tions of a given kind—in their analyses of vital
rates. Density is thought to be an indicator both of
the acceptance or legitimacy of a form (which
raises foundings and decreases disbandings) and
of the number of competitors attempting to sur-
vive within a given environmental niche (which
reduces foundings and increases disbandings). The
life chances of an organization initially increase—
though not smoothly—as density rises, and then
decrease as competition intensifies.

SOURCES OF INTERNAL DIVERSITY

AMONG ORGANIZATIONS

All models of organizations as coherent entities
can be reduced to two basic views. The systemic
view sees organizations as social systems, sustained
by the roles allocated to their participants, whereas
an associative perspective treats organizations as
associations of self-interested parties, sustained by
the rewards the participants derive from their
association with the organization (Swanson 1971).
These two views each have a venerable heritage in
the social sciences. Despite subtle variations, all
perspectives on organizations ultimately use one
or both of these models.

Institutional, functionalist, and ecological per-
spectives rely on a systemic model, viewing organi-
zations as relatively coherent, stable entities. Such
models emphasize the activity systems in organiza-
tions that are deliberately designed to accomplish
specific goals. Formal structures of organizations,

including a division of labor, authority relation-

ships, and prescribed communication channels,

are treated as fulfilling a purposeful design. For

example, an institutional approach emphasizes

member socialization and other processes that

make the transmission of shared meanings easier.

Ecological models usually treat organizations as

units that are being selected for or against by their

environments, and thus assume that organizations

cohere as units.

Interpretive and more micro analytic views

rely more on an associative model, leading to the

expectation that organizations are constantly at

risk of dissolution (March and Olsen 1976). For

example, in the interpretive view, the reproduc-

tion of organizational structure depends on par-

ticipants resubscribing to, or continually negotiat-

ing, a shared understanding of what they jointly

are doing. Some cultural theories of organization

emphasize the different, conflicting views that co-

exist within one organization (Martin 1992).

Views of organizations as marketplaces of in-

centives (Dow 1988), bundles of transactions

(Williamson 1981), or arenas of class conflict (Clegg

1989), are in harmony with the associative view,

insofar as they focus on actors’ contributions to

sustaining interaction. Indeed, organizational econo-

mics views organizations primarily as mechanisms

for mediating exchanges among individuals, argu-

ing that they arise only when market coordination

has proven inadequate (Williamson 1981). One

variant on this approach, agency theory, focuses

on the relationships between self-interested prin-

cipals (such as owners or stockholders) and the

self-interested agents (such as workers or manag-

ers) engaged on behalf of principals. The self-

interests of these actors may be divergent, and

hence agency theory examines how systems of

incentives, monitoring, and coordination can be

designed to align the activities of agents with the

objectives of principals, at minimal cost.

These complementary views of organizations—

the associative and the systemic—highlight the

sources of two fundamental problems of social

organization, those of differentiation and integra-

tion. Some differentiation occurs through the divi-

sion of labor among different roles and subunits;

for example, employees may be divided into de-

partments such as sales, finance, and manufactur-

ing. Differentiation pressures also arise because