84 4: Public Institutional Th eory
Child Left Behind Act treated local schools. Public schools are perhaps the an-
tithesis of high-reliability organizations, yet the act treated them as if they could
function—and be held accountable—as such.
System Fragmentation
Institutional theory is also informed by the long-standing empirical, conceptual,
and normative debate over the Tiebout Th esis, according to which multiple small
jurisdictions in a metropolitan area aid marketlike individual choice, competi-
tion, and public service effi ciency both in separate jurisdictions and in entire met-
ropolitan areas (Tiebout 1956; Ostrom, Tiebout, and Warren 1961). Although
oft en framed as a rational choice debate versus a nonrational choice debate, for
institutional theory purposes this is a systems fragmentation versus a consoli-
dated systems argument, with its attendant hypotheses and empirical tests.
At the outset, the theoretical question has to do with the unit of analysis. Frag-
mentation theory uses the individual or the family as the appropriate unit of anal-
ysis and the aggregation of individual and family choices as measures of rational
preferences and institutional eff ectiveness. And, too, fragmentation theorists tend
to use the logic of individual bureaucratic preferences to explain institutional
choices (Niskanen 1971; Downs 1967; Ostrom 1973). Likewise, consolidated sys-
tems theorists use individual, family, and bureaucratic preference as units of anal-
ysis, but they also use overall measures of whole system eff ectiveness (Lowery
and Lyons 1989; Lowery, Lyons, and DeHoog 1992; Rusk 1995; Stephens and
Wikstrom 2000).
David Lowery, a leading critic of the Tiebout Th esis, neatly summarizes the
consolidated systems theorists’ critique of fragmentation theory by the straight-
forward testing of these three hypotheses:
- Racial and income segregation will be greater in fragmented settings
than in consolidated settings (2000, 63). - Fragmentation results in a spatial mismatch in which the poor and mi-
norities are isolated in jurisdictions with limited fi scal capacity and a
signifi cant demand for expenditures, but wealthy whites escape to en-
claves with limited needs and a generous fi scal capacity (65). - Consolidated (limited or complete) systems are more likely to have
policies that minimize sorting by race and income and maximize redis-
tribution and generalized economic growth (68).
Basing his conclusions on his own work and the work of others, Lowery (2000)
marshals considerable empirical verifi cation for these hypotheses. Fragmentation
theorists, for their part, marshal evidence and logic to reject the hypotheses (Os-
trom 1973). But theorists from both vantages agree that relative levels of system
fragmentation or consolidation matter a great deal in institutional functioning, in