Organizations as Social Structures

Organizations as social structures is a perspective that focuses on the hardware of human association, the durable factors that govern people’s ways of being together as they achieve common goals by coordinated means. As it has been understood in the literature, social structure is what permits the organization’s persistence over time; it describes relations among differentiated positions, and references an agency or institutional will that transcends that of individuals. Structure implies wholeness rather than aggregates, predictable patterns of transformation, self-regulation, and closure. Structure itself is a term borrowed from architecture, hence the spatial emphasis on prescribed places that people can inhabit. But if the architect designs the structure before it is inhabited, the organizational cognate can be discerned only after the fact by means of analysis. As the building goes up, its structure is visible to the untrained eye. Only the effects of social structures are visibly manifest in human responses to institutional circumstances – their material is not so much physical as latent. Organizational studies would need to be devised to disclose the plans and patterns of the social edifice.

The possibility of identifying structure rested upon a positive disposition toward the nature of society; namely, that the interconnections among persons were an entity in their own right, but also that these fixtures bore the properties of reason. Society is rational, and structures are the register in which rules can be read. The historical and conceptual novelty and gain of such a sweeping claim needs to be appreciated in relation to its opposite. The rationalistic view confronted the conviction that human action is given by nature, directed from without by omnipotent figures, and that local acts of common people are devoid of logic, insignificant, unworthy of serious attention. The anxieties swirling around the turbulence of market societies derived from the concern that those displaced from traditional beliefs and dispossessed from their ways of life constituted a mass that would devolve into a mob, threatening public order and property. The emerging sociological profile was Janus faced: modern society was rule giving, but also generated its own forms of unreason; it normalized but engendered abnormality; it imposed association in common but was driven by conflict. As organizational studies coalesced in the twentieth century around the notion of social structure, they undertook the analysis of these societal antinomies in terms that could be either apologetic or critical.

Intellectual Origins

Early organizational studies, whether prescriptive like those of Taylor (1911) and Fayol (1919) or more predictive like Roethlisberger and Dickson (1939) or Roy (1952), were oriented toward most effective maximization of effort for the reasonableness of profit taking work. Barnard (1938) and Selznick (1948) launched the turn toward structure by treating the organization as a sui generis entity, an adaptive system in its own right. The concern with labor control that had been so explicit in the first studies seemed masked by the claims that organization was a universal form that transcended the particularities of the workplace. Yet the seminal studies of the 1950s reflected as much economic changes that increased public sector employment (Selznick 1949), deepened unionization (Gouldner 1954; Lipset et al. 1956), or the rise of professional service fields (Blau 1955).

The consolidation of organizations as a generalizable field of study corresponded less to the passage away from industrialization linked to the first half of the century than to a deepening and extension of the industrial model to domains of activity and association hitherto untouched by it. The resonance of structures across what were presented as functionally distinct domains of polity, culture, and economy made the case that society was becoming increasingly rationalized. At the same time, rationality was itself grounded in problems of labor control and inspired by models of decision making derived from research and development in the military and the stock market. If the key conceptual turn that gave rise to the field of organizations was the use of structure to treat human association as a system, an architectural metaphor was being used to underwrite the idea that society worked like a machine. But if the system metaphor was to serve the legitimating perquisites of a modernizing society grounded in expanding opportunities for wealth and progressive opportunities for participation in general decision making, it would need to attend some dynamic of change or morphogenesis in its structure.

The machine is a closed entity, a bounded box, where each part serves the needs of the whole design. Modern society is, by contrast, auto evolutionary, a machinery that improves itself. To achieve rational evolution (and not simply directionless variation or change), information from the surrounding environment must be taken in to correct the operations of the existing structure. If natural or mechanical systems existed in a state of equilibrium where inputs and outputs were internally recycled, social systems subject to innovation and its uncertain consequences would stray far from equilibrium. Structures would have to change in the face of both internal stresses and external strains. The strategic means to manage these tensions would take the form of systems, operations, informatics, and organizational research. The adaptive structure for the now open system would be the servomechanism (Scott 1975: 3), in actuality a device used in World War II anti-aircraft machine guns to try to get a fix on their moving targets (De Landa 1991). Problems of disequilibrium were also being attacked by students of the stock market, like Henry Markowitz, whose portfolio theory advised internal diversification of positions in stocks to deal with external uncertainty. Internalization of external complexity became a main stay of organizational theory through the 1970s.

But machines were not simply a metaphor in organizational research and its ideas about structure. The goal of military and portfolio research was to perfect decision making – or at least mitigate the distorting effects of uncertainty on the capacity to secure predictable out comes based upon prescribed calculation (a killing on the battlefield or the stock market). The infallible decision maker, the intelligent machine, the computer first envisaged by Turing was enhanced by the work of computer science pioneer Herbert Simon, who had teamed with Jim March and others in the 1950s and 1960s to model the organization itself on measurably discrete individual decision making. The notion that structure is the design element of hardware, the architecture of the computer, is as much a literal reference as it is a metaphor. Paradoxically, the work on open and far from equilibrium systems initiated in the 1950s had a deferred reception in the field until the 1970s after the reign of structure had its day.

Conceptual Florescence and Challenges

The dialectic between fixity and contingency, continuity and change was expressed in the dualism of structure and process which oriented organizational sociology during its florescence from the 1950s to the mid-1970s. If structure described regularities, process could divine motivation, as decision makers responded to unintended consequences. Structure could identify variation along three dimensions, complexity, formalization, and centralization. Complexity meant more than that size matters.

It assumed that the sophistication of decision makers as evident in their specialization, professional experience, and activity spoke to horizontal and vertical differentiation within a given organization as well as to the spatial dispersion of coherent operations at far flung sites (like a mobile sales force, maintenance and repair staff, or consultants). Formalization measured the rules and procedures used to handle contingencies but also the deformations that could result when rigid bureaucratic personality types were internalized. Finally, centralization referred to the distribution or concentration of power within the organizational hierarchy (Hall 1972).

In their emphasis on professionals within the organization and on decision making as a function of meritocratic competence, the structural perspective not only displaced labor with norms of participation, but also in so doing reimagined the worker as manager. If people suffered the tyranny of organizations, it was due to ”insidious control” that robbed people of their sovereignty, not discretion over how to dispose of associatively created wealth (Blau & Schoenherr 1971). This critical observation returns organizational sociology to its intellectual roots in a tragic Weberian view of rationality that informed critical theory of the Frankfurt School. The technical competency meant to serve fundamental judgments incarcerates social values. The asphyxiating consequence of rule governed organization was a narrow specialized interest that colonized the general interest in forming associations as an end in itself. The defense of individual iconoclasm against organizational conformity was also part of C. Wright Mills’s critique, one which, like the subsequent organizational studies, took the lost autonomy of the professional as its model.

The primacy of structure in organizational sociology was challenged on a number of fronts in the 1970s. The critique of society as a conformity inducing machine, a staple of sixties movements, was anticipated in the study of organizations. But organizational studies could not sustain the more radical turn that sociology took. The engagement with Marxism, especially the reception of Antonio Gramsci and Harry Braverman, articulated a potent critique of labor, capital, and the state via an interest in the labor process and in cultural studies. The question of structure could no longer be considered formally as a value neutral mechanism, but pertained to the domination of social life by particular class interests and capacities. Cultural studies unseated the normative conception of culture as shared values, and introduced more nuanced interpretive approaches to questions of agency that the term process had sought to understand.

At the same time, the institutional conditions for organizational studies were undergoing transformation. Professionalization was making itself felt on the liberal arts ideals of education as an end in itself. University enrollments were expanding and much of the growth was concentrated in professional programs like business. Business and management programs, seeking legitimacy as research based disciplinary endeavors, hired organizational sociologists. The instrumental and prescriptive demands that had characterized the first management studies made themselves felt again. Service to the profession jostled with the claim that organizational structure or theory could be treated as an end in itself. While the 1970s were characterized by labor militancy, a proliferation of social movements politicizing the life world (feminism, environmentalism, civil rights, gay and sexual liberation), and nationalist revolutionary movements for decolonization (from Vietnam to Angola to Nicaragua), managerialism as a way of life was also on the rise. Over the next 20 years, self-help manuals directed toward every conceivable human activity adopted the premise that any problem could be solved or situation improved – be it sex, finances, or personal enlightenment – by application of rational techniques, rules, and formulas. The hubris of organizational studies’ confidence in universal structures had been popularized, secularized, commercialized, and profaned. Rationality was specified as providing not just rules, but ruling frameworks for advancing interests attached to historical structures of western colonialism, patriarchy, and capital.

Recent Directions

Over the past 30 years organizational studies have continued within sociology (and perhaps more robustly without). The idea of organizations as bounded entities containing discrete memberships and fixed structures has become untenable, both in concept and in practice. Structure and process have merged and internal and external adaptations have become inter twined (Ahrne 1994). Where once the corporations appeared to have endless capacity for taking the world’s complexity into their midst, outsourcing, downsizing, and reengineering have become the order of the day so that now externalization makes suspect the notion of structure as a thing or entity (Scott 2004). On the one hand, organizations have been invited to focus on core competencies, slim down, and become ”lean and mean” (Harrison 1994). Yet at the same time, mergers and acquisitions and the ever enlarging scope and scale of economic activity have continued apace. Corporations over the past 30 years have themselves seen the blurring of inside and outside, and seen structure and process take the form of an amalgamation of the functions of production and circulation, once separated between industrial concerns and banks. Now, General Motors Corporation’s largest revenue stream comes from its financial services division, small garment manufacturers trade in currency futures, and, with personal computer based constant vigilance over one’s portfolio, daily life is more finely calibrated than ever before to the discipline of financial management. A plethora of financial instruments has emerged, the value of which has dwarfed the annual global product by a factor of ten.

This trend toward financialization has had significant organizational consequences. Securitization, the bundling together of discrete debts (such as from mortgages, credit cards, or auto loans) into tradable commodities, achieves a complex spatial dispersion of association via ownership that is no longer localized in a particular institution (like a thrift or savings and loan). Derivatives, financial tools for managing risk that tie a prospective variation in, say, exchange rates to the underlying value of a commodity, are now a $100 trillion market by which relatively small but volatile investments can send ripple effects through global financial markets (as occurred in the Asian financial meltdowns of the late 1990s, the scandals associated with Enron, or the failed high stakes hedge fund Long Term Capital Management) (Li Puma & Lee 2004). Where structure referred to well bounded closed organizational systems, managerial strategies were oriented toward the externalization of uncertainty. Financialization rewards risk, and suggests a logic where the inside (firm assets, personnel, branding) can be leveraged to forms of association or economic interconnection that are features of organizational environments (Martin 2002). This logic of highly leveraged risk embrace, evident in militaristic foreign policy, approaches to fiscal regulation (tax cuts and anti-inflationary monetary approaches), and the shift from defined benefit to defined contribution notions of social welfare (compassionate conservatism and the ownership society) augur a potential return of organizational structure’s interest in patterns and regularities across apparently discrete societal domains. If, contrary to recent sociological formulations, contemporary society is characterized not simply by efforts to externalize risk, but also by risk embrace through structural effects unleashed on the world by a series of organizational initiatives, something like structure, albeit in revised form, may be poised for a return to analytic attentions.

This has certainly been the direction of much recent work in organizational theory, some of which has identified explicitly a ”new structuralism” to expand the earlier objectivist concept to embrace external resources and agential meanings and embodiments (Lounsbury & Ventresca 2003). But even this new structural ism has kept its sociological sources and debts closely guarded. Unlike the broad trans disciplinary framework from which it takes its name and to which organizational studies aspired, this trend has tended to stay close to the sociological border. For the idea of social structure to stage a robust comeback, organizational theorists will need to be sufficiently sensitive to nuanced analytic approaches that complicate the basic concept and its attendant metaphors and applications. As historians of the field have noted, organization theorists achieved substantial scholarly recognition by turning inward, engaging a deep and generative conversation and research agenda among themselves (Scott 2004).

What was lost to these endeavors was the benefit of more philosophically endowed interlocutors. Hence sociology’s structural functionalism made scant use of the structural ism developed through semiotics and other interpretive approaches from aesthetics, literary studies, psychoanalysis, and anthropology. The cost of this intellectual parochialism was high. Social structure existed in space, but without history. It attained objectivity, but one divorced from subjective intentionality and agency. The result was a highly formalistic separation of structure and process, inside and outside, macro and micro. The two halves of these binaries were always found wanting the other. Adding body to mind, subjective to objective, stasis to change, decision to environment did little to upend the brittle dualistic thinking that had produced these semantic chains to begin with. The more supple cache of approaches – loosely grouped under the rubric of post structuralism – that were committed to critically rethinking the binary structures of thought that gave rise to the human sciences was, until recently, viewed with suspicion.

During the 1990s, most notably in the pages of the journal Organizations, that state of affairs began to change. A much broader disciplinary and philosophical archive has been brought to bear on the study of organizations. New immigrants to business and management and other professional programs that treat organizations as conceptually central to their enterprises have brought with them different customs of reading and research. Appropriate to the times, the architectural metaphor that social structure had rested upon may shift its reference from buildings (the internal skeleton) to computers, where the term applies at once to hardware and software. Structure’s future may lie in its ability to transit in between.

References:

1. Ahrne, G. (1994) Social Organization: Interaction Inside, Outside, and Between Organizations. Sage, London.
2. Barnard, C. (1938) The Functions of the Executive. Harvard University Press, Cambridge, MA.
3. Blau, P. (1955) The Dynamics of Bureaucracy. Chi­cago University Press, Chicago.
4. Blau, P. & Schoenherr, R. (1971) The Structure of Organizations. Basic Books, New York.
5. De Landa, M. (1991) War in the Age of Intelligent Machines. Zone Books, New York.
6. Fayol, H. (1919) General and Industrial Management. Pitman, London.
7. Gouldner, A. (1954) Patterns of Industrial Bureaucracy. Free Press, Glencoe, Ill.
8. Glencoe, IL. Hall, R. (1972) Organizations: Structure and Process. Prentice-Hall, Englewood Cliffs, NJ.
9. Harrison, B. (1994) Lean and Mean: The Changing Landscape of Corporate Power in an Age of Flexibility. Basic Books, New York.
10. Li Puma, E. & Lee, B. (2004) Financial Derivatives and the Globalization of Risk. Duke University Press, Durham, NC.
11. Lipset, S., Coleman, M., & Trow, J. (1956) Union Democracy. Free Press, Glencoe, IL.
12. Lounsbury, M. & Ventresca, M. (2003) The New Structuralism in Organizational Theory. Organizations10: 457-80.
13. March, J. & Simon, H. (1958) Organizations. Wiley, New York.
14. Martin, R. (2002) Financialization of Daily Life. Temple University Press, Philadelphia.
15. Roethlisberger, F. & Dickson, W. (1939) Management and the Worker. Harvard University Press, Cambridge, MA.
16. Roy, D. (1952) Quota Restriction and Goldbricking in a Machine Shop. American Journal of Sociology 57: 427-42.
17. Scott, W. R. (1975) Organizational Structure. Annual Review of Sociology 1: 1-20.
18. Scott, W. R. (2004) Reflections on a Half-Century of Organizational Sociology. Annual Review of Sociology 30: 1-21.
19. Selznick, P. (1948) Foundations of the Theory of Organizations. American Sociological Review 12: 25-35.
20. Selznick, P. (1949) TVA and the Grassroots. University of California Press, Berkeley.
21. Taylor, F. (1911) The Principles of Scientific Management. Harper, New York.

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