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The Origins of Organization Theory

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 page 141

part ii
...................................................................................................................................................

THE
CONSTRUCTION
OF
O R G A N I Z AT I O N
T H E O RY
...................................................................................................................................................
page 142
 page 143

chapter 5
...................................................................................................................................................

THE ORIGINS OF
O R G A N I Z AT I O N
T H E O RY
...................................................................................................................................................

william h. starbuck

According to Webster's Third International Dictionary, theory is `a coherent group

of general propositions used as principles of explanation'. Organization theory is a
collection of general propositions about organizations. Although people have been
creating organizations for many thousands, perhaps tens of thousands of years,
generalizations about organizationsÐcontributions to organization theoryÐare
almost entirely products of the last half of the twentieth century. People proposed
very few generalizations about organizations before 1850, when a trickle of such
propositions began. Propositions about organizations remained infrequent until
the late 1940s, and they did not become prevalent until the 1960s.
The history of organization theory contrasts with the history of managerial
thought. When people began to compose texts about organized activities, between
2,000 and 3,000 years before the Christian era (bce), they focused on managerial
practices rather than on organizations as such. Several writers proposed general
principles for managerial practice before 1000 bce, so one can say that theories
about managing have existed for at least 3,000 years. These writings often said
nothing about the organizational contexts in which managing was to occur. When
the writers did make statements about organizations, they did not generalize. They
wrote about speci®c organizations.
144 william h. starbuck

This chapter argues that contemporary organization theory owes its existence to
social and technological changes that occurred during the last half of the nineteenth
century and ®rst half of the twentieth century. These changes created both a basis
for theorizing and an audience for theories about organizations. They stimulated an
explosion in the numbers of large, formalized organizations, they made organiza-
tions relevant to many more people, and they made many more people interested in
and capable of understanding theoretical propositions. This chapter reviews the
developments that made organization theory possible and interesting.
The idea may have originated with Gulick's (1937) phrase `the theory of organiza-
tion', but it appears to have been Simon (1950, 1952±3, 1952) who most actively
promoted the actual phrase `organization theory'. Simon (1952) envisaged `organ-
ization theory' as a broad category that included scienti®c management, industrial
engineering, industrial psychology, the psychology of small groups, human-
resources management, and strategy. He said his ideas re¯ected his participation
in two conferences, and the programs of these conferences show that organization
theory had a very broad meaning in the early 1950s. A conference at the Rand
Corporation in August 1951 brought together social psychologists who discussed
interactions among small groups, roboticists who discussed automata, and econo-
mists who discussed mathematical models of choice and information (Flood 1951).
The second conference, at Princeton University in June 1952, assembled more than
thirty scholars from a dozen universities to discuss the `Theory of Organization'.
The presentations at this conference focused mainly on intraorganizational behav-
iors: morale, leadership, the effects of organizations on their members, decision-
making.
Despite the broad concepts of organization theory during the 1950s, intraorga-
nizational topics are generally not included in the present-day meaning of `organ-
ization theory'. In 1950, Princeton University received a grant to strengthen its social
sciences, and it used this grant for an `Organizational Behavior Project'. The
Princeton scholars chose the topic `organizational behavior' because it would
embrace very diverse studies and encourage interdisciplinary research (Princeton
University 1950±4). By 1960, however, many academics were making a distinction
between `organization theory' and `organizational behavior', and the latter term had
come to denote intraorganizational activities that focus on individual workers and
small groups (Argyris 1957, 1960). A few years later, strategic management emerged
as another partly distinct domain. Although the dividing lines remain very fuzzy
and they may actually interfere with understanding, there now exists general
agreement among academics that `organization theory' somehow differs from
both `organizational behavior' and from `strategic management'. This chapter
assumes that `organization theory' has this restricted contemporary domain,
which involves looking at (a) single organizations as integrated systems, (b) many
organizations that resemble each other, or (c) interactions among groups of
organizations. The chapter explicitly excludes intraorganizational issues such as
 the origins of organization theory 145

work design, industrial psychology, compensation, human relations, leadership,

decision-making by individuals, and strategizing. In doing so, the chapter imposes
esoteric, academic distinctions that appeared after 1960 on real-world events occur-
ring long ago.
The chapter follows a loosely chronological itinerary. It begins by taking note
that theoretical writing about management began more than 4,000 years ago, and
that some organizations had the essential bureaucratic properties more than 3,000
years ago. Next, the chapter surveys the educational, occupational, and techno-
logical changes that laid foundations for a new, organizational perspective. These
changes escalated gradually through the sixteenth to nineteenth centuries, and then
accelerated rapidly after 1850. Ensuing sections of the chapter examine changes in
how people thought about organizations. The term `organization' evolved from a
Roman medical term into a perceived property of societies, and then came to
denote both a property of diverse social systems and medium-sized social systems
that possess some degree of `organization'. Organizational forms such as company
and corporation emerged and gained status, not as mere labels for their collective
members, but as legal persons distinct from their members.
Although the term `organization' arose from a philosophical tradition that saw
social systems as history-dependent organisms, the earliest contributions to organ-
ization theory portrayed organizations as machine-like systems and they said little
about how organizations might re¯ect history or temporary environmental condi-
tions. Some of these early contributions protested against bureaucracies' de®cien-
cies or against threats that bureaucracies posed; others hailed organizations' virtues
or opportunities that organizations offered; the latter had a prescriptive tone. These
themes began to merge during the late 1940s. Also around that time, writings about
organizations started to acquire a character that its proponents described as more
`scienti®c'.
The chapter ends sometime around 1960, as other chapters in this book discuss
the subsequent events in detail. At that time, many studies were appearing and
organization theory was acquiring a different kind of existence as an autonomous
academic domain. Organization theory had arrived, but it now had to contend with
pressures to fragment and to become self-absorbed and irrelevant to its environ-
ment.
As with any historical study, this one has biases created by the availability
of records, my limitations, and my choices about what to report. History has
often been a harsh editor of itself, with the result that surviving documents
represent only a small fraction of those that once existed, and people chose this
surviving fraction to support political or religious goals. Where no documents
survive, understanding derives from later interpretations that incorporate the
cultural and personal biases of the interpreters. As a resident of the United States,
I have had much better access to documents in the English language, and although
colleagues in other nations gave valuable assistance, this chapter's cultural and
146 william h. starbuck

linguistic biases are still obvious.1 The chapter expresses a cognitive and social-
constructionist view of science; it emphasizes people's perceptions and their choices
of perceptual frameworks. The resulting description of the origins of organization
theory is rather phenomenological and atheoretic. It does not rest on a theoretical
framework, and it does not purport to describe the development of social theories
other than organization theory.

5.1 Premodern Writings about

Management
.........................................................................................................................................................................................

5.1.1 In the beginning, there was the boss

The most conspicuous property of the oldest writings is their emphasis on super-
ior±subordinate relations (Rindova and Starbuck 1997a). Probably the oldest sur-
viving advice about managerial practices, a Mesopotamian version of the ark and
¯ood, explains why leaders have to deceive their followers and how they can do so.
The ark-builder asks one of his gods how to persuade other people to help him
construct the ark: they will not help him if he discloses that the ark is intended to
save him while a great ¯ood drowns everyone else, including those who helped him
build the ark. His god advises the ark-builder how he can tell the literal truth but do
so in a way that deceives the workers.
Ancient texts from China, Egypt, Greece, India, and Mesopotamia describe
uncomfortable and wary relations between leaders and followers, relations ®lled
with ambivalence and fear. Superiors distrusted their subordinates, and subordin-
ates distrusted their superiors, yet each had to depend on the other. People were
concerned about (a) whether leaders and followers did or should trust each other
and speak forthrightly to each other, (b) how leaders did or could manipulate
followers and followers could control leaders, (c) how much followers did or should
respect leaders and leaders respect followers, (d) whether status differences were
justi®ed, and (e) when leaders could be trusted to act appropriately. All strategies
for controlling subordinates entail advantages and disadvantages, as do all strategies
for acting as a subordinate. Ancient people saw these trade-offs and recognized their
complexity.
1
This chapter would contain even stronger biases had I not received help from Michel Anteby, Mie
Augier, Mike Barnett, Barbara Czarniawska, Roger Dunbar, Wolf Heydebrand, Geoff Hodgson, Sten
JoÈnsson, Alfred Kieser, Lee Kam-hon, Christian Knudsen, Jim March, Derek Pugh, Jacques Rojot,
Haridimos Tsoukas, and Malcolm Warner.
 the origins of organization theory 147

Some writers sought to render superiors and subordinates more compatible.

They urged superiors to restrain their exercise of power, to focus on behaving
properly themselves, to be just and considerate, and to cultivate support of
the populace over the long run. They urged subordinates to accept subordination,
to demonstrate respect, to act honestly and forthrightly, and to pursue
their superiors' best interests rather than their own. Other writers advised superiors
to be suspicious of their subordinates, to deal harshly with dissenters and rebels,
to pit subordinates against one another, and to manipulate subordinates by
means of rewards and punishments. Control of armed force permitted superiors
to seize property, to alter people's statuses, and to in¯ict death, so their subjects
had reason to avoid actions that might arouse superiors' displeasure. Because
many superiors had power of life or death over their subordinates and corporal
punishment was prevalent, subordinates took pains to appear obedient and
they stood ready to perform very diverse services if their superiors asked them
to do so.
Superior±subordinate relations did elicit theorizing. One very old Chinese
text, `The Great Plan', spells out precepts about leadership that resemble
some contingency theories of the late twentieth century (Rindova and Starbuck
1997b). This document and others not only stated prescriptions about how
superiors and subordinates should behave but also articulated philosophies that
explicitly related superior±subordinate relations to the structures of societies
more generally. However, theories about organizations, if they existed, have not
survived. In fact, the few documents that do survive from before 2000 bce do
not even discuss organizations as such. Organizations did exist, of course. There
were armies, businesses, construction projects, and royal households. But, it appears
that people did not regard themselves as working for or in organizations. They
perceived themselves primarily as subordinates of speci®c individualsÐsuch as
kings, ministers, or owners of businesses. Their exact job assignments were second-
ary because their ®rst responsibility was to do whatever their superiors asked of
them.

5.1.2 Then came bureaucracy

The surviving documents indicate that some organizations became clearly bureau-
cratic during the second millennium bce. Evidence from before 2000 bce
shows that organizations kept written records and had well-de®ned hierarchies of
authority and rules about the rights and duties associated with positions, but
not that they had other properties of bureaucracy. By 1100±1200 bce, however,
documents from China and Egypt and archeological remains from Mycenae testify
that some organizations had also acquired division of labor based on functional
148 william h. starbuck

specialization, work procedures, impersonal relations among people performing

roles, and promotion and employment based on technical competence. Thus, these
organizations exhibited the key properties of bureaucracy (Hall 1963).
Probably the most complete and interesting example of ancient bureaucratic
practices is `The Of®cials of Chou', which was written around 1100 bce (Rindova
and Starbuck 1997b). This document describes an elaborate organizational struc-
ture for the `royal domain', which was a combination of the government and the
king's household staff. This document gives a long, exhaustive, and detailed list of
job descriptions for the many of®cials in the king's service, ranging from the prime
minister to household servants (Biot 1851; Gingell 1852). However, `The Of®cials of
Chou' does not generalize about organizations. It describes only one speci®c
organization, and when it states principles, it does not indicate that they also
apply to other organizations. Likewise, after several years of searching documents
from other regions, I have found only documents that focus on speci®c organiza-
tions, none that state generalizations about organizations. This dearth contrasts
strikingly with the multitude of generalizations about managing that various people
generated over four millennia.
This bifurcated pattern persisted over the next 3,000 years. Ideas about
how to manage evolved and many authors proposed generalizations about man-
aging. These generalizations were relevant to organizations in that they focused
on activities that managers or organizations performedÐon rule, military
strategy, military logistics, motivation, compensation, role performance, money
making, occupational and task specialization, and the ever-present issues posed
by superior±subordinate relations. The generalizations dealt with how to organize
or how to make organized activities effective, yet they did not speak to the proper-
ties of organizations as distinctive, integrated social systemsÐdifferent from
small, informal groups and different from very large societies. Evidently, people
saw the results of organized activities as being products of actions taken
by individuals, so they formulated prescriptions about actions individuals should
take.
Large, formalized organizations existed, but they were rare. Many nations
had well-organized governments. The Chinese and the Romans, for example,
operated imperial governments that spanned several thousand miles and hundreds
of administrative subunits. Hundreds of cities had large civic governments. On
various occasions, people formed large armies that carried out complex missions
over long periods, Alexander the Great and Genghis Khan being two examples.
Some organized activities involved hundreds or thousands of workersÐfor in-
stance, the Chinese Wall, the Egyptian pyramids and temples, the vast network
of Roman roads, mines in many locations throughout history, the English and
Dutch East India Companies, and the Hudson's Bay Company. Some organizations
had very long lives. The Roman Catholic Church has been operating for two
millennia. Stora Enso Oyj, a mining company founded in 1288, continues
 the origins of organization theory 149

in business today as one of the world's largest paper and timber companies. Striking
as these examples were, they may have been too idiosyncratic and too extraordinary
to inspire generalizations. I have been able to ®nd only a few authors who proposed
generalizations about organizations as distinctive social systems before the late
nineteenth century.
One organizationally relevant theme that did elicit theoretical generalizations
was division of labor, specialization, and mass production. People have understood
the value of division of labor, specialization, and mass production for many
thousands of years. People have had specialized occupations for as long as written
records exist, and the bureaucratization that occurred in the second millennium
bce depended on specialization and division of labor. Archeological remains testify
to the use of mass production techniques for glass-blowing and pottery-making
as early as 500 bce. Around 400 bce, Plato remarked that specialization can
increase productivity. Around 300 bce, the Chinese philosopher Mencius discussed
division of labor. Greek and Roman soldiers received training to standardize and
coordinate their ®ghting techniques. In the early 1400s, the Arsenal of Venice was
using an assembly line with about 2,000 workers to equip ships for ®ghting, and to
make this process effective, the arsenal used standardized armaments and stand-
ardized components for the ships (George 1968; Lane 1934). Nevertheless, theoriz-
ing on these topics remained very sparse until European countries began to
industrialize. Adam Smith (1776) put a spotlight on the economic bene®ts of
specialization, division of labor, and mass production. Melchiorre Gioia (1815)
and Charles Babbage (1832) sought to articulate principles for making mass pro-
duction effective. Then these topics became the foci of the Scienti®c Management
movement in the late nineteenth century (Merkle 1980).
Two men collaborated inadvertently in the seventeenth and eighteenth centuries
to contribute a pair of insights to modern organization theory. In 1665 King
Louis XIV appointed Jean-Bapiste Colbert his Comptroller General of Finance. At
that time, the French economy was in turmoil. Colbert prosecuted corrupt of®cials
and reorganized commerce and industry according to the economic principles
known as mercantilism. To assure the populace that the government was going
to act fairly, he demanded that of®cials abide by rules and apply them uniformly to
everyone (Wolin 1960: 271). About eighty years later, in 1751, Jean-Claude
Marie Vincent de Gournay became France's Administrator of Commerce. An
outraged Gournay railed against the numerous governmental regulations that he
judged to be suppressing business activity. To symbolize a government run
by insensitive rule-makers and rule-enforcers who did not understand or care
about the consequences of their actions, he coined the sarcastic term `bureau-
cratie'Ðgovernment by desks.
Another forerunner of modern organization theorists was Andrew Ure, a profes-
sor of chemistry. An enthusiastic proponent of `the factory system', Ure (1835) took
a step beyond Adam Smith. Whereas Smith's pin factory was solely an example
150 william h. starbuck

of division of labor, Ure pointed out that a factory poses organizational challenges.
He asserted that every factory incorporates `three principles of action, or three
organic systems': (a) a `mechanical' system that integrates production processes,
(b) a `moral' system that motivates and satis®es the needs of workers, and (c)
a `commercial' system that seeks to sustain the ®rm through ®nancial management
and marketing. Harmonizing these three systems, said Ure, was the responsibility of
managers.

5.2 Organizations Become Topics of

Discussion
.........................................................................................................................................................................................

5.2.1 Education, specialization, and technology create

the concept of an organization
Theories about organizations began to attract much more attention after 1850, as
several long-term trends accelerated abruptly, making the concept of `organiza-
tions' relevant to many people and preparing them to appreciate generalizations
about organizations.
The societal changes that have greatly affected organizations and organiza-
tion theory seem to have occurred mainly in education, occupational and
task specialization, and technologies (George 1968; Shafritz and Ott 1996; Wren
1994). The people of 3,000 years ago had very well thought-out ideas about
hierarchical control, superior±subordinate relations, motivational techniques,
and compensation. However, they provided only rather basic education, and
that for only small fractions of the populace; they generally drew fuzzy distinc-
tions among occupations; they made little use of mass production; and they lacked
access to technologies such as electricity, business machines, telecommunica-
tions, and ¯ight that have had pervasive effects on procedures, strategies, and
logistics.

5.2.2 Education makes it possible for large organizations

to proliferate and to work effectively
Over the centuries, education gradually grew more elaborate, especially after the
invention of printing reduced the cost and increased the availability of study
 the origins of organization theory 151

materials. However, education did not become widely available until the nineteenth
century. Prussia led the movement toward universal education: in 1810, it began to
require every child to receive three years of education. By 1850, well over 90 percent
of the Prussian residents had become literate, and in 1868, Prussia began to require
that every child receive eight years of education. Other countries followed Prussia's
example. Sweden made education compulsory in 1842, Australia and New Zealand
during the 1870s, Switzerland in 1874, Britain in 1876, the Netherlands in 1878,
France in 1882, Serbia in 1888, and Ireland in 1892. The American states took almost
seventy years to introduce compulsory schooling, starting with Massachusetts in
1852 and ending with Mississippi in 1918. For reasons political or religious, universal
education came much later or not at all in Austria, Belgium, Italy, Portugal, Russia,
and Spain (Bowen 1981).
Three factors drove the expansion of education in the nineteenth century.
First, the Enlightenment period created an enthusiasm for rationality and a belief
in the perfectibility of mankind. For example, in 1812, James Mill published
a pamphlet titled `Schools for All, in Preference to Schools for Churchmen Only'.
Second, during the middle of the nineteenth century, while industrialization
was creating employment for women and older children, many nations and states
placed restrictions of the use of child labor. For example, Britain's Factory Act
of 1833 forbade the employment of children less than 9 years of age. They
shortly thereafter discovered that they needed to remove the young children
from the streets. Third, industrialization created white-collar jobs that demanded
literate workers. White-collar jobs quadrupled in England during the 1860s
and 1870s.
As opportunities for white-collar employment multiplied during the last half of
the nineteenth century, the graduates of elementary schools stayed in school to
study accountancy and law. In America, the Land Grant Act following the Civil War
encouraged the founding of many universities that embraced practical subject
matter such as agriculture, engineering, and commerce. Merkle (1980) inferred
that the Scienti®c Management movement contributed signi®cantly to the expan-
sion of managerial activity after 1880.
Then at the turn of the century, business-related studies acquired much
higher status as curricula in elite universities. The University of Pennsylvania
began teaching accounting and business law in 1881. Several prestigious universities
created business schools around 1900. Harvard University launched a business
school at the graduate level in 1908. These programs did not require that students
take courses about management, but such courses were popular electives (Chandler
1977).
Education continued to spread and to grow more elaborate through the twenti-
eth century. In the United States, in 1900, 24 percent of the population had less than
®ve years of schooling. This percentage dropped to 11 percent in 1950, and to 1.6
percent in 1998. Similarly, in 1900, only 14 percent of adults had completed twelve
152 william h. starbuck

years of schooling. By 1950, 33 percent of adults had completed twelve years of

schooling, and by 1998, 83 percent.
Education disseminates literacy and arithmetic skills widely. Literacy and arith-
metic skills have long been associated with organizations because they constitute
foundations for consistent procedures, public accountability, coordination through
written communication, and the enforcement of contracts.2 The writing process
shapes rationality by forcing authors to identify speci®c foci of attention and to
arrange these foci in sequences. Thus, writing teaches people how to decompose
complex tasks into sequences of elementary components, and this skill is a step
toward dividing collective labor into sequential steps (Kallinikos 1996). Although
written texts are distinctly arti®cial constructions, they are constructions that
facilitate organizing (Ong 1982). Likewise, arithmetic facilitates the perception of
individuals as substitutable units, the ordering and aggregation of divided labor,
and commercial transactions (Hoskin and Macve 1986). As they grew larger and
more systematic, organizations developed more complex and nuanced numerical
methods (Edwards and Newell 1991).
Formal, public education also tends to emphasize generalizations because
teachers try to make lessons meaningful to almost all students. Education empha-
sizes abstraction because lessons typically use in-principle discussions in classrooms
rather than on-the-job experience. And such teaching also asserts the usefulness of
abstract generalizations and gives students practice in applying generalizations to
concrete instances. Thus, formal, public education creates a foundation for discuss-
ing abstract concepts such as `an organization', `bureaucracy', or `role' and for seeing
such concepts as useful.
Dreeben (1968) argued persuasively that one major function of schools is to
transform people from junior and dependent members of small families into
autonomous participants in multiple large organizations and social institutions.
Schools teach `principles of conduct' that include the proper behaviors of organiza-
tional membershipÐdistinctions between roles and role incumbents, respect for
bureaucratic authority, respect for standardized procedures, and accountability
for task performance. In a similar vein, Foucault (1975) portrayed schools as systems
for evaluating people and placing them into homogeneous categories, and in the
process, teaching the use of numerical performance measures. However, Dreeben's
and Foucault's observations may not describe all cultures. For example, the expatri-
ate Chinese have built their business ®rms around families and their business
relationships have emphasized personal networks (Chan 1998).

2
One consequence of the association between writing and organization has been the destruction of
historical documents that described organizations. Conquerors and rebels usually destroyed the
records of the governments they overthrew.
 the origins of organization theory 153

5.2.3 Growing populations and new technologies make

large organizations ef®cient and increase the bene®ts
of white-collar work
Occupational and task specialization developed gradually until the last half of the
nineteenth century. Very likely, the slowness of this development re¯ected the small
scale of non-agricultural production. Although people have understood the advan-
tages of mass production for thousands of years, small populations and slow,
dif®cult transportation had kept markets small and had restricted the potential
returns to scale.
World population grew slowly until approximately 1600, and then the rate
of population increase began to rise. By the late seventeenth century, the world
population was increasing by roughly twelve times its average rate during the
previous 2,000 years, and it continued to increase at this rate until the twentieth
century, although the populations of Europe and the Americas grew more rapidly
than the rest of the world during the nineteenth century. Population growth
accelerated even further in the twentieth century. By 1950, the world population
was increasing more than twice as rapidly as it had during the nineteenth century
and almost four times as rapidly as it had during the eighteenth century. As a result,
the world population grew 60 percent between 1750 and 1850, and more than 100
percent between 1850 and 1950. By 1987 the earth held ten times as many people as it
had in 1650 (Cameron 1993; Reinhard, Armengaud, and Dupaquier 1968; United
Nations 1998; Wrigley 1969).
Population increases both resulted from and stimulated technological changes.
Better sanitation, better diets, and better housing reduced infant mortality and
lengthened lifespans. Other technological changes lowered the costs and risks of
transport, accelerated the speed of transport, and extended the distances over which
trading occurred. In 1754 the 200-mile trip across England took four days, largely
because the roads were terrible; and robbers often preyed on persons who at-
tempted such a journey (Boulton 1931). The eighteenth century brought improved
roads, more bridges, and a few canals, but such heavy construction remained
dif®cult and infrequent until steam engines became available. Similarly, although
continuous improvements in sailing ships encouraged Europeans to explore the
world and to build empires, truly dramatic changes did not occur until boats and
ships acquired steam power. Inventors began to experiment with steam power in
the late 1700s; a few steam-powered boats came into use during the early 1800s; and
steam power was coming into wide use by the mid-1800s. However, steam power
was dangerous. Not until the mid-1880s did people understand why steam engines
exploded, and explosions continued to be frequent into the twentieth century
(Petroski 1996; Ward 1989). When it did become reliable, steam power made
154 william h. starbuck

many new technologies possible: large ocean-going ships, long railway lines, large
bridges, tunnels, paved roads, and massive earth moving. During the early years of
the twentieth century, internal combustion engines added to the available options
and made automobiles, trucks, and aircraft practical. Manufacturers could obtain
raw materials from afar and send their products long distances. Firms could manage
plants that were far apart. Chandler (1980) argued that the especially rapid growth
of American markets caused the United States to become a ®rst-mover toward
managerial capitalism.
Numerous large construction projects such as canals and railroads required
numerous large organizations. As large markets materialized, the returns available
from standardized, high-speed production led to the creation of thousands of large
factories. As these new organizations imitated each other, they created a substantial
population of similar social systems, and these similarities stimulated generaliza-
tions. It became useful for observers to think about general principles for categories
of organizations instead focusing on the idiosyncrasies of speci®c organizations.
The new prevalence of large organizations also made people more aware of the
distinctive problems and opportunities that they pose. Although such problems
and opportunities had been occurring since antiquity, they had been unusual and
easily ignored; now they became prevalent and very evident. Managers, who
had earlier received low pay and disrespect, now gained value as problem solvers
and opportunity pursuers (Pollard 1965). Large organizations created markets for
consistent procedures and business machines to automate them. Business machines
in turn reinforced the usefulness of consistent procedures (Elbourne 1934).
Although manufacturing has never dominated employment, the advent of fac-
tories had dramatic social effects that framed the birth of organization theory.
Specialization and division of labor made work more ef®cient and less demanding
physically but less satisfying. Women and children became more employable.
Compliance received larger rewards, and ability received smaller ones. Social and
economic differences between skilled and unskilled workers decreased, mainly by
the devaluing of skill. Skilled workers began to form trade unions.
Frederick W. Taylor demonstrated how business could extract monetary value
from white-collar activitiesÐindustrial engineeringÐthat emphasized measure-
ment and calculation and that possessed the avant-garde and respectable aura of
`science'. Greatly increased productivity made it possible for owners to reap large
pro®ts, and a lack of government regulation allowed predatory business behavior,
with one result being creation of a class of very wealthy capitalists (Veblen 1904).
Strife between business owners and employees gave impetus to the Scienti®c
Management movement, which claimed to ameliorate con¯ict by increasing prod-
uctivity and allowing higher wages (Merkle 1980; Shenhav 1995).
Strife between business owners and employees also spawned much controversy.
Karl Marx (1867) railed against working conditions in factories, arguing that
division of labor created unsatisfying jobs and allowed capitalists to dominate
 the origins of organization theory 155

and take advantage of workers. Business organizations thus served as battlegrounds

for con¯ict between working classes and capitalist ones. Marx also criticized the
idea that managerial activity deserved special status; he opined that anyone could
perform administrative tasks if these tasks were divided into suf®ciently elementary
components. He did not discuss who would decide what administrative tasks were
needed, who would assign administrative tasks, or who would revise these assign-
ments when circumstances changed. Marx's close colleague, Frederick Engels (1872)
remarked, `Everywhere combined action, the complication of processes dependent
upon each other, displaces independent action by individuals. But whoever men-
tions combined action speaks of organisation; now, is it possible to have organisa-
tion without authority?' He responded to this rhetorical question by saying, `The
automatic machinery of the big factory is much more despotic than the small
capitalists who employ workers ever have been. . . . If man, by dint of his knowledge
and inventive genius, has subdued the forces of nature, the latter avenge themselves
upon him by subjecting him, in so far as he employs them, to a veritable despotism
independent of all social organisation.' Presumably, Engels never met the clerk at
the Bank of England who had to sign his seven-letter name on 5,300 new bank notes
during an eleven-hour work shift (Babbage 1832).
Throughout the twentieth century, more af¯uent countries moved away from
agriculture and manufacturing and toward service and information activities
(Machlup 1962; Rubin and Huber 1986). Among white-collar workers, the fastest
growing occupations were clerical, professional, and technical workers, and man-
agers and administrators. In the United States, jobs in manufacturing fell from 27
percent in 1920 to 13 percent in 1999. Six factors contributed to this shift, which
accelerated throughout the century. First, third-world and developing economies
did more manufacturing while so-called advanced societies shifted toward services.
Second, knowledge-intense and information-intense products and services grew,
and production of traditional products made more intensive use of information
and knowledge. Third, business invested in equipment to support information
work. Fourth, within manufacturing, knowledge workers and information workers
replaced manual production workers. Fifth, workers gained more education and
information-processing skills. Sixth, new kinds of knowledge-intense and infor-
mation-intense organizations emerged that focused on production, processing, and
distribution of information (Laudon and Starbuck 2001).

5.2.4 The term `organization' evolves and splits into several

concepts
Linguistic practices support the inference that people began to see organizations as
a general category around the turn of the century. Usage of `organization' to denote
156 william h. starbuck

voluntary associations appears to have begun late in the nineteenth century, and by
the 1920s, some people had started to use `organization' as a general term denoting
the general category of formally constituted medium-sized social systems.
The word `organization' derives from an ancient Indo-European root that also
spawned the words `organ' and `work'. The Roman verb `organizare' meant initially
`to furnish with organs so as to create a complete human being', but later Romans
gave it the broader meaning `to endow with a coordinated structure'. Organizare
migrated from Latin into Old French. In 1488, the French language included the
word `organisation', which an ancient dictionary de®ned self-re¯exively as `the state
of an organized body'. At that time, people probably reserved the term for biological
bodies.
Although dictionaries published between 1750 and 1840 do not mention this
usage explicitly, around 1800 some writers began to use `organisation' to describe a
property of societies. Dohrn-van Rossum (1977) attributed this new usage to
proponents of the French Revolution. For example, in 1789, in a pamphlet that
played an important role in initiating the French Revolution, Emmanuel-Joseph
SieyeÁs declared: `it is necessary to prove further that the noble order does not enter
at all into the social organization; that it may indeed be a burden upon the nation.'
But six years earlier, in 1783, Justus MoÈser, a German historian, wrote of `the better
organisation of our political body', so it may be that this usage was inspired by the
Romantic Movement, which fed the French Revolution but also appeared in every
European country, the United States, and Latin America.
During disorder following the French Revolution, Claude-Henri Saint-Simon
(1976) wrote about the dangers posed by uncontrolled individualism. He argued
that superior social organization makes humans superior to other animals and
enables humans to exploit their environment and live at a high standard of
prosperity. But, organization and equality are mutually inconsistent, he said,
because organization requires hierarchy, subordination, and authority. He advo-
cated reorganization of society by scientists and industrialists, to create a scienti®c-
ally optimal division of labor that would produce social harmony, productivity,
ef®ciency, and technological innovation. John Stuart Mill also spoke of societal-
level social organization in 1829, as did Auguste Comte in 1865. In¯uenced by
Herbert Spencer's (1862, 1876) ideas about societal evolution, Alfred Marshall
(1892) explained that `industrial organization' entails both differentiation and
integration of economic activities. A French progress report dated 1840 used the
phrase `organization of work' to indicate production methods.
Two signi®cant changes began during the late nineteenth century. First, people
recognized that social groups smaller than societies may exhibit organization.
Second, people started to use `organization' to denote not a property of a social
group, but the social group itself. Initially, however, the label `organization' may
have been restricted to voluntary associations: The Durham University Journal of 7
November 1894 said `We now have in the University . . . somewhere about ®fty-three
 the origins of organization theory 157

different ``Organisations,'' athletic, intellectual, literary, social, and religious.' Like-

wise, the Century Dictionary of 1902 said that organization meant either the act of
organizing or something that is organized `speci®callyÐan organized body of
persons, as a literary society, club, corporation, etc.' The Catalogue GeÂneÂrale de la
Librairie FrancËaise had no entries for `organisation' in 1912, included voluntary
scienti®c `organisations' in 1915, and listed many kinds of `organisations' in 1921. In
1920, the [American] National Association of Commercial Organization Secretaries
published a text titled Commercial Organizations that is devoted to voluntary
associations for business executives (Bruce 1920). Certainly, not many people
were giving `organization' the broad meaning it has in today's phrase `organization
theory'. The Encyclopñdia Britannica of 1910 used the term only in the context of
biology; early organization theorists such as Michels (1911) and Weber (1910±14) did
not speak of organizations but of bureaucracies; Fayol (1916) spoke of `social
bodies'; and Urwick (1933a) spoke of `governmental, ecclesiastical, military and
business structures' (emphasis added).
Some people were giving `organization' its contemporary meaning as a broad
category of formally constituted social groups by the 1920s. Gutjahr (1920) observed
that the word `organization' has both a concrete meaning and an abstract one, the
concrete meaning being exempli®ed by a commercial enterprise, the State, the
Church, or the Army. Gutjahr also pointed out that whereas the components of
some organizations were almost entirely human, a commercial enterprise combines
people with equipment. Similarly, Davis (1928), the Pitman Dictionary of Industrial
Administration (Lee 1928), and Mooney and Reiley (1931) explained `organization'
could mean a business ®rm.

5.2.5 Companies and corporations become immortal persons

In one of the most implausible social constructions of the nineteenth and twentieth
centuries, business and voluntary organizations changed from temporary special-
purpose coalitions of speci®c owners into immortal legal persons having rights
independently from their owners, members, or other stakeholders.
In Europe up to the late nineteenth century, almost all business organizations
were sole proprietorships or partnerships, the business entity was regarded as
indistinguishable from its owners: any owner could unilaterally dissolve a business
or make agreements on behalf of their businesses, and owners were liable for all
debts incurred by their businesses and for any legal violations committed by their
businesses. Indeed, under Greco-Roman law, partners in bankrupt businesses could
be imprisoned or sold into slavery, so partners needed to have very great con®dence
in each other (Baskin and Miranti 1997). Such ownership imposed growing risks as
enterprises grew larger and extended their geographic ranges.
158 william h. starbuck

Alternative forms of shared control emerged between the tenth and ®fteenth
centuries. First, to raise capital for expensive ventures, some partnerships sold
transferable ownership shares. Small groups of senior partners controlled
such partnerships. Second, Italian merchants invented a variety of ownership
contracts for ventures encompassing a few voyages or short periods; the nouns
`company', `college', and `fraternity' derive from these arrangements. Later, the
term `company' denoted a partnership having a royal charter that granted it
®xed-term monopoly rights for a speci®c form of manufacture or trade. Starting
in the mid-1500s, some companies sold transferable ownership shares. These `joint-
stock companies' were usually ones that undertook expensive, risky ventures. Third,
the label `corporation', which had emerged originally to describe the Roman
Catholic Church's claimed status as the embodiment of Jesus Christ, gradually
spread to other collective bodiesÐmonasteries, universities, craft guilds, munici-
palities, and the British Parliament. Corporations could own property and they had
papal or royal charters that enabled them to persist inde®nitely despite changes in
the speci®c people who composed them. Thus, by the sixteenth century, companies
were partnerships that engaged in manufacture or trade for ®xed periods whereas
corporations were collectivities that could legally exist inde®nitely.
Improvements in sailing technology led European countries to expand their
empires between the sixteenth and eighteen centuries, and joint-stock companies
played important roles in these expansions (Arrighi, Barr, and Hisaeda 1999; Law
1986). By spreading risk across many people, joint-stock companies enabled the
raising of large amounts of capital, and thus the constructing of multi-ship convoys
and trading forts in remote lands. However, joint-stock companies remained quite
unusual because they required royal charters. In this period, corporations, which
also required royal charters, were often created to carry out public projects such as
the construction and maintenance of roads.
By 1800, considerable variety had developed in forms of ownership, but propri-
etorships and partnerships vastly outnumbered joint-stock companies and corpor-
ations. The general perception seems to have been that joint-stock companies and
corporations differed little from partnerships (Lamoreaux 2000). Legal decisions
concerning joint-stock companies or corporations used plural pronouns and verbs
just as did decisions concerning partnerships. Each company or corporation re-
quired a unique charter and, during the early part of the nineteenth century, these
charters generally did not limit the liability of owners.
The nineteenth century brought many changes (Lamoreaux 2000). The Ameri-
can states competed with each other to attract businesses, and one medium
for competition was legislation about business organization. More and more
charters gave owners limited liability. The distinction disappeared between joint-
stock companies and corporations. Legislatures stopped requiring each new
enterprise to obtain a unique charter and, instead, they set up procedures by
which people could create business corporations by ®ling standardized forms.
 the origins of organization theory 159

Most corporations were small, but the construction of railroads spurred the
creation of corporations so large that they could not have been partnerships. British
legislation also changed, culminating in a major revision in 1856 that made it
much easier to form joint-stock companies (Wilson 1995). The number of British
stockbrokerages more than tripled between 1800 and 1870 (Killick and Thomas
1970).
Confusion continued well into the twentieth century regarding the differences
between corporations and partnerships. A focal issue was whether corporations
were aggregates of their owners or were distinct from their owners. For instance,
Machen (1911) asserted that a house could not be `merely the sum of the bricks
that compose it' for one could `change many of the bricks without changing the
identity of the house'. Gierke (1868±1913) put forth the idea that each corporation
possesses a distinctive personality, and this notion progressively won supporters in
Germany, then in France and Italy, and around the turn of the century in Britain
and the United States. Legal decisions about corporations began to use singular
pronouns and verbs, unlike decisions concerning partnerships (Laski 1916). Grad-
ually, there came growing agreement in Europe and North America that a corpor-
ation possessed `personhood' and was distinct from its owners (Lamoreaux 2000;
Mark 1987). Rathenau (1917) proposed that many corporations no longer had
permanent owners: `The claims to ownership are subdivided in such a fashion,
and are so mobile, that the enterprise assumes an independent life, as if it belonged
to no one; it takes an objective existence, such as in earlier days was embodied only
in state and church, in a municipal corporation, in the life of a guild or a religious
order.'
The logical next step occurred during the 1930s, when some observers remarked
that managers of corporations often act in ways that are inconsistent with the
interests of stockholders. Berle and Means (1932: 313) surmised, `The rise of
the modern corporation has brought a concentration of economic power which
can compete on equal terms with the modern state.' They reported that some
corporations had grown so large that by 1930 the 200 largest ones controlled half
of all corporate assets and a quarter of American assets. At the same time, stock
ownership had been greatly dispersed and nearly all stockholders held very small
fractions of the stock, with the result that stockholders of about half of the largest
corporations could not exert effective control. Thus, in many cases, it was no longer
realistic to think of managers as agents who were running businesses in the interest
of owners:
On the one hand, the owners of passive property, by surrendering control and responsibility
over the active property, have surrendered the right that the corporation should be operated
in their sole interest. . . . At the same time, the controlling groups [managers], by means of
the extension of corporate powers, have in their own interest broken the bars of tradition
which require that the corporation be operated solely for the bene®t of the owners of passive
property. (1932: 311±12)
160 william h. starbuck

5.3 Organization Theory Emerges

.........................................................................................................................................................................................

5.3.1 Organization theory takes root in a mechanistic

philosophical tradition
Proposed generalizations about organizations began to appear shortly after 1850.
At that time, scholars had recourse to two contradictory philosophical traditions
regarding societies and their development (Mirowski 1994; Schumpeter 1912; Toul-
min 1990). An older tradition characterized societies as history-dependent organ-
isms, analogous to the bodies of animals. Social systems should not be regarded
as mere aggregates of individuals for not only do individuals interact but societies
contain many interacting subsystems. Occurrences blend concepts about what
should happen with external factors such as accidents and temporary conditions,
so explanations need to allow for the speci®cs of particular cases. Theories should
describe the diversity of observed phenomena and ®t them into evolutionary
analytic frameworks. People are integrated creatures; human thinking occurs
in human bodies; people have motives of which they are unconscious, and
human actions are not always rational. Because people are not machines, it is
both unrealistic and immoral to treat them as substitutable components in factories
or bureaucracies.
A more `modern' tradition that rose to prominence during the seventeenth
century regarded societies as machine-like. This mechanistic tradition saw
the natural universe as a system of clockwork that follows timeless and immutable
laws and sought theories that describe these causal laws. Abstract generalizations
are better than concrete descriptions because they focus on durable essentials.
Although the animal nature of humans corrupts their behavior, people should
isolate and suppress their animalistic urges and strive to act solely on the basis of
rational thought, which gives human reason a machine-like quality. Factories and
bureaucracies achieve high productivity and reliability by training people to behave
uniformly and consistently and treating them as substitutable components. By
using their rationality, people can create stable and effective social systems.
The mechanistic tradition gained popularity during the nineteenth century,
which was a period of mechanical invention and of fascination with mechanical
contrivances. Especially toward the end of the century, the proliferation of new
machines and the successes of physical and chemical science sparked interest in
theories that depicted people and social groups as mechanical systems. In the very
®rst issue of the American Journal of Psychology in 1887, Charles S. Peirce addressed
the then controversial topic of whether logical machines would be able to replicate
human thought. Irving Fisher's doctoral dissertation of 1892 drew analogies
between competitive economies and hydraulic systems.
 the origins of organization theory 161

A persistent topic of debate through many centuries has been the degree to which
humans could exercise choice or control events, and both of the philosophic
traditions made ambiguous statements regarding this issue. Mechanistic views of
societies said people have very limited freedom to do what they please, but they
also said people do not value freedom of choice because they act rationally and they
can predict the consequences of their actions. Organismic views said societies can
accommodate peculiarities and temporary deviations, but they also said societies
must satisfy requirements about completeness and harmony. As a result, both
traditions struggled to reconcile contradictions between societies' predictability
and their controllability, between the stability of social arrangements and humans'
ability to engineer them. A mechanistic system is very predictable because human
intervention cannot affect it much. If people could control social arrangements,
they would be able to turn the causal processes into unpredicted directions. Perhaps
this debate explains the slowness with which observers came to see organization
members as decision-makers. Not until the late 1930s did anyoneÐBarnard
(1937/1938), as it turned outÐassert that decision-making is an important activity
within organizations; and decision-making remained a marginal theme in organ-
ization theory until the late 1950s.
A few thinkers explored the middle ground between these polar philosophical
traditions. John Stuart Mill, for example, drew distinctions between the more
permanent and the more volatile economic laws, and Karl Marx asserted that
`natural laws' are no more than descriptions of temporary social relations
that happen to exist at a particular time. However, the two traditions are suf®ciently
dissimilar that it was and remains quite dif®cult to integrate them.
Wolin (1960) took it as signi®cant that Simon (1952) used mechanical language to
describe organizations; he interpreted this as a sign that Simon was attributing
rationality to organizations. In this, Wolin may have been placing too much
emphasis on Simon's personal input. Even the earliest generalizations about organ-
izations tended to treat organizations as almost-mechanistic systems, and rational
behavior has long been a component of the mechanistic philosophical tradition.
From the 1860s to the 1960s, two themes dominated organization-theoretic
writings. One theme was `Bureaucracy has defects.' The earliest organiza-
tional writings by sociologists and economists focused on governmental bureau-
cracies, and they paid much attention to how bureaucratic governments affect
societies. They expressed particular concern about bureaucracies' propensity to
ignore their environments. The second theme was `How can organizations operate
more effectively?' The earliest organizational writings by consultants and former
managers discussed factories and other businesses, and they concentrated on
identifying structural properties that in¯uence organizations' productivity and
responsiveness to top managers. The mechanistic orientations of the consultants
and former managers are easier to understand because almost all these people
162 william h. starbuck

expressed admiration for Scienti®c Management and mechanistic conceptions

seemed to make it feasible to analyze organizations and to render them more
ef®cient or effective. The mechanistic orientations of the early sociologists are
more mysterious, since many of them had studied in academic traditions that
viewed societies as history-dependent organisms.
Thus, organization theory's birth was motivated by both perceived threats and
perceived opportunities. Those who wrote about bureaucracy generally saw it as a
repulsive threat to somethingÐgood government, control by rulers, individual
freedom. Those who wrote about organization design generally saw organizations
as offering attractive opportunities for somethingÐef®cient production, control by
owners, cooperative effort.

5.3.2 Theme 1: Bureaucracy has defects, some of which

generalize to other organizations
Given that Gournay de®ned bureaucracy as an undesirable form of government
administration, it is not too surprising that `bureaucracy' has generally had a bad
connotation. Nearly everyone who has written about bureaucracy has complained
about it; almost the only authors who found value in bureaucracy were German
economists and sociologists writing between 1870 and 1915. It is also not too
surprising that the authors who have pointed to bureaucracy's de®ciencies have
each de®ned it differently. Bureaucracy has tended to mean not a speci®c form of
organization so much as some undesirable aspects of any organization.
In 1861 John Stuart Mill contrasted representative democracy with several
governmental forms, including monarchical, aristocratic, and bureaucratic. He
de®ned bureaucracy as government by trained of®cials, but he did not even
mention bureaucracy in his chapter about the `executive functionaries' in a repre-
sentative democracy even though he discussed the education and selection of such
personnel at length, so he evidently saw bureaucracy as a government without
elected personnel. Mill asserted that bureaucracy exhibits higher political skill and
ability than any other governmental form except representative democracy. Bur-
eaucracy `accumulates experience, acquires well-tried and well-considered trad-
itional maxims, and makes provision for appropriate practical knowledge in those
who have the actual conduct of affairs' (1861: 122). But bureaucracies are burdened
`by the immutability of their maxims; and still more, by the universal law that
whatever becomes a routine loses its vital principle, and . . . goes on revolving
mechanically'. Bureaucracy's weakness arises from its internal consistency; `con-
¯icting in¯uences are required to keep one another alive and ef®cient' (1861: 123±4).
The economic historian Gustav Friedrich von Schmoller (1898) lauded the
achievements of the Prussian government, which, he concluded, had been able to
 the origins of organization theory 163

overcome feudal traditions and to bring about reforms because its administrators
had stood above the sel®sh interests of social classes. He emphasized that in the
Prussian state, government administrators were professionals with specialized
training who were pursuing careers as civil servants, and they operated within a
legal framework that de®ned their rights and duties. Such administration depends,
he said, on the existence of a well-developed educational system. There was,
however, risk that the professional administrators might act inconsistently with
the will of the state's ruler and that they might form a new social class with its own
sel®sh interests.
During the 1910s, the sociologists Robert Michels and Max Weber extrapolated
the notion of bureaucracy from governmental units to other kinds of organizations.
But, their bureaucracies were rather restricted organizations, being no more than
administrative hierarchies that performed well-de®ned tasks.
In 1884 the Italian political scientist Gaetano Mosca published a book arguing
that an effective organized political minority could dominate an unorganized
majority. Michels took Mosca's idea an additional step (Albertoni 1987). Using
arguments that re¯ect the German tradition of dialectic reasoning, Michels
(1911/1999) pointed out that voluntary associations, such as political parties and
labor unions, develop bureaucracies that become ends in themselves. To act rapidly
and ef®ciently, bureaucracies create `a certain administrative unity' and they tend
not to listen to their constituents. Since bureaucracies' centralizing tendencies
con¯ict with the democratic norms of voluntary associations, the associations
have both centralizing and decentralizing tendencies. `[T]he various tendencies
towards decentralization . . . , while they suf®ce to prevent the formation of a single
gigantic oligarchy, result merely in the creation of a number of smaller oligarchies,
each of which is no less powerful within its own sphere' (1911/1999: 202). On the one
hand, `Democracy is inconceivable without organization' (p. 61); and on the other
hand, there are `immanent oligarchical tendencies in every kind of human organ-
ization which strives for the attainment of de®nite ends' (p. 50).
Scholars have made divergent interpretations of Weber's writings, which use
complex language that contains ambiguity and inconsistency. Weber (1910±14)
attempted to understand social phenomena in terms of idealized groups of mutu-
ally reinforcing properties that he called `ideal-types'. One of these ideal-types was
bureaucracy. Thus, Weber saw bureaucracy as an idealization of a type of organiza-
tion rather than as a description of actual organizations, yet he applied this label to a
very wide range of contemporary and historic organizations that did not necessarily
possess all properties of the ideal-type. Because he emphasized the technical virtues
of bureaucracy and described its de®ciencies as contingent possibilities, his charac-
terizations resemble prescriptions for how to organize effectively. The examples that
Weber cited included many ancient organizationsÐsuch as the Egyptian army, the
late Roman government, the treasury of the Norman stateÐbut he also argued that
`modern bureaucracy' was a new and pervasive organizational form that was
164 william h. starbuck

especially well suited to meet the complex administrative challenges posed by a

capitalist industrial society (Heydebrand 1994). According to Weber, bureaucratic
administrative practices gained impetus from the spread of democracy, from
demands for fast accurate business transactions, and from increases in public
services such as police, roads, waterways, and railroads. He expressed a fear that
the spread of bureaucratic practices would create an `iron cage' of rational thought
and impersonal relationships that would make human life less enjoyable.
The properties that Weber attributed to modern bureaucracy include: (a) div-
ision of labor into assigned areas of authority, (b) clear hierarchy of authority, (c)
administrative actions based on formal rules rather than personal relationships, (d)
written documents, (e) functional specialization, and (f) full-time jobs that convert
administration into a vocation. He said the combination of a secure salary, career
prospects, cohesion among colleagues, and vulnerability to public criticism com-
pels bureaucrats to apply rules impersonally and mechanistically, but these proper-
ties also make bureaucracies resist change and make governmental bureaucracies
resist control by parliaments or rulers. Weber stated:
The decisive reason for the development of bureaucratic organization has always been its
purely technical superiority over every other form. A fully developed bureaucratic apparatus
compares to other forms as do mechanical to non-mechanical modes of production.
Precision, speed, clarity, accessibility of ®les, continuity, discretion, unity, strict subordin-
ation, avoidance of friction and material and personal expensesÐall these attain an optimal
level under bureaucratic . . . forms of administration and by means of trained individual
of®cials. . . . (Heydebrand 1994: 77±8)
What made `modern bureaucracy' distinctively modern, Weber said, was that
functional specialization `presumes a thorough training in an area of specialization'
(1994: 61). As a qualitative statement, this rationale for modernity makes no sense,
because clerical workers and administrators have been receiving training and
serving apprenticeships more than 4,000 years. However, there is no question that
after the mid-1800s, much higher percentages of the populace were literate, were
learning law, accounting, and clerical skills, and were attending schools of business.
The economist Alfred Marshall (1919: 850) asserted that bureaucracy was more
appropriate to Germany than to Britain: `although the semi-military organization
of Imperial Germany was well adapted for the methods of bureaucratic control,
other methods are needed by a nation which governs its own Government.' Even
though `each of the numerous Government of®ces in Westminster is in some
measure bureaucratic', these partial bureaucracies were rule-bound impediments
to innovation. Thus, Marshall observed that the effectiveness of organizational
forms relates to their societal contexts, and that different organizational forms
produce different consequences, but he did not discuss these relationships.
By the 1930s and 1940s, complaints about governmental bureaucracies could be
heard in France, Germany, the United Kingdom, and the United States. Mannheim
(1935) protested that societies were falling increasingly under the monopolistic
 the origins of organization theory 165

control of administrative bureaucracies staffed by isolated administrative castes. He

observed `universal alarm at the growth of bureaucracy' based on `the old belief that
institutions and organizations are perfectly rigid, and incapable of developing new
attitudes of mind' (1940: 325). Mannheim expressed particularly distress over the
`cold impersonal atmosphere' in `the new bureaucracy', yet he advocated a new
form of `objective justice' such that `emotion becomes attached to the handling of
the case and not to the individual who is helped' (1940: 322).
Warnotte (1937) also remarked on bureaucracy's dreadful reputation. He ob-
served that French dictionaries assigned two meanings to the word `bureaucracy',
one being the spreading in¯uence of government of®cials upon business ®rms, the
other being abusive actions by administrators. `Administration, in the minds of
those who are governed, is something ugly, incomprehensible, mysterious, irritat-
ing, and incompetent. Bureaucracy owes the birth of this sentiment in the populace
to its frequent and unexpected intrusions into the life of citizens, to its ambition to
observe all rules, without daring to risk diverse experiences and impeding innov-
ation with an excessive lethargy' (1937: 258). Warnotte blamed the abusive actions
on adherence to rules, conformity to precedents, and of®cials' acclimatization to
their jobs, `la deÂformation professionelle du fonctionnaire'.
Merton and Selznick restated the foregoing ideas in more formal language.
Merton (1940) articulated three processes that had been identi®ed by Michels,
Mannheim, and Warnotte. First, an emphasis on reliability fosters adherence
to rules. Rules become ends in themselves and lose their relationship to the
purposes for which they originated. As a result, bureaucracies resist changes and
have trouble adapting. Second, similarities among colleagues keep them from
competing with each other and promote esprit de corps. As a result, the entrenched
interests of bureaucrats take precedence over their concern for clients or their
responsiveness to superiors. Third, depersonalized relationships with clients
and general, abstract rules cause bureaucrats to ignore the peculiarities of individ-
ual cases. As a result, bureaucrats appear arrogant and haughty. Selznick (1943)
contributed a formal restatement of Michels's ideas about how bureaucracies take
actions that contradict their espoused norms. He emphasized the idea that organ-
izations informally modify their procedures to obtain `operationally relevant solu-
tions' to problems that arise daily. The need for cooperative effort induces
organizations to delegate functions to of®cials. Nominally, of®cials are supposed
to be agents for someone elseÐmembers of voluntary associations, owners of
®rms, the citizenryÐbut the interests of of®cials do not always align with the
interests of those they represent. The of®cials are able to de¯ect organizations'
goals because they control bureaucracies and they have more expertise than do the
people they represent.
Von Mises (1944: 1) observed that nearly everyone interpreted the term `bureau-
cracy' as a `disparaging criticism'. `Even in Prussia, the paragon of authoritarian
government, nobody wanted to be called a bureaucrat.' He (1944: 2) offered his
166 william h. starbuck

opinion that even though `everyone seems to agree that bureaucracy is an evil, . . .
nobody has ever tried to determine in unambiguous language what bureaucracy
really means.' After much debate, he ®nally de®ned bureaucratic management as
`management in strict accordance with the law and the budget' (p. 43), and he said
that people resort to bureaucratic management to handle `affairs which cannot be
checked by economic calculation' (p. 47). He devoted most of his book to bureau-
cratic management's undesirable effects, including complacency and regrettable
psychological effects.
World War II produced expansions of central governments and so made more
people aware of bureaucratic behaviors. Thus, the postwar period brought more
commentaries about bureaucracy. However, bureaucracies were not the only or-
ganizations that elicited complaints. By the late 1950s, complaints about organiza-
tions had extended beyond governmental bureaucracies. One of the most widely
read and in¯uential documents of the 1950s was Whyte's (1956) best-selling and
in¯uential critique of American corporate society. Whyte asserted that America was
in the grip of a troubling `Social Ethic'. He said, `Its major propositions are three: a
belief in the group as the source of creativity; a belief in ``belongingness'' as the
ultimate need of the individual; and a belief in the application of science to achieve
the belongingness.' As a result, many employees, at all levels of management and in
technical specialties, were allowing their employing organizations to dominate their
lives and the lives of their families. Organizations were telling employees how to
dress and to behave. They were cutting off employees' roots in communities by
moving them and their families frequently. They were shaping employees' person-
alities.
In a book that in¯uenced many academics, Argyris (1957) shifted the discussion
from sociology to psychology when he spelled out some potential effects of organ-
izations on employees' personalities. Young children, he said, are passive, depend-
ent, subordinates who lack self-awareness and who have limited behavior
repertoires, short-term interests, and short time horizons. Through their lifetimes,
people ought to be maturing into active, independent adults who have self-
awareness, diverse behavior repertoires, long-term interests, and long time
horizons. But, organizations give workers minimal control over their activities,
encourage the use of super®cial abilities, and require workers to be passive,
dependent, and subordinate and to have short time horizons. Thus, organizations
impede people's development and foster unhealthy personalities. Argyris called for
more academic research into `organizational behavior' to counteract these unfor-
tunate effects of organizations.
Thus, bureaucracy motivated organization theory with both propulsion and
repulsion. Some writers sought to describe bureaucracy's attractive qualities;
many writers sought to describe its de®ciencies and harmful effects. Since more
admirers wrote earlier and more critics wrote later, the general trend was to
formulate organization theory as the study of tribulations.
 the origins of organization theory 167

5.3.3 Theme 2: How can organizations operate more

effectively?
Weber's research method was to think of examples a speci®c type of organization,
the bureaucracy, and to try to infer what was similar or dissimilar about these
examples. Other writers used much the same method during the 1920s and 1930s to
look for properties common to organizations of all kinds. Like Michels and Weber,
most of them took a limited view of organizations as being merely administrative
hierarchies with well-de®ned tasks to perform, and they thought they were creating
rigorous, scienti®c theories (e.g. Urwick 1933b). But unlike Michels and Weber, they
used the plain language of managers, they rarely attempted to compare organiza-
tions from different eras, and they focused their thinking on how to make organiza-
tions more effective: How should organizations be organized? Their prescriptions
resemble `The Of®cials of Chou', but unlike the authors of `The Of®cials of Chou',
they sought to generalize across many organizations and they explicitly recognized
that administrative hierarchies function as integrated systems.
Textbooks written during the very early years of the twentieth century talked
about alternative ways to organize administrative hierarchies and to standardize
procedures (Elbourne 1914; Kimball 1913), but they devoted little attention to
organizations as integrated systems. These books often spoke of `systems', but
when they did so, they were talking about the need for organizations to have explicit
procedures.3 However, a gradual change took place, and documents written during
the 1920s began to view organizations as integrated systems and to discuss the
structures of these systems. In one of the earliest of these works, Gutjahr (1920)
devoted a chapter to ways in which a commercial enterprise can or should adapt to
its economic environment. He discussed product specialization, the failure of
unsuccessful businesses, horizontal and vertical integration, alliances and joint
ownership, choice of location, and advertising.
Child (1969) credited Frederick W. Taylor and Henri Fayol with rousing interest
in the merits of different organizational structures (also see Urwick 1956). A highly
in¯uential and controversial author and speaker, Taylor focused his attention on
work design and related topics that lie outside the domain of this chapter. But, he
(1903) did experiment with `functional management', in which each supervisor
concentrated on a narrow range of `functions' and each worker had no less than
eight supervisors who attended to different aspects of the worker's job.
A retired business executive, Fayol became involved in the reorganization of
government agencies, and as a result, he formulated prescriptions that he believed
to be generally applicable in all kinds of organizations. According to Fayol (1923),

3
Shenhav (1995) argued that industrial and mechanical engineers were treating organizations as
systems between 1900 and 1920. As I read those works, they were talking about the need for systematic
(ef®cient, consistent, orderly) procedures.
168 william h. starbuck

the word `administration' had meant only government of®cials in 1910 when people
met for the First International Congress of Administrative Science. Fayol saw
himself as broadening the meaning of `administration' to encompass, `not only
the public service but enterprises of every size and description, of every form and
purpose. All undertakings require planning, organization, command, co-
ordination and control, and in order to function properly, all must observe the
same general principles' (1937: 101).4
Both Fayol and Taylor had enthusiastic adherents in France, and so Chevalier
(1928) sought to reconcile the two viewpoints, arguing that they proposed comple-
mentary principles rather than contradictory ones. He also debated the generaliz-
ability of organizational prescriptions across cultures: he speculated about the
implications of his stereotypes about the Americans, English, and Germans, and
he proposed that the French would appreciate methods of rational organization
that respect workers' individuality. French workers do not resist following orders,
he said; they only resist following bad orders.
An early management text by Ralph C. Davis (1928) recognized that an organiza-
tion includes workers as well as executives, and it took a rather broad view of
organizational properties that should concern managers. For example, Davis ob-
served that assignments of responsibilities typically take account of managers'
personal abilities, personalities, experience, family connections, ambitions, and
intraorganizational politics. He also said organizations bene®t from esprit de corps,
and `this, in turn, depends on the creation of an ideal for which the whole organiza-
tion is striving' (1928: 43). He described ®ve basic `organization types', as well
as various subtypes, but he restricted these to alternative hierarchical arrangements.
Dennison (1931) expressed skepticism about the general validity of `principles of
organization structure'. Tasks change. Some tasks impose restrictions on organiza-
tional forms whereas other tasks can be performed well by very diverse
organizations. In addition, organizations tend to grow more rigid as they grow
older and larger, with the result that they become insensitive to gradual changes.
One implication is that organizations need to reorganize, to evolve continuously.

4
Despite Fayol's belief that `administration' had meant only government of®cials in 1910, just four
years later Elbourne (1914) published a large book titled Factory Administration and Accounts that
assumed readers well understood the usage of `administration' in the context of factories. However,
Lewis's (1896) book on The Commercial Organisation of Factories says nothing about `administration'.
Fayol (1916) formulated a prescriptive `Administrative Theory' that focused on ®ve functions
performed by a managerial hierarchy: planning, organization, coordination, command, and control.
He asserted that managers with adequate knowledge of this Administrative Theory could successfully
manage organizations of every type. Almost three decades later, Edward H. Litch®eld (1956) advocated
very similar ideas as the dean of Cornell's Graduate School of Business and Public Administration.
Litch®eld had been successful as a military, business, and academic administrator. He argued that
administration is the same `in industrial, commercial, educational, military, and hospital organiza-
tions'. He launched Administrative Science Quarterly to promote the development of a general theory of
the `administrative process', in which he included decision-making, programming, communications,
controlling, and evaluating.
 the origins of organization theory 169

A second implication is that organizations need to balance mobility with stability,

¯exibility with equilibrium.
The automobile executive James Mooney and Alan Reiley (1931) inquired what
functions do organizations need to perform in order to operate effectively. They
sought to identify the common properties of all kinds of organizations, the proper-
ties that make them distinctive social entities. They selected three key properties,
which they called principles: coordination, hierarchy, and functional differenti-
ation. Following Anderson's (1929) prescriptions for logic, they developed a systems
theory of organization that assigned to each principle a causal process and an effect.
In an effort to marshal empirical evidence that was unusually systematic for its
time, they then discussed evidence about these principles in governments, the
Roman Catholic Church, military organizations, and industrial ®rms.
Several other authors followed the lead of Fayol, Davis, and Mooney and Reiley in
searching for general properties of organizations that could lead to prescriptions:
Graicunas (1933) analyzed the combinatorial implications of different spans of
control. Urwick (1933a, 1933b, 1934) contrasted the contributions of Fayol and
Mooney and Reiley, and offered his thoughts on methods of coordination, spans
of control, and especially relations between line and staff. Elbourne (1934) listed
many principles that should guide organizations or managers; particularly interest-
ing are his principles for treating organizational arrangements as experiments. Gaus
(1936: 90) reviewed various organizational principles and concluded limply that
organizing should be `a relating of individuals so that their efforts may be more
effective'. Gulick (1937) also offered prescriptions regarding spans of control, rela-
tions between line and staff, and methods of coordination, and analyzed the merits
of alternative forms of decentralization (purpose, product, clientele, location).
Chester Barnard (1937/1938: p. ix), a retired executive, protested that

`the social scientistsÐfrom whatever side they approachedÐjust reached the edge of
organization as I experienced it, and retreated. Rarely did they seem to me to sense the
processes of coordination and decision that underlie a large part at least of the phenomena
they described. More important, there was lacking much recognition of formal organization
as a most important characteristic of social life, and as being the principle structural aspect
of society itself '.

In particular, Barnard complained that theories rooted in observations about

governmental and church organizations had overstated the importance of formal
authority, and that theories rooted in economics had overstated the importance of
`intellectual' processes as distinguished from emotional and physiological ones. In
comparison with prior authors, Barnard's analyses exhibit more complexity and
much more awareness of psychological factors. He de®ned an organization as any
consciously coordinated system of cooperative activities, and argued that every
organization needs willing participants, purpose, communication, effectiveness,
and ef®ciency. Large, complex organizations, he said, are composed of many
170 william h. starbuck

small organizations involving from two to twenty persons, some of them consti-
tuted formally and others informally. The component organizations must be small
enough that people are able to communicate and lead effectively. Barnard pro-
ceeded to discuss (a) alternative bases for specialization, (b) the economy of
inducements that organizations offer members and the contributions they receive
from members, (c) the properties of authoritative communications, and (d) the
properties of organizational decision-making. He ended his analysis by discussing
various functions performed by executives, the key element being that executives do
`the specialized work of maintaining the organization in operation' (1937/1938: 215).
Barnard introduced the then novel ideas that decision-making is an important
activity performed by executives and that organizations in¯uence executives' deci-
sions. Simon (1944, 1947), a professor with strong interest in the academic implica-
tions of actual administrative practices, spelled out some ways in which
organizations affect decision-making. The inputs to decisions include authority,
organizational loyalties, ef®ciency criteria, intra/organizational communications,
and plans, and then after they are made, decisions become subject to review for
their correctness. Both Barnard and Simon were characterizing organizations as
settings for dynamic processes and they were asserting the relevance of social
psychology for understanding these processes. Before 1950, Barnard and Simon
were the only writers who paid much attention to decision-making or information-
processing in organizations. Theories of leadership did not discuss decision-making
skills or communication skills. Although economists portrayed ®rms as choosing
prices or output quantities, they assumed that ®rms had perfect information and
unlimited analytic abilities; some economists even argued that the decision-making
and information-processing within ®rms could not matter because any ®rm that
took suboptimal actions would go bankrupt. Changes began during the 1940s and
1950s, when some economists began to talk about possible limitations on econo-
mists' theories, and some social psychologists studied problem-solving by small
groups, in which different group members played different roles. In addition, in the
1950s, a few psychologists began to use computer programs as models of human
problem-solving (Laudon and Starbuck 2001; Salgado, Starbuck, and Mezias 2002).
Barnard and Simon described organizations as settings in which individuals
make decisions; they did not describe organizations as decision-making systems.
In fact, the ideas that organizations per se process information and make decisions
did not appear until the late 1950s and early 1960s. A conceptual shift became visible
in 1958 when Forrester and March and Simon described organizations as infor-
mation processors. Then in 1963, Cyert and March portrayed organizations as
systems that learn and they described some organizational decision processes in
detail. The contributions by Forrester, March and Simon, and Cyert and March
emphasized the importance of rules in organizational behavior: organizations are
understandable and predictable because they behave consistently, because they act
like machines.
 the origins of organization theory 171

In contrast with the writings about bureaucracy, the prescriptive literature said
little about organizations' de®ciencies and generally portrayed organizations as
offering opportunities. Most of the prescriptive writers sought to raise productivity,
ef®ciency, or morale, but Barnard and Simon saw organizations as offering oppor-
tunities to apply social psychology.

5.3.4 The themes merge, organizational research becomes

more `scienti®c', and empirical methods become
more public
The late 1940s and early 1950s saw two changes in the character of writings about
organization theory, and Selznick participated signi®cantly in both developments.
For one thing, the two streams of thought about organizationsÐsociological
writings about bureaucracy and managerial writings about organizational effect-
ivenessÐdiscovered each other. For another thing, authors began to speak about
the empirical bases for their theories.
Selznick (1948) led the integration of sociological and managerial streams of
thought. Acknowledging in¯uence by the writings of Barnard, Dennison, Gaus,
Mooney and Reiley, and Urwick, he departed from the sociological focus on
`bureaucracy' and framed his discussions in more general language about `organiza-
tions' and `formal organizations'. He acknowledged as well in¯uence by Parsons,
Malinowski, MacIver, and Merton upon his discussion of `structural-functional
analysis', and his overall discussion had a distinctly sociological ¯avor. Another step
in the direction of integration was taken by the Reader in Bureaucracy (Merton et al.
1952), which drew excerpts from many different sources. March and Simon (1958)
pushed integration even farther by drawing ideas and ®ndings from arti®cial
intelligence, cognitive psychology, economics, human-resources management,
industrial engineering, industrial psychology, political science, public administra-
tion, the psychology of small groups, scienti®c management, sociology, and
strategic management.
As some were integrating the managerial and bureaucracy streams of thought,
others were attempting to introduce new themes. Barnard and Simon had advo-
cated the relevance of social psychology, and Simon (1946, 1947) had voiced a need
for more `scienti®c' studies of organizations. In particular, Simon attacked the idea
that principles of organization and management are useful, and he pointed out that
every principle seemed to contradict an equally plausible principle. He asserted
that a more `scienti®c' approach to the study of organizations would eliminate the
contradictions. Simon spelled out this idea of a `scienti®c' organization theory in
three more articles and a book. First, he (1950: 4) predicted, `we are in time going to
have theory in managementÐtheory of the kind that predicts reality, and not the
172 william h. starbuck

kind that is contrasted with practice'. As examples of the kinds of theorizing he

deemed relevant, he cited game theory, linear programming, servomechanisms,
computers, and laboratory experiments with small group communication. Second,
Simon, Smithburg, and Thompson (1950) produced a textbook about governmen-
tal organizations that discussed many of the topics that have attracted research in
the second half of the twentieth century: centralization±decentralization, team-
work, communication, intergroup relations, environmental change, and need for
support from external stakeholders. Third, Simon (1952) sketched his vision of the
scope of organization theory: decision-making in organizations, power in organiza-
tions, rational and nonrational behavior in organizations, stability and change in
organizations, specialization and division of work, and relations between organiza-
tions and their environments. Finally, he (1952±3) published an algebraic analysis
that compared the economic theory of the ®rm with `O-theory', in which organiza-
tions need only survive, not maximize pro®ts, and participants receive inducements
to make contributions.
The general norm throughout the ®rst half of the century was that authors
said nothing about their sources of data, and this pattern continued into the late
1940s. For example, the Journal of Social Issues devoted one of its ®rst issues
to bureaucracy. The contributions to this issue described bureaucracies or its
effects (Watson 1945a, b; Brady 1945), but none of these articles described the
bases for their observations. Likewise, Bendix (1947: 507) reviewed assorted issues
regarding bureaucracy without identifying a speci®c organization or organizations.
He concluded that `we cannot pro®t from the ef®ciency of large-scale organizations
unless we succeed in making the initiative of the individual one of the principles
of our organization' without adducing any data, even examples, to support
his assertions. Also without identifying a speci®c organization or organizations,
Selznick (1948) portrayed organizations' behaviors as speci®c instances of `social
action' and advocated the use of `structural-functional analysis' that seeks to explain
observed behaviors in terms of `stable needs and self-defensive mechanisms'. As
an example of structural-functional analysis, he discussed organizations' use of
cooptation to deal with opposition arising in their environments. Although Selz-
nick's remarks derived in part from his study of the Tennessee Valley Authority,
he did not mention this: this omission implies that the norms for sociological
research did not require authors to refer to data.
During the late 1940s, some authors began to specify the kinds of data they
were using as referents. In some instances, the speci®cations were quite vague.
For example, Turner (1947) reported that navy disbursing of®cers during World
War II did not function as `ideal-type' bureaucrats insofar as `rules become
of secondary importance' (p. 348). Rules sometimes con¯icted with the commands
of their superior of®cers, and the disbursing of®cers treated their friends differently
from others and they engaged in exchanges of favors with of®cers who controlled
 the origins of organization theory 173

other resources. However, Turner did not describe how he observed navy disbursing
of®cers. Similarly, Worthy (1950) described the use of employee surveys in
Sears, Roebuck and Co. without presenting data. He said, `The results of our
research suggest that over-complexity of organizational structure is one of
the most important and fundamental causes of poor management±employe rela-
tionships. . . . we have found that where jobs are broken down too ®nely, we are
more likely to have both low output and low morale' (p. 174). In a book that he
intended to offer advice to restaurant managers, Whyte (1948) used interviews
in Chicago restaurants to illustrate sociological concepts such as social status,
clique, race relations, and informal organization. Still another example is Stewart's
(1951) report on administrative processes in the Selective Service System during
World War II.
Selznick (1949) and Jaques (1951) forwarded data-based research by providing
book-length case studies. Selznick used his study of the Tennessee Valley Authority
(TVA) to illustrate the use of cooptation. While arguing that `All formal organiza-
tions are molded by forces tangential to their rationally ordered structures
and stated goals' (p. 251), he interpreted the TVA's behavior as illustrating `unantici-
pated consequence in social action'. Unanticipated consequences occur because
focusing on speci®c goals induces people to overlook seemingly irrelevant events
and because commitments made earlier limit later options. However, Selznick's
theoretical contributions may have been less in¯uential than his methodological
contribution of showing an explicit, detailed example. This methodological contri-
bution demonstrated its transitional character in two ways. First, Selznick devoted
only three paragraphs in his Preface to describing his research methodology.
Second, he did not discuss the potential in¯uence of his prior beliefs on his
observations.
Two years later, Jaques (1951) and colleagues exhibited much more methodo-
logical sensitivity in their highly visible and in¯uential case study of Glacier Metals
Company. Not only did Jaques devote the ®rst chapter to methodology, but
the book contains many comments about data-gathering methods, about premises
guiding inferences, and about the relations between the researchers and people in
the company. In his Introduction to this book, Wilson (1951: p. xv) observed:
`In scienti®c work of all kinds there has been a growing realization of the part
played by the observer himself as one factor determining his observations. Scienti®c
research in relatively new ®elds of work shows the importance of the observer
describing in detail his role, his methods, and his view of the character and limits of
his ®eld of observation.' The case study itself affords a good example of why
organization theory should not be separated from organizational behavior, for
it traced the interdependencies between the ®rm's origination, formal structural
changes, management changes, internal politics, communication patterns, and
people's feelings.
174 william h. starbuck

5.4 Organization Theory Organizes

.........................................................................................................................................................................................

By the late 1950s, the writings about organizations were multiplying rapidly. The
Organization Man and The Man in the Grey Flannel Suit had made the public aware
of organizations' centrality (Whyte 1956; S. Wilson 1955). Parkinson's Law had made
organizations a topic for laughter (Parkinson 1957). A number of sociologists went
beyond the traditional focus on bureaucracy, with studies of diverse `complex
organizations'. Many sociologists published organizational studies during the late
1950s and those who did so came from the elite of American sociology. Political
scientists discussed intraorganizational power relations and decision-making in
governmental organizations. Economists, who had exhibited great disinterest
in organizational factors, began to consider them for the ®rst time when Marschak
(1955) discussed the costs of communication within a `team' and Penrose (1959)
discussed the need for managerial activity to plan and implement expansion. Social
psychologists discovered organizations as interesting settings for research, although
few of them regarded organizations as coherent social systems. March and Simon
(1958) provided a compendium that allowed scholars to explore ®ndings and ideas
from diverse ®elds.
By 1960 organization theorists had become much more numerous and many of
them had high social status. Organization theory had arrived, and the following
decades have offered it the bene®cence of multiplying and expanding degree
programs in business. Expansion and af¯uence have brought pressures to fragment
and to become self-absorbed and irrelevant to environmental problems.
Pressures for organization theory to become self-absorbed and irrelevant to its
environment have arisen partly from its growing size and rising status and partly
from the relevance of its subject matter for degree programs in business. Collegiate
business programs have provided steady and rapidly increasing funding after 1950.
By 1956, nearly 43,000 Americans per year were graduating from collegiate business
programs, and by 1998, this ®gure had more than quintupled to 233,000 per year. In
1956, just over 3,000 Americans per year were graduating from MBA programs, and
by 1998, this ®gure had rocketed to more than 100,000 per year.
As organization theory has become larger and more respected, it has grown more
autonomous from external constraints and more organized. Academics have gained
latitude to de®ne what is interesting or important to themselves. Research method-
ology has received ever more respect, and the most prevalent empiricism has been a
stylized type that isolates the observer from the observed and allows the observer to
maintain detachment. The subtopics within organization theory have proliferated
and derived their popularity from their intellectual attractiveness. Organization
theorists have created specialized divisions of professional associations and many
specialized journals, including a few that have focused on subtopics within organ-
ization theory.
 the origins of organization theory 175

The themes that gave rise to organization theory have received little attention.
Few organization theorists have focused on social problems associated with organ-
izations. The old social problems still exist and new ones have appeared, but it is
depressing to dwell on what is wrong, and business students are not eager to discuss
the disadvantages associated with their future occupations. Few academic organiza-
tion theorists have sought prescriptions for how organizations can become more
productive, ef®cient, or effective. The frequent management fadsÐsuch as Japanese
management, downsizing, re-engineering, teamwork, Quality Circles, Six-Sigma
quality management, the Learning Organization, outsourcing, knowledge manage-
mentÐhave been originated by managers and consultants. Although some aca-
demic organization theorists have studied the consequences of such management
fads, the most prominent organization theorists have ignored them. The prominent
organization theorists have also generally ignored long-run changes in organiza-
tions' characteristics that have been stimulated by technological and population
changes such as rising educational levels, computerization, telecommunication
capacities, or globalization of ®rms.
Pressures to fragment have originated in the social sciences that organization
theory spans. Whereas hostile environments can induce a collective enterprise to
coalesce, multiple but friendly environments create ambivalence about participa-
tion in collective enterprise. In the case of organization theory, one force toward
fragmentation has come from the divide between psychology and sociology. Many
social scientists with psychological orientations have de®ned their focal interest as
`organizational behavior' as distinguished from `management' or `organization
theory'. `Organization theory' has consequently been more closely associated with
sociology. A second force toward fragmentation has come from teachers and
practitioners of `strategic management', who sought legitimacy by de®ning a dis-
tinctive behavioral domain. However, boundaries between these topics have
remained ill-de®ned, and they have often contributed to strange interpretations
of observations when organization theorists ignored issues they perceived to fall
into the neighboring domains. Strategic management has itself shown a tendency to
split into two domains, one more closely associated with economics and the other
more closely associated with sociology or management. A third force toward
fragmentation has been dissatisfaction with the effectiveness of existing social
theories, which has induced organization theorists to experiment with a wide
range of diverse theories. Because it deals with complex phenomena, organization
theory has drawn productively from very diverse intellectual domains. However,
newer ideas have supplemented older ideas rather than replaced them. For example,
population ecology did not replace contingency theory; it added a dynamic per-
spective that supplemented contingency theory. As a result, contingency theory
retained enthusiastic proponents while population ecology gained others. A fourth
force toward fragmentation has been culture, as theories and methodologies have
evolved differently in different societies.
176 william h. starbuck

A few integrating activities have restrained fragmentation and kept boundaries

permeable. Foremost among these, have been three prominent academic journals
that have bridged the fragments and continued to publish articles on diverse
topicsÐAdministrative Science Quarterly, Academy of Management Journal, and
Journal of Management Studies. Likewise, the fragments have not affected the
major periodicals for managersÐsuch as Harvard Business Review, Sloan Manage-
ment Review, California Management Review, and Organization Dynamics. Also,
some researchers have crossed the boundaries between domains. For example, some
strategy researchers have studied top-management teams, some organization the-
orists have applied evolutionary models to strategic changes, and some organiza-
tional-behavior researchers have studied managers' perceptions of strategic
environments.
Organization theory has developed considerable complexity, so much complex-
ity that doctoral students sometimes complain that it makes no sense to them. The
students say they do not understand how the fragments of organization theory
relate to each other, how they differ, what each has to offer. In particular, recogni-
tion has grown that organizations are quite heterogeneous. Since organizations
are diverse and complex, and since they inhabit diverse and complex environments,
the complexity of organization theory makes sense. But this complexity poses the
classical dilemma of how complicated theories should be. Complex theories
capture more aspects of what researchers observe, but they are hard to understand.
Simple theories are easy to understand but they overlook phenomena that some
people deem important.

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