- Information
- AI Chat
Institutionalized Organizations: Formal Structure as Myth and Ceremony
Strategic management (6112)
Addis Ababa University
Recommended for you
Preview text
Institutionalized Organizations: Formal Structure as Myth and Ceremony
Author(s): John W. Meyer and Brian Rowan
Reviewed work(s):
Source: American Journal of Sociology, Vol. 83, No. 2 (Sep., 1977), pp. 340-
Published by: The University of Chicago Press
Stable URL: jstor/stable/.
Accessed: 07/03/2013 09:
Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at.
jstor/page/info/about/policies/terms.jsp
.
JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.
.
The University of Chicago Press is collaborating with JSTOR to digitize, preserve and extend access to American Journal of Sociology.
jstor
This content downloaded on Thu, 7 Mar 2013 09:41:59 AM
Institutionalized Organizations: Formal Structure
as Myth and Ceremonyl
John W. Meyer and Brian Rowan Stanford University
Many formal organizational structures arise as reflections of ratio- nalized institutional rules. The elaboration of such rules in modern states and societies accounts in part for the expansion and increased complexity of formal organizational structures. Institutional rules function as myths which organizations incorporate, gaining legitimacy, resources, stability, and enhanced survival prospects. Organizations whose structures become isomorphic with the myths of the institu- tional environment-in contrast with those primarily structured by the demands of technical production and exchange-decrease internal coordination and control in order to maintain legitimacy. Structures are decoupled from each other and from ongoing activities. In place of coordination, inspection, and evaluation, a logic of confidence and good faith is employed.
Formal organizations are generally understood to be systems of coordinated and controlled activities that arise when work is embedded in complex networks of technical relations and boundary-spanning exchanges. But in modern societies formal organizational structures arise in highly institu- tionalized contexts. Professions, policies, and programs are created along with the products and services that they are understood to produce rational- ly. This permits many new organizations to spring up and forces existing ones to incorporate new practices and procedures. That is, organizations are driven to incorporate the practices and procedures defined by prevailing rationalized concepts of organizational work and institutionalized in society. Organizations that do so increase their legitimacy and their survival pros- pects, independent of the immediate efficacy of the acquired practices and procedures. Institutionalized products, services, techniques, policies, and programs function as powerful myths, and many organizations adopt them cere- monially. But conformity to institutionalized rules often conflicts sharply
1 Work on this paper was conducted at the Stanford Center for Research and Development in Teaching (SCRDT) and was supported by the National Institute of Education (contract no. NE-C-00-3-0062). The views expressed here do not, of course, reflect NIE positions. Many colleagues in the SCRDT, the Stanford Organizations Training Program, the Ameri- can Sociological Association's work group on Organizations and Environments, and the NIE gave help and encouragement. In particular, H. Acland, A. Bergesen, J. Boli-Bennett, T. Deal, J. Freeman, P. Hirsch, J. G. March, W. R. Scott, and W. Starbuck made helpful suggestions.
340 AJS Volume 83 Number 2
This content downloaded on Thu, 7 Mar 2013 09:41:59 AM
American Journal of Sociology
a blueprint for activities which includes, first of all, the table of organization: a listing of offices, departments, positions, and programs. These elements are linked by explicit goals and policies that make up a rational theory of how, and to what end, activities are to be fitted together. The essence of a modern bureaucratic organization lies in the rationalized and impersonal character of these structural elements and of the goals that link them. One of the central problems in organization theory is to describe the conditions that give rise to rationalized formal structure.- In conventional theories, rational formal structure is assumed to be the most effective way to coordinate and control the complex relational networks involved in modern technical or work activities (see Scott 1975 for a review). This assumption derives from Weber's (1930, 1946, 1947) discussions of the historical emergence of bureaucracies as consequences of economic markets and centralized states. Economic markets place a premium on rationality and coordination. As markets expand, the relational networks in a given domain become more complex and differentiated, and organizations in that domain must manage more internal and boundary-spanning interdepen- dencies. Such factors as size (Blau 1970) and technology (Woodward 1965) increase the complexity of internal relations, and the division of labor among organizations increases boundary-spanning problems (Aiken and Hage 1968; Freeman 1973; Thompson 1967). Because the need for coordination increases under these conditions, and because formally coordinated work has com- petitive advantages, organizations with rationalized formal structures tend to develop. The formation of centralized states and the penetration of societies by political centers also contribute to the rise and spread of formal organization. When the relational networks involved in economic exchange and political management become extremely complex, bureaucratic structures are thought to be the most effective and rational means to standardize and control sub- units. Bureaucratic control is especially useful for expanding political centers, and standardization is often demanded by both centers and periph- eral units (Bendix 1964, 1968). Political centers organize layers of offices that manage to extend conformity and to displace traditional activities throughout societies.
The problem. Prevailing theories assume that the coordination and control of
activity are the critical dimensions on which formal organizations have succeeded in the modern world. This assumption is based on the view that organizations function according to their formal blueprints: coordination is routine, rules and procedures are followed, and actual activities conform to the prescrip- tions of formal structure. But much of the empirical research on organiza- tions casts doubt on this assumption. An earlier generation of researchers concluded that there was a great gap between the formal and the informal organization (e., Dalton 1959; Downs 1967; Homans 1950). A related
342
This content downloaded on Thu, 7 Mar 2013 09:41:59 AM
Formal Structure as Myth and Ceremony
observation is that formal organizations are often loosely coupled (March and Olsen 1976; Weick 1976): structural elements are only loosely linked to each other and to activities, rules are often violated, decisions are often un- implemented, or if implemented have uncertain consequences, technologies are of problematic efficiency, and evaluation and inspection systems are subverted or rendered so vague as to provide little coordination. Formal organizations are endemic in modern societies. There is need for an explanation of their rise that is partially free from the assumption that, in practice, formal structures actually coordinate and control work. Such an explanation should account for the elaboration of purposes, positions, policies, and procedural rules that characterizes formal organizations, but must do so without supposing that these structural features are implemented in routine work activity.
INSTITUTIONAL SOURCES OF FORMAL STRUCTURE By focusing on the management of complex relational networks and the exercise of coordination and control, prevailing theories have neglected an alternative Weberian source of formal structure: the legitimacy of ratio- nalized formal structures. In prevailing theories, legitimacy is a given: assertions about bureaucratization rest on the assumption of norms of rationality (Thompson 1967). When norms do play causal roles in theories of bureaucratization, it is because they are thought to be built into modern societies and personalities as very general values, which are thought to facilitate formal organization. But norms of rationality are not simply general values. They exist in much more specific and powerful ways in the rules, understandings, and meanings attached to institutionalized social structures. The causal importance of such institutions in the process of bureaucratization has been neglected. Formal structures are not only creatures of their relational networks in the social organization. In modern societies, the elements of rationalized formal structure are deeply ingrained in, and reflect, widespread understandings of social reality. Many of the positions, policies, programs, and procedures of modern organizations are enforced by public opinion, by the views of important constituents, by knowledge legitimated through the educational system, by social prestige, by the laws, and by the definitions of negligence and prudence used by the courts. Such elements of formal structure are manifestations of powerful institutional rules which function as highly rationalized myths that are binding on particular organizations. In modern societies, the myths generating formal organizational structure have two key properties. First, they are rationalized and impersonal pre- scriptions that identify various social purposes as technical ones and specify in a rulelike way the appropriate means to pursue these technical purposes
343
This content downloaded on Thu, 7 Mar 2013 09:41:59 AM
Formal Structure as Myth and Ceremony
professions and programs become institutionalized in laws, union ideologies, and public opinion, organizations incorporate these programs and profes- sions. The growth of rationalized institutional structures in society makes formal organizations more common and more elaborate. Such institutions are myths which make formal organizations both easier to create and more necessary. After all, the building blocks for organizations come to be littered around the societal landscape; it takes only a little entrepreneurial energy to assemble them into a structure. And because these building blocks are considered proper, adequate, rational, and necessary, organizations must incorporate them to avoid illegitimacy. Thus, the myths built into ratio- nalized institutional elements create the necessity, the opportunity, and the impulse to organize rationally, over and above pressures in this direction created by the need to manage proximate relational networks: Proposition 1. As rationalized institutional rules arise in given domains of work activity, formal organizations form and expand by incorporating these rules as structural elements. Two distinct ideas are implied here: (1A) As institutionalized myths define new domains of rationalized activity, formal organizations emerge in these domains. (iB) As rationalizing institutional myths arise in existing domains of activity, extant organizations expand their formal structures so as to become isomorphic with these new myths. To understand the larger historical process it is useful to note that: Proposition 2. The more modernized the society, the more extended the rationalized institutional structure in given domains and the greater the number of domains containing rationalized institutions. Modern institutions, then, are thoroughly rationalized, and these ratio- nalized elements act as myths giving rise to more formal organization. When propositions 1 and 2 are combined, two more specific ideas follow: (2A) Formal organizations are more likely to emerge in more modernized societies, even with the complexity of immediate relational networks held constant. (2B) Formal organizations in a given domain of activity are likely to have more elaborated structures in more modernized societies, even with the complexity of immediate relational networks held constant. Combining the ideas above with prevailing organization theory, it becomes clear that modern societies are filled with rationalized bureaucracies for two reasons. First, as the prevailing theories have asserted, relational networks become increasingly complex as societies modernize. Second, modern societies are filled with institutional rules which function as myths depicting various formal structures as rational means to the attainment of desirable ends. Figure 1 summarizes these two lines of theory. Both lines suggest that the postindustrial society-the society dominated by rational organiza- tion even more than by the forces of production-arises both out of the
345
This content downloaded on Thu, 7 Mar 2013 09:41:59 AM
American Journal of Sociology
The prevalence of rationalized institutional elements
Societal Societal The elaboration presence and of modernization formal organizational structures The complexity of networks of social organization and exchange FIG. 1.-The origins and elaboration of formal organizational structures
complexity of the modern social organizational network and, more directly, as an ideological matter. Once institutionalized, rationality becomes a myth with explosive organizing potential, as both Ellul (1964) and Bell (1973)- though with rather different reactions-observe.
The Relation of Organizations to Their Institutional Environments
The observation is not new that organizations are structured by phenomena in their environments and tend to become isomorphic with them. One explanation of such isomorphism is that formal organizations become matched with their environments by technical and exchange interdependen- cies. This line of reasoning can be seen in the works of Aiken and Hage (1968), Hawley (1968), and Thompson (1967). This explanation asserts that structural elements diffuse because environments create boundary-spanning exigencies for organizations, and that organizations which incorporate structural elements isomorphic with the environment are able to manage such interdependencies. A second explanation for the parallelism between organizations and their environments-and the one emphasized here-is that organizations struc- turally reflect socially constructed reality (Berger and Luckmann 1967). This view is suggested in the work of Parsons (1956) and Udy (1970), who see organizations as greatly conditioned by their general institutional environments and therefore as institutions themselves in part. Emery and Trist (1965) also see organizations as responding directly to environmental structures and distinguish such effects sharply from those that occur through boundary-spanning exchanges. According to the institutional conception as developed here, organizations tend to disappear as distinct and bounded units. Quite beyond the environmental interrelations suggested in open- systems theories, institutional theories in their extreme forms define organi- zations as dramatic enactments of the rationalized myths pervading modern societies, rather than as units involved in exchange-no matter how com- plex-with their environments.
346
This content downloaded on Thu, 7 Mar 2013 09:41:59 AM
American Journal of Sociology
institutional requirements. New formal organizations emerge and extant organizations acquire new structural elements. Leadership eforts of local organizations.-The rise of the state and the expansion of collective jurisdiction are often thought to result in domesti- cated organizations (Carlson 1962) subject to high levels of goal displacement (Clark 1956; Selznick 1949; and Zald and Denton 1963). This view is mis- leading: organizations do often adapt to their institutional contexts, but they often play active roles in shaping those contexts (Dowling and Pfeffer 1975; Parsons 1956; Perrow 1970; Thompson 1967). Many organizations actively seek charters from collective authorities and manage to institu- tionalize their goals and structures in the rules of such authorities. Efforts to mold institutional environments proceed along two dimensions. First, powerful organizations force their immediate relational networks to adapt to their structures and relations. For instance, automobile producers help create demands for particular kinds of roads, transportation systems, and fuels that make automobiles virtual necessities; competitive forms of transportation have to adapt to the existing relational context. But second, powerful organizations attempt to build their goals and procedures directly into society as institutional rules. Automobile producers, for instance, attempt to create the standards in public opinion defining desirable cars, to influence legal standards defining satisfactory cars, to affect judicial rules defining cars adequate enough to avoid manufacturer liability, and to force agents of the collectivity to purchase only their cars. Rivals must then compete both in social networks or markets and in contexts of institutional rules which are defined by extant organizations. In this fashion, given organizational forms perpetuate themselves by becoming institutionalized rules. For example: School administrators who create new curricula or training programs at- tempt to validate them as legitimate innovations in educational theory and governmental requirements. If they are successful, the new procedures can be perpetuated as authoritatively required or at least satisfactory. New departments within business enterprises, such as personnel, advertis- ing, or research and development departments, attempt to professionalize by creating rules of practice and personnel certification that are enforced by the schools, prestige systems, and the laws. Organizations under attack in competitive environments-small farms, passenger railways, or Rolls Royce-attempt to establish themselves as cen- tral to the cultural traditions of their societies in order to receive official protection.
The Impact of Institutional Environments on Organizations
Isomorphism with environmental institutions has some crucial consequences for organizations: (a) they incorporate elements which are legitimated externally, rather than in terms of efficiency; (b) they employ external or
348
This content downloaded on Thu, 7 Mar 2013 09:41:59 AM
Formal Structure as Myth and Ceremony
ceremonial assessment criteria to define the value of structural elements; and (c) dependence on externally fixed institutions reduces turbulence and maintains stability. As a result, it is argued here, institutional isomorphism promotes the success and survival of organizations. Incorporating externally legitimated formal structures increases the commitment of internal partici- pants and external constituents. And the use of external assessment criteria- that is, moving toward the status in society of a subunit rather than an independent system-can enable an organization to remain successful by social definition, buffering it from failure. Changingformal structures.-By designing a formal structure that adheres to the prescriptions of myths in the institutional environment, an organiza- tion demonstrates that it is acting on collectively valued purposes in a proper and adequate manner (Dowling and Pfeffer 1975; Meyer and Rowan 1975). The incorporation of institutionalized elements provides an account (Scott and Lyman 1968) of its activities that protects the organization from having its conduct questioned. The organization becomes, in a word, legitimate, and it uses its legitimacy to strengthen its support and secure its survival. From an institutional perspective, then, a most important aspect of isomorphism with environmental institutions is the evolution of organiza- tional language. The labels of the organization chart as well as the vocabu- lary used to delineate organizational goals, procedures, and policies are analogous to the vocabularies of motive used to account for the activities of individuals (Blum and McHugh 1971; Mills 1940). Just as jealousy, anger, altruism, and love are myths that interpret and explain the actions of individuals, the myths of doctors, of accountants, or of the assembly line explain organizational activities. Thus, some can say that the engineers will solve a specific problem or that the secretaries will perform certain tasks, without knowing who these engineers or secretaries will be or exactly what they will do. Both the speaker and the listeners understand such statements to describe how certain responsibilities will be carried out. Vocabularies of structure which are isomorphic with institutional rules provide prudent, rational, and legitimate accounts. Organizations described in legitimated vocabularies are assumed to be oriented to collectively defined, and often collectively mandated, ends. The myths of personnel services, for example, not only account for the rationality of employment practices but also indicate that personnel services are valuable to an organization. Em- ployees, applicants, managers, trustees, and governmental agencies are predisposed to trust the hiring practices of organizations that follow legiti- mated procedures-such as equal opportunity programs, or personality testing-and they are more willing to participate in or to fund such organiza- tions. On the other hand, organizations that omit environmentally legiti- mated elements of structure or create unique structures lack acceptable
349
This content downloaded on Thu, 7 Mar 2013 09:41:59 AM
Formal Structure as Myth and Ceremony
functions and maps them onto economic production functions: organizations assign externally defined worth to advertising departments, safety depart- ments, managers, econometricians, and occasionally even sociologists, whether or not these units contribute measurably to the production of outputs. Monetary prices, in postindustrial society, reflect hosts of cere- monial influences, as do economic measures of efficiency, profitability, or net worth (Hirsch 1975). Ceremonial criteria of worth and ceremonially derived production func- tions are useful to organizations: they legitimate organizations with internal participants, stockholders, the public, and the state, as with the IRS or the SEC. They demonstrate socially the fitness of an organization. The in- corporation of structures with high ceremonial value, such as those reflecting the latest expert thinking or those with the most prestige, makes the credit position of an organization more favorable. Loans, donations, or investments are more easily obtained. Finally, units within the organization use cere- monial assessments as accounts of their productive service to the organiza- tion. Their internal power rises with their performance on ceremonial measures (Salancik and Pfeffer 1974). Stabilization.-The rise of an elaborate institutional environment stabilizes both external and internal organizational relationships. Centralized states, trade association, unions, professional associations, and coalitions among organizations standardize and stabilize (see the review by Starbuck 1976). Market conditions, the characteristics of inputs and outputs, and tech- nological procedures are brought under the jurisdiction of institutional meanings and controls. Stabilization also results as a given organization becomes part of the wider collective system. Support is guaranteed by agreements instead of depending entirely on performance. For example, apart from whether schools educate students, or hospitals cure patients, people and governmental agencies remain committed to these organiza- tions, funding and using them almost automatically year after year. Institutionally controlled environments buffer organizations from turbu- lence (Emery and Trist 1965; Terreberry 1968). Adaptations occur less rapidly as increased numbers of agreements are enacted. Collectively granted monopolies guarantee clienteles for organizations like schools, hospitals, or professional associations. The taken-for-granted (and legally regulated) quality of institutional rules makes dramatic instabilities in products, techniques, or policies unlikely. And legitimacy as accepted sub- units of society protects organizations from immediate sanctions for varia- tions in technical performance:
Thus, American school districts (like other governmental units) have near monopolies and are very stable. They must conform to wider rules about proper classifications and credentials of teachers and students, and of topics of study. But they are protected by rules which make education as defined
351
This content downloaded on Thu, 7 Mar 2013 09:41:59 AM
American Journal of Sociology
by these classifications compulsory. Alternative or private schools are pos- sible, but must conform so closely to the required structures and classifica- tions as to be able to generate little advantage. Some business organizations obtain very high levels of institutional sta- bilization. A large defense contractor may be paid for following agreed-on procedures, even if the product is ineffective. In the extreme, such organiza- tions may be so successful as to survive bankruptcy intact-as Lockheed and Penn Central have done-by becoming partially components of the state. More commonly, such firms are guaranteed survival by state-regu- lated rates which secure profits regardless of costs, as with American public utility firms. Large automobile firms are a little less stabilized. They exist in an environ- ment that contains enough structures to make automobiles, as conventionally defined, virtual necessities. But still, customers and governments can inspect each automobile and can evaluate and even legally discredit it. Legal action cannot as easily discredit a high school graduate.
Organizational success and survival.-Thus, organizational success depends on factors other than efficient coordination and control of productive activities. Independent of their productive efficiency, organizations which exist in highly elaborated institutional environments and succeed in be- coming isomorphic with these environments gain the legitimacy and re- sources needed to survive. In part, this depends on environmental processes and on the capacity of given organizational leadership to mold these processes (Hirsch 1975). In part, it depends on the ability of given organizations to conform to, and become legitimated by, environmental institutions. In institutionally elaborated environments, sagacious conformity is required: leadership (in a university, a hospital, or a business) requires an under- standing of changing fashions and governmental programs. But this kind of conformity-and the almost guaranteed survival which may accompany it- is possible only in an environment with a highly institutionalized structure. In such a context an organization can be locked into isomorphism, cere- monially reflecting the institutional environment in its structure, func- tionaries, and procedures. Thus, in addition to the conventionally defined sources of organizational success and survival, the following general assertion can be proposed: Proposition 3. Organizations that incorporate societally legitimated ratio- nalized elements in their formal structures maximize their legitimacy and increase their resources and survival capabilities. This proposition asserts that the long-run survival prospects of organiza- tions increase as state structures elaborate and as organizations respond to institutionalized rules. In the United States, for instance, schools, hospitals, and welfare organizations show considerable ability to survive, precisely because they are matched with-and almost absorbed by-their institu- tional environments. In the same way, organizations fail when they deviate
352
This content downloaded on Thu, 7 Mar 2013 09:41:59 AM
American Journal of Sociology
Types of Organizations
Institutionalized myths differ in the completeness with which they describe cause and effect relationships, and in the clarity with which they describe standards that should be used to evaluate outputs (Thompson 1967). Some organizations use routine, clearly defined technologies to produce outputs. When output can be easily evaluated a market often develops, and con- sumers gain considerable rights of inspection and control. In this context, efficiency often determines success. Organizations must face exigencies of close coordination with their relational networks, and they cope with these exigencies by organizing around immediate technical problems. But the rise of collectively organized society and the increasing inter- connectedness of social relations have eroded many market contexts. Increasingly, such organizations as schools, R & D units, and governmental bureaucracies use variable, ambiguous technologies to produce outputs that are difficult to appraise, and other organizations with clearly defined tech- nologies find themselves unable to adapt to environmental turbulence. The uncertainties of unpredictable technical contingencies or of adapting to environmental change cannot be resolved on the basis of efficiency. Internal participants and external constituents alike call for institutionalized rules that promote trust and confidence in outputs and buffer organizations from failure (Emery and Trist 1965). Thus, one can conceive of a continuum along which organizations can be ordered. At one end are production organizations under strong output controls (Ouchi and McGuire 1975) whose success depends on the manage- ment of relational networks. At the other end are institutionalized organiza- tions whose success depends on the confidence and stability achieved by isomorphism with institutional rules. For two reasons it is important not to assume that an organization's location on this continuum is based on the inherent technical properties of its output and therefore permanent. First, the technical properties of outputs are socially defined and do not exist in some concrete sense that allows them to be empirically discovered. Second, environments and organizations often redefine the nature of products, services, and technologies. Redefinition sometimes clarifies techniques or evaluative standards. But often organizations and environments redefine the nature of techniques and output so that ambiguity is introduced and rights of inspection and control are lowered. For example, American schools have evolved from producing rather specific training that was evaluated according to strict criteria of efficiency to producing ambiguously defined services that are evaluated according to criteria of certification (Callahan 1962; Tyack 1974; Meyer and Rowan 1975).
354
This content downloaded on Thu, 7 Mar 2013 09:41:59 AM
Formal Structure as Myth and Ceremony
Structural Inconsistencies in Institutionalized Organizations Two very general problems face an organization if its success depends primarily on isomorphism with institutionalized rules. First, technical activities and demands for efficiency create conflicts and inconsistencies in an institutionalized organization's efforts to conform to the ceremonial rules of production. Second, because these ceremonial rules are transmitted by myths that may arise from different parts of the environment, the rules may conflict with one another. These inconsistencies make a concern for efficiency and tight coordination and control problematic. Formal structures that celebrate institutionalized myths differ from structures that act efficiently. Ceremonial activity is significant in relation to categorical rules, not in its concrete effects (Merton 1940; March and Simon 1958). A sick worker must be treated by a doctor using accepted medical procedures; whether the worker is treated effectively is less im- portant. A bus company must service required routes whether or not there are many passengers. A university must maintain appropriate departments independently of the departments' enrollments. Activity, that is, has ritual significance: it maintains appearances and validates an organization. Categorical rules conflict with the logic of efficiency. Organizations often face the dilemma that activities celebrating institutionalized rules, although they count as virtuous ceremonial expenditures, are pure costs from the point of view of efficiency. For example, hiring a Nobel Prize winner brings great ceremonial benefits to a university. The celebrated name can lead to research grants, brighter students, or reputational gains. But from the point of view of immediate outcomes, the expenditure lowers the instructional return per dollar expended and lowers the university's ability to solve immediate logistical problems. Also, expensive technologies, which bring prestige to hospitals and business firms, may be simply excessive costs from the point of view of immediate production. Similarly, highly professionalized consultants who bring external blessings on an organization are often difficult to justify in terms of improved productivity, yet may be very important in maintaining internal and external legitimacy. Other conflicts between categorical rules and efficiency arise because institutional rules are couched at high levels of generalization (Durkheim 1933) whereas technical activities vary with specific, unstandardized, and possibly unique conditions. Because standardized ceremonial categories must confront technical variations and anomalies, the generalized rules of the institutional environment are often inappropriate to specific situations. A governmentally mandated curriculum may be inappropriate for the students at hand, a conventional medical treatment may make little sense given the characteristics of a patient, and federal safety inspectors may intolerably delay boundary-spanning exchanges.
355
This content downloaded on Thu, 7 Mar 2013 09:41:59 AM
Formal Structure as Myth and Ceremony
maintain close alignments between structures and activities. Conformity is enforced through inspection, output quality is continually monitored, the efficiency of various units is evaluated, and the various goals are unified and coordinated. But a policy of close alignment in institutionalized organiza- tions merely makes public a record of inefficiency and inconsistency. Institutionalized organizations protect their formal structures from evaluation on the basis of technical performance: inspection, evaluation, and control of activities are minimized, and coordination, interdependence, and mutual adjustments among structural units are handled informally. Proposition 4. Because attempts to control and coordinate activities in institutionalized organizations lead to conflicts and loss of legitimacy, elements of structure are decoupled from activities and from each other. Some well-known properties of organizations illustrate the decoupling process: Activities are performed beyond the purview of managers. In particular, organizations actively encourage professionalism, and activities are delegated to professionals. Goals are made ambiguous or vacuous, and categorical ends are substituted for technical ends. Hospitals treat, not cure, patients. Schools produce stu- dents, not learning. In fact, data on technical performance are eliminated or rendered invisible. Hospitals try to ignore information on cure rates, public services avoid data about effectiveness, and schools deemphasize measures of achievement. Integration is avoided, program implementation is neglected, and inspec- tion and evaluation are ceremonialized. Human relations are made very important. The organization cannot for- mally coordinate activities because its formal rules, if applied, would generate inconsistencies. Therefore individuals are left to work out technical inter- dependencies informally. The ability to coordinate things in violation of the rules-that is, to get along with other people-is highly valued.
The advantages of decoupling are clear. The assumption that formal structures are really working is buffered from the inconsistencies and anomalies involved in technical activities. Also, because integration is avoided disputes and conflicts are minimized, and an organization can mobilize support from a broader range of external constituents. Thus, decoupling enables organizations to maintain standardized, legiti- mating, formal structures while their activities vary in response to practical considerations. The organizations in an industry tend to be similar in formal structure-reflecting their common institutional origins-but may show much diversity in actual practice. The logic of confidence and good faith.-Despite the lack of coordination and control, decoupled organizations are not anarchies. Day-to-day activities proceed in an orderly fashion. What legitimates institutionalized organiza- tions, enabling them to appear useful in spite of the lack of technical valida-
357
This content downloaded on Thu, 7 Mar 2013 09:41:59 AM
American Journal of Sociology
tion, is the confidence and good faith of their internal participants and their external constituents. Considerations of face characterize ceremonial management (Goffman 1967). Confidence in structural elements is maintained through three practices-avoidance, discretion, and overlooking (Goffman 1967, pp. 12- 18). Avoidance and discretion are encouraged by decoupling autonomous subunits; overlooking anomalies is also quite common. Both internal participants and external constituents cooperate in these practices. Assuring that individual participants maintain face sustains confidence in the organi- zation, and ultimately reinforces confidence in the myths that rationalize the organization's existence. Delegation, professionalization, goal ambiguity, the elimination of output data, and maintenance of face are all mechanisms for absorbing uncertainty while preserving the formal structure of the organization (March and Simon 1958). They contribute to a general aura of confidence within and outside the organization. Although the literature on informal organization often treats these practices as mechanisms for the achievement of deviant and subgroup purposes (Downs 1967), such treatment ignores a critical feature of organization life: effectively absorbing uncertainty and main- taining confidence requires people to assume that everyone is acting in good faith. The assumption that things are as they seem, that employees and managers are performing their roles properly, allows an organization to perform its daily routines with a decoupled structure. Decoupling and maintenance of face, in other words, are mechanisms that maintain the assumption that people are acting in good faith. Professionaliza- tion is not merely a way of avoiding inspection-it binds both supervisors and subordinates to act in good faith. So in a smaller way does strategic leniency (Blau 1956). And so do the public displays of morale and satisfaction which are characteristic of many organizations. Organizations employ a host of mechanisms to dramatize the ritual commitments which their participants make to basic structural elements. These mechanisms are especially common in organizations which strongly reflect their institu- tionalized environments.
Proposition 5. The more an organization's structure is derived from institu-
tionalized myths, the more it maintains elaborate displays of confidence, satisfac- tion, and good faith, internally and externally. The commitments built up by displays of morale and satisfaction are not simply vacuous affirmations of institutionalized myths. Participants not only commit themselves to supporting an organization's ceremonial facade but also commit themselves to making things work out backstage. The committed participants engage in informal coordination that, although often formally inappropriate, keeps technical activities running smoothly and avoids public embarrassments. In this sense the confidence and good faith
358
This content downloaded on Thu, 7 Mar 2013 09:41:59 AM
Institutionalized Organizations: Formal Structure as Myth and Ceremony
Course: Strategic management (6112)
University: Addis Ababa University
- Discover more from:
