Books and Reviews

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Organizations Evolving

[From etss.net] We are kicking off our book review feature today (February 8, 2000) with Howard Aldrich's new oeuvre "Organizations Evolving." (Click on title for table of contents) Hayagreeva Rao and Arthur Stinchcombe have read the book over the holidays for us and we are very pleased to publish their reviews on etss.net. As will be customary for all our reviews, we invited Howard Aldrich to respond to the two evaluations of his book. You can share your views and participate in a discussion of the book by posting a message at the end of the review.

Review by Hayagreeva Rao

Two decades ago, Aldrich published his classic text Organizations and Environments (1979) which helped pioneer an evolutionary understanding of organizations. In this befitting sequel, Aldrich skillfully surveys advances in organizational evolution and masterfully consolidates cutting-edge research on the processes of organizational emergence. In this gem of a book, Aldrich ranges far and wide as he assesses the twenty-years of organizational research on variation, selection and retention in the world of organizations. The roughly 1000 plus references cited in the book, many of them from the 1990’s, attest to Aldrich’s catholicity and his emphasis on the state-of-the art research in organizational evolution. This exceptional accomplishment is compulsory reading for the budding organizational researcher and the experienced scholar.

Chapter 1 provides an overview of the book and introduces it to the reader. Chapter 2 outlines the sub-processes of evolution, recounts and rebuts criticisms of evolution, and sets the stage for our understanding of evolution as a multi-level process. Chapter 3 casts evolutionary theory as a meta-theory underlying the institutional, interpretive, organizational learning, ecological, resource dependence, and transaction cost approaches to organizations. Chapter 4 unpacks how entrepreneurs create fledgling organization by pursuing knowledge and mobilizing resources. Chapter 5 asks how founders delineate the boundaries of the organization and reproduce organizational knowledge. Chapter 6 studies how members emerge out of the communities of practice that congeal around organizational tasks. Chapter 7 demarcates the scope conditions under which transformations occur and promote survival, and Chapter 8 makes ‘history’ rather than time, a key dimension for understanding population-level transformations. Chapter 9 shifts the level of discussion to the population level, and dimensionalizes the processes underlying the emergence of new populations. Chapter 10 unravels the processes that trigger the foundings and disbandings of organizations. Chapter 11 ratchets up the analysis to the level of organizational communities, and sketches the trajectory of community evolution. Chapter 12 closes the book with an invitation to scholars of organizational evolution to examine the problematic issues in the conceptualization and study of of variation, selection, and retention processes. In this last chapter Aldrich lays out a large research agenda for the years to come.

The book is meant to be read in the order of the chapters, and is a twelve-course meal with each course whetting the reader’s appetite. Some courses/chapters stand out. Chapter 4 skillfully integrates principles from network analysis, social psychology and cognitive psychology to explain how the founding process unfolds. Chapter 5 superbly contrasts how users and supporters underpin the boundaries of organizations and details the processes of reproduction in organizations. Chapter 9 is notable for the detailed discussion of how new populations emerge and become legitimated. Chapter 11 provides a very cogent account of symbiosis and commensalism in communities and contains an engaging discussion of how new communities form around technical and institutional cores.

When one juxtaposes Aldrich’s arguments with the contemporary landscape, important questions about the relationship between political change and patterns of organizational evolution come into view. During the past decade, post-socialist revolutions have dismantled state-owned enterprises, and spawned new organizational forms in the financial sectors of Central and Eastern European economies. What explains variety in variation in post-socialist countries? Are new variants built on the ruins of the old order or built with the ruins of the old order? How do revolutions affect the level at which organizational entities are selected? What explains the retention of organizations in societies convulsed in revolutions? The study of these and related questions promises to be one of the cutting edges of organizational evolution and they should be added to the research agenda articulated in the last chapter.

The book’s emphasis on the processes of emergence suggests that we also need to pay attention to the other side of the coin of organizational change - the processes of collapse. Several problems beckon organizational evolutionists - the study of schisms and splits within organizations, the analysis of contagion in bankruptcies, and inquiries into the disintegration of communities. In turn, a deeper understanding of the processes of collapse leads to a renewed appreciation of how evolutionary processes also underlie conflict and disorder in social life.

In summary, Organizations Evolving is a timely and important addition to the literature on organizational evolution. It is essential reading for all organizational researchers.

References

Aldrich, Howard E. (1979).  Organizations and Environments.  Englewoods Cliffs, NJ, Prentice-Hall.

Zablocki, Benjamin David (1980). Alienation and Charisma: A Study of Contemporary American Communes. New York, Free Press.

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Review by Arthur Stinchcombe

The immense learning of Aldrich’s book shows that there is a lot of promise in evolutionary theory applied to organizations. Let me start this review by contrasting our problem here with the problem of investigating evolutionary theory in biology.

The logic of biological evolutionary theory has itself evolved over the century and a half or so since Darwin. This means that its form is shaped by what works in that scientific niche. For example, the separation of “reproduction” into genes, mixing of genes in sexual reproduction, structural shaping of the immediate descendants’ bodies by the mix, the physiological system dependent on that structure, and the behavioral possibilities that result in the reproductive success or failure of the descendants, have little direct analogy in the development of General Motors out of a buggy manufacturer.

But the logic of investigation in biology is adapted to that chain of separations, because they provide exogeneity, the knowledge of where a particular cause came from. The first step justifies the human genome project, which would make little sense in organizational behavior. I suppose the nearest analogy is the sort of “descent trees of patents” that Podolny and Stuart (1995) work on. But we do not believe in the high level of stability of reproduction of bits of genetic information in the buggy manufacturer, nor that we could identify those genes in the Chevrolet division.

The same applies to biological niches, to which genetic forms adapt. We can sort out the grand ecological niches of desert, tropical rainforest, tundra, prairie, and so on. When we go to a desert, we look for water conserving behaviors, so water conserving structures, and so eventually water-conserving genes. Sunlight is not scarce on a desert because vegetation is sparse; there is not enough water to support dense vegetation. Therefore we do not look for how a cactus can produce an efficient panoply of leaves to get as much sunlight as possible for the least investment of wood growth, or to get wood strong enough to support so many leaves in the wind with a small weight.

At the two ends of the reproductive chain, then, the genes and the niches, we can look for exogenous causes. Variations in water and competition for sunlight are exogenous at the niche end. Variations in the genes of parents and in the pollen that gets to a cactus flower are exogenous at the genetic end. The delicate unfolding of causal structures-that makes Darwin able to untangle the tangled bank, to explore the neat fit of the flower to the body of the insect and the insect to the shape of the flower-relies on this ease of locating exogenous causes, so difficult to find in organizational evolution.

Sometimes in Aldrich we run across an elegant example where the logic unfolds neatly. He reports on Han’s study of the bifurcation of certified public accountant firms into the (then) big six versus multiple smaller ones (pp. 246-247). The big clients choose the big CPA firms because only big firms can handle the massive data review necessary. Middle sized corporations choose the particular big firms that the big clients in their industry choose, showing that the imitation that constitutes replication follows within-industry descent lines. The same selective forces apply within an industry’s niche in the capital market, for that is what auditing firms are oriented toward; different industries are different niches. The smallest firms, whatever their industry, choose smaller auditing firms, indicating that they are in a different niche in the capital market, though perhaps (by being in the same industry) the same one in the product market.

But sometimes crucial logical links are missing. An example is his analysis on p. 219 of Fligstein’s (1990) findings about the spread of multi-divisional firm organization from the 1920s to the 1980s. He notes the arguments that the selective forces toward the multi-divisional form are stronger if a corporation operates in several product markets, and has higher executives oriented to either sales or to finance (the capital market). Selective forces for multidivisional forms are evidently stronger if a corporation is in an industry dominated by that form. That is, distinctive niches in either the sales or capital markets evidently select for this form.

Thus we should, by evolutionary logic, expect that there would be niches with different forms, niches with the multi-divisional form and niches with others forms. But Aldrich’s conclusion is, “Thus, a type of transformation that began in the 1920s, when two large firms [Du Pont and General Motors, both in multiple markets and dominated by executives and board members strongly oriented to the capital market, ALS] adopted it, became a standard feature of large firms’ structures by the 1980s. From a cohort-specific practice, MDF evolved into community-wide organizational knowledge.” But this means that the selective situation must have changed as the form became dominant in its niches, so that the whole spectrum of industrial corporations dependent on the capital market adopted the form, whether or not they were in multiple markets and dominated by sales executives.

Fligstein in fact made an argument that the multi-divisional form became institutionalized in the capital market for industrial corporations toward the end of the period (and also that finance became more dominant in higher executive positions in such firms), and thus that the selective pressures did indeed change. For the capital market, at least, and for large industrial firms, there was a different niche requiring a different form of corporation in the 70s and 80s than in the 20s through the 60s.

The problem with Fligstein’s (1990) argument (and so presumably the reason Aldrich missed a crucial part) is that there are no easy exogenous causes, which we know come from somewhere else, that change the nature of the niche in the capital market occupied by the moderate to huge sized industrial corporations. And we do not know why retail chain department stores, with 40 or so divisions headed by buyers and allocated separate floor space in the stores (or separate pages in the catalogs), were under different pressures earlier. Further from the main time of origin of department stores, all such stores were selected for using multiple autonomous divisions. The departments in the tiny department store in Mount Pleasant, Michigan, where I worked in my teens, had a multidivisional form with quite autonomous buyers and separate accounting schemes for each and the whole bit. In Fligstein’s argument there is no way to measure the rainfall and the sunlight, and to know where they come from, to sort out the causal autonomy of niche forces. So the problem for us in organizational evolutionary studies seems to me to be get deeply into the physiology of the organizations in our studies, into the flows of information, goods, and activities modifying those flows.

An early study, that we have forgotten, is a wonderful example of what I think we need: Benjamin Zablocki’s Alienation and Charisma: A Study of Contemporary American Communes. We didn’t notice it much when it was published, because the population of communes had already disappeared, and because business schools do not want to know what makes communes disappear, on average, even faster than restaurants. There is extensive discussion of the contexts, the main varieties of alternative services provided for people of different needs, and the like, hinting at selective pressures. But there are also detailed studies of the networks among people within the communes, the degree of individualism of the motives for joining, the degree to which one is converted in different types of communes into someone who cares for the fate of the whole, what makes communes split into warring factions, what varieties of leaders can hold them together under different circumstances, and so on, that are shown to affect the rates of individuals quitting and communes disappearing.

That is, there is detailed (and quantitative) study of the physiology of the communes as structures, the main varieties of physiologies, and the different vulnerabilities of different forms to different sorts of physiological disruption. It turns out, for example, that the problem of turnover is quite different from the problem of the survival of the commune. For example, if a person is well-loved within a commune, he or she is considerably less likely to quit. But if everybody loves everybody, the commune as a unit is more likely to dissolve or split. Zablocki seems never to be in trouble about what is exogenous, what endogenous, for a given analysis. You can almost see the bee adapting to the flower, and the flower to the bee, and never getting lost in the tangled bank of communes growing every which way, to completely fill their little and disappearing niche.

Thus it seems to me that what organizational evolutionary studies need is an exemplar, as well as an encyclopedia, in order to become a dominant paradigm. Aldrich has provided the encyclopedia, and a fine encyclopedia it is. I propose Zablocki as the exemplar, to show us how to do network analysis, turnover analysis, survival determinants, varieties of niches in a given “industry,” and the like; a wonderful example of what fine work looks like. It took him about a decade to do it right, and then unfortunately nobody noticed. I propose that, after giving Aldrich a careful reading, we turn to Zablocki’s book and apply the standards and elegance of the exemplar to the important outstanding research questions that Aldrich raises in the concluding chapter of Organizations Evolving.

References

Fligstein, Neil (1990). The Transformation of Corporate Control. Cambridge, MA, Harvard University Press.

Podolny, Joel and Toby Stuart (1995). “A Role-Based Ecology of Technological Change.” American Journal of Sociology 100(5): 1224-1260.

Zablocki, Benjamin David (1980). Alienation and Charisma: A Study of Contemporary American Communes. New York, Free Press.

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Response to Reviewers��� Comments by Howard Aldrich

I appreciate the opportunity ETSS has given me to increase awareness of my book’s themes. Professors Rao and Stinchcombe have been generous in their description of the book’s strengths, while also suggesting issues deserving more attention. I have only a few comments to make in response.

Rao’s concise and cogent summary of the book’s 12 chapters makes an important point: it was meant to be read in chapter order. I wanted to show the applicability of the evolutionary model to multiple levels of analysis, from organizations to communities. The chapter order also reflects my emergentist focus communities are built on populations, which are built on organizations, which emerge from the actions of entrepreneurs.

Stinchcombe’s review raises two issues that bedevil all studies of organizational change, not just evolutionary ones: the problem of endogeneity, and the problem of the missing organizational physiologists. He contrasted the clear distinction between what’s exogenous and what’s endogenous in biological ecology with the situation facing social scientists. A central theme in my book is the significant role of purposive collective action and the constructed nature of meaning in social life. Cacti in the Arizona desert cannot band together and demand more rainfall, nor can they observe how succulents in other deserts have dealt with the problem of conserving what little rainfall they get. No cacti ideologues create messianic visions that enable cacti to go without the pleasures of water for short spells. In contrast, the communes Zablocki studied were not only a product of their historical time—the mid-1960s to the mid-1970s—but also shaped it. Many, but not all, communes had charismatic leaders who helped members interpret why they had (temporarily) left the larger society. As Stinchcombe noted, members flowed freely through the communes, most not staying very long, and upon their return to the larger society, saw things differently. Popular culture made icons of some communal leaders and communal vocabulary worked its way into the mass media.

Zablocki was able to make sense of the emergent complexities of the modern communal era because he did not study it at arm’s length. He began his research in 1965 and continued it until 1975, using a wide variety of data-gathering techniques: surveys, observation, gathering of documents, map-making, and analysis of census data. Fligstein, by contrast, was not alive in the 1920s when the multi-divisional form was born, and did not spend time in large corporations all across America, hanging out with corporate officers and getting them to answer his questions about what they were doing. Corporate officers’ motives, their social networks, and what they really knew about what other corporations were doing remain a mystery to us.

In a similar line of argument, Rao noted that evolutionary theorists should be paying more attention to several contemporary developments that will eventually loom large in history. He listed two areas where my perspective could be applied: patterns of change in post-socialist countries, and processes of organizational collapse. I agree. As Rao described them, post-socialist nations are virtual laboratories for the study of evolutionary processes, with events unfolding in a short enough time span that researchers can actually document the emergence of new organizational forms. With regard to organizational, population, and community collapse, I agree with his implicit premise that too much contemporary research focuses on surviving and successful organizations and forms. If organizational scholars don’t study the changes occurring in this era, 30 years from now they will confront the same problem that Fligstein faced in studying the M-form. The historical record will be incomplete and researchers will have to fill in the gaps with informed speculation.

As an exemplar, Zablocki is probably non-reproducible. Junior faculty who spent 10 years collecting their data and another five years writing it up would be heroic figures, indeed. But we need people willing to try. Such exemplars would be organizational physiologists, willing to spend inordinate amounts of time in the field, learning what goes with what—what is endogenous, what is exogenous, and when the distinction makes no sense (except dynamically). Zablocki thanked dozens of people in the forward to his book, and I suspect that traditional research models of solo practitioners and cottage industry projects must give way to teams of researchers who divide up the task of a Zablocki-type study so that it becomes manageable. Senior scholars could become the leaders of such teams and manage the process for as long as it takes to create the data needed for evolutionary analyses.

In chapter 12 of my book, as Rao notes, I pose a series of questions for further reflection, including “do our research methods overstate organizational homogeneity?” and [are we] “leaving the past behind?” A sub-theme throughout the book is the need for more organizational ethnographers. I can only hope Stinchcombe’s plug for Zablocki’s book encourages the Free Press to reprint it. Perhaps we have a potential generation of organizational physiologists enrolled in our graduate schools now, as well as a core of senior leaders, awaiting the call.

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