Stanford's Organization Theory Renaissance, 1970–2000: Volume 28

In 1981, W. Richard (Dick) Scott of Stanford's sociology department described a paradigmatic revolution in organizational sociology that had occurred in the preceding decade. In Organizations: Rational, Natural, and Open Systems (Scott, 1981), he depicted the first wave of organizational theory as based in rational models of human action that focused on the internal dynamics of the organization. He described the second wave, found in human relations theory and early institutional theory, as based in natural social system models of human action but still focused on the internal “closed system.” A sea change occurred in organizational theory in the 1970s as several camps began to explore environmental causes of organizational behavior. The open-systems approaches that Scott sketched in 1981 were still seedlings, but all would mature. What they shared was an emphasis on relations between the organization and the world outside of it. The roots of these new paradigms can be traced to innovations of the 1960s. Contingency theorists Paul Lawrence and Jay Lorsch (1967) had argued that firms add new practices and programs largely in response to external social demands and not simply to internal functional needs. James Thompson (1967) argued that organizations come to reflect the wider environment and particularly the regulatory environment.

My intent in this chapter is not to review this ever-expanding body of work, which now encompasses all sorts of “new” institutionalisms applied to micro-, meso-, and macro-levels of social analysis in a wide variety of fields. Rather, I propose to stay a narrower course, focusing on the “new” organizational institutionalism that emerged at Stanford in the 1970s. To a considerable extent, this focus excludes from sustained attention the growth of world polity theory, a body of work that is closely aligned to organizational institutionalism, but that was developed somewhat independently of Scott by Meyer and his associates (for an excellent, short overview of this line of work, see Jepperson, 2002; otherwise, see Meyer et al., 1997 or Meyer, 2000). In focusing on organizational institutionalism, I will add only marginally to what has already been written. My first task will be to describe the earliest developments of this form of analysis in the 1970s and early 1980s at Stanford, since describing how research programs in organizational studies got founded at Stanford is a major theme of the present volume. After that, I will advance some ideas about how and why this research program became so influential, in so many fields of study.

This chapter reviews the origins and primary arguments of resource dependence theory and traces its influence on the subsequent literatures in multiple social science and professional disciplines, contrasting it with Emerson's power-dependence theory. Recent years have seen an upsurge in the theory's citations in the literature, which we attribute in part to Stanford's position of power in the network of academic exchange. We conclude with a review of some promising lines of recent research that extend and qualify resource dependence theory's insights, and outline potentially fruitful areas of future research.

Every paper needs a theme. Luckily, the venue defines the theme for me; how did the initial conditions at Stanford affect the development and diffusion of population ecology as a theoretical research program. I use the term theoretical research program reluctantly, especially considering the context of the department of sociology at Stanford University during the 1970s and 1980s (Lakatos & Musgrave, 1970). Nonetheless, I believe that population ecology can be usefully described as such. It is not a theory but rather a collection of theories developing over time with progressive problem shifts. There are methodological rules that define what paths of research to pursue and to avoid (Pfeffer, 1993, p. 613).

This chapter comments on organizational learning research produced by scholars who studied or taught at Stanford University during the last third of the 20th century. Challenging classical learning models, Stanford scholars have demonstrated how cognitive and social processes attenuate connections between environmental action and the lessons learned from it. They have demonstrated how goals change over time as a partial function of prior performance and the importance of temporal processes in learning rates. They have shown how rules and routines encode only imperfectly lessons learned from organizational action. Their research has deepened and enriched our understanding of organizational learning.

Stanford contributed significantly to the organizational culture movement that occurred in organization studies from 1970–2000. This chapter traces developments at Stanford and puts the contributions of its researchers and scholars in the context of the many influences that shaped the study of organizational culture during this period. In addition to the historical account, there is speculation about why the culture movement at Stanford more or less ended but might yet be revived, either by those studying institutionalization processes or by those who resist them.

The 1980s and 1990s at Stanford University were a uniquely productive era for research on organizations and labor markets. I describe three important, interconnected themes that characterize the research on organizations and labor markets that emerged from Stanford during this era: the central role of the firm in a multi-level system that determines labor market outcomes, the role of institutions in both creating and constraining labor market outcomes, and the dynamic, often unexpected, consequences of labor market outcomes. I describe the genesis and development of each theme and conclude by discussing what lessons can be learned from this era about creating an innovative and productive research culture.

When first asked to write a chapter on “Corporate Networks,” I was flummoxed by the Stanford focus. Unlike many of the other theories in this volume, where a game of word association by theory results in a roster of current or emeritus Stanford faculty members, corporate network has roots in many institutions. Indeed, institutions such as University of Chicago or Stonybrook may make a claim for being at the forefront of research on corporate networks, and University of Michigan is the current home to three of the top researchers in the area. Yet, among the core network researchers, a good number of them either spent their early faculty years at Stanford (e.g., Pam Haunschild, Don Palmer, Joel Podolny) or completed doctoral training at Stanford (e.g., Jerry Davis, Henrich Greve, Toby Stuart, Christine Beckman). And this list does not include those that came to Stanford later in their careers (e.g., Mark Granovetter and Woody Powell). Furthermore, the history of corporate network research is intertwined with many of the theories developed at Stanford during the late 1970s. To understand this influence, I begin with a brief but broad history of research on corporate networks, a history that begins somewhat earlier than 1970 and continues to the present. Then I turn to the question of Stanford's role in supporting this research stream and intellectual life more broadly.

The Stanford School of Organizational Sociology has influenced the development and direction of healthcare organizations as a field of research in several very significant ways. This chapter will provide a focused review of the major paradigms to develop from work at Stanford from 1970 to 2000, much of which involved the study of processes and structures within and surrounding healthcare organizations during this period. As a subarea of organizational theory and health services research, healthcare organizations embrace both theory-based research and applied research, and they borrow concepts, theories, and methods from medical sociology, organizational theory, healthcare administration and management, and (to a more limited extent) health economics and decision theory. The bulk of this chapter will focus on four major themes or paradigms from research on healthcare organizations that grew from work by faculty and students within the Stanford School of Organizational Sociology: Health Care Outcomes, Internal Organizational Dynamics, Organizations and Their Environments, and Organizational Systems of Care and Populations of Care Providers. Following our examination of these four paradigms, we will consider their implications for current and future debates in health services research and healthcare policy.

Most of my work focusing on educational systems – including universities, public elementary schools, private schools, and training programs in organizations – was supported by Stanford University centers and grants separate from the Training Program, for example, the Stanford Center for Research and Development in Teaching (1968–1977) and the Institute for Research on Educational Finance and Governance (1979–1986). Faculty collaborators in these studies included Elizabeth Cohen and Terrence Deal in the School of Education, and John W. Meyer, my colleague in Sociology. A number of NIMH trainees participated in these studies, including Andrew Creighton, Margaret Davis, and Brian Rowan. Other doctoral students involved in this research included Sally Cole, Joanne Intili, Suzanne E. Monahan, E. Anne Stackhouse, and Marc Ventresca.

In the late 1970s, the much beloved tradition of Asilomar began. But then, of course, it was not even located at Asilomar. Rather it was a much smaller event that was held at Pajaro Dunes. Nonetheless, it featured what ultimately became the traditional blend of informal sessions that mixed students and faculty from around the University. The most memorable conference of that time featured working papers by Jeff Pfeffer and Jerry Salancik, John Meyer and Brian Rowan, and Mike Hannan and John Freeman. Each of these pairs of authors presented fledgling work that would go on to become keystone statements for three highly influential theories: resource dependence (Pfeffer & Salancik, 1978), “new” institutional theory (Meyer & Rowan, 1977), and population ecology (Hannan & Freeman, 1977).

In their original invitation, editors Kaye Schoonhoven and Frank Dobbin urged the contributors to this volume to be substantive and scholarly in their approach to their essays. I have tried to honor their request by summarizing the results of a programmatic line of scholarly inquiry on a thorny academic problem. It is also a problem of enormous and enduring real-world importance: As the world continues to confront divisive and escalating conflicts over how to share increasingly scarce global resources, we need to have a better understanding of when and why people are willing to cooperate to solve such problems.

I received a traditional undergraduate degree in Civil Engineering from the University of Witwatersrand in South Africa. Under the very inflexible British system of higher education then in place in South Africa, my civil engineering degree allowed me just one elective in four years – either German-English or French-English technical translation. I was not allowed to enroll in courses in such “irrelevant” fields as economics or law, much less sociology.

For many years, Stanford University has had a major organizations research faculty distributed across at least four schools and numerous departments. By its existence, that faculty has recruited others of similar quality. It has attracted a strong group of students who in due course have gained their doctorates at Stanford and have populated North American, European, and Asian universities.

Cultural portraits usually begin with a description of the context, but as this material is covered elsewhere in this volume, this introduction will be mercifully brief. At any time during the last four decades, there have been dozens, perhaps even hundreds, of Stanford University faculty and doctoral students interested in studying organizations. They have been scattered across the campus, often in small groups within larger schools and departments. They have been based in the Sociology Department and the Organizational Behavior and Strategy areas at the Graduate School of Business. There were always a handful at the Education and Engineering schools, as well as a scattering of individuals doing related work in Psychology, Political Science, and Anthropology. In spite of their numbers, before the Stanford Center for Organizational Research (SCOR) was founded in 1972, many of these faculty, postdoctoral fellows, and doctoral students felt rather isolated. They had little contact with colleagues across campus who shared their interest in organizations and little collective clout when resources were being distributed.

This chapter attempts to explain why the community of scholars at Stanford University generated an unparalleled amount of highly influential theory and research on organizations in the last three decades of the 20th century.¹

I am honored to contribute to this volume on the Stanford Organization Theory Renaissance, though I must admit that I am a bit sheepish about being listed as a faculty member. I was indeed on the Stanford faculty, from 1997 to 2001. However, the experience for me was more of a developmental one in which I learned from my colleagues, who consisted of the leading lights in the sociology of organizations and organization theory generally. This period was as formative for me as was the prior period, when I was a student in the formal sense. I find it easy to point to specific ideas that I encountered during my stay at Stanford and to trace how they shaped my perspective on key questions of social and economic organization. In the following, I will discuss one example of this Stanford influence. In particular, I build on ideas developed at Stanford during the 1970s and 1980s (and which I came to appreciate during the 1990s) to make progress on a puzzle that did not occupy center stage there and then. Nothing testifies to the value of a theory or approach than its ability to generate insight well beyond the original questions for which it was originally developed.

A summer spent at Stanford University in 1973 contributed significantly to my emerging perspective on organizations and generated the spark I needed to begin working on what became Organizations and Environments (Aldrich, 1979). Dick Scott invited me to be the second visiting scholar to participate in the Research Training Program on Organizations and Mental Health, following my Cornell colleague, Karl Weick, who had done it the year before. Curiously enough, Paul Hirsch, a former colleague of mine in graduate school, was the third visiting scholar in the program. I taught an organizational theory course to a class that included Chuck Snow, Kaye Schoonhoven, and a number of Mike Hannan and John Meyers' students. I suspect that I learned as much over those three months as did the students in my course.

Two courses that focus on organizational theory are taught for doctoral students and two others are taught for Masters of Public Health students; only the former are relevant. The development and theses of macro-organizational theory are reviewed along with empirical applications to health care organizations like hospitals, nursing homes, and community mental health centers.

Those who were students in the Stanford Sociology Department at the time received first, a top-quality grounding in basic methods (using the term broadly), and second, in clear thinking. It took me long to understand how exceptional that was. For years, in academia, I did not realize how many of my colleagues and competitors lacked exactly such a grounding. I was puzzled by the combination of their hard work and low productivity. (I am retired; I can afford to tell the mean, pitiless truth.) How did this happen? First, in this case, people and personalities mattered. I do not think they always do.

Nine months later, after four days and nights on a bus, I was dropped off on El Camino Real, walked into campus with my backpack, and navigated my way to the Sociology Department, temporarily housed in three residential buildings, a volleyball net outside. Wow, now this is laid back, which was totally fine with me as a then legal resident of ski area. So I thought, until I started talking in more depth to Larry Wu, with whom I was rooming for the first few days. Larry had come from Harrison White's group at Harvard. Like others from that group (e.g., David Strang), he already had essentially completed a math major, along with several math-social science courses. My heart sank. Lucky, I thought, that Stanford is willing to give a Master's degrees to those who want to leave Ph.D. program!

We both arrived at Stanford in September 1982 to begin the Ph.D. program at the Graduate School of Business (GSB). The beginning was not auspicious; it rained heavily during orientation, an unusual event in itself, but a fitting precursor to one of the worst El Niňo's on record. By February of our first winter in California, there was one period in which it rained 60 of the prior 63 days. The cold and the wet did not dampen our curiosity or that of our cohort, however, as we began the required Organizational Behavior class with GSB Professor James March in January 1983. We emerged from the shock of the first semester of graduate school into a course that powerfully underscored the interdisciplinary nature of the doctoral program at the GSB. Because the syllabus actively engaged the literature of rational choice in making the case for behavioral perspectives, students from all disciplines were drawn into the discussion. We learned more about rational choice in the many discussions that ensued in this cross-disciplinary climate than in our graduate economics classes. More importantly, we learned through experience that the individual mind is not an adequate level of analysis to understand the dynamics of the organizations community at Stanford in the early 1980s. Only in retrospect, though, can we appreciate fully the uniqueness of that time and place, and the resulting impact of scholarship that emerged from this context. For this reason, our discussion will emphasize a situated learning perspective to comprehend the Stanford phenomenon. The resulting de-emphasis of the individual mind as the focal repository of knowledge and emphasis on interactions among actors and sources of embedded knowledge is not intended to slight the role of incredibly intelligent individuals and the stellar intellects that surrounded us. Rather, we adopt a situated perspective because it provides a mechanism for traversing the large Stanford community and its multiple levels of analysis without resorting to aggregation, dominant coalitions, or anthropomorphized learning units. Although we will confine our examples of activities and dynamics to the community at the GSB that we knew best, we also believe that other communities of practice were similar to varying degrees. The importance of these other communities will be implicit in our discussion of the role of bridges linking these dense networks of situated learning.

In retrospect, one of the most extraordinary features of the support from faculty was that they encouraged me to follow my interests rather than being concerned about making sure that I would contribute to enlarging their research agenda. I say, in retrospect, because it has only been in seeing how often graduate students are given limited options by faculty that I have understood the model that I was taught at Stanford. Each faculty member I interacted with knew that I was developing a different agenda either because of my interest in ethnography or because of my interest in different disciplines than theirs. Seymour Martin Lipset, similarly, could clearly see that I was not following in his footsteps, yet hired me as a research assistant and provided important input for my dissertation work. When I returned from doing fieldwork in Washington, DC, Joanne Martin's expertise in studying culture and narratives helped me to make sense of my data and helped provide a different perspective to the ambiguity and choice scholarship. My work was more closely related to that of my dissertation advisor, Jim March, though he was also in a position to see how my ethnographic leanings would uncover issues that required me to move in directions other than his work. Yet, he defended and supported my choice even to the point of walking me through the conundrums that arose while I was working as a policy analyst and doing fieldwork.

I was a doctoral student in the Organizational Behavior (OB) Ph.D. program in the Graduate School of Business (GSB) from 1984 to 1989 and a faithful participant in the annual Stanford Organizations Conference at Asilomar, on the shores of the Pacific. I worked under the guidance of Professors Joanne Martin, Rod Kramer, Robert Sutton, and James March. I also benefited from the support and guidance of sociology professor Richard Scott in his capacity as director of the National Institute of Mental Health (NIMH) and National Institute of Aging (NIA) Fellows Training Program in which I was a pre-doctoral fellow from 1985 to 1988. The reflections that follow are based primarily on my experience as a student during this vibrant period, although, as a current a faculty member within the School of Education at Stanford, I cannot resist drawing occasional comparisons between the organizations community then and now.

Charged with a daunting task of organizational analysis, the good Stanford graduate of my era dutifully turns for inspiration to Dick Scott's Organizations: Rational, Natural and Open Systems. It is not quite the Bible, but it has a far more useful index and bibliography. And, as a beginning, I often encourage my own students to consider the basic “elements of organizations” that Scott presents in the form of a simple “diamond” typology, originally attributed to Harold Leavitt (1965) and in the most recent edition (Scott & Davis, 2007) updated to reflect the work of Nadler, Tushman, and Nadler (1997). This typology directs attention to five key components of any organizational phenomenon: (1) the participants; (2) the formal structure; (3) the informal structure; (4) the technology; and (5) the environment. Considering each of these elements may shed some light on the Stanford experience.

When I arrived at Stanford in the fall of 1993, the university was a thriving site of organizational research. The department of sociology served as a sort of epicenter, with workshops on organizational ecology (led by Mike Hannan), organizations in the world polity (John Meyer and Francisco “Chiqui” Ramirez), and healthcare organizations (Dick Scott). In the school of education, Jim March was intriguing a new generation of students with his puzzles and wisdom. In addition to Mike Hannan's joint appointment, the Graduate School of Business featured such luminaries as Jeff Pfeffer, Joanne Martin, Jim Baron, Joel Podolny, and Bill Barnett. Slightly further afield, Ray Leavitt and Michael Fehling had begun to train engineers to think about organizational issues, as they developed computer simulations with nuanced attention to cognitive and decision-making processes. Steve Barley would join (what was then) the department of industrial engineering in 1994 and Mark Granovetter would join the department of sociology in 1995, adding fresh insights from the sociology of work and economic sociology, respectively, to what was already a firm foundation for organization studies. The umbrella organization that linked many of these efforts was the Stanford Consortium on Organizational Research (SCOR), which had been guided by Dick Scott's able leadership since 1988 and hosted an annual organizations conference at the beautiful Asilomar retreat in Monterey, California.

As I have reflected upon the last thirty years, since it was precisely thirty years ago that I started as a student at Stanford, I have wondered if there is an overall theme to how my professional career has unfolded and the role Stanford played in it. I believe Albert Bandura's (1982) paper, The Psychology of Chance Encounters and Life Paths, provides a good descriptive framework to work with. I am persuaded that at various points of time as I stood at the proverbial fork in the road, due to one chance factor or another, my decision was tipped one way. This is not to suggest that my career has been a sequence of random events; quite the contrary. While the specific fortuitous events occurred largely outside my control, my responses to them were quite systematic; some fortuitous events had lasting influence, and some even changed my life trajectory. But, what I am struck by, ex post, is that in 1973, as I was just finishing my undergraduate education in India, the ex ante probability of my ending up some years later as a professor at an Ivy League university was essentially zero. Yet, this did eventually happen.

My own work reflects an attempt to understand organizational processes as, at their core, the process of pursuing or facilitating sense-making. Organizational members make sense of complex, changing conditions. Organizational systems and organizational leaders can be seen as serving the role of facilitating or impeding sense-making (Sitkin, Lind, & Siang, 2006).

Since the late 1970s, Stanford-based research and researchers have been absolutely central to the field of organizational studies. Cohen, March, and Olsen's “A garbage can model of organizational choice,” Meyer and Rowan's “Institutionalized organizations: formal structure as myth and ceremony” (1977), Hannan and Freeman's “The population ecology of organizations” (1978), Pfeffer and Salancik's “The external control of organizations” (1978), and Scott's “Organizations: rational, natural, and open systems” (first edition, 1981) defined distinctive perspectives that shaped and continue to shape the scholarly conversation. It is hard to underestimate the influence of these authors and of the many other students of organizations who have taught and/or been trained at Stanford.

I was at Stanford from 1984 to 1986 as a post-doctoral fellow in the NIMH Organizations and Mental Health Training Program. I never thought of myself as a sociologist of organizations or of mental health. As a student of feminist sociologist Joan Acker, my interests were firmly in the area of gender inequality and work, and I went to Stanford primarily for the opportunity to collaborate with Jim Baron. I had been very much influenced by Baron and Bielby's (1980) call to “bring firms back in” to the study of work and inequality. Baron and Bielby's research on job- and firm-level gender segregation and their efforts to probe its underlying organizational dynamics seemed to offer exciting new vantage points from which to understand gender inequality in the workplace.

Dick Scott's “statesmanship” stands out as an obvious factor in explaining the Stanford phenomenon. By statesmanship, I refer to what Selznick (1957) meant by the institutional leader who plays a fundamental role in making an organization an institution that has the capacity to develop, adapt, and endure over time. Perhaps this goes without saying; Dick's statesmanship has been recognized elsewhere with the aim that he will know how much he is appreciated for his vital role.

Operating as a promising regional university well into the 1960s, Stanford witnessed a “great leap forward” in the 1970s and 1980s. Guided by the visionary leadership of its president, Wallace Sterling, and provost, Frederick Terman, Stanford began its meteoric climb into the ranks of the nation's top tier universities. This more general history has been told and retold in numerous publications (e.g., Lowen, 1997; Gillmor, 2004) and need not be recounted here.