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University of Alberta
Two distinct vie'ws of organizational structure, configurational and
coactivational, are discussed. The conhgurational view stresses the
authoritative coordination of work, whereas the coactivational view
emphasizes recurrent patterns of interaction among participants. These
two conceptual schemes differ in their stances toward hierarchy,
power, and organizational purposiveness. The coactivational view
substitutes "invisible hand" explanations of structure for the intentionalist explanations advanced by configurational theory.
Organizations are singularly complex systems,
and it is far from obvious how their internal structures can best be described. Two distinct views
of organizational structure can be found in the
literature: the configurational and the coactivational. The configurational view emphasizes the
integration of work tasks under common managerial authority, whereas the coactivational view
stresses recurrent patterns of interaction among
organizational participants. These two conceptual schemes differ in their stances toward hierarchy, power, and organizational purposiveness.
Configurational theory advances intentionalist
explanations of organizational structure, whereas
the coactivational view is more compatible with
"invisible hand" modes of explanation.
This paper is concerned primarily with descriptive uses of these views, rather than with the
prescriptions for organizational design that can
be derived from them. The prescriptive stances
of the two views are compared briefly in the closing section of the paper.
The coactivational view opens up promising
new avenues of attack on questions which seem
largely impervious to the tools of configurational
analysis. These questions include the relationship between organizational hierarchy and mar-
early configurational writing. Its advocates advanced the idea that structure is a result of the
organization's size, technology, and environment. However, the contingency theorists continued to view structure in configurational terms,
much as the classical theorists did. For example,
Lawrence and Lorsch reformulated the division
of labor and task coordination as differentiation
and integration, remarking that these ideas
"suggest a return to the central concern of early
organizational theorists; i.e., the optimal division
of labor given a general organizational purpose"
(1967, p. 2). Although the notion of a single best
way to organize was rejected by contingency
theory, observed structures were regarded as
appropriate adaptations to technological and environmental exigencies.
Economists arrived at a configurational perspective by two quite different routes. First, this
viewpoint figured prominently in Chandler's
(1962, 1977) work on business history, particularly in his account of the transition of large U.S.
firms from functionally departmentalized structures to multidivisional structures. Chandler's
analysis stimulated the development of transaction cost economics (Armour & Teece, 1978;
Williamson, 1975, chap. 8) and provoked an extensive body of empirical research by other industrial organization economists (Caves, 1980).
Another more mathematically oriented variant of economic configurationism has developed
that has few, if any, precursors in common with
sociological organization theory. Much of this
work traces generally to the planning and market socialism debates of the 193Gs and 1940s
(Nelson, 1981; Ward, 1967, chap. 2), and more
specifically to the explosion of interest in the
economics of information during the 1970s
(Spence, 1975). Popular research areas have included identifying the limits to a firm's size
(Beckmann, 1977; Calvo & Wellisz, 1978; Williamson, 1967), explaining observed intraorganizational pay differentials (Calvo & Wellisz, 1979;
Mirrlees, 1976; Rosen, 1982), and the optimal coordinating of subunits (Cremer, 1980; Groves &
Radner, 1972; Weitzman, 1974). Each of these
studies postulates an organizational objective
56
Intellectual Genealogy
Among U.S. writers, the coactivational view
received its first clear formulation in the works of
Cyert and March (1963), March and Simon (1958),
and Simon (1976), a group often labeled the
Carnegie school, although Barnard (1938) and
the human relations school also were significant
in its development. The fundamental difference
between the Carnegie school and classical theory was the former's elevation of individual decision making to a paramount analytic position.
At an early stage, Simon argued that a scientifically relevant description of an organization
"designates for each person in the organization
what decision that person makes and the influ57
58
tional structure because the decision rules of others partially determine the consequences of his
or her actions. Therefore, to study power relations one must examine the opportunities that a
given structure of interaction affords each actor
to alter the behavior of other actors and the distribution of resources among them (Mackenzie,
1986; Ranson, Hinings, & Greenwood, 1980). In
particular, if one actor's behavior is unilaterally
conditioned by the decisions of another, an authority structure can be inferred (Dow, 1987b);
complex hierarchies are characterized by nested
power asymmetries of this type.
Systematic investigation of power relations
from a coactivational perspective requires knowledge of the decision rules of the actors, the available channels of resource and information
flow, and the nature of the exchanges between
the organization and its environment. Since an
actor's power is derived from his or her role in
an organizational structure, a theoretical account
of the decision rules that constitute this structure
simultaneously explains the power relations embedded in it. This broad view of power allows
one to map the power relations that arise under
unconventional forms of administration (the
labor-managed firm) or in settings devoid of formal hierarchy (relations of bargaining or market
exchange).
Economists often are uncomfortable with the
idea of intraorganizational power because it runs
counter to the usual assumption that market competition eviscerates any potential bargaining
power an organizational actor might seek to
exercise. However, this conventional assumption
becomes untenable if some actors control idiosyncratic physical or informational resources that
cannot be replicated on comparable terms in
the external market. The advocates of transaction cost economics have argued convincingly
that instances of asset idiosyncrasy are commonplace; indeed, they also help to explain the very
existence of business firms in a market economy
(Williamson, 1985). Accordingly, intraorganizational power relations are partially insulated from
the discipline of the market, even where the external market has a competitive structure (Dow,
1985, in press).
flicting aims of individual actors. Thus, the coactivational view demands an invisible hand explanation of organizational structure.
The concept of an invisible hand is derived
from Adam Smith's (1974) idea that market forces
could yield a coherent allocation of resources
without deliberate guidance from any economic
actor. In the present context, no connotations of
economic efficiency or social harmony are intended. Simply, the point is that often one can
explain patterns of social behavior as the unplanned outcomes of processes of social interaction (UUmann-Margalit, 1978),
An invisible hand approach at the social level
of analysis is logically compatible with an intentionalist view of individual behavior (Schelling,
1978); modem microeconomic theory provides the
most highly elaborated instance of such a blend.
Also, although invisible hand theories can have
functionalist overtones, as in economic models
of perfect competition and in some interpretations of evolutionary biology (Elster, 1983, chap,
2), they need not. Thus, theories of this type offer
an escape from the quicksands of functionalist
organization theory (Burrell & Morgan, 1979,
chap, 5), The game-theoretic concept of Nash
equilibrium, for example, constitutes an invisible hand model of social interaction in the sense
that the equilibrium position of the game is not
directly dictated by any single player. In prisoners' dilemma situations, a Nash equilibrium
can prove socially disastrous (Axelrod, 1984),
The clash between visible and invisible hand
perspectives is illustrated through controversies
about corporate culture, A configurational approach encourages the belief that top managers
can and should engineer an effective organizational culture, much as they engineer the coordination of work tasks more generally. This proposition is endorsed to varying degrees by the
contributors to a volume of readings on the topic,
titled Gaining Control of the Corporate Culture
(Kilmann, Saxton, Serpa, & Associates, 1986),
On the other hand, the coactivational view
stresses the idea that shared beliefs and values,
like the patterns of behavior fhey support, emerge
from processes of social interaction in which top
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