Organizations as Sites and Drivers of Social Action

Abstract

This chapter advances a recursive view of organizations as both sites of important social outcomes, such as inequality, persistence, change, as well as embeddedness, and drivers of them. Society and people configure organizations, and organizations shape and reproduce society and the lives of people. We illuminate the mechanisms through which these relations co-evolve, highlighting four bundles of social processes that operate inside and outside organizations: (1) discrimination and formalization, (2) institutionalization and imprinting, (3) socializing and mobilization, and (4) learning and access. We contend that organizational theory offers insights to many sociological subfields, and we encourage scholars across the discipline to re-engage with organizational analysis.

Full text

Organizations as Sites and Drivers of Social Action,
Chapter 14 in Handbook of Contemporary Sociological Theory
Seth Abrutyn, editor, Springer Publishing, forthcoming
Walter W. Powell1 and Christof Brandtner2
Abstract: This chapter advances a recursive view of organizations as both sites of important
social outcomes, such as inequality, persistence, change, and embeddedness, and drivers of them.
Society and people configure organizations, and organizations shape and reproduce society and
the lives of people. We illuminate the mechanisms through which these relations co-evolve,
highlighting four bundles of social processes that operate inside and outside organizations: 1)
discrimination and formalization, 2) institutionalization and imprinting, 3) socializing and
mobilization, and 4) learning and access. We contend that organizational theory offers insights to
many sociological subfields, and we encourage scholars across the discipline to re-engage with
organizational analysis.
14.1 Introduction
Organizations generate power, employment, prestige, identity, contacts, and income. A
person's life chances are shaped by the kinds of organizations he or she is associated with, and
how well or poorly those organizations perform strongly affects the distribution of wealth in
society. Friendships are formed in organizations, and biographies molded by organizational
affiliations. Organizations are tools for shaping the world. And the gains that accrue from
improving organizational performance and learning from successes can be enormous, just as the
failures of organizations can damage lives and communities. Both success and failure change the
probabilities that certain courses of action will occur.
Organizations are rarely powerful enough to simply dictate outcomes, in part because
they are simultaneously both sites and drivers of action. As sites, organizations are the arena in
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
1Walter W. Powell
Stanford University
California, USA
woodyp@stanford.edu
2Christof Brandtner
Stanford University
California, USA
cbrandtner@stanford.edu!

which debates occur, struggles take place, and identities are formed. As drivers, organizations
alter the odds that certain things get done. The leaders of organizations navigate particular paths,
represent interests, and signal the importance of certain views. We use this dual imagery of sites
and drivers to organize our discussion of the literature.
The sociology of organizations has a distinguished pedigree, tracing back to Max Weber
and Robert Michels, and running through such luminaries as Peter Blau, Michel Crozier, Alvin
Gouldner, Robert Merton, and Phillip Selznick. Collectively, these scholars produced touchstone
portraits of 20th-century organizational life. The 1970s and 1980s welcomed new theoretical
perspectives with the writings of Michael Hannan, John Meyer, Charles Perrow, and Richard
Scott. Today, however, the study of organizations has migrated out of sociology departments and
into professional schools of business, government, education, and law. This development has
brought ideas into a wider orbit and led to more engagement with the world of practice, but it
also comes at a cost. Core areas of sociology have lost contact with, and enrichment by, an
organizational perspective. Our goal in this chapter is to re-establish those links and re-connect
with processes that shape and stamp the lives of people in organizations and reproduce larger
patterns in society. We intend the chapter to be of interest to sociologists in general, and we hope
that it stimulates organizations researchers to ask questions outside the confines of their
subfields.
14.1.1 Sites and drivers
We define an organization broadly as a purposeful collective of people, operating with
formal structures and perceived boundaries that distinguish it and its members from the wider
environment and draw a distinction between members and external stakeholders. Organizations
are made up of individuals pursuing a common goal, such as producing a good or service or

advocating for some cause. Organizations usually also display a certain level of formality, such
as being registered with the government and having documented rules and regulations. In this
sense, organizations form the social context in which people work, volunteer, or lead. This view
of organizations underlies most economic and behavioral theories of firms, which are interested
in understanding the day-to-day events of organizations, such as deciding between making or
buying a component part of the final product, improving the motivation of employees, or
determining what inhibits or stimulates careers.
Organizations can also be seen as discrete entities that are exposed to a social
environment of their own; market institutions, the state, the professions, and society at large
constrain and enable organizations in fulfilling their mission. From this ‘open systems’ point of
view, the individual actions of people are less important than what they amount to on the
organizational level. The open-systems view emphasizes different social processes: people are
busy responding to and negotiating external pressures, as well as entering into transactions and
collaborations with other organizations and individuals. Consequently, theories associated with
organizations as an open system attempt to measure the implementation and diffusion of
organizational practices, competition and collaboration between organizations, and the
comparative status, power, and prestige of organizations.
As the boundaries between organizations and their environment, and sometimes even
between two organizations, are often porous, a clear-cut distinction between the internal and
external world of organizations is hard to make. Many organizational activities also cross the
boundaries of the organization at some point. For instance, a press release is drafted, circulated,
and authorized by people internally before eventually representing the organization to its external
audiences. On the other hand, many products—from cars to medical drugs to apps—go through

extensive market research with potential clients outside the organization before the assembly
lines start moving. This feature of organizations is particularly evident in the following section
on networks. Consequently, organizations have significance for sociological theory from both
perspectives: as sites of social action and as drivers of it.
Our goal in this chapter is to illuminate the processes through which these recursive
relations occur. To do so, we introduce important properties of organizations as nouns, and the
processes and causal mechanisms of organizational life as verbs.
14.1.2 Verbs and nouns
Most overview essays, as well as textbooks, on the sociology of organizations start with
the viewpoint that it is a field typified by contrasting theories and lines of research. The ‘theory-
group’ approach to surveying the literature has persisted for several decades. This pedagogical
strategy has provided students of organizations with a good deal of insight, as well as notable
texts by Charles Perrow (2014[1972]) and Richard Scott (2013[1995]). A number of handbook-
type chapters also survey the field by making stops along the way at various theory communities.
We think the time is right to try a different approach. Rather than emphasize differences
among rival theoretical perspectives, we want to stress commonalities. Moreover, in lieu of
examining the literature at a high level of abstraction and discussing only disembodied things
referred to as organizations, we want to bring the varied world of organizations to life.
Contemporary studies have been conducted in hospitals, restaurants, social movements, biotech
firms, investment banks, call centers, and factories. But this rich diversity is elided in most
reviews, which focus only on particular theoretical approaches that deal with highly general
statements about organizations.

Our attention is directed toward processes that occur in different kinds of organizations.
We emphasize that organizations are the locus where many of the critical activities of modern
society take place. Organizations compete, collaborate, create, coordinate, and control much of
contemporary life. Consequently, it is not surprising that the sociology of organizations spills
over into related subfields, including public administration, medicine and public health,
education, industrial engineering, business history, and international business.
We posit a handful of critical processes, or mechanisms, that we argue are at the center of
contemporary organizational research and are attended to by scholars of varied theoretical
orientations. These include 1) discrimination and formalization, 2) institutionalization and
imprinting, 3) socializing and mobilization, and 4) learning and access. Using these phenomena
as the lens through which to view the field has several distinct advantages. One, we will show
that these ideas come from multiple theories and that this attention unites rather than fractures
the field. Two, we discuss the varied methods that have been used to study these phenomena and
again highlight the complementarities of different approaches. Three, we describe the kinds of
organizational settings in which these phenomena have been studied, illustrating the wide
purchase of organizational research. We summarize the processes we cover in Table 14.1.
Our approach to reviewing the organizational theory literature was iterative. We started
inductively by looking at the core themes of organizational theory articles published in major
journals over the past twenty-five years, using methods from computational linguistics. The
emerging themes reflected the field's conventional theoretical perspective, as well as the types of
organizations studied.
These topic models, or linguistic clusters, were dominated by nouns and adjectives rather
than verbs, and they obscured the mechanisms associated with the various perspectives.

Following the recent turn in social theory to focus on mechanisms (Hedström 2005; Hedström
and Bearman 2009; Padgett and Powell 2012), we chose to focus on processes that cut across
research schools. Although each of the eight dynamics that are at the center of the chapter is
useful for predicting multiple outcomes, we posit four primary outcomes associated with the
mechanisms: inequality, persistence and order, change and disorder, and networks and relations.
Because we see these attributes as central to sociological inquiry at large, we structured the
chapter in accordance with the four outcomes. We are mindful of the theoretical origins of these
mechanisms, but draw largely on recent, empirical research about a variety of organizational
forms to illustrate the processes.
14.2 Organizations as Equalizers and Stratifiers
Organizations are often considered the great equalizers of modern civilization. Weber,
one of the founding fathers of contemporary sociological theory, described the ideal-typical
organizational form—bureaucracy—as a champion of both reliability and equality. By adhering
to the rules of law and merit, corporate and public administrations could level social differences.
Even though bureaucratic organizations are often complicated by informal relationships among
colleagues (Blau 1955), influences that are often antagonistic to hierarchical structures (Dalton
1959), administrative arbitrariness is limited by both the primacy of expertise and the
impersonality of the office. Despite the shortcomings of bureaucracy, equality is one of the core
promises of complex organizations today. Many people regard universities as escalators to social
mobility, see the armed services as a vehicle for upward mobility for racial and ethnic minorities,
and perceive corporations as the manifestation of meritocracy. Thus Weberian bureaucracy, in
theory, is the backbone of democracy and fairness.

That promise has often been belied by reality, however. Organizations are also the locus
of various mechanisms of stratification. Firms, in particular, contribute to unequal income
distribution and social hierarchy, through steps ranging from hiring to wage negotiations, gender
and racial segregation of jobs, promotions, and firing.
Organizations reinforce gender and racial hierarchies, even when their clients are diverse,
and such biases can inhibit the kinds of clients and employees that are subsequently attracted to
companies. A 2015 survey by Page Mill Publishing of 257 US venture capital firms identified a
total of only 403 women involved in the industry. Women are less likely to apply for jobs at
venture firms with no female employees, and female entrepreneurs are less likely to approach
all-male firms for funding. Similarly, a 2014 survey by the National Association for Law
Placement revealed that only 5.6% of US lawyers who hold top leadership positions at law firms
are non-white. And fewer than 2% of law firm partners are African-American. Black lawyers
operate in a profession that is one of the country's least racially diverse (Rhode 2015), despite
growing demands from clients to see more diversity.
Baron and Bielby (1980) depicted the organization of work as a primary mechanism of
socio-economic stratification, in both how workers are stratified inside organizations and how
organizations are stratified in the market: “If firms are indeed ‘where the action is,’ then social
scientists interested in the structure of social inequality should find the vast literature on complex
organizations illuminating” (Baron and Bielby 1980, 748).
Contemporary empirical research has demonstrated that organizations from all walks of
life, from daycare centers to research universities, contribute to the way society is stratified. Two
particular organizational processes through which organizations shape societal outcomes are
formalization and discrimination. Formalization (e.g., the introduction of written rules of

conduct, normative codes of ethics, or policies) obviously has important implications for social
outcomes. If hiring, for instance, is regulated by formal criteria and overseen by labor unions,
organizations can be assumed to lead to a leveling of social hierarchies (Perrow 2014[1972]).
Equal employment opportunity (EEO) legislation, for example, is meant to restrain
discrimination in the labor market by targeting organizations (Dobbin 2009), and workplace
policies aim to reduce work-life conflicts, for instance by improving employees’ schedule
control (Kelly, Moen, and Tranby 2011).
Discrimination, in turn, may play out on the individual level. One example is racial
discrimination among police, which has been shown to be a result of implicit biases against
African-American men (Eberhardt, Goff, Purdie, and Davies 2004; Saperstein, Penner, and Kizer
2014). Another is the baseball field, where umpires favor white over black pitchers in spite of
high levels of scrutiny from players, fans, and commentators (Kim and King 2014). But once
sorting and exclusion become organizational practices, they can reproduce and persist regardless
of the intent or interest of any of the individuals involved. In organizations, institutionalized
discriminatory practices produce persistent and ever-increasing inequality through the process of
accumulative advantage, which Merton (1968) famously described as the Matthew Effect: high-
status actors stay on top because they are rewarded disproportionally for their good performance.
As a result, those at the apex of a social order pull further away from those in the middle or at the
bottom. Once a hierarchy—one of the constitutive elements of a bureaucracy—exists, the status
order can exacerbate societal segregation. This is true for individuals in organizations as well as
for organizations themselves. Sharkey (2014), for instance, shows that investors judge firms in
higher-status industries less harshly than those of lower rank when the firms restate their
earnings because of some form of wrongdoing.

14.2.1 Organizations as sites of inequality
Typically, organizational practices are not intended to introduce bias against particular
groups of people, but they may have that unintended effect. As one illustration, Castilla and
Benard (2010) find evidence for ‘the paradox of meritocracy.’ The authors asked MBA students
to reward the performance of fictitious employees and then randomly manipulated the
descriptions of the corporate setting. Study subjects who made decisions on behalf of firms with
more meritocratic corporate values tended to distribute rewards based on gender rather than on
talent and performance. The authors speculate that ‘moral credentials’ stemming from a formal
commitment to meritocracy may have enabled prejudiced behavior. Their finding shows that
“gender and racial inequality persist in spite of management’s efforts to promote meritocracy or
even because of such meritocratic efforts” (Castilla and Benard 2010: 544).
Biased behavior in organizations is by no means limited to salary, but can even affect
where people can work. United States Department of Labor agents consistently discriminate
against Latin American green card applicants and favor applicants of Asian descent (Rissing and
Castilla 2014). The authors find that this bias is much smaller in a quasi-random set of audited
cases, in which more performance information is available to the agents. This finding suggests
that the bias against some applicant groups is not the result of the agents’ own preferences
regarding certain ethnicities, but more likely the outcome of statistical bias introduced by a lack
of information. DoL agents, Rissing and Castilla conclude, unlawfully—but also unknowingly—
use nationality as a proxy for performance in the absence of more detailed information. In this
case, the organization of the application process gives rise to opportunities for discrimination that
would be absent if agents had access to more detailed information. Rissing and Castilla’s study is
a good example of how larger societal trends such as prejudice against immigrants from certain

nationalities, which are usually believed to operate at the individual level of analysis, shape
social outcomes through organizations.
Sterling (2015) sought to understand how variation in social position can shape
workplace opportunities. She studied the influence of individuals’ social connections at the time
of organizational entry on the subsequent formation of ties within the workplace. In a study of
new business and law professionals, she found that individuals with an initial advantage in social
ties formed more extensive networks post entry than those without such an advantage. But when
there was clear evidence about the accomplishments of new hires, network formation was
moderated by ability.
Another illustrative case is Fernandez’s (2001) quasi-experimental study of a food
processing firm before and after a retooling. The study investigates the black box of
technological changes that underlie skill-based bias explanations of wage inequality (Autor,
Katz, and Krueger 1988; Card and DiNardo 2002). By studying one organization in unusual
detail, Fernandez illuminates how an endogenous technological shift leads to wage inequality,
rather than treating technological change as a residual variable that may be due to self-selection.
Even though Fernandez links increases in wage inequality to the increased complexity of tasks, a
result consistent with skill-based wage bias, he finds that the actual reason for increasing
inequality is organizational turnover. There are significant wage differences between stayers and
leavers: high-wage stayers (mostly electricians) received a wage increase, whereas low-wage
leavers were replaced with even-lower-wage entrants. In this case, bureaucratic structures—
unionization and a seniority-based pay scale—rendered the stayers better off.
14.2.2 Organizations as drivers of inequality

Particularism is not always purged through organizational structures; inequalities
following from discrimination are a problem in hiring and firing alike. In some cases, such as
Rivera’s (2012; 2015) study of cultural matching in the hiring process in elite professional firms
and Kalev’s (2014) research on the effects of corporate downsizing on workforce diversity,
managers are drivers of larger social inequity.
Rivera (2012) studied how employers made decisions about new hires based on fit; she
conducted extensive interviews and observations in investment banks, law firms, and consulting
firms. She finds that behind the closed doors of hiring committees, skills sorting—hiring based
on competence—is frequently supplemented by cultural matching—hiring based on cultural
similarity. Such homophily occurs not only because formal evaluation criteria emphasize fit
between employee and company, but also because decision-makers evaluate performance
through a cultural lens that they are familiar with and therefore prefer candidates from the same
social backgrounds. Those doing the hiring establish an emotional connection with culturally
similar applicants. “Whether someone rock climbs, plays the cello, or enjoys film noir may seem
trivial to outsiders, but these leisure pursuits were crucial for assessing whether someone was a
cultural fit” (Rivera 2012: 1009). Through homophily, even highly formalized hiring procedures
can reproduce social segregation.
Organizational procedures and bureaucratic formalization are therefore not a guaranteed
remedy for inequalities. Kalev (2014), in a mixed-methods study of 327 firms from 1980 to
2002, investigated how formal rules and managerial accountability affect gender and racial
inequality in light of corporate downsizing. She finds that some forms of formalization—
particularly restricting layoffs to people with certain lengths of tenure and in certain positions—
in fact exacerbate the effects of downsizing on workforce diversity because recent hires are more

likely to be women and minorities. In contrast, layoff rules that are based on performance
evaluations improve the prospects of black and female managers. Moreover, both managerial
discretion and reviews by an external attorney can offset the negative effect of formal rules on
the diversity of employees. In short, “organizational structures and institutional dynamics,
coupled with executives’ accountability and agency, play an important part in shaping
inequality” (Kalev 2014: 129).
14.3 Organizations as Standardizers and Monuments
The social forces that give rise to social arrangements are often different from those that
hold them in place (Stinchcombe 1968). Yet organizational dynamics are important for both: as
much as organizations can determine and create societal outcomes, they can solidify social
relationships and standardize practices.
In fact, rigid organizations can be inadvertent anchors of the status quo. The role of
organizations in the reproduction and stability of social settings and practices is particularly
central to institutional theory. In that research program, the taken-for-grantedness of certain
behaviors is seen as the source of persistence of culture and structure (DiMaggio and Powell
1983). Zucker (1977) cites “some sort of establishment of relative permanence of a distinctly
social sort” as the primary characteristic of institutions; her view of institutionalization highlights
that institutionalization is both a property variable (the fact that something is considered real) and
a process (that meanings and taken-for-grantedness of actions change). Taken-for-granted norms
are a strong form of conservation; for example, most people do not even consider questioning the
fact that they have to go to work in the morning, and going to work requires no justification vis-
à-vis others (Berger and Luckmann 1966; Colyvas and Powell 2006). But what is considered
‘normal’ also depends heavily on core sociological categories, such as class, race, or gender. For

instance, women are evaluated less favorably when they take on stereotypically masculine jobs
or work above-average hours because of prescriptive norms about how women ought to behave;
and in some areas the working class might be expected to work two or even three jobs to make a
living (Heilman 2001; Ely, Ibarra, & Kolb, 2011). Such norms limit people’s range of action and
create realities and routines that are difficult to disrupt.
At the same time, the rigidity of social hierarchies is directly linked to the fact that social
structure can hold people and organizations in place. Organizations’ limited ability to alter their
realities arbitrarily is a fundamental assumption of the population ecology paradigm in
organizational theory. For organizations, such inertia, or difficulty in changing, has internal as
well as external causes (Hannan and Freeman 1984). Sunk costs, political contention, and habits
restrict change inside organizations, and regulative and economic trade barriers as well as social
norms lock whole industries within powerful constraints.
Inertial forces are particularly important for the reproduction of social orders because
organizations are strongly influenced by the social context at the time of their founding. Society
leaves deep marks on organizations. Through such imprinting, social arrangements can
subsequently become extraordinarily persistent (Stinchcombe 1965). Stinchcombe illustrated his
classic argument about the enduring influence of the social context at the time of an
organization’s founding by showing that the labor supply at the founding of various firms—from
farms to construction companies— deeply affected how they were staffed much later. This
observation applies equally to modern-day organizations such as Silicon Valley start-ups. In a
study of 100 technology ventures in California, Baron, Hannan, and Burton (1999) show that the
founder’s premises about employment relations are a better predictor of the current
organizational model than the views of the current CEO, even after the founder’s departure.

Taken together, institutionalization and imprinting are the fabric that weaves together and
reproduces societal relations, for both good and ill. Organizations help to crystallize a status quo
by copying wages, quotas, and policies from purportedly successful role models and relying on
routines that invoke the authority of tradition. Organizations also create standards for what is
considered normal, such as how much more a CEO can earn than his or her employees, or to the
degree to which citizens can participate in the formation of public policies.
14.3.1 Organizations as sites of persistence
Institutionalization (and de-institutionalization) is not a uniquely organizational process,
but it frequently becomes manifest in organizational practices and routines. Practices initially
adopted out of contingent circumstances or for sensible political or economic reasons can enter
the standard repertoire of organizations, regardless of their specific champions or function
(Tolbert and Zucker 1983, Colyvas and Powell 2006). The idea of institutionalization—and
especially decoupling of ceremonial structures and actual practices—may explain why many
reforms hardly change the daily activities in organizations (Meyer and Rowan 1977; Bidwell
2001; Hallett 2010).
The similarity of structures across organizations and over time is not just a result of the
invisible hand of culture: myths about what behavior is proper and rational can be reflected in
such mundane things as people’s professional education, the criteria of performance evaluation,
codes of ethics, or even binding laws (Scott 2013). Institutionalized ideas can travel far and wide,
despite (or because of) vague labels such as ‘managerial reform’, ‘accountability’, or
‘sustainability’ (Czarniawska-Joerges and Sevón 1996; Bromley and Meyer 2013). But empirical
research has shown that institutional myths are not merely hot air. In various cases they can
become manifest in organizations.

Institutionalized myths may constrain change by becoming incarnate in individuals and
organizational culture. An apt example is Hallett’s (2010) ethnographic study of teachers’
compliance with accountability reforms at a public elementary school. Hallett (2010:53)
observes a dynamic that he calls recoupling, “creating tight couplings where loose couplings
were once in place.” Put simply, the ceremonial accountability structures that enhance public
legitimacy can become manifest in the daily practices of the people inhabiting organizations. In
this case, the hiring and managerial approach of a determined school principal transformed a
previously ceremonial commitment to accountability into a new classroom reality. The
disruption of teachers’ autonomy and routines led to uncertainty, turmoil, and even political
mobilization. By focusing on the local, micro-level dynamics of accountability reform in
schools, Hallett shows that recoupling of institutionalized myths can create resistance and
ultimately alter the legitimacy of reform endeavors. What began as reform momentum ended up
in a morass of ambiguity and frustration.
Turco’s ethnographic investigation into Motherhood Inc., a for-profit company that
provides services to young mothers, illustrates that institutional processes also constrain change
through organizational culture. As the firm’s CEO put it, its business model was built on the fact
that mothers’ “stress is lucrative” (Turco 2014: 390). She also observes decoupling between
commercial practices—the marketing and sales of products to a vulnerable target group—and the
euphemistic discourse surrounding the business. By posing as the ‘trusted advisor’ to young
mothers, Motherhood Inc. could gain public legitimacy for filling the supportive role of friends
and family with ‘child development professionals’—for a price. But the sugarcoating trickled
down into organization culture and was co-opted by lower-level employees. In turn, this led to
increasing resistance to the firm’s perceived ruthless profit-making, surprisingly from the

company’s own employees. In one case, an employee even told a customer not to “waste money
on [the company’s] products” and to buy a swaddle blanket at a box store instead (Turco
2014:397). Events like this one undercut the company’s profitability and ultimately led to layoffs
and business failure. Hallett’s and Turco’s studies show that institutional myths and discourse
can constrain organizations and ultimately restrict societal change, be it the push for classroom
accountability in education or market-taking services intruding into the personal realm of
motherhood.
The power of institutional myths to create tangible constraints for organizations and
ultimately lead to the standardization of structures and practices is apparent not only in micro-
level studies. The phenomenon of rankings, ratings, and awards and how they standardize
organizational behavior to fit institutionalized understandings of performance has been widely
studied (Timmermans and Epstein 2010). Espeland and Sauder (2007), drawing on a series of
interviews with officials in law schools throughout the United States, demonstrate that U.S. News
and World Report rankings have introduced and materialized standards for law schools that have
astonishing behavioral effects. Law school officials, despite widespread skepticism about the
utility and methods of the rankings, react to evaluations by resorting to similar admission
practices, pushing students to enter private practice over public service because of higher starting
salaries, and re-classifying students to appear in a better light. Rankings alter how legal
education is perceived through both coercion and seduction (Sauder and Espeland 2009).
Bromley and Sharkey (2014), in a study of US firms’ responses to ratings of environmental
performance, find not only that rankings have direct effects on organizations; firms whose peers
are ranked also tend to reduce their emissions of toxic pollutants in certain contexts. Firms in
highly regulated industries decrease their emissions as more of their peers are rated, even if they

are not evaluated themselves. These two studies, and a host of related research, suggest that
rankings and ratings can have direct and indirect effects on the behavior of organizations, leading
to new standards of environmental or educational management that are dictated neither by the
law nor by market dynamics.
14.3.2 Organizations as drivers of persistence
As the studies above illustrate, social reform is often inhibited and shaped by how people
and practices inside organizations represent larger social trends. A different perspective on the
fixity of social orders sees organizations as carriers of practices through time and space instead.
As Marquis and Tilcsik (2013) point out, organizations (as well as organizational collectives,
building blocks of organizations, and individuals) can go through various sensitive periods that
make them particularly susceptible to influences of the organizational environment. In light of
the many inertial forces that prevent organizations from changing at the discretion of policy
makers and managers, organizations can become monuments (or museums) of the past.
One insightful study of the tenacity of social relations is Phillips’s ecological account of
the genealogies of gender hierarchies in firms. Why does workplace discrimination—and
inequality at large—change so little? Using longitudinal data on established law firms and their
offspring ‘progeny firms’ in Silicon Valley, Phillips (2005) finds that many newly founded firms
copy the gender hierarchy of existing firms. They do so as founders import workplace routines,
including flexible work schedules and part-time employment, from their previous employers to
their new companies. Such copying can be both positive and negative. For example, having
worked alongside high-status women in previous positions tends to improve the views of new
founders about the legitimacy of female leaders. Compared to newly founded firms,

organizations with parental ties to Silicon Valley law firms with established female leadership
are more likely to have women in partnership positions.
Johnson’s (2007; 2008) analysis of the famous Paris Opera vividly illustrates the power
of persistence. Johnson develops a theory of cultural entrepreneurship in order to unpack the
mechanisms that underlie the observation that organizations reflect the social, economic, and
technological context of their creation. Her argument highlights that this process of imprinting
involves critically thinking people activating and recombining the resources available at the time.
Her description of how the poet Pierre Perrin founded the Paris Opera in the 17th century
illuminates the resilience of history. Drawing on organizational models available at the time of
Louis XIV, Perrin was able to secure funding for the foundation of an opera modeled after the
prestigious royal academies, with elements of a commercial theater. But the Opera also persisted
after the French Revolution. Thus, as a second step, imprinting also includes the reproduction of
historical elements at a later time, which implies that inertia and related dynamics can
“reproduce the organizational status quo” (Johnson 2007:121). The opera’s properties of a
commercial theater, for example, helped it survive the French revolution, when the royal
academies were abolished. Throughout the process, the political goals of the authorities and
stakeholders were as important for the outcome as the creative recombination of established
organizational forms by the cultural entrepreneur, Perrin. This century-old mélange of zeitgeist
and interests still shapes French culture and the panorama of Paris today, a reminder that social
history undergirds contemporary society.
14.4 Organizations as Movers and Shakers
In the previous section, we argued that organizations often constrain societal change. But
organizations can also be ‘movers and shakers’ of society. In myriad ways, organizations can

enable social change and enhance people’s life chances. On the micro- and meso-level,
organizations help to perform tasks that invigorate and advance society. People in organizations
coordinate the creation and enforcement of rules and regulation, be it under the roof of
parliaments, the courts, or police departments (McPherson and Sauder 2013). Complex tasks
exceeding the capability of any single person, from producing movies full of special effects to
the creation of ever-smaller semi-conductors, are performed in organizations. On the macro-
level, too, movement and fluidity characterize organizations. Ventures—both business start-ups
and social enterprises—seek to disrupt the status quo and to create innovation and change.
Countless organizations, especially though not exclusively nonprofits, are explicitly dedicated to
improving social mobility and facilitating exchanges across nations, cultures, social classes, and
generations.
Organizations can make the social manageable. In contrast to our previous discussion of
formalization as a mechanism through which organizations can reproduce inequalities, changing
society does not necessarily require the introduction of new bureaucratic rules or purposive
structures. Chen (2009) provides a vivid account of an organization that manages to coordinate
without creating order: the Burning Man organization (BMO) as an enabler of chaos. Burning
Man is an arts festival with almost 50,000 annual guests in the Black Rock Desert in Nevada.
Over the course of ten years, Chen observed the growth and change of this volunteer
organization that accomplishes the seemingly impossible. BMO manages an anti-commercial,
quasi-anarchic festival and sells tickets for an event that operates strictly without monetary
exchanges. The organization coordinates various complex tasks, from recruiting and training
volunteers to dealing with permits, media inquiries, and the police, and leaves no trace once the
festival is over. Organizations can also have unintended positive consequences on social life.

Small’s (2009) study of a childcare center in New York City illustrates the important
ramifications of mundane tasks, ranging from children’s birthday celebrations to field trips, on
the creation of social capital. The encounters between parents, Small finds, lead to unexpected
and rewarding social ties, and thus unanticipated network gains accrue from common
experiences at schools and daycare centers.
In contrast to the rigidity of ideal-type bureaucracy, Small’s and Chen’s cases illustrate
the versatility of organizations in catalyzing, supporting, and maintaining robust action in
society. It would be misguided to portray organizations only as the guardians of the status quo.
Societal progress is a frequent goal and regular outcome of action in and around organizations—
whether intended or not. Organizations can act as catalysts of change on various levels of
analysis. Within organizations, mundane social processes—such as socialization into roles and
the routines of problem-solving—allow for the coordination of complex and difficult tasks
(Rerup and Feldman 2011; Winter 2013). Organizational routines are both generative, in that
they make complex activities possible, and performative, inasmuch as they enable responses to
emergencies (Feldman and Pentland 2003). Consider the delicate interplay among surgical teams
or in hospital emergency rooms; all these coordinated efforts are made possible because of
socialization into routines (Edmondson, Bohmer, and Pisano 2001). Nevertheless, fumbles with
patient handoffs between medical shifts are, sadly, a leading cause of death in hospitals, and they
indicate deficient routines (Cohen and Hilligoss 2010; Vogus and Hilligoss 2015).
Organizations are also involved in the mobilization of change. This is true not only in the
important but exceptional cases of activists targeting and influencing firms with protests and
boycotts (McDonnell, King, and Soule 2015; Bartley and Child 2014; King and Soule 2010).
Social movement organizations create opportunities for the invention of new technologies and

solutions to social problems, as illustrated in studies of the creation of consumer watchdogs (Rao
1998), co-operatives (Schneiberg, King, and Smith 2008), wind energy (Sine and Lee 2009), and
soft drinks (Hiatt, Sine, and Tolbert 2009). On a more mundane level, the movement of people
between organizations and the ideas they carry around in the course of their careers are a major
source of change and its diffusion in society.
14.4.1 Organizations as sites of change
One important organizational process that enables action in organizations is coordination,
that is, a set of interactions that allows the completion of a larger task (Okhuysen and Bechky
2009). Organizational theorists have long been preoccupied with coordination problems. Coase’s
(1937) famous essay on the nature of the firm contends that the very existence of bureaucracy is
tied to the cost advantages of coordinating economic changes within firms rather than through
the market. Chandler’s (1977) seminal explanation of the rise of professional managers in the
United States argued that technological change required more sophisticated coordination of tasks
and people within capitalist enterprises. Organizational sociologists have criticized these
arguments for their limited understanding of organizational environments, the role of bounded
rationality, and social network effects (Granovetter 1985; Scott 2013). Nevertheless, sociologists
concur that the coordination of social action is a central organizational task. Organizations and
their participants can create order out of chaos and render difficult situations manageable, by
providing rules and infrastructure for challenging situations and problems and by establishing a
basis for members’ socialization into specific roles.
Research on organizations as diverse as film crews and police teams vividly illustrates
the social processes that enable the coordination of highly complex tasks. Bechky (2006:4), in a
comparative ethnography of four film sets, shows that temporary organizations can be structured

through “enduring, structured role systems whose nuances are organized in situ.” Even though
the film crew works on a set for only a few days and does not necessarily undergo any formal
training, the work gets done consistently and layoffs are rare. Bechky argues that roles, not swift
trust or formal rules, allow coordinating complex tasks. Socialization into roles as diverse as
electricians (called gaffers) and cameramen commonly occurs through everyday interactions,
such as reinforcing appropriate behavior by saying thank you, making a joke to lower-status
workers, and giving polite feedback.
Okhuysen (2005) studied Special Weapons and Tactics (SWAT) police teams and found
that their professional, coordinated behavior is largely based on behavioral routines. SWAT
teams are deployed in situations in which highly concerted action is required. For members of a
special unit, organizational arrangements at various levels introduce “sets of actions by
individuals that make up a larger unit of performance that repeats over time” (Okhuysen
2005:140). Routines, such as how to enter a building dynamically, are introduced through a
common ‘basic school’ training at the beginning of the career, adapted in the context of each
specific SWAT group, and then continuously rehearsed in the group to refresh the core
knowledge. In addition, specialized schools allow members to learn new practices, such as
controlling crowds or handling explosives, to introduce them to the group. Okhuysen also
observes that SWAT team members organize the routines in bundles of coherent practice and
hierarchies of more or less preferred routines. His research highlights that the complex
interrelated tasks that define coordination can be completed only if individuals learn a common
core of routines and practice them collectively. But at the same time, for routines to really grease
the wheels, “the group must also rely on individual members to use their experience to initiate
change or to help maintain the repertoire as an ongoing activity” (Okhuysen 2005:162).

There are obviously many other mechanisms through which organizations coordinate
work, divide tasks, and allocate resources. The core insight of the Carnegie School (March and
Simon 1958; Cyert and March 1963) is that through routines, standard operating procedures, and
rules, organizations can accomplish complex actions and even respond “on the fly” to new
situations and challenges. By managing coordination, organizations enable change as much as
they constrain it; in so doing, they create social capital, facilitate and perform the law, and
produce and curate culture.
14.4.2 Organizations as drivers of change
Change is by no means an endogenous process that occurs only inside organizations;
social conflicts, power struggles, and technological innovations occur outside organizations as
well. Debates on the external determinants of change in organizations are rich in both theoretical
insights and empirical evidence. Among the often discussed mechanisms of change are learning
from others (March 1991), the creation of resource dependencies (Pfeffer and Salancik 1978),
the adoption of societally recognized templates (Meyer and Rowan 1977), and selection
pressures stemming from competition for resources (Hannan and Freeman 1989).
These various theoretical traditions have generated a rich understanding of the trans- and
inter-organizational dynamics that produce a heterogeneous landscape of organizations and lead
to large-scale shifts in how society pursues its goals. Such macro-organizational research is
sometimes difficult to connect with micro-sociological theories, in part because people’s
behaviors are treated as only secondary to that of organizations. As one illustration, a core
feature of studies of institutional change is the travel of ideas: numerous empirical studies deal

with the diffusion of organizational practices and structures (for an early review, see Strang and
Soule 1998), the ensuing isomorphism of organizational form and content (Strang and Meyer
1993), and the variety that results from heterogeneous local translations and editing of global
ideas (Sahlin and Wedlin 2008).
A related mechanism of change in and across organizations is the mobility of people
throughout their careers (Stewman and Konda 1983; Rosenfeld 2003; O’Mahony and Bechky
2006). For studying social outcomes, organizations matter because of the simple fact that they
employ all kinds of diverse people, who in turn move between organizations frequently. People
move up and down career ladders inside and between organizations and bring along ideas and
skills, transferring standards and practices; in so doing they can even generate novelty (Powell,
Packalen, and Whittington 2012).
To understand the wide-ranging effects of careers on societal outcomes—at the
individual as well as the organizational level—consider Bidwell and Briscoe’s (2010) study of
the careers of information technology workers. The authors investigate the way people move
between jobs over the course of their lives. They find that the sequence of employers is life-
changing: most people move from large, generalist organizations early in their careers to smaller
workplaces that require more specialized knowledge. In other words, people do not arbitrarily
move across jobs; their careers follow a structured progression, in which workers transpose the
skills required in one position to other organizations that build on those skills. Inter-
organizational career ladders thus have “important consequences for both firms and workers”
(Bidwell and Briscoe 2010:1034).
The effect on workers’ life chances throughout their careers is a contested issue within
organizational theory. In line with our discussion above about the constraints that organizations

create, some jobs lock people into specific positions. For feature film actors, having a “simple,
focused identity,” that is, being renowned for appearing in a certain genre, can be beneficial for
securing future work. But typecasting also limits actors’ opportunities outside the genre they are
known for and effectively constrains their career paths (Zuckerman et al. 2003). Another
illustration is found in Briscoe and Kellogg’s (2011) longitudinal study of family-friendly,
reduced-hours programs in a law firm. The authors find that an initial assignment with a
powerful supervisor makes it easier for workers later to use work-family programs and more
generally improves their subsequent career outcomes.
Such career dynamics also have important implications for the industries and sectors in
which organizations are situated. One the one hand, organizations can benefit economically from
the skill and creativity of workers who join them, as brain drain can pose severe problems for
management (Wang 2015). On the other hand, core sociological outcomes can be affected by
workers’ mobility. One example mentioned above is Fernandez’s (2001) study of a plant
retooling in which worker turnover was a major determinant of internal income inequality.
Another case, from the nonprofit sector, involves managerial practices in public charities, which
Hwang and Powell (2009) show are driven by the hiring of increasingly professional executives.
Nonprofit leaders recently trained in professional schools are more likely to introduce rational
methods—from strategic planning to quantitative performance evaluation—than long-tenured
nonprofit executives or passionate activists (Hwang and Powell 2009, Suarez 2010). The
managers exiting and entering charities thus contribute to transforming how civil society is
coordinated. Through their roles in both structuring and managing careers, organizations embody
and abet change in people’s lives and social structures.
14.5 Organizations as Networks and Wirings

Networks are ubiquitous in organizations; they flow through and across organizations so
extensively that efforts to classify their features have been challenging. Viewed in its most
elemental form, a network is simply a node and a tie. Nodes can be persons, groups,
organizations, or technological artifacts such as webpages, or even more abstract entities such as
ideas or concepts. Ties are simply the relationships among the nodes. These relationships can
take many forms, including friendship, advice, mentoring, or the exchange of resources or
information. The social ties in and between organizations affect numerous outcomes of primary
sociological significance, including the creation and distribution of ideas, resources, status, and
power.
Researchers have developed numerous tools to try to capture the importance of networks
and applied these both inside organizations and to inter-organizational relationships. Attempts at
quantification reflect efforts to depict properties of both nodes and relationships; these include
social processes such as influence, centrality, prestige, awareness, and leverage, as well as
concepts including distance, centrality, cohesiveness, equivalence, and density. These various
indicators portray how networks permeate organizational life and reflect our core contention that
organizations are both venues for action and drivers of social and economic relations. When we
analyze how networks influence organizations, the relationships can be portrayed at multiple
levels. As sites of action, organizations host networks of people whose decisions are affected by
their relations to people in other organizations. As drivers, organizations constitute and shape
large inter-organizational networks that are usually perceived as communities—including
industries, organizational fields, and cities.
14.5.1 Organizations as sites of social relations

Organizations are rife with interpersonal networks; this realm of interaction reflects the
informal life of organizations that is, at times, at odds with the formal hierarchy (Dalton 1959).
Sometimes the formal and informal are aligned, for example in the case of mentoring networks.
Friendship networks may even provide the fuel that makes the formal system run. But the formal
and the informal can be misaligned, and they may then become a seedbed for discontent or
resistance.
Inside organizations, networks influence hiring selection, perceptions of performance,
and compensation and promotion. We have long known that employees often find jobs through
acquaintances, the classic weak-tie network that was famously studied by Granovetter (1976) in
his analysis of job-hunting by middle-class professionals in Newton, Mass. Indeed, weak-tie
insights are now used by organizations in all manner of ways, from formal job-referral systems
in which the referrers are paid bonuses, to automobile maker Tesla’s use of referrals for new car
sales and rewards to loyal early purchasers. Fernandez, Castilla, and Moon (2000) analyzed
employee referrals at a call center within a large bank and found that employee referrals not only
were cost effective, but resulted in a richer applicant pool. Ron Burt (1992) has shown that
employees whose networks span disconnected parts of organizations—that is, “bridge a
structural hole”—are promoted faster than those with more limited ties. In subsequent work,
others have shown that such brokerage networks work differently for men and women and
minority groups (Ibarra 1992). More generally, Burt (2004) has shown that employees who are
located in positions that enable them to bridge ideas from different units can capitalize on their
positions to propose better ideas.
Internally, organizations can be more or less porous. Some organizations have relational
spaces where members from various ranks and departments can mix freely, undeterred by formal

role differentiation (Kellogg 2010). Organizations can be structured more like a network than a
hierarchy; this has long been a common practice in the construction, film, and fashion industries,
where projects come together on a short-term, temporary basis. Many activities, from fashion to
computers, are created in fast product cycles, where speed and timing are urgent concerns (Uzzi
1996). In such cases, a group of people act as the project organizers and work with others from
the outside on teams of relatively short duration. The relationships may become repeated games,
as has been shown in the case of particular genres of films where directors, writers, and actors
come together on a project, disperse, and return to work with one another on a later project
(Faulkner and Anderson 1987). Similarly, in the electronics sector, the model of contractors who
design equipment but outsource the making of the parts is commonplace. There are also
manufacturers, sometimes critically referred to as “box stuffers,” who outsource many stages of
the production process, performing only some high-level integration work (Sturgeon 2002). Dell
Computer is a classic example. And recent efforts at open innovation have created new models,
such as the confederacy represented by Wikipedia or crowd-funding forms such as Kickstarter
(Von Hippel 2006).
The social relations among people inside organizations not only shape professional
mobility, they also enable and constrain organizational behavior. Classic research in
organizational theory (Gouldner 1954) and a foundational work in economic sociology
(Macaulay 1963) demonstrate that even highly purposive economic exchanges are enmeshed in
and driven by social networks. Organizational and economic actions result from a complex
lamination of motivations and meanings that participants draw from the various relations in
which they participate.

In a study of auto dealers, Macaulay (1963) found that businessmen often disregard the
legal rights and responsibilities inherent in contracts in favor of more social means of
dealmaking and dispute resolution. Networks shaped how businessmen approached transactions.
As one of his respondents commented, “You don’t read legalistic contract clauses to each other if
you ever want to do business again. One doesn’t run to the lawyers if he wants to stay in business
because one must behave decently” (Macaulay 1963: 61). Lawyers should be excluded, not
because they are personal strangers, but because they view the same relationship through a
different lens, which explains why they find the businessman’s approach “startling.” As
Macaulay noted, where businessmen see orders that can legitimately be cancelled, lawyers view
the violation of contracts as having strongly negative consequences.
The meaning of a relationship and the actions appropriate to it depend on the character of
the parties to the tie and their broader professional milieus. Put differently, car dealerships
promote a relational view suggesting that the parties will solve problems as they arise; lawyers,
on the other hand, see their firms’ role as drafting contracts that anticipate problems. The
relational view, as opposed to a transactional one, eases the cost of doing business, enhances
flexibility, and offers support during lean times (Dore 1982).
14.5.2 Organizations as drivers and constituents of networks
Organizations are also connected through networks. Inter-organizational relations range
from dyadic relations, such as research partnerships, supplier relations, and joint ventures, to
multi-party research consortia and industry associations. Such linkages are particularly common
in knowledge-intensive industries, where access to new ideas is critical and the sources of
expertise are dispersed (Powell, Koput, and Smith-Doerr 1996). Inter-organizational relations
can also be linked to persons, as is the case with interlocking boards of directors (Palmer,

Freidland, and Singh 1986). Several decades of research have focused on the degree of linkage
among corporate elites, asking how integrated are the large firms, such as the South Korean
chaebol, that dominate the economies of their countries (Mizruchi 1996). It turns out that many
organizational linkages are deeply dependent on personal relations; corporate executives are
asked onto boards more because boards recruit individuals than they do the companies that the
individuals represent. Leading executives find such positions both strategically valuable for the
view of the business horizon they afford and highly remunerative (Useem 1984).
One application of inter-organizational networks is to the conception of networks as
industrial districts—geographically concentrated regions in which relations among firms are so
densely interwoven that the locus of innovation is found more in the overall network than in the
individual constituents (Marshall 1890; Piore and Sabel 1984; Saxenian 1994).
To illustrate this phenomenon, we draw on prior work on the emergence of biotechnology
districts in the United States (Owen-Smith and Powell 2004; Whittington, Owen-Smith, and
Powell 2009). We discuss the Boston and San Francisco Bay Area biotech clusters, the two most
densely populated scientific and commercial clusters in the United States. Both these two
regional communities are highly productive, but one (Boston) is anchored in a network that grew
from public-sector origins. The other community (SF Bay) is clustered around a network that
emerged from venture capital initiatives. The different anchor tenants—the highly central
organizations that have access to various other players and broker between them—in these two
technical communities result in divergent approaches to innovation. Both clusters are successful,
and networks are fundamental in both, but the types of success and the ways in which relations
matter vary with the organizational form and mindsets of the respective participants.

Each region developed distinctive patterns of collaboration that stamped their trajectory
of innovation. Where universities dominated, as in Boston, a focus on discovery that favored
openness and information sharing prevailed, and membership alone sufficed to increase rates of
innovation. In contrast, when for-profit organizations were core players in the network, more
‘closed,’ proprietary approaches dominated; thus a central network position was essential to
extract benefits (Owen-Smith and Powell 2004). In addition to altering how organizations garner
advantage from their networks, the different approaches associated with the disparate partners
shaped strategies for innovation, the kinds of connections the organizations pursued, and the
markets they sought to serve.
There are two notable differences between the Bay Area and Boston clusters. The former
is larger, both organizationally and geographically, with many more biotech firms, several major
universities, including Stanford and the Universities of California (UC) at Berkeley and at San
Francisco (UCSF), and numerous venture capital firms. The Boston network, although denser
and somewhat smaller and more geographically compact, had many more public research
organizations, including MIT, Harvard, Massachusetts General Hospital, Dana Farber Cancer
Center, and Brigham and Women’s Hospital, among others. The Boston area had many fewer
venture capital firms in the 1970s and 1980s; VCs arrived much later. Neither region housed a
large multi-national pharmaceutical corporation during the period from the 1970s through the
1990s, so both regions were free from the dominance of an “800-pound gorilla” (Padgett and
Powell 2012: 439). Both clusters had structurally cohesive networks, but they differed in their
organizational demography.
The Boston network grew from its origins in the public sector, and public science formed
the anchor for subsequent commercial application (Owen-Smith and Powell 2004; Porter,

Whittington, and Powell 2005). Because the Boston biotechnology community was linked by
initial connections to public research organizations, this cluster manifested an open trajectory. By
contrast, the Bay Area was influenced by a host of factors: the prospecting and matchmaking
work of venture capitalists, the multidisciplinary science of the UCSF medical school, and
pioneering efforts at technology transfer at Stanford University (Colyvas and Powell 2006; Popp
Berman 2012; Powell and Sandholtz 2012). The San Francisco Bay Area evolved out of a more
entrepreneurial orientation than Boston’s. Both the Boston and Bay Area clusters were catalyzed
by a non-biotech organizational form, but these different forms left distinctive relational imprints
on the respective clusters.
The two clusters also differed in how they produced knowledge and the products they
developed. We compared the patent citation networks of biotech firms in the two clusters
(Owen-Smith and Powell 2006). The results suggest that Boston biotechs more routinely
engaged in exploratory search, which typically yields a few very-high-impact patents at the
expense of numerous innovations with lower than average future effects (Fleming and Sorenson
2001). In contrast, the dominant Bay Area patenting strategy had a more directed ‘exploitation’
design, as one might expect of companies supported by investor networks that demand
demonstrated progress. Companies that pursue exploitative strategies generally develop
numerous related improvements on established components of their in-house research. Boston
area companies were much more reliant on citations to prior art generated by universities and
public research organizations than were Bay Area companies, which relied more on citations to
their own prior art. As for medicines, many Boston-based firms have focused on orphan drugs, as
one might have expected of companies that were enmeshed in networks dominated by
universities and hospitals. In contrast, Bay Area biotech firms pursued medicines for larger

markets in which the potential patient populations run into the millions, and for which there was
likely to be stiff product competition. This high-risk, high-reward strategy reflected the imprint
of the venture capital mindset.
This extended illustration underscores the dual effects of networks, both within and
across organizations. Networks are constitutive in the sense that the people inside organizations
are simultaneously embedded in both work and personal relations, sometimes to such an extent
that it is difficult to disentangle the two. And organizations both learn and access resources and
new knowledge through their inter-organizational relations. These sources of ideas and
relationships also define what organizations do, as they are influenced by the actions of their
peers. In so doing, networks shape how organizations come to regard themselves and conceive of
their goals.
14.6 Implications
The studies reviewed in this chapter combine insights from a wide variety of recent
research on different types of organizations across sectors, geography, and time periods. The
authors we have discussed study schools, jazz producers, SWAT teams, maternity counselors,
wind power, corporate foundations, art festivals, social movement organizations, drug courts,
childcare centers, breweries, soft drink producers, environmental rating agencies, the film
industry, the civil service, call centers, government bureaus, biotech firms, and law and
investment firms.
14.6.1 Organizations reflect and remake society
Organizations matter for the study of society in two fundamental ways. First,
organizations reflect social structure. Society tailors organizations in many meaningful ways:
the professions and the state, labor market structures, cultural fads, and political movements and

ideologies all leave their mark on organizational practices and structures. Various processes,from
imprinting to isomorphism, make organizations an effigy of society. In Perrow’s (1972: 4) apt
language, people “track all kinds of mud from the rest of their lives with them into the
organization, and they have all kinds of interests that are independent of the organization.” On
the other hand, even though organizations are frequent sites of larger societal processes,
organizations also forge and remake society. Once an organization has been founded that
capably performs a certain task or represents some interest, structural dynamics such as inertia
and institutionalization enable such interests and tasks to persist.
The effect that organizations—be they public agencies, business firms, or civil society
groups—have on society is quite profound. They are responsible for hiring and firing people, for
paying and promoting them, for giving them voice and instilling loyal membership, and even for
provoking resistance. Organizations facilitate innovation, sort people through careers, reproduce
stratification and solidify discrimination, and determine the reputation and power of certain
individuals. Organizations matter because they are monuments of times past as well as sculptors
of the future.
Indeed, extending Stinchcome (1965), one might argue that generations and society are
shaped by the kinds of organizations that are predominant in an era. Consider the post–World
War II era, which some have termed Pax Americana, running from the 1950s to the 1980s. This
period was characterized by the dominance of large corporations, with stable internal labor
markets, and good middle-class and skilled blue-collar jobs. This era of US manufacturing
dominance meant that employment futures were relatively secure for those who worked for such
companies, and the larger society, from housing to shopping malls, was molded by these
organizational dynamics.

The postwar organizational regime split apart at the seams in the face of global
competition and the quest for cheap overseas labor, ushering in the end of long-term employment
and creating a new period of downward mobility and rising inequality. In contrast, today we live
in the age of the lean start-up, with work futures precarious and the distribution of rewards
highly skewed. But the model of disruption that is the hallmark of Silicon Valley start-ups has
become an enviable symbol worldwide for its innovative capabilities, even if its rewards do not
generate stable employment for large numbers of workers. Thus one can view both social history
and social change through the lens of organizational models.
Two luminaries of organizational research have made the argument that we live in an
organizational society more succinctly. Nobel laureate Herbert Simon (1991:42) averred that
“the economies of modern industrialized society can more appropriately be labeled
organizational economies than market economies,” and organizational sociologist Charles
Perrow (1972: vii) made the striking claim that “all important social processes either have their
origin in formal organizations or are strongly mediated by them.”
14.6.2 Organizational dynamics at multiple levels of analysis
Distinguishing among the different levels through which social relations shape
organizational behavior and by which organizations alter social ties can be challenging.
Networks spill over both within and across organizations, and an ostensibly internal relation can
easily become an external affiliation as careers and organizations develop over time (Padgett and
Powell 2012). Similarly, for inter-organizational relations, what makes for an attractive partner is
an obvious question, and here having prior knowledge of and experience with a specific
partnership eases external relations (Rosenkopf, Metiu, and George 2001). The propensity to

form an alliance, or create a regional cluster, depends on the parties sharing mutual interests.
Such prior relations are more likely forged by individuals than by corporate entities.
Sorenson and Rogan (2014) argue that three factors enhance the likelihood that
individuals are the key to inter-organizational affiliations: 1) the extent to which the needed
resources, such as tacit knowledge, belong to individuals rather than organizations; 2) the extent
to which indebtedness and gratitude are owed to persons rather than formal organizations; and 3)
the degree of emotional attachment associated with a linkage. Thus interpersonal relations are
often the glue that binds inter-organizational relations. In this sense, organizations are the
conduits through which interpersonal relations are actualized.
How society affects organizations and vice versa is also often a dynamic process.
Viewing organizations as sites and drivers of social action does not imply that these two
dimensions can, or should, always be separated. The relationship between organizations and
society is rarely a one-way street.
Organizations may intervene in the regulation and structuring of their own institutional
environment or resource space. Corporations, for instance, not only are influenced by public
opinion, but can themselves alter public opinion by lobbying, contributing to electoral politics, or
supporting grassroots efforts (Walker and Rea 2014). In her study of historically black colleges
in the United States, Wooten (2015) shows that the organizational development and resource
access of black colleges was constrained by American social and educational policy. One of her
findings is that the legitimacy-building accreditation of the foundation-supported United Negro
College Fund in the 1950s and 1960s favored organizational structures that maintained the
discrimination against blacks in US society. Similarly, rankings and ratings are important
touchstones for organizations ranging from law schools to companies, but how that information

is implemented and used is subject to organizational involvement, as is the creation of rankings
and ratings itself (Espeland and Sauder 2007).
Although organizational perspectives have many theoretical applications, their actual use
may be limited. One problem is that data tend to be biased toward formal models of organization.
Quantitative studies of civil society, for instance, are frequently limited to organizations formally
registered as 501(c)(3)s, and studies of unemployment, crime, and inequality often rely on the
comprehensiveness of administrative data. More informal arrangements—such as movements,
casual groups, or temporary projects—are sometimes systematically excluded from
organizational data.
Another limitation is that the importance of organizational dynamics is often revealed
only in retrospect. Some exemplary studies of race, ethnicity, and culture applying an
organizational lens are historical. One such study shows that organizational dynamics shape the
politics of ethnic categories. Why, despite their different country of origin, skin color, and social
class, did Puerto Ricans, Mexicans, and Cubans end up under the umbrella label of ‘Hispanic’?
Mora (2014) shows that it was neither a common language nor perceived cultural similarities that
led to the emergence of the Latino category, as Spanish-speaking Haitians are left out whereas
non-Spanish-speaking Mexicans are included. Instead, she finds that a field-spanning
combination of pan-ethnicity activists, government bureaucrats, and media executives was
responsible for creating a new identity category over the decades from the late 1960s to the
1990s.
Another compelling historical example of the influence of organizational context is
Phillips’s (2009; 2011) comprehensive study of the role of producers and places for predicting
the success of jazz music. Why are some pieces of music, particularly those recorded in

peripheral places and with elements hard to categorize, rerecorded many times in later years?
Phillips argues that the appeal of ‘authentic outsiders’ explains the evolution of this cultural
market. He finds that jazz from cities that were more disconnected from other jazz-producing
cities was more likely to enter the jazz canon than jazz from cities central to the jazz music
industry.
These studies by Mora and Phillips create new knowledge about how culture and
ethnicity are shaped by organizations, but similarly insightful studies of contemporary
phenomena would prove difficult because of limited access to organizational elites and the
constantly changing constellations of collaborating and competing organizations.
14.6.3 Conclusion
Many accounts of organizational performance, whether in schools, hospitals, or firms, are
unable to explain why one unit has positive outcomes and another middling success. For
example, why do hospitals vary in their rates of Caesarian births, even within the same county,
or why do charter schools do better than public schools in low-income, non-white urban areas,
but produce little difference in student performance in suburban school districts? Learning from
the “bright spots” among hospitals, schools, manufacturing plants, or government bureaus, and
understanding how these successes might be spread, could be immensely valuable, but
researchers often struggle to explain variation, both within organizations and between
organizations that are, roughly speaking, comparable.
The challenge for researchers who study schools, hospitals, or employee productivity is
to understand how organizational factors dictate health, educational, and labor outcomes. Part of
the difficulty is, of course, the familiar statistical problem of selection bias—that is, those who
are chosen for ‘treatment’ differ in important ways from the larger population. But an equally

vexing problem is determining the appropriate level of organizational analysis. For schooling, is
it the classroom, the grade level, the school, the neighborhood, or the district? We contend that a
number of subfields in sociology—medicine, education, law, and stratification, to name only the
most obvious candidates, would greatly benefit from a deeper engagement with organizational
sociology.
If organizations matter for society, does organizational theory matter for sociological
theory? We think so, as the bidirectional relationship between organizations and a wide array of
social institutions is reflected in the diverse empirical literature reviewed in this chapter. In some
instances, organizational research draws heavily on core sociological theories (see the various
essays in Adler 2009 for examples of how organizations scholars draw on a wide range of
classical theorists). We do not want to be content with this distinguished pedigree; instead we
want to urge scholars in other areas of mainstream research to re-engage with organizational
analysis, as effects as varied as hospital mortality, people-processing in courts and bureaus, and
learning in classrooms are fashioned by the organizational processes we have detailed here. We
close with a nod to the father of organization studies, Max Weber, and invoke one of those
delightfully indecipherable German terms, ‘Querschnittsmaterie’, which describes a cross-
sectional field that may apply across the board to a range of sub-disciplines. In our view,
organizational sociology played this intellectual role throughout much of the 20th century, and
we hope that it resumes this position in the coming years.

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