THE STRUCTURATION AND DESTRUCTU RATION OF

ORGANIZATIONS AN D ORGAN IZATIONAL FI ELDS

W. Richard Scott

It is a heartening experience to join a conversation among colleagues whose par- ticipants are engaged in civil discussion about matters of consequence. Too often our professional conversations degenerate into debates and thence to slugfests as protagonists turn into pugilists defending their traditions or turf. Happily, such is not the case here.

Before commenting briefly on the recent dialogue, let me first revisit the origi- nal papers, discussing both their similarities and differences. The two papers, by Prahalad and Bettis and by DiMaggio and Powell, share a number of features. Both are theoreticN, programmatic essays in that they do not report original research but outline a conceptual framework intended to reorient work in a given research domain. Both propose that existing models are deficient because of the assumptions made about rational actors in organizations and the forces shaping organizational behavior and structure. Moreover, the two sets of authors agree

Advances in Strategic Management, Volume 17, pages 181-185. Copyright © 2000 by JAI Press Inc. All rights of reproduction in any form reserved. ISBN: 0-7623-0661-0

181

182 W. RICHARD SCOTT

that cultural-cognitive factors have received insufficient attention in existing the- ory and research. Managerial schemas and normative and cultural models for organizing are introduced and elaborated. In developing their arguments, the authors draw on some similar sources, including cognitive psychology, sense making, and organizational learning.

In addition, both papers employ an open systems conception of organizations, each noting not only the environment's role as a source of information and resources but also the ways in which an organization is affected by changes in the environment's configuration. Prahalad and Bettis emphasize changes in the struc- ture of the industry; DiMaggio and Powell, changes in field-level systems or pro- cesses.

Still, important differences in the two original articles are apparent, as Powell notes in his commentary. Prahalad and Bettis employ an organization-centric approach. Their analytic focus is the firm--indeed, a particular type of f i n n ~ h e multi-divisional diversified firm. Their concern is how top managers in the firm acquire the dominant logics that guide their strategic decision making. They offer a rather vague account of logic formation and change that combines general prin- ciples of cognitive psychology, experiential learning, and a recognition of the importance of team composition. Specific predictions or arguments are not pro- posed. Rather, a general case is made that: (1) managers in firms come to develop collective schema or logics that guide strategic decision making based on their past experiences; (2) as firm diversification or the structure of the wider industry changes, new managerial logics are called for but may not be forthcoming; and (3) the development of appropriate managerial logics is a key factor mediating between firm diversity and performance.

The main contribution made by Prahalad and Bettis is their recognition of the important role played by managerial logics together with their exploration of the nonrational nature of these logics. Between the environment and its demands and the firm and its performance is a set of key actors who must collectively interpret the situation and formulate a course of action. And, importantly, their interpretive work is not simply a matter of rational information processing, but the employ- ment of schemas derived from imperfect learning from past experiences.

DiMaggio and Powell shift the level of analysis from the firm or, more broadly, the organization to the organizational field--an analytic framework encompass- ing all organizations in the same general institutional arena, including producers, suppliers, customers and regulators of the good or service. Indeed, the identifica- tion of this level of analysis is one of the key contributions made by this article. This work constituted an advance on previous conceptions of the institutional environment--in particular, that of Meyer and Rowan (1977) by emphasizing that institutional forces and processes are bounded and differentiated by field or sector. More so than related conceptions, DiMaggio and Powell embraced a net- work conception of the field, attending both to the density and complexity of net- work ties in the field--field strncturation -as well as to the types of network

The Structuration and Destructuratiou of Organizations 183

connections and sm~ctural equivalence characterizing a particular firm's location. By contrast, Scott and Meyer (1983) emphasize more the role of widespread cul- tural beliefs and shared professional norms that are less dependent on specific net- work linkages among organizations.

The second major contribution of the DiMaggio and Powell's formulation is their identification of a set of generic processes inducing conformity or isomor- phism of organizational smlcture in a field. Their typology of coercive, normative and mimetic processes has been widely utilized in subsequent research and theo- rizing.

The objectives of the two articles differ, as does their relation to the "logics dominant" in their respective disciplines. Prahalad and Bettis seek to explain per Ibrmance differences among diversified firms, to which end they propose a type of contingency argument. They subscribe to the basic tenants of structure-strat- egy performance--t he dominant theoretical paradigm in strategic management theory and propose only to slightly amend them by introducing an intervening variable dominant managerial logics. DiMaggio and Powell, on the other hand, seek to develop general arguments regarding processes at work among all organi- zations within a given field. And, their arguments directly challenge mainstream models--both more conventional economic arguments and those underlying con- tingency and resource dependence theory. Rather than privileging the operation of markets or the effects of material-resource environments, DiMaggio and Powell emphasize the dominant role of institutional environments and sketch out a set of processes "that make organizations more similar without necessarily making them more efficient" (p. 147).

Turning to the cnn-ent dialogue, Bettis attempts to update the argumen~for mulated in the early 1980s--in order to take into account the new circumstances of thc late 1990s. He suggests that whereas the original papers emphasized "mechanisms resulting in the suppression of variance" at the firm and field levels, contemporary conditions call tbr the "encouragement of variance." Whereas 1 agree that a different set of mechanisms is now dominant in a number of fields, 1 believe this is not inconsistent with DiMaggio and Powell's general formulation or with the tenants of institutional theorists. However, it is essential to contextual- ize these propositions in a broader framework of field strncturation processes.

Field "structuratiun." as depicted by DiMaggio and Powell in their original arti- cle. ref?rs to the processes by which a field becomes more highly s t ructure~fur example, increasing consensus on field logics, more dense relational networks, more stable hierarchical and status alignments, and so on--as it evolves over time. It is the case that early theorizing on the institutional structure of organiza- tional fields placed great emphasis on processes conducing toward stability and isomorphism of structures and strategies. (See, e.g., the articles collected in the three early major edited collections, Meyer & Scott, 1983, Zucker, 1988 and Pow- ell & DiMaggio, 1991). However, these arguments need not imply that all fields continually undergo increased structuration. More recently, there has been

184 W. RICHARD SCOTT

increasing recognition that structuration processes must be regarded as only one possible phase of field evolution, and that equal attention should be accorded destmcturation and restructuration processes. Empirical studies examining the latter types of processes have begun to appear--for example, Davis, Diekmann, and Tinsley's (1995) account of the deinstitutionalization of conglomerate form, Thornton's (1995) study of the dismantling of independent publishing houses and corporate restructuring of the U.S. college publishing industry, Holm's (1995) description of the rise and fall of a regime to govern Norwegian fisheries, and Scott and colleagues (2000) examination of the erosion of professional gover- nance systems and rise of market and managerial systems during the last half cen- tury in healthcare delivery systems in the United States.

Among the factors that can give rise to the destructuration of existing organiza- tional fields are major advances in technology, elimination of trade barriers between societies, and changes in domestic industrial policy, for example in fed- eral subsidies or regulatory and deregulatory regimes.

Organizations respond to these changes in multiple ways. Certainly, main- stream organizational forms are likely to find themselves to be under great pres- sure to adapt. Some will be unsuccessful and will die; others will attempt to change by adding or subtracting personnel, routines, or business units. Many will seek to develop linkages to other forms regarded as more successful, negotiating mergers or acquisitions or utilizing the newer "virtual" modes of relational con- tracting and the formation of strategic alliances. [Note that these latter forms sub- stantially reduce the need for the development of new dominant logics on the part of the host firm.] In addition to adaptation efforts by existing organizations, new organizational forms are likely to develop. Novel, unconventional and unusual, hybrid forms are likely to arise. These are among the many mechanisms that will be employed to "enhance variance."

But, over time, we would expect such disturbed fields to again become more settled. Some of the forms and strategies will begin to win oat or be thought to be more successful, and others will emulate them. Some of the more powerful organizations and interests will craft governance arrangement such that com- petitive processes are reduced and prevailing power protected (see Fligstein, 1990). In short, once again we will observe the prevalence of mechanisms for variance reduction first described so well by Prahalad, Bettis, DiMaggio, and Powell.

Hence, I agree with Bettis that we need to "think more about mecha- nisms that can encourage variance in both individual firms and field of organizations." But, I believe that we must also continue to think about the mechanisms that reduce this variance, structuration and destructuration are two different, but equally important moments of the endless cycle of social evolution.

The Structurat ion a n d Destructurat ion o f Organizat ions 185

REFERENCES

Davis, G.F., Diekmann, K. A., & Tinsley, C. H. (1994). The decline and fall of the conglomerate firm in the 1980s: The deinstitutionaliza0on of an organizational form. American Sociological Review, 59, 547-570.

Fbgstein. N. (1990). The transjormation of corporate control, Cambridge, MA: Harvard University Press.

Holm, P. (1995). The dynamics of institutionalization: Transformation processes in norwegian fisher- ies. Administrative SHenee Quarterly, 40, 398-422.

Meyer, J. W., & Scott, W. R. eds. (YEAR). O~qanizational environments: Ritual and rationality, Bev erly Hills, CA: Sage.

Powell. W. W., & DiMaggio, P. J. eds. (1991). The new institutioncdism in organizational analysis. Chicago: University of Chicago Press.

Scott. W. R., & Meyer. J. W. (1983). The organization of societal sectors. In J. W. Meyer & W. R. Scott (Eds.). Organizational environments: Ritual and rarionali O' (pp. 129-153). Beverly Hills. CA: Sage.

Scott, W, R., Ruef, M., Mendel, P. J., & Caronna, C. J. (2000). hlstitutional change and heal#icare organizations: From professional dominance to managed care. Chicago: University of Chi cago Press.

Thornton, P. (1995). Accounting for acquisition waves: Evidence from the u.s. college publishing industry. In The institutional construction of organizations: International and longitudinal studies (pp. 199 225). Thousand Oaks. CA: Sage.

Zucker. L. G. ed. (1988). Institutional patterns and organizations. Cambridge, MA: Ballinger.