RETHINKING THE INTERORGANIZATIONAL

ENVIRONMENTS OF PUBLIC ORGANIZATIONS

John C. Morris Mississippi State University

Mark Burns Auburn University

The authors suggest that most existing attempts to cIassifL interorganiza- tional environments are founded on inappropriate assumptions concerning human action, particularly when such fiameworks are applied to public- sector settings. Proceeding jiom that contention, the authors apply the concepts of referent organizations and rule sets to develop an alternative vpologv of interorganizational environments. The resulting matrix sug- gests four distinct types of interorganizational environments: ( I ) the natu- ral market, (2) the structured market, (3) the bureaucratic environment, and (4) the associative environment. An examination of these environments and their relevance for public-sector organizations suggests that rule-based conceptions of interorganizational action that take into account the role of referent organizations are more consistent with traditional democratic theory than are purely market-based conceptions of action. The alternative 3amework presented in this paper also has usefir implications for both practical public administration, and especially for general concepts of public policy.

R e c e n t literature in the field of interorganizational theory is charac- terized by numerous efforts to describe organizational environments. Such a concern is by no means new. In fact, for the past three decades, scholars have sought a broader understanding of the forces that shape actions of organizations in complex multiorganizational environments. The impor- tance of these studies was perhaps best expressed by Emery and Trist:

A main problem in the study of organizational change is that the environmental contexts in which organizations exist are themselves changing, at an increasing rate, and towards increasing complexity. This point, in itself, scarcely needs labouring. Nevertheless, the

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characteristics of organizational environments demand considera- tion for their own sake, if there is to be an advancement of under- standing in the behavioral sciences of a great deal that is taking place under the impact of technological change ...( 1965,21).

In succeeding decades, much work has been done to meet the challenge forwarded by Emery and Trist, yet there are still gaps in our understanding of complex interorganizational environments. This paper will develop a new typology of such complex interorganizational environments and con- sider implications for both general public policy and practical administra- tion of public organizations.

Work in this vein is especially relevant given recent efforts in the United States and other nations to redefine the proper role of the national govern- ment in federavstate relations. In the past, for example, American states may have relied on federal expertise or guidance to direct activities at the state level (Gage 1984), but any such guidance may now have to come from new directions and sources, if it is present at all. States that previously had no incentive or reason to construct their own stand-alone interorganiza- tional structures may now find themselves impelled by necessity to create such structures but may still have to do so while meeting objectives and standards imposed by federal-level actors.

Furthermore, the aftermath of the 1994 midterm congressional elections in the United States provides some evidence that shifts in political values may redefine the role and scope of both public and private organizations. As political values and priorities change, the light in which the role of public organizations are viewed also changes to reflect shifts in political values. Although carehl thought may be given to the missions or the organizational goals of public organizations, the impact of a change in political values often remains unexplored. This paper offers a theoretical framework that may prove to be a useful heuristic for understanding the impact of political values on the interorganizational environments of public organizations.

Many attempts to describe interorganizational activity have relied on one of two basic concepts, exchange or resource dependency (Schmidt and Kochan 1977). The former approach assumes organizations trade goods, both tangible and non-tangible, in a free-market-like process; the latter assumes organizations with overwhelming aggregations of legal authority or other needed resources bend lesser, more dependent, organizations to their will. Each of these approaches retains its own appeal and theoretical individuality, but the premise that organizations in complex environments are entwined in both exchange and resource dependency relationships considerably compounds the theoretical complexity of conceptual efforts (Schmidt and Kochan 1977; Walton and McKersie 1965).

Interorganizational Environments of Public Orm 5

We propose to link concepts found in both the interorganizational and the institutional literatures in an attempt to reach a broader understanding of the environments in which public organizations must operate. Our typology includes an examination of rules that shape the patterns of action allowed within that interorganizational setting, coupled with a detemina- tion of organizational roles within that setting. In turn, interorganizational environments vary in their degree of appropriateness for attempts to develop alternatives to traditional bureaucratic mechanisms for the delivery of public services. A useful point of departure is an examination of previous descriptions of interorganizational environments.

THE INTERORGANIZATIONAL ENVIRONMENT The study of how influences beyond an organization affect its behavior

has long been of interest to organizational scholars, with some efforts tending to emphasize impacts on specific organizations or categories of organizations,’ whereas others have sought to develop more general con- cepts.*

The work of Emery and Trist (1 965) incorporated the idea of “causal texture,’’ a concept based on the structure of interdependencies within the environment. Shirley Terreberry (1968) further refined the work of Emery and Trist, especially in the development of the concept of the “turbulent environment.” Terreberry concluded that organizations could indeed move from one environment to another, and that all movement seemed ultimately to be in the direction of the turbulent setting, but in a manner and at a pace determined by factors within the environment. Indeed, Terreberry hypothe- sized that “organizational change is largely externally induced” (1 968, 6 10).

Subsequently, Lawrence and Lorsch (1969) linked environmental adap- tation to a successful balance between internal integration and differentia- tion, and Aldrich (1976, 1979) linked turbulence in the environment to resource dependency. Further expansions on this theme were seen in the rich assortment of propositions offered by Thompson’s (1967) and Downs’ (1 967) concept of competition among organizations for influence for con- trol in territorial policy spaces. More recently, Pennings, Hambrick, and MacMillan (1984) applied the concept of the turbulent environment to a study of vertical integration in several manufacturing sectors, and Delacroix and Swaminathan (1991) examined the effects of environmental variety on organizational change. Kessler (1987) noted that policy outputs in public organizations are linked closely to their interorganizational environment and Nutt and Backoff (1995) emphasized that public organizations must adopt strategies appropriate to such organizational environments.

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For our purposes, the concept of the interorganizational environment is both useful and crucial. Much of the literature in the field cited above tends to delineate an organization’s environment in Darwinistic terms. For example, Terreberry commented:

The lag between evolution in the real world and evolution in theo- rists’ ability to comprehend it is vast, but hopefully shrinking ... the environment exerts selective pressure. “Survival of the fittest” is a function of the fitness of the environment (1968,70).

This quasi-Darwinism, implied in studies focusing on exchange rela- tionships, tends to be particularly characteristic of studies emphasizing the concept of “resource dependency.” Aldrich, in discussing the concept, noted:

Two underlying assumptions of the resource dependence model are: 1) that environmental resources are in short supply because of interorganizational competition, and 2) organizations survive and prosper to the extent that they are able to outmaneuver other organi- zations in the acquisition of scarce resources (1976,421).

Thus, a major underlying premise of resource dependency is that organi- zations face a life-or-death struggle with their environments. Resources must be gathered to ensure their ultimate survival, most probably at the expense of other organizations (Dunford 1987) and only the “fittest” will survive. In the process, some organizations will evolve to meet the chang- ing demands of their surroundings; those that do not evolve will meet the unpleasant fate of organizational dinosaur^."^

Although competition for resources clearly is one major concern of organizations,“ to emphasize so heavily the struggle for organizational assets implies some rather unflattering assumptions concerning both the human condition and the actions of humans in organizational settings. Most important for students of public organizations, the quasi-Darwinism asso- ciated with resource dependency portrayals of interorganizational relations is at least conceptually at odds with some aspects of traditional democratic value^.^

On first examination, resource dependency frameworks appear to be simply market-based conceptualizations of organizational action, postulat- ing that the ability of organizations to survive in a complex environment is primarily dependent upon their success in the process of securing needed organizational inputs in an often hostile environment. At the same time, organizations produce outputs which in turn are assimilated into the envi- ronment and consumed by actors within that environment. The similarity to a market setting is striking.

Interorganizational Environments of Public Orzs. 7

However, the conceptual utility of the resource dependency model or organizational action declines notably when public, rather than private, organizations, are under consideration. At least two underlying aspects of capitalist-market models are of questionable relevance for public-sector, or even mixed, organizations.6 First, studies of free market systems assume certain sets of conditions, including access to perfect information, freedom of access to the marketplace, and ownership of capital. Although the point at which these assumptions become rules may be open to a great deal of interpretation, the salient matter is that these assumptions/rules are also internally generated-they emanate from within the system.

Second, classic capitalist theory suggests that free markets have their own internal logic, structures, and rule systems. The profit motive, for instance, provides a strong incentive for actors in the market to act in an efficient manner. Those that fail to be efficient find themselves in a less-than-competitive position. The market is self-regulating, in that only the most efficient (and therefore profitable) firms will survive in the long term. Thus, market systems operate under their own set of internal rules.

In contrast, public-sector agencies operating in modern multiorganiza- tional environments set neither the assumptions under which they operate nor their systemic rules for operation. Indeed, public agencies generally operate under the influence of a great number of externally mandated rules. The polity mandates rule structures and content; a given organization’s capacity to act freely is assumed to be fairly limited, at least in the long term. Rules such as the scope of an agency’s functiodpurview, the out- comes it can affect, the size of its operating budget, its long-term “invest- ment” strategy, are, for the most part, determined by actors outside the a g e n ~ y . ~

These differences in conceptual underpinnings and rule systems serve to limit the applicability of the resource dependency emphases for public- sector Organizations, and thus, to broader questions of public policy making. The role of the organization in this context is one in which restraints are placed on organizational action and effectiveness. Although we do not deny the premise that organizations can influence the processes and interactions of actors outside the agency in a public setting, the fundamental conflict between resource dependency approaches and broader conceptions of the public sector in a democratic society suggests the need for a more sophis- ticated framework for considering multiorganizational arrangements. With these considerations in mind, we propose a broader explanation of organ- izational environments-ne that may be more applicable, if not more normatively attractive, for the study of public organizations.* To do this we will draw upon the concepts of referent organizations and rule sets.

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THE REFERENT ORGANIZATION Our concept of the referent organization is drawn primarily from the

work of Eric Trist (1983), which in turn is drawn from the sociological concept of reference groups. Although Trist’s study applies the concept of the referent organization in an attempt to classify the development of organizational domains, our interest is limited to the stated fbnctions of the referent organization. In this regard, Trist identifies three basic functions for the referent organization:

1. Regulation-the referent organization establishes ground rules, maintains base value sets, and regulates current relationships and activities;

2. Appreciation-the referent organization must keep abreast of emergent issues and trends in its environment, and must work to develop a consensus view of the future of the setting;

3. Infrastructure Support-the referent organization must act as a facilitator for the movement of resources, information, and other activities within the environment.

The importance of the referent organization as a facilitator has been noted by O’Toole (1983). In a study of the implementation of labor market training policies in two West European countries, O’Toole found that, when a facilitator organization was present, not only was implementation of such programs likely to be more successful, but also other organizations in the environment expressed a higher degree of perceived common interest. These findings were echoed by Lawless and Moore (1989), who found that the existence of a central broker in public-sector service delivery settings may be an important factor in the explanation of policy outcomes?

Thus, the existence of a referent or facilitative agent has a positive effect on the ability of organizations in a complex environment to achieve some level of stability within that environment. The means by which a referent organization achieves its position has also been addressed by Trist ( 1983).1°

Our primary interest in the concept of the referent organization is whether such an actor is present or absent in a given multiorganizational setting. For simplicity we will accept Trist’s (1983) explanation of the functions of the referent organization (see above), with the caveat that the ability of the referent organization to establish rules may depend upon the nature and strength of external mandates, particularly in predominantly public settings. On the other hand, following the methodology of institu- tional analysis described by Ostrom (1986a, 1986b), we will depart from

Interoraanizational Environments of Public Orgs. 9

Trist’s typology of referent organizations in order to hold external factors constant and facilitate comparison of rule sets across settings.”

RULE PREDOMINANCE The structure of rule sets in an institutional environment is of great

theoretical and empirical interest to those studying multiorganizational settings. Raelin (1982, 1980) notes the importance of rules in public settings, suggesting that externally imposed mandates might reduce conflict by directing resource allocation. Organizations are then free of the require- ment to direct overwhelming attention to the acquisition of additional resources. Schopler (1 987) notes, however, that organization outcomes are enhanced in environments where interactions are voluntary rather than mandated.

Ostrom defines rules as “...prescriptions about what behaviors (or states ofthe world) are required, prohibited, or permitted” (1986b, 465). Rules can also be divided into two types, working and formal (Ostrom 1986b): Formal rules are those formulated through some generally-accepted and consciously enacted method accepted by the community. Working rules, on the other hand, are built up through everyday relations in order to justify the actions of participants.’* Whereas working rules can become institu- tionalized over time among the set of actors, it is also possible for modifi- cations of those rules to become de regueur.

The ability to create, alter or modify working rules may be an important factor in defining or identifying a referent organization (Trist 1983). An actor (or set of actors) able to modify working rules may be able to strengthen its/their own position within the system. Rules that determine what actors are allowed entry into the system, how relations among actors are conducted, and what outcomes are available, to name a few, are crucial in determining relationships within the system. We also suggest that it is not necessary for referent organizations to actually modify the rules; the salient point is that they, or other actors in the system, perceive that a referent actor has the ability to modify working rules.

Ostrom’s later work seems to suggest, however, that working rules (rules-in-use) “...are the result of implicit or explicit decisions made at a collective choice level” ( 1 990a, 13). This implies that rules-in-use cannot be modified by a single actor or by some subset of ac to r sAa t rules-in-use can be modified only through collective choice. We assert, however, that rules-in-use may in fact be altered by a dominant actor or set of actors in a system. If such an actor is capable of acquiring some requisite amount of authority in a system, the choices of that actor will become the norm, regardless of existing rule structures.

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Ostrom’s (1986% 1986b, 1990a, 1990b) characterization of rules may be more applicable to some environments than others. In a legal-rational society, for instance, citizens are likely to feel uncomfortable with the thought that rules may be modified without broad-based upp port,'^ or, at the very least, without the approval or participation of those formally charged to act on behalf of the citizenry. In less formal (or private sector) settings, rule systems may also be more informal, or participation and adherence to those rules may be voluntary. For example, in a study of rule making in the Chicago Board of Trade, Leblebici and Salancik (1982) noted that rules were changed on the basis of environmental uncertainty. In an in-depth study of the processes of the National Collegiate Athletic Asso- ciation (NCAA), Stem (1981) made special note of the informal and arbitrary manner that rules were applied in terms of sanctions.

For our purposes, it is perhaps best to conceptualize rules by their source; that is, whether the rules in a given interorganizationa1 setting emanate from within the setting or from an external source. Indeed, we may suggest that rules imposed from outside an interorganizational environment are more likely to be formal rules (and, perhaps, less likely to change in the short run), whereas rules developed within may be more arbitrary, informal, and more easily modified by participants.

Our examination of rules within multiorganizational environments will be oriented in terms of the source of those rules. Specifically, rules that emanate primarily from outside the setting will be referred to as mandated rules; rules developed within the confines of the setting will be termed voluntary rules. Of course, any given setting, particularly a complex setting, will probably exhibit some mix of both mandated and voluntary rules. For researchers concerned with identifying and classifying rule sets in the pattern suggested by Ostrom (1986a), the question of the degree of mix between mandated and voluntary rules assumes a high level of impor- tance. The current study, however, centers on a general evaluation of the nature of the rules present in interorganizational environments rather than the detailed study of specific environments; for that purpose, we will treat rules as a dichotomous variable.

These two concepts, presence/absence of a referent organization, and sources of rules, can be combined into a matrix of four possible interorgani- zational environments of theoretical interest (see Figure 1). If a referent organization is present, and rule predominance is mandated, we charac- terize this as a bureaucratic environment. If a referent organization is present, but there is voluntary rule predominance, an associative environ- ment exists. In the case of environments with no referent organization, if there is mandated rule predominance, a structured market environment

Interorganizational Environmnts of Public Orgs. I1

0

Bureaucratic Environment

Associative Environment

3 -5 Mandated s % k, Voluntary d' w

entails. Finally, if there is no referent organization but voluntary rule predominance exists, there is a natural market environment. The foIIow- ing sections will describe the salient features of each environment, and offer illustrative examples.

Structured Market Environment

Natural Market Environment

Figure 1

A Typology of Interorganizational Environments

THE BUREAUCRATIC ENVIRONMENT It is within the bureaucratic environment that most traditional public-

sector activities may be found. Marked by a reliance on mandated rules and the presence of a referent organization, the bureaucratic environment is often highly structured and routinized. Entry into the system is limited subject to the strenuous conditions set by the rules of the environment. Entrepreneurial creation of relevant organizations tends to be discouraged. The referent organization assumes a facilitative role, often charged by external mandates with the task of ensuring compliance with the external mandates by those within the environment. In this sense, the referent organization often undertakes a regulatory role.

The State Revolving Fund program (established by PL 100-4, the Water Quality Act of 1987) provides a case in point. The mandates from Congress are clear: states are to assume responsibility for the funding of wastewater treatment facilities, yet the Environmental Protection Agency (USEPA) is accorded strict regulatory powers to ensure states maintain compliance with federal pollution control imperatives. The USEPA certainly fits the de- scription of a referent organization, especially given its ability to create and enforce administrative regulation. The predominance of mandated, formal rules is self-evident.I4

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Organizations that wish to thrive in the bureaucratic environment tend to rely on compliance with the rules and efforts to maximize internal efficiencies. Efforts to act outside of the rules are strongly discouraged by both the rules and a concomitant organizational culture of routinization which tends to accompany them (Merton 1940).

THE NATURAL MARKET ENVIRONMENT In contrast to the bureaucratic environment, the natural market environ-

ment is characterized by the lack of a referent organization and a reliance on voluntary rule systems. As the name implies, the natural market envi- ronment brings to mind an environment in which entry is generally unre- stricted, a “level playing field” exists.I5 In such a situation, all actors have an equal chance to participate and compete in the environment, no actor exists in the environment who is capable of restricting either entry or activity, and in which actors are self-governing (Ostrom 1990b). This last condition may be interpreted in at least two different ways. In one construc- tion, the actors may rely on collective choice mechanisms for governance, in the tradition of such writers as Olson (1 969, Buchanan and Tullock 1969), and V. Ostrom (1989). Rules (or governing structures) are the result of carefully planned, rational decisions made on the part of all participants. In the other construction, the system itself may provide needed impetus, much in the tradition of Adam Smith’s ([1776] 1982) “Invisible Hand.” Rules in this construction are kept to a minimum, primarily because they are not needed to maintain the system.

Examples of the natural market setting abound in the private sector. Consider, for example, service stations located at a major interstate exit. All participants are bound by some minimal set of mandated rules, but the rules apply equally to each participant. Informal rules may exist in the form of pricing agreements; that is, all participants might agree not to undercut the price other participants charge for gasoline in order that all participants maintain a set profit marginal6 Each participant would then have to make a conscious choice to obey or to disregard the voluntary rule. Other examples might include a self-governing water allocation institution (0s- trom 1990b; Tang 1991), an international fishing agreement, or a multilat- eral international trade agreement. In each case, the rules are set by the participants collectively, and no one organization dominates the setting.17

In the natural market setting, organizations may feel free to engage in a strategy of relatively open bidding and competition against each other for the services they provide. If a particular organization proves weak or inept, it falls by the wayside, but the overall efficiency of the market is thereby

Interorganizational Environments of Public Orgs. 13

enhanced. The parallels to the quasi-Darwinism of resource dependency models in organization theory are notable.

It is just such a market-oriented environment which seems to be the goal of some conservative critics of the public sector. Indeed, calls to make the public arena more “businesslike” are as old as the era of Woodrow Wilson ( I 887). Within more recent years, one of the authors, in the course of an interview with a top official of a state-level interest group prominent among private providers of health care services, recalls his denouncing government efforts to regulate hospital construction through certificate-of-need laws; among his contentions was, “If government doesn’t regulate competition among hardware stores, why should it regulate competition among hospi- tals?”

However, our framework highlights the difficulty of conceiving of such arrangements in the public sector, primarily because most public sector settings rely heavily on mandated rule sets to accomplish their tasks. Public organizations are not often given the discretion to enter into market-like agreements, primarily because such discretion may weaken accountability mechanisms currently in place. A reliance on mandated rule sets is consis- tent with Weber’s description of a legal-rational society. This is true not only at the national level of government, but also at the state and local levels.

In a sense, the bureaucratic and natural market environments represent two pure types with obviously opposing characteristics. If the bureaucratic environment represents traditional concepts of public administration, to which the natural market environment represents an unfeasible alternative, then the other two environments, structured and associative, represent more conceptually intriguing “mixed” varieties.

THE STRUCTURED MARKET ENVIRONMENT The structured market environment is marked by the presence of man-

dated rule systems, but without the presence of a referent organization. Activities within the structured market environment might be described as routinized and controlled. The lack of a referent organization is not con- ceived as a handicap; rather, it suggests an egalitarian state of being in which actors are essentially competing on a “level playing field.” However, entry is limited in accordance with the structure set by the mandated rules; totally free access is not an option.

Many social-service programs sponsored by the federal government are illustrative of this type of environment. Head Start programs, although receiving primary funding from a single source, the Department of Health and Human Services (DHHS), could be included in this type of environment in that they must operate under constraints from numerous other agencies,

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including the Department of Agriculture (USDA), monitoring their break- fast and lunch programs; local fire departments, placing constraints on their buildings; local public health departments, supervising the conditions of their kitchens; and state departments of human resources, enforcing child day-care regulations. In this complex situation, the national DHHS serves less as a referent organization than a major player among multiple organi- zations of influence.

Similarly, a nursing home in a state with a strong certificate-of-need (CON) law must first be approved by the state CON agency, but once in operation has no single referent organization. Instead, it may have to answer to multiple regulations from a variety of sources-such as the state public health department, the licensing agency for such entities, and state Medicaid.

Yet another public-sector example ofthe structured market environment might be found in an American state system of higher education lacking a strong central coordinating body. One such example is to be found in one of the Southeastern states. Public universities in that state are governed by a set of constraints (mandates) emanating from a number of external sources, including the state legislature, the state commission on higher education, and numerous federal actors (most notably, the U.S. Department of Education), These external sources all impose mandates of one sort or another on actors within the environment, although none of these sources directly engages in the activities of the actors in the environment, namely, providing direct higher education services.

The mandates are typically applied equally to all actors. Federal man- dates determine some operating conditions; state mandates determine re- source issues, eligibility requirements, and other programmatic matters. Although the distribution of resources may not be equal, compliance with the external mandates, is held to be equal for all participants. In this situation, successful organizational strategies tend to take the form of limited bidding-in the case of state public universities in the Southeastern state mentioned earlier, for example, competition for students, grants, donations, state funding, etc. However, mandates do place limits on this process; for example, one university may not promote programs blatantly duplicative of another.

THE ASSOCIATIVE ENVIRONMENT The last environment combines the presence of a referent organization

with an emphasis on voluntary rules. The role of the referent organization is likely one of control, but only over those organizations that voluntarily choose to associate themselves with its duties, and then only in areas

Interorganizational Environments of Public Orgs. I5

relevant to the activities of the referent organization. Referring to Trist’s (1983) functions of a referent organization discussed above, one might conceive of the referent organization as one that has been able to amass a critical amount of authority within the environment. Due to the lack of externally mandated rule systems, the rules must emanate from within the interorganizational setting.

This is not to suggest that the referent organization must necessarily be viewed as a negative force in the environment; indeed, the voluntary nature of the rules suggests that other actors in the environment yield to the role of the referent organization out of conscious choice. This is certainly the case when other actors in the environment perceive some benefit from the presence of the referent organization.

One example ofthe associative setting would be in the non-profit sector. Non-profit (not-for-profit) organizations are typically perceived as residing somewhere between the public and private sectors. In the United States, United Way, for instance, is a non-profit organization that actively works to support a number of other non-profit organizations, especially in the area of fund raising. United Way clearly plays an important (and dominant) role in the non-profit sector; many smaller organizations might not survive if it were not for the efforts of United Way. The relationship is clearly beneficial to all.

An example which bridges the non-profit and public sectors is that of accrediting bodies in higher education, such as the National Association of Schools of Public Affairs and Administration (NASPAA). No university or college program in public administration must become a member of NASPAA, but NASPAA affiliation is seen by most as a vital mark of prestige which can improve their ability to attract capable students, recruit outstanding faculty, and have a more favorable position in grant seeking.

Within the public sector, some public grant review processes are also illustrative. In such cases, organizations are not necessarily compelled to enter the process, but definite incentives for doing so abound. Once an organization has voluntarily entered, it must comply with the wishes of the review agency if it wishes funding. This review authority can be used as either a positive or a negative lever by the grant review agency. One illustration is the AmeriCorps program for national service. Although no organization is compelled to participate in AmeriCorps, any organization involved in the program is subject to possible rigorous scrutiny by a state monitoring agency which can withhold funding for failure to comply with its directives.

Other examples might be drawn from the international arena. Bodies such as the United Nations, the European Union, and mutual defense treats

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organizations (NATO or the now-defunct Warsaw Pact) draw their mem- bers from nation-states either regionally or globally, and each body sets rules collectively for its member organizations. Each body also may have an identifiable referent organization, whether it is a member of the body or a “super-national” body drawn from all members (such as the General Assembly of the United Nations, the NATO Council of Ministers, or the European Parliament). In all cases, though, the rules that govern members are voluntary, and members must voluntarily agree to submit to these rules.

These examples suggest an intriguing corollary: Although the referent organization may not set entry conditions, it may be able to have some influence over exit conditions. By strict interpretation of standards and selective bureaucratic “foot-dragging,” it may be able to arrange what might be termed a “facilitated exit” for organizations that are low in their own resources, unconventional in their behavior, or both.

We suggest that, if public institutions are to restructure themselves, it may well be the associative model, not the natural market model, which is the more realistic goal. Whereas the relatively unrestricted competition of the market model, with “losing” organizations falling to die by the wayside, is unlikely to be acceptable to constituents of democratic politics,18 the concept of organizations voluntarily bidding to provide public services without necessarily sacrificing their existence is more inherently appealing, as would be the resulting efficiencies in the delivery of public services.’’

CONCLUSION The purpose of this paper has been to develop an alternative typology

of organizational environments. As noted before, past attempts at descrip- tion rely heavily on the quasi-Darwinist assumptions of resource depend- ency concepts of interorganizational action. In a society governed in a tradition of human law, to apply fully such an approach to public-sector organizations seems not only to be at odds with democratic theory but also to be in conflict with observable interorganizational reality.

As human societies become more complex, the accomplishment of public goals must increasingly hinge not only on individual organizations, but also on multiorganizational arrangements. Increasingly, these arrange- ments involve the melding of public and private sector organizations to deliver public services (Savas 1987). Whether these arrangements consti- tute public-private partnerships (Heilman and Johnson 1992; Kettl 1993) or public-nonprofit partnerships (Milward 1994; Salamon 1992), these structures may not be described or explained adequately by theories depend- ent on quasi-Darwinist assumptions of multiorganizational behavior.

Interorganizational Environments of Public Orps. I 7

The typology developed in this paper offers a potentially useful means to describe multiorganizational environments. Rather than a “one size fits all” characterization of multiorganizational environments, this typology allows us to capture and explain some of the richness and variation of different structures and settings. Further study and empirical observation will be needed to determine to what degree the typology presented here serves to significantly increase our understanding of interorganizational environments. However, we already have suggested two observations of import: The first is a matter of practical administration, namely, as sug- gested in some previous studies (Miles and Snow 1978; Burns and Mauet 1984; Nutt and Backoff 1995) that operational strategies to achieve organi- zational success will differ from environment to environment. Administra- tors who have the opportunity to operate within more than one such setting would do well to keep this consideration in mind.

The second, broader, concern is more policy-oriented. Calls for sys- temic reform of the public sector based on notions that a natural market is the appropriate model for restructuring the public sector (Savas 1987) are most probably fallacious, or at least of limited utility. However, reform- minded public policy analysts in search of appropriate alternatives to traditional bureaucratic arrangements for delivery of public services would do well to devote more study to alternative conceptions of multiorganiza- tional environments. A more complete understanding of the effects of values change on complex interorganizational environments will better inform theorists, practitioners, and political reformers alike about the potential consequences of a particular value choice. When the effects of alternative values are more clearly understood, policy makers will be better equipped to choose interorganizational structures to meet effectively the social and political goals of the societies they serve.

NOTES The authors express their appreciation to Joseph S. Molnar, Laurence J.

O’Toole, Jr., Robert A. Bernstein, and Caleb M. Clark for their assistance in the development of this paper.

‘See, for example, Selznick (1 949), Ridgeway (1 957), Long (1 958), Hammond (1960), Kaufman (1960), Elling and Halebsky (1961), Clark (1969, Wamsley (1 969), Kronenberg (1 973), Meyer (1 979), Miller (1980), Bums (1982), Ford and Bums (1987), Hannan and Freeman (1989), and Viteritti (1990).

2111ustrative are efforts by Dill (1958), Thompson and McEwen (1958), Levine and White (1 96 I), Levins (1 962), Litwak and Hylton (1962), Dutton

f& Southemteh Political Review Vol. 25 No. I

and Walton (1966), Evan (1966), Warren (1967), Pfeffer and Salancik (l978), Aldrich (1979), Bums and Mauet (1984), Gray (1985), and Yanay (1989).

’See Terrebeny (1968) for the literal application of this term. Aldrich (1979) provides more detailed theoretical and empirical bases for what he terms the “population ecology” concept. See also Benson (1978) and Hall (1972) for further illustrations of the approach.

4Burns and Mauet (1984), for instance, contend that resource considera- tions are at maximum salience early and late in the life-cycle of organiza- tions.

%ee, for example, The Federalist Papers (Hamilton, Madison, and Jay 1961), Bentham (1948), Mill (1971), and Dahl(1961).

%ee Wamsley and Zald (1973) for a useful discussion of overlaps between the public and private modes.

’Of course, political power itself can be a resource of potential interest to public agencies in improving their lot. However, in a democratic polity, power available to public agencies is limited by such constraints as con- stituency pressure, countervailing interest groups, and constitutional prohi- bitions.

*In their recent study, Nutt and Backoff (1995) have also noted the necessity of moving interorganizational concepts beyond market-based models. Their focus, while complementing the central conceptual thrust of the current effort, is more on strategy selection for individual public organizations, whereas our perspective is more oriented toward societal perspectives on public policy. Our goal is to change common conceptions of organizational environments and to provide conceptual justification for a different approach to the analysis of the effects of varying types of organizational environments on the interactive behavior of the public agencies operating in them.

91n a slightly different vein, a number of scholars have applied the notion of network centrality to explain policy outcomes-Miller (1980) to social service systems, Boje and Whetten (1981) to client referral networks, and Vaughan (1990) to the Challenger shuttle disaster.

‘OTrist (1983) suggests a typology of such organizations based on four variables:

1. * -constituent or representative. 2. * -mandated or voluntary

. .

lnterorpanizatiuntac Environments of Pubzic Orm. I9

3. @-established or emergent 4. --single or multiple actor

Although the specific typology developed by Trist is conceptually interesting, our major focus is on the existence of such an organization, without regard to specific characteristics. However, it must be noted that our concept of rules may be closely linked with certain elements of the typology created by Trist, especially if one accepts the ability to makes rules as a basic fimction of the referent organization.

“The reader may note that such a case-specific methodology does limit the generalizability of findings in regard to other multiorganizational set- tings. Nonetheless, such an approach represents an intermediate step from a purely ideographic method toward generalizability. For a more complete explication of this issue, see Guba and Lincoln (1 989), Heilman (1991), and Morris and Burch (1 99 1).

121n a later work, Ostrom refers to working rules as “rules-in-use,” defined as “the shared understandings about enforced prescriptions about who may, must or must not inform or act in particular ways given the position they are in” ( 1990a, 12).

I3Or, at the very least, without the approval or participation of those formally charged to act on behalf of the citizenry.

141n fact, the bureaucratic model describes most traditional government programs. Many government programs empower a specific agency to administer the program, as well as to create and enforce rules and regula- tions pertinent to that program. These rules and regulations are mandatory, and carry the force of law.

I5In such a situation, all actors have an equal chance to participate and compete in the environment, and no actor exists in the environment who is capable of restricting either entry or activity.

I60f course, the legality of such an arrangement would pose its own problems. However, in terms of our framework, an action of this nature would still constitute a voluntary (and informal) rule.

17Note that, for a host of reasons, we are unlikely to find many pure natural market settings. Thus our examples may leave some readers with questions about the viability of this setting. Our purpose is not to make a case for the pure form of any setting, but rather to describe a “theoretically pure” setting against which we may compare characteristics. The same may be said of all four of the environments developed in this paper.

20 Southeastern Political Review VoL 25 No. I

18Consider, for example, the low number of agencies which actually have disappeared under “Sunset” laws (Curry 1990; Kearney 1990).

‘9Actual experiments in Phoenix, Arizona, and Newark, New Jersey, would tend to support this position (Bartlett 199 1 ; Hinds 199 1 ; Governing 1991).

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