Emerging Developments in the Study of Organizations

The Review of Higher Education Fall 1982, Volume 6, No. 1 Pages 1 to 18 Copyright © 1982 Association for the Study of Higher Education All Rights Reserved EMERGING DEVELOPMENTS IN THE STUDY OF ORGANIZATIONS James G. March An invitation to speak on emerging developments in any active research field is an invitation to pretense; and my observations will, I fear, be sub­ stantially less comprehensive than might be wished. Recent studies of or­ ganizations encompass enough variety to assure that the parochial interests and competence of a speaker will color considerably the portrait that is painted, and 1 am no exception. Thus, a small introduction in the spirit of full dis­ closure. I intend to talk about a few developments in that small comer of the study of organizations having to do with decision-making, change, infor­ mation, and the like. Within this domain of organizational research, I intend first to provide a little background, a quasi-history of the development of ideas; second, to list a few recent developments; third, to note some impli­ cations of those developments for some basic questions about organizations; and fourth, to comment on a few prospects and needs for additional research. My concern that such a relatively narrow focus may be inadequately respon­ sive to your invitation is ameliorated by a conviction that it is necessary and an awareness that others have looked at different comers of the field in recent review articles that are readily available (Nystrom and Starbuck, 1981; Cum­ mings, 1982; Faucheux, Amado, and Laurent, 1982). Background The canonical beginning for students of organizations is a view of orga­ nizations as hierarchial systems for taking consequential action in a compreThis paper was delivered at the annual meetings of the Association for the Study of Higher Education, Washington, D. C., March 3, 1982. The paper reports work done jointly with a number of colleagues, most notably Michael D. Cohen, Martha Feldman, Scott Herriott, Daniel LeVinthal, Johan P. Olsen, Guje Sevon, and Zur Shapiro. The research has been supported by grantsfrom the Spencer Foundation, the Stanford Graduate School of Business, and the Hoover Institution. James G. March is professor of management, Stanford University 1 2 The Review of Higher Education hensible world. Although everyone knows that such a characterization can be profoundly misleading, it is a frame for much of our thinking about organizational life. Modem theories of organizational decision-making can be viewed as attempts to modify that conception in two simple ways. First, there has been considerable effort devoted to examining the consequences of the ways in which organizations, and the people in them, act on the basis of a limited comprehension of the world. They are boundedly rational rather than completely rational. They have incomplete information and modest ca­ pacities for processing information. These observations have led to devel­ opment of theories of limited rationality, satisficing, attention, search, and organizational slack. The basic ideas are well-known. Decision-makers are assumed to have aspiration levels against which they evaluate performance. When goals are not achieved, the organization searches for new alternatives and new infor­ mation. The search continues until it reveals an alternative that satisfies the currently evoked goals. New alternatives are sought in the neighborhood of old ones. The key scarce resource is attention; and theories of limited ra­ tionality are, for the most part, theories of the allocation of attention. They are also theories of organizational slack. When aspirations are achieved, search for new alternatives is assumed to be modest, slack accumulates, and aspi­ rations rise. Conversely, when performance falls below aspiration, search is stimulated, slack is decreased, and aspirations delcine. These changes in aspirations, search, and slack tend to keep performance and aspiration resonably close; and the process serves to buffer the organization somewhat from fluctuations in the environment. Second, it has been observed that organizations are not simple hierachies. They are political systems with unresolved, or partially resolved, conflicts of interest. Awareness of conflicts of interest in organizations has led to an elaboration of theories of coalitions, bargaining power, the quasi-resolution of conflict, and implementation. These basic ideas are also well-known. It is assumed that individuals enter a decision arena with preferences and...