On the Economic Approach to Institutional Organization
New Horizons in Management series
Chapter 7: The Evolution of Institutional Organization: Economics of Environmental Change or a Behavioral Discovery Process of ‘True’ Human Nature?
From the beginning, the forces of light and the forces of darkness have polarized the field of organizational analysis and the struggle has been protracted and inconclusive. The forces of darkness have been represented by the mechanical school of organizational theory . . . The forces of light . . . came to be characterized as the human relations school. (Perrow, 1983, p. 90) [A] theory which illumines the right things now may illumine the wrong things another time . . . [T]here is . . . no economic theory which will do for us everything we want all the time . . . We may . . . reject our present theories not because they are wrong, but because they are inappropriate. (Hicks, 1976, p. 208) The development of organization theory has been linked to a discovery process of ‘true’ human nature. Behavioral organization research, for example, the human relations school or behavioral economics, support this suggestion. The previous chapters hinted that Taylor, Simon and Williamson made certain claims in this respect, too. This chapter discounts such suggestions that organization theory and how it developed over time directly reflected on the portrayal of human nature. Chapters 4 and 5 outlined that Taylor, Simon and Williamson specified theoretical–(practical) concepts of institutional organization and skills utilization in different ways. This chapter here connects to Hicks’ (1976: 208) thesis on the timeliness of organization theory. It analyzes changes in business organization over time and their conceptualization in relation to environmental change. Section 7.1 outlines an institutional economic conceptualization of interdependence between organizational change and environmental change. It projects...
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