Foundations of the Theory of Organization

T RADES unions, governments, business corporations, political parties, and the like are formal structures in the sense that they represent rationally ordered instruments for the achievement of stated goals. Organization, we are told, the arrangement of personnel for facilitating the accomplishment of some agreed purpose through the allocation of functions and responsibilities.' Or, defined more generally, formal organization is system of consciously coordinated activities or forces of two or more persons.2 Viewed in this light, formal organization is the structural expression of rational action. The mobilization of technical and managerial skills requires a pattern of coordination, a systematic ordering of positions and duties which defines a chain of command and makes possible the administrative integration of specialized functions. In this context delegation is the primordial organizational act, a precarious venture which requires the continuous elaboration of formal mechanisms of coordination and control. The security of all participants, and of the system as a whole, generates a persistent pressure for the institutionalization of relationships, which are thus removed from the uncertainties of individual fealty or sentiment. Moreover, it is necessary for the relations within the structure to be determined in such a way that individuals will be interchangeable and the organization will thus be free of dependence upon personal qualities.3 In this way, the formal structure becomes subject to calculable manipulation, an instrument of rational action. But as we inspect these formal structures we begin to see that they never succeed in conquering the non-rational dimensions of organizational behavior. The latter remain at once indispensable to the continued existence of the system of coordination and at the same time the source of friction, dilemma, doubt, and ruin. This fundamental paradox arises from the fact that rational action systems are inescapably imbedded in an institutional matrix, in two significant senses: (i) the action system-or the formal structure of delegation and control which is its organizational expression-is itself only an aspect of a concrete social structure made up of individuals who may interact as wholes, not simply in terms of their formal roles within the system; (2) the formal system, and the social structure within which it finds concrete existence, are alike subject to the pressure of an institutional environment to which some over-all adjustment must be made. The formal administrative design can never adequately or fully reflect the concrete organization to which it refers, for the obvious reason that no abstract plan or pattern can-or may, if it is to be useful-exhaustively describe an empirical totality. At the same time, that which is not included in the abstract design (as reflected, for example, in a staff-and-line organization chart) is vitally relevant to the maintenance and development of the formal system itself. Organization may be viewed from two standpoints which are analytically distinct but which are empirically united in a context of reciprocal consequences. On the one hand, any concrete organizational system is an economy; at the same time, it is an adap* Manuscript received September 9, 1947. 'John M. Gaus, A Theory of Organization in Public Administration, in The Frontiers of Public Administration (Chicago: University of Chicago Press, 1936), p. 66. 2 Chester I. Barnard, The Functions of the Executive (Cambridge: Harvard University Press, 1938), p. 73. 8 Cf. Talcott Parsons' generalization (after Max Weber) of the law of the increasing rationality of action systems, in The Structure of Social Action (New York: McGraw-Hill, IT37), p. 7.52.