Organization Studies

http://oss.sagepub.com Vita Contemplativa: Following the Scientific Method: How I Became a Committed Functionalist and Positivist
Lex Donaldson Organization Studies 2005; 26; 1071 DOI: 10.1177/0170840605053542 The online version of this article can be found at: http://oss.sagepub.com/cgi/content/abstract/26/7/1071

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Authors name

Vita Contemplativa Following the Scientic Method: How I Became a Committed Functionalist and Positivist
Lex Donaldson
Abstract
Lex Donaldson Australian Graduate School of Management, Sydney, Australia

I summarize my view of organization theory and then explain how it developed over my life. I stress that it arose gradually from a series of empirical tests, so that my views are based on good reasons, despite being in some ways unconventional. Early inuences upon me include the non-conformist climate of my school days and the empirical ethos at the University of Aston. I have long been interested in the creation of social science. This has been informed by the philosophy of science, which emphasizes the centrality of theory and its empirical testing. My early work in the Aston programme laid the basis for commitment to functionalism and generalization. The vociferous rejection of this style of research by ideologically oriented critics led me to defend it, both theoretically and philosophically. My later work on strategy and structure led me to reject strategic choice and embrace situational determinism. I analysed these and other research topics as being within structural contingency theory. I also used this theory frequently in my business school teaching. In the USA, newer theories arose, which, collectively, fragmented organizational theory. I critiqued these theories, and this fragmentation. Moreover, I became convinced that contingency theory in its classic variant is more correct than newer variants, and offered detailed argumentation. My empirical research also found that crises of low performance triggered adaptive structural change. From that, I created organizational portfolio theory, which draws upon nance to explain performance uctuations and the resultant organizational change and lack of change. More recently, I offered an integrated statement of structural contingency theory and ideas for its future development theoretically and methodologically.
Keywords: functionalism, positivism, contingency theory, structure, organizations,

science

Organization Studies 26(7): 10711088 ISSN 01708406 Copyright 2005 SAGE Publications (London, Thousand Oaks, CA & New Delhi) www.egosnet.org/os

I have steadfastly argued for positivism and functionalism, for a long period of time. In part, this stems from a lifelong commitment to taking a scientic approach to the study of organizations. However, some of my views have emerged piecemeal over many years. I have been aware of many different views, and only gradually settled for my present views, as a result of a long and laborious process of considering the theories and empirical evidence. Similarly, my views have also become more extreme over time, in the sense that they have departed more from the mainstream. While some basis for this was laid early in my life, much has come about gradually as a result of this same consideration of the theories and evidence.
DOI: 10.1177/0170840605053542
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I will briey present my theoretical position and then explain how it arose, by telling the story of my intellectual life.

How I View Organizations

My view of organizations is positivist in several senses. It is a general theory of organizations, which holds across many different kinds of organizations and in many different settings (Donaldson 1996a). The methods used to test the theory include scientic methods such as quantication and controlling for extraneous causes. The theory is also positivist in the sense that the causal processes are conceived of as operating deterministically, with many of them involving objective forces that place pressures on the organization (Donaldson 1996a, 1997a). It is also positivist in that material factors play a role, e.g. organizational size, being the number of organizational members (Donaldson 1996a). My view of organizations is functionalist (Donaldson 1996a) in that organizations are created and maintained primarily because of their instrumental benets: that is, they enable tasks to be accomplished that an individual alone cannot (Donaldson 1985a). Similarly, organizations have an organizational structure because this is necessary to coordinate the work of their members to achieve task accomplishment (Donaldson 1985a). Some structures produce greater organizational performance, and so organizations tend to adopt those structures. Organizational managers are under environmental pressure from competitors, owners and so on, to increase the performance of their organizations, and they also tend to want to do so, as stewardship theory states (Donaldson 1990a). Higher performance results from tting structures to the contingencies, such as size, strategy, innovation and uncertainty (Donaldson 2001). Managers and their organizations tend to act rationally, by choosing structures that t the contingencies, so their choices are determined by the contingencies (Donaldson 1996a). Hence, contingency change drives structural change. The adaptation of structures to contingencies occurs across different countries and so generalizes (Donaldson 1996a). However, organizations may remain in mist for some time, until performance drops to crisis levels (Donaldson 2001). This results from managerial rationality being bounded, i.e. imperfect, reecting limited managerial knowledge (Donaldson 1999). The functionality of organizations is therefore also imperfect, leaving scope for improvement through better knowledge being provided to managers through research and education (Donaldson 1985a). The theory is one of disequilibrium (Donaldson 2001). The higher performance enjoyed by organizations in t gives them surplus resources. Organizations tend to use these surplus resources to expand, thereby increasing the level of some of their contingency variables, e.g. size, while also retaining their existing structure, and so organizations move into mist of structure to contingency.

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School Days

At my non-denominational Protestant state schools, it was impressed on us that we should always say what we believed to be the truth, even if it contradicted others or went against the norm or led us to suffer. The values imparted were that one had to follow duty and serve ones fellow human beings. This required hard work and self-control. We were also trained to be critical, for example about what we read in the newspapers, to see through propaganda, self-interest and falsehood. This spirit of scepticism was rampant in the Merseyside community and among my family and friends. There was a strong sense that many public announcements, especially by those in ofcial positions, were sanctimonious and hypocritical. Organized religion was particularly a target of grass-roots critique. Later on, it astounded me to hear people in universities talk as if being critical is something new or only exists in universities or only among followers of critical theory or postmodernism. In my world, during the early 1960s, science had great prestige. There was a strong Enlightenment sense that the best knowledge was scientic knowledge and this enabled action to be taken to improve the lot of humankind. Therefore, for my latter years at school, I specialized in mathematics and physics, which undoubtedly provided me with an enduring role model of successful science. Novels that inuenced my thinking included science ction works, by Huxley and others, of future societies controlled by scientic forces. I recall one evening arguing with friends about whether people had free will, as religion said, or were determined, as science said. We all concluded that human behaviour was completely determined. To deny this inescapable inference of science seemed to all of us to be wrong, and either muddled or hypocritical. In my last years at school, we listened weekly to a series of radio talks on the philosophy of science. This included a talk by Popper on falsicationism, and a talk on Kuhns paradigms. These philosophers were adamant that empirical facts always needed to be interpreted through theory. When I was only about 15, I took out books from the public library by Eysenck, in which he argued for a decidedly scientic approach to psychology, refuting as unscientic earlier psychologies such as Freuds. He explained the basis of the scientic approach to psychology, including the correlation coefcient and experiments. I found his writing thrilling, in that it was clear, denite and aggressive. It made its case rationally, but boldly, tearing down all doctrines that were shown by science to be false. This kindled in me a desire to be a part of this scientic movement, freeing us from the inuence of old, false views, and so informing key social policy questions. One of Eysencks points was that science sometimes shows that the natural world works in an unpleasant or unjust way. For example, a child born with one disadvantage is more likely to have other disadvantages, so that the fond idea that all children excel in something is false. This is part of the toughmindedness of the scientic view. And it is one of the reasons why science

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should strive to be objective and value-free, because value-driven beliefs will often be beguiling but wrong (Donaldson 1997b).

Undergraduate Degree at the University of Aston

Subsequently, at the University of Aston, I initially specialized in psychology, but I later switched to sociology, because I found its analyses far more interesting, being eld-based and realistic. Industrial sociology was strong then. The format of the lectures was what I came to recognize as the British empirical critique: Well, there is this theory [often American], but in the study of the women down in the biscuit factory, in reality they ... This was admirable, in that it was both critical and empirical. In sociology, I was exposed to functionalism. Functionalism is widely used in the biological sciences, so it seemed reasonable to inquire as to whether social and organizational structures were shaped by their consequences. Moreover, by revealing latent functions unknown to participants, functionalist research was not just telling people what they already knew. The key formulation of functionalism was Merton (1968), in which the function of a structure was a hypothesis to be investigated empirically. There was disavowal of any presumption that every structure is functional, and indeed there was the explicit concept of dysfunctions. In sociology more generally, a prevailing doctrine was structuralism, meaning that social interactions recur in patterns, reecting social facts about the situations that constrain people, even if they would prefer to do something else. For example, social stratication meant that people from lower socio-economic strata are enduringly disadvantaged. And, in organizations, members are subject to hierarchical subordination and to compliance systems (Etzioni 1961). Thus, explanation consists of charting patterns that make up the social structure and identifying their causes, which lie outside of individuals. In psychology, I was exposed to the idea that human beings are relentlessly adapting to their varying environments. These ideas undoubtedly provided a bedrock of thinking for my later research. There was also a course on the philosophy of science. This included ideas that, on a priori philosophical grounds, challenged the notion that there could be a social science. We read Ayer, Popper, Winch and Wittgenstein. Popper was a gure much respected throughout British universities in the sixties, and I greatly enjoyed reading his Open Society and its Enemies, and was much inuenced by it. Again, this was a vigorous and cogent critique that revealed the unscientic nature of theories such as Marxism, and roundly refuted them. Thus, I internalized the view that philosophy was to be respected, and that social science was potentially vulnerable to crushing objections of an a priori philosophical kind. At Aston, I had the great good fortune to be taught by David Hickson, who is an exemplary positivist humanist, and John Child, who is an exemplary scholar. The prevailing ethos there was liberal and sceptical. No theory should be either accepted or ruled out a priori; rather they all have the right to be

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included in empirical research, which will show which theories are valid. Such inclusion also allows synthesis of theories. Thus, far from being indoctrinated in some particular organizational theory, I was encouraged towards an eclectic empiricism. While I was a student, the student revolution of 1968 erupted. Being conscious of social injustices and the need to right them through social change, I became part of the movement. However, for many, the radicalization was accompanied by a politicization of sociology, which I came to resist. Within British sociology, there was a faction that rejected notions that sociology was, or ever could be, a science, or that it should be value-neutral. The faction tended to see these and other, then mainstream, ideas, such as functionalism and positivism (particularly in American sociology), as being false and as an ideology justifying capitalism or pernicious statism. Functionalism was challenged by what was then called conict theory. Society was seen as characterized by conict between social classes. Functionalist theory was an ideology of the establishment and conict theory the ideological weapon of the insurgents. Thus, conict theoretical sociologists were partisans for the oppressed. For them, sociology is the continuation of social struggle through academic means. This stance became increasingly popular, and many people who entered British sociology from 1968 onwards saw themselves as partisans. In contrast, I (along with my peers) saw myself as becoming a professional social scientist.

Philosophy of Science

At school and university, I developed a view of the philosophy of science that I have basically held for my life to date, which has guided my research. The aim of science is to create coherent theories, which have been empirically validated. Progress involves the overturning of pre-existing theories by falsifying them. Science involves use of the hypothetico-deductive method: some of the elements in a theory may not be observable, but observable implications can be deduced from them. These hypotheses about observables are tested against the empirical data. An example, used repeatedly in my early exposure to the philosophy of science, was the bubble chamber experiments in atomic physics. When a particle shoots out from a nucleus, it leaves a track of bubbles in a liquid, and, from the trajectory, the scientist infers the nature of the particle, without actually observing the particle. Thus, one can validate or falsify a theory without empirically studying all of its processes, some of which may remain inaccessible. This is why statistical analysis of quantitative data can be so revealing, even if some processes that are in the theories are not directly studied. Knowledge development often takes the form of a contest between two or more competing theories. By formulating and empirically testing the hypotheses derived from each theory, one may be able to conclude validly that one theory is false and the other conrmed. Whereas accuracy is a scientic virtue, many social science data are not highly accurate, but often they do not

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need to be to discriminate between competing theories. The struggle between competing theories is what gives much of the form and dynamic to a literature. Policies propounded by pundits, political parties and governments can also be formalized into theories, whose propositions can be turned into testable empirical hypotheses. My 1974 PhD thesis was just such an examination, a programme evaluation of British government policy for higher education. One of the chapters in the book from my thesis is entitled Policy as Theory (Donaldson 1975a). Managerial practices also can be treated as being based on implicit theories whose hypotheses can be tested empirically. My earliest social science research was a study of job enrichment in Phillips Electrical Limited (Donaldson 1975b). In such ways, academic research has social relevance. A commentator has written that I see organizational theory as a policy science (Reed 1989), which is a correct view of my position. I have wanted research to develop knowledge that is useful and speaks to managerial and social concerns (Donaldson 1979, 1985a, b, c, 2000, 2002, 2003a, Donaldson and Hilmer 1998, Hilmer and Donaldson 1996).

Entering Academia

My decision to become an academic was prompted by my deep interest in social science, and by my desire for a job in which I would be autonomous and free to express my views without having to be subservient to a hierarchy. After being a student, I was employed as a researcher. Initially, I researched higher education policy. In so doing, I wrote my rst published article (Donaldson 1971). I spent much time poring over the data and comparing their patterns with those implied by the prevailing government policy. I was very hesitant about making any statement that went beyond just reporting the data. I would attempt a theoretical interpretation, only to think: I cant say that; it is not allowable under scientic method. So I would cross out the statement and then try a much more cautious one. Then Id think that I was missing the theoretical signicance of the nding, and so Id try a less cautious statement. This process went on for a long time. Gradually I felt I had made a theoretical interpretation of the data that was reasonable, in the sense of according with scientic principles. While the process had been painstakingly slow, learning had occurred, so that in writing subsequent articles I could more quickly make the judgments about what theoretical interpretation is reasonable. Next, I moved to London Business School (LBS), to the Organisational Behaviour Research Group, headed by Derek Pugh. The Aston study had found in Birmingham a relationship between organizational size and organizational structure. At LBS, John Child had run a large-scale replication study of organizations in England and Wales. As I entered his ofce, I saw computer printouts stacked everywhere. John said something like: The replication has come out pretty much in support of the original Aston study, with size being important. It seemed to me that I was truly standing in a social scientic institute: here were data, results, statistics, replication tests and patterns that generalized across samples and locales.

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Under the leadership of Malcolm Warner, we applied the Aston method to the organizational structures of trade unions (i.e. labour unions) and professional associations. Many of the relationships found in other Aston programme studies held (Donaldson and Warner 1974a). Moreover, we extended the framework by adding variables that tapped the democratic aspects of these organizations and were able to interpret the ndings in a theoretically meaningful way (Donaldson and Warner 1974b). We were contributing incrementally to the building of an empirically validated general theory of organizational structure (Donaldson and Warner 1976), which seemed a satisfactory development within the mantle of social science. However, my rst presentation of our ndings at a conference proved stormy. The research was vehemently attacked, with one speaker becoming passionately hostile, belittling and dismissive. The root of the dispute was the view of sociology-as-ideology. To the critics, this functionalist, quantitative research aped science and was ideologically pernicious especially being a study of unions conducted in a business school. This was the rst time I was publicly on the receiving end of the ideologically based critique. The criticisms were highly emotional. This was not cautious scientic interchange; it was political diatribe. At subsequent conferences and inter-university colloquia, I listened to this style of invective being delivered against me and others. During the seventies, these kinds of vitriolic attacks at conferences on social scientic research became so strong that some good researchers were cowed and stayed away. I had sympathy for societal change towards socialist democracy. However, I also believed that not all knowledge was politicized, in that organizational research was not perpetuating capitalism and could inform democratic, working-class or governmental organizations. A key reason is that issues such as how to organize more effectively to attain organizational goals are valueneutral. It is this technical nature of administrative knowledge that allows organizational theory research not to be an ideology justifying the status quo (Donaldson 1985a). Therefore organizational theory research should not be overthrown as part of combating bourgeois ideology. One type of argument that was used a lot by the ideological critics was a priori philosophical argument. They freely bandied about words like underlying philosophical assumptions, epistemology, Kuhnian paradigms, incommensurability, meaningfulness, reication and behaviouristic correlations. Many academics and students quailed before these verbal pyrotechnics, or were in awe of those who uttered them. In contrast, I readily found aws in their arguments. I could deal with these philosophically based objections, because my grounding in philosophy, though rudimentary, was at least a match for many of the critics. Many of them were too used to winning by bamboozling their targets, but I was not so easily fazed, and came back at them. The more I was involved in these interchanges, defending social science and its practitioners against the sociology-as-ideology brigade, the more I found that the critics arguments were wrong or weak. Thus I felt that I was becoming adept at rebutting them. However, despite their weak rational

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foundations, it also became obvious that some social scientists just could not stand up to these critics in public brawls. They were good men and women, but they lacked the philosophical or other foundations, or they emotionally disliked the conict. In contrast, I felt that I had the capacity to take on the volatile critics. The emotional part of this capacity came from my background values and from traits inherited from my mother. At the intellectual level, I was acting out the Popperian mission of wrestling with the ideologues, in order to build social science. I have continued to defend the philosophical basis of the scientic study of organizations (Donaldson 1985a, 1992, 2003b, c ,d). As I worked on the analysis and write-up of the union data, I was repeatedly comparing different competing theories to see which best accorded with the empirical evidence. For instance, I concluded that the relationship between organizational size and organizational specialization was real, and not some artefact or emanation of abstracted empiricism (as critics sometimes labelled Aston-type research). Not only were the respondents in small unions telling us that they had few specialists, but their head ofce was a modest house, so we could see that there really were no specialists there. Thus, the coding of low specialization was valid. One hypothesis at a time, I gradually eliminated plausible rival theories and converged on the theoretical interpretation in the published articles. This is an incremental, little-by-little approach, which proceeds over quite a time and involves a lot of hard work. Because of the intellectual foment against functionalism, positivism and determinism, and in favour of conict or human choice theories, there was pressure on Astonian and other quantitative researchers to interpret their correlations in ways that accommodated the conict/choice theories. John Child published a paper that criticized the Aston theory and methods quite strongly, and advocated instead the strategic choice position, which was a combination of the systems and actor theories. I was shocked as I read the working paper, because it undermined the rationale of the Astonian approach. This article (Child 1972) became one of the most cited of the Aston programme articles from the 1970s, is well known internationally, and helped create a move away from quantitative, scientic methods in British organizational studies. Thus, in the 1970s, an ongoing issue was the relationship between statics and dynamics, in that there were substantial cross-sectional correlations between contingencies and structural variables, but some theorists argued strongly that change was created by humans conicting and exercising choice. By the early 1970s, my position was pluralistic, in that I believed that functionalist systemic causality operated whereby organizations adapted to their environment, but that there was also a substantial realm of choice in which actors (e.g. managers) made decisions, shaped by their perceptions, oriented towards their valued ends and entailing political processes of conict and power. Thus organizational behaviour was both systemic and deterministic on the one hand, and also individualistic and voluntaristic on the other. Both systems theory and social action theories were correct. Derek Pugh conceded in seminars that they both might account for about 50 per cent of the variance. Similarly, in a publication in 1982, debating against Schreyoggs critique of

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contingency theory, I wrote that there were relationships between contingencies and structure, but that the changes were more random, reecting conictchoice processes (Donaldson 1982a). At LBS I worked on various issues (Donaldson 1975a; Donaldson and Lynn 1976), mostly within the Aston programme, including the dimensionality of organizational structure (Donaldson 1975c) and the relationship of structure with technology (Donaldson 1976). Zwerman (1970) had published a US study that replicated Woodwards (1965) ndings that technology was the key. I read through the book quickly and accepted his argument. However, I then prepared an internal memorandum for my colleagues and felt that I should include some tables that clearly showed the replication. However, as I unpacked his ndings and reassembled them in tables, using Woodwards format, it became strikingly obvious that Zwerman had not replicated Woodwards relationship between t of structure-to-technology and performance. I then went on to write a paper that compared the Zwerman and two Astonian studies, and found that none of the Woodwardian relationships were replicated consistently by them all. The paper was very much a Popperian falsication of a then major organizational theory. I submitted it to the Journal of Management Studies, but heard nothing for over a year. Eventually, a new editor wrote to say that, when he had taken over from his predecessor, in the ofce had discovered my paper, which had fallen down behind a cabinet! Upon its publication it caused something of a stir, with another journal, Omega, publishing an editorial commentary on it (Eilon 1977), which was followed in a later edition by correspondence from various researchers: Charles Baker, John B. Chapman, John Donaldson, David J. Hickson, Tom Kynaston Reeves and Leonard Sayles (Baker et al.1978; also Donaldson 1978).

Core Academic Career

I moved to the Australian Graduate School of Management in 1977. Because, over the years, I had to teach organizational structure many times, my mind was focused on the contingency theory research: how its ideas come together in a coherent way, and its validity. Publicly arguing for a model undoubtedly motivates one to attend to its validity and increases ones commitment to it. In 1978 I reected on my intellectual life and laid out a strategy for the future. I was aware that I had gradually evolved a set of beliefs of the contingency theory type, which involved functionalism and positivism. I realized that this was contested and that I was well equipped to argue for this position, and that such arguments would be distinctive and of interest to a broad audience because they addressed fundamental issues. Moreover, I was conscious that, of my ten publications at that time, the one that had caused the most interest was the critique of Woodward, rather than the more constructive and incrementalist contributions. I saw that, making critical statements about core parts of the literature played to my strengths and led to contributions valued by the academic community.

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I had been interested in working in the USA and, at about this time, visited a university there. I was struck that many of its academics felt oppressed by hierarchy. To get tenure, they had to have the right publications, which meant writing things that pleased certain editors and reviewers. Just one too few journal acceptances led to denial of tenure. At a social party in the home of one professor, I watched as the very formally attired academics and their spouses lined up and shook the hand of a senior university ofcial the woman who had just denied tenure to one of their colleagues. She passed along the line like royalty. Afterwards, the academics gasped and wiped their sweating palms. These people were not living the life of academic freedom; they were living a life of academic serfdom. Since I had tenure in Australia, I decided to stay there, so I could enjoy the freedom to write what I wished. Also, by publishing my main statements in books, I could avoid censoring by the journal editors. I started writing a paper that was a rebuttal of the criticisms of contingency theory made by the Marxian left and the strategic choice position. As soon as I began writing, the ideas and words poured forth rapidly, and I soon realized I was writing my rst Popperian-style book, which was exhilarating. This book became In Defence of Organization Theory, published in 1985. In it I sought to provide an intellectual defence of functionalism, positivism, contingency theory and quantitative, comparative research methods. There have been discussions about my defence (Aldrich et al. 1988), but no cogent rebuttal (Donaldson 1988). My main concern was to defend these theories and methods from dismissal, by arguing that they had validity. While I made criticisms of rival approaches, I did not deny them a place. Thus I did not assert one paradigm to the exclusion of others. A commentator has classied me as an integrationist (Reed 1985), which is a correct view of my position (Donaldson 1998). Simultaneously, I was also pursuing, at a more detailed level, the type of research that I was defending. By late 1970s, a series of studies had been published that provided comparative, quantitative evidence that Chandlers (1962) strategy leads to structure thesis replicated and generalized. However, Aston researchers tended to be sceptical about Chandlers thesis, because of his use of the case method, which was seen as the old, awed method that Aston was replacing. The newer studies were an improvement, in that they made extensive quantitative comparisons, but they used no, or only rudimentary, statistics, and did not test hypotheses in the way required by their functionalist theory. I suspected that much in the patterns of their cross-tabulations could be explained by chance. Therefore, I set out to conduct a secondary re-analysis, thinking that I would refute the Chandler thesis, as I had done Woodwards. However, as I tested the hypotheses one by one, they each came out in support of Chandlers thesis. They also failed to support the would-be post-Chandlerians, such as institutional, strategic choice and transaction cost economics theories. I gradually came to believe in the soundness of his original thesis, and in the 1980s I published a series of articles reporting these ndings (Donaldson 1982b, c, 1984, 1986a, b, 1987). In examining the strategystructure issue, my method, of course, was to deduce from the theory the implied hypotheses. First, I had to dene which
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structures tted each strategy and which were mists. Having operationalized t in this way, I then tested its effect on subsequent nancial performance. Prior work tended either not to measure t, or failed to nd an effect on performance. Yet, clearly the tperformance link was the key to the whole functionalist explanation of why strategy led to structure. I found that, indeed, t led to higher performance, thereby supporting the key idea of functionalism (Donaldson 1987). I could then test the other hypotheses implied by Chandlers strategystructure thesis. In so doing, I was testing structural contingency theory for a major contingency strategy and its corresponding aspect of structure, functional versus multidivisional. Corporations moved into mist through diversifying, that is, by increasing their level of the diversication contingency variable (Donaldson 1987). Consequently, they suffered performance loss while they remained in mist. They then moved from mist to t, by changing structure, typically by adopting the multidivisional structure (Donaldson 1984, 1987). Hence, the overall process was that diversication caused divisionalization. Raised to a higher level of abstraction, these results showed that early contingency theory was right in arguing that contingency change leads to adaptive structural change, because organizations suffer performance loss while in mist. Rival theories were shown to be false. For instance, the institutional theory explanation of divisionalization, as being a mere fad in the 1960s, was falsied. Corporations adopting the divisional structure in that decade were actually moving into t, and so their divisionalization was rational adaptation rather than mere fad (Donaldson 1987). A problem with many institutional theory explanations is that they groundlessly dismiss the explanation that structures are adopted to raise performance, without actually measuring performance, and so they are unable to show that there is no performance benet. Here, when performance is measured, it reveals benet from adopting the divisional structure after having diversied, and thus a rational motive for divisionalizing. To test fairly for the presence of performance benets, it is necessary to follow the functionalist programme of examining the consequences of structures, and, more particularly, to follow the contingency programme of looking for the positive performance consequences of t between structure and contingency. Thus, disputed theories of organization were evaluated through empirical testing. Throughout the years, the Aston programme of research into organizational structure continued, in country after country, revealing that the basic relationships held, especially between size and bureaucracy (Miller 1987). This attested to the generalizability of the relationship between the size contingency and organizational structure. However, it also supported the functionalist interpretation. If organizations whose size was increasing became more bureaucratic in order to maintain effectiveness, then one would expect to nd size and bureaucracy connected in every study, which was what emerged. Thus the sizebureaucracy relationship was another set of compelling empirical ndings that helped shape my convictions about organizational theory. My 1985 book was mostly debating against the Marxian, conict and subjectivist critics of systems-type organizational theory, who are mainly to be found in Europe, Australia and other countries. America was different, and
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yet home to several other theories that also challenged contingency theory, so I subsequently published American Anti-management Theories of Organization: A Critique of Paradigm Proliferation (Donaldson 1995a). In this book, I made a critique of the major US theories: population ecology, institutional theory, resource dependence theory and organizational economics (i.e. agency theory and transaction cost theory). I closely examined them and found many problems of coherence and contradiction by empirical evidence. A major scientic problem was their treatment of prior work, such as Aston or Chandler. Scientically, one expected a careful assessment and an attempt to build upon what these earlier research programmes had established, or to give a refutation argued in detail. However, these newer US theories were advanced with only supercial consideration of prior work or none at all! Many of the statements made by the newer theories were known to be wrong from previous contingency-type research. Overall, they put organization theory in a poor condition, in that it lacked cumulation and was fragmented into disparate streams. There was no integrated model of the organization that provided an intellectual achievement for the discipline, or could be used to advise managers (despite the vast sums expended on research). Privately, some American colleagues conded to me that the eld was in a mess, but no one wanted publicly to take on the protagonists of the new theories, who were prominent and in powerful positions. I saw that this was a task that I could and should do. During the 1990s I gave seminars and conference presentations in the USA, laying out my critique, touring the leading US universities to criticize openly their eminent professors (sometimes they were backed up by a whole room full of their students and colleagues). These sessions were electric, to say the least. On one occasion it erupted into a rancorous debate late at night in a restaurant overlooking San Francisco Bay. I closed that 1995 book by taking the empirically validated parts of each of the theories and synthesizing them into an integrated model (Donaldson 1995a). The book achieved prominence, as I expected it would, because it deals highly critically with central theoretical contributions. It has been used by doctoral students in programmes such as at Harvard and Wharton, so this may help to inuence future generations. Then, in 1996, I published the book that lays out the detailed case for the functionalist, positivist, structural contingency theory: For Positivist Organization Theory: Proving the Hard Core (Donaldson 1996a). By a careful consideration of the theory and empirical evidence, I showed why this is sounder than other views that sought to supplant or correct contingency theory (for a much briefer statement see Donaldson 1996b). These erroneous views include organizational politics and, in ways, organizational congurations (Donaldson 1996a). The book also shows in detail that strategic choice theory fails theoretically and empirically, because contingences strongly determine structure, with little inuence left to choice unconstrained by the contingency imperatives. Thus there is no need to leap to a different paradigm to deal with change. The statics and dynamics of organizations are both subsumable under the same organizational theory, and it is the functionalist, positivist systems theory.

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I have always been aware of Poppers view that theory development is a process of bold conjecture, and I had long wanted to try that. I have been interested to hear colleagues in nance talk about their research. They are very strongly committed to taking a scientic approach. Using their concepts of risk and portfolio, I developed organizational portfolio theory. This theory predicts when adaptive organizational change will occur and when it will not. The theory is presented in Performance-Driven Organizational Change: The Organizational Portfolio (1999). Its starting point was that my empirical research found that crises of low performance triggered adaptive structural change (again supporting Chandler), so this deserved to have its implications developed in an extended theory. Returning to the dominant US theories, agency theory achieved considerable popularity among academics, yet has a dark and unsavoury view of managers, which, although deserved by some high-prole cases (e.g. Tyco), may be undeserved by the typical manager. While there is argument and evidence supporting the manager as the agent of agency theory, there is other argument and evidence overlooked by agency theory of the manager as being responsible and pro-organizational, which I term stewardship theory (Donaldson 1990a, b). An empirical test by James H. Davis and me showed that stewardship theory was conrmed and agency theory disconrmed (Donaldson and Davis 1991, 1993). Stewardship theory is clearly an extremely positive and, in that sense, one-sided view of managers, and its utility is as a corrective against agency theory. The truth is undoubtedly some kind of synthesis and, with colleagues, I have tried to offer a more integrated model of the contingency type (Davis et al. 1997). However, consideration of the underlying contingencies leads me to the view that the average manager is more steward than agent. As ever, a major concern here has been to conserve important prior achievements in organizational theory. Miners (2003) survey of organizational behaviour (OB) found that out of 73 OB theories, structural contingency theory ranked at about the mean on importance. Various authors have identied different contingency factors (Donaldson 1995b). I came to the view that strategy, size, innovation and uncertainty are among the main contingency factors. For all of these, there is a common framework in which they can be subsumed: t of structure to contingency leads to higher performance. Moreover, change processes tend to take the form of changing the contingency, which creates mist, and then changing the structure to regain t. These commonalities mean that there is a contingency theory of organizational structure, rather than just disparate contingency theories. In 2001, I detailed much of my view of contingency theory in The Contingency Theory of Organizations. I argued that the contingency literature contains two main strands, which I termed bureaucracy theory and organic theory. These are at some points in conict, and so I integrated them into one theory. I emphasized the key theoretical role of t and performance, being the crucial relationship that produces the correlations between the contingencies and the structural variables. I suggested how bureaucracy theory could be reformulated to make it more functionalist, by depicting the role of

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t and performance within it (Donaldson 2001). I also reviewed literature on the effect of t on performance, and discussed methods for ascertaining the effect of t on performance. Thus I have sought to defend, clarify and synthesize structural contingency theory. In my reections upon structural contingency theory, however, I have come to see deciencies in some aspects of its existing formulation. The main one is the traditional conceptualization of the relationship between t and performance, which may require revision, for some major contingency factors. The conventional view is iso-performance, where iso means equal: any t to a contingency variable produces equally high performance as any other t to that same contingency. For example, the t of low organizational formalization to small organizational size produces the same performance as the t of high organizational formalization to large organizational size. A problem is: why should any organization bother to increase its size and formalization if there is no performance gain? To avoid this difculty, we can replace isoperformance by the concept of hetero-performance, which states that: t to higher levels of the contingency variable produces greater performance than t to lower levels of the contingency variable (Donaldson 2001). For example, the t of high organizational formalization to large organizational size produces greater performance than the t of low organizational formalization to small organizational size. This means that organizations have an incentive to increase their size contingency and their structural formalization. Thus hetero-performance provides a theory that explains why there are wide empirical variations between organizations in their levels on contingency and structural variables. Thus, my theoretical views have gradually changed over time to become less ambivalent and more certain. And they have changed to become more functionalist, more determinist, more organizationally rational, more generalizing and more seeing contingency and performance as drivers of structural shifts. These changes have moved me away from the mainstream and more towards what some might see as an extreme. Yet, they have been prompted by a careful process of weighing the theoretical arguments and the empirical evidence. Thus, scientic method, rather than some organizational theory, has played the role of the overarching master framework. This is consistent with the ethos of my early student days at Aston: that all theories stand or fall by their empirical test.

The Future

What is the future prospect for scientically based organizational studies? Some British organizational researchers have rejected positivism and embraced qualitative case studies, but this has failed to produce generalizable knowledge, and so has had little impact on the world literature. The number of antiscientists may have grown in Europe and shows some slight increase in the USA. However, there has been a great increase in the number of organizational researchers worldwide in the past thirty years, and many of them are

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oriented towards general theory construction and quantitative analysis. There has been a rise in the standard of this kind of research in the published literature. Regrettably, the proliferation of paradigms (Donaldson 1995a) has hampered the rapid development of organization studies. And the overall process has not been the rational one of different viewpoints being resolved through detailed discussion leading to consensus. However, researchers who persist with a theory are able to make cumulating contributions. In particular, there is a continuing stream of research into the effect on organizational performance of the t of structure to the contingencies (see Donaldson 2001, chapter 8). These can benet in the future from increased use of psychometric methods to reveal stronger and theoretically clearer patterns (Hunter and Schmidt 2004). Hence, organization studies can contribute knowledge about organizational performance, some of which is not already known by organizational members (Priem and Rosenstein 2000). The future for organization studies is one in which succeeding generations can continue to make progress, by keeping the science in social science.

References

Aldrich, Howard, John Child, Stewart Clegg, Lex Donaldson, C.R. Hinings, and Lucien Karpik 1988 Offence and defence in organization studies. Organization Studies 9/1: 132. Baker, Charles, John B. Chapman, John Donaldson, David J. Hickson, Tom Kynaston Reeves, and Leonard Sayles 1978 Feedback structural determinism. Omega, The International Journal of Management Science 6/1: 109115. Chandler, Alfred D. Jr 1962 Strategy and structure: Chapters in the history of the American industrial enterprise. Cambridge, MA: MIT Press. Child, John 1972 Organizational structure, environment and performance: The role of strategic choice. Sociology 6: 122. Davis, James H. F., David Schoorman, and Lex Donaldson 1997 Toward a stewardship theory of management. Academy of Management Review 22/1: 2047. Donaldson, Lex 1971 Social class and the polytechnics. Higher Education Review 4/1: 4468.

Donaldson, Lex 1975a Policy and the polytechnics: Pluralistic drift in higher education. London: D. C. Heath Ltd. Donaldson, Lex 1975b Job enlargement: A multidimensional process. Human Relations 27/8: 721738. Donaldson, Lex 1975c Organisational status and the measurement of centralisation. Administrative Science Quarterly, 20 September: 453456. Donaldson, Lex 1976 Woodward, technology, organisational structure and performance: A critique of the universal generalisation. Journal of Management Studies 13/3: 255273. Also in Management: A book of readings, 5th edn, 1980. Harold Koontz, Cyril ODonnell, and Heinz Weihrich (eds), 369380. New York: McGraw-Hill. Donaldson, Lex 1978 Feedback - structural determinism. Omega, The International Journal of Management Science 6/2:109110. Donaldson, Lex 1979 Regaining control at Nipont. Journal of General Management 4/4, Summer: 1430.

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Donaldson, Lex 1982a Comments on Contingency and choice in organization theory. Organization Studies 3/1: 6572. Donaldson, Lex 1982b Divisionalization and diversication: A longitudinal study. Academy of Management Journal 25/4: 909914. Donaldson, Lex 1982c Divisionalization and size: A theoretical and empirical critique. Organization Studies 3/4: 321337. Donaldson, Lex 1984 Explaining structure change in organizations: Contingency determinism or contingency-t. Australian Journal of Management 9/2: 1524. Donaldson, Lex 1985a In defence of organization theory: A reply to the critics. Cambridge: Cambridge University Press. Donaldson, Lex 1985b Organization design and the lifecycles of products. Journal of Management Studies 22/1: 2537. Donaldson, Lex 1985c Entrepreneurship applied to middle management of corporations: A caution. Journal of General Management 10/4: 520. Donaldson, Lex 1986a The interaction of size and diversication: Grinyer revisited. Organization Studies 7/4: 367379. Donaldson, Lex 1986b Divisionalisation and size: A reply to Grinyer. Australian Journal of Management 11/2: 173189. Donaldson, Lex 1987 Strategy and structural adjustment to regain t and performance: In defence of contingency theory. Journal of Management Studies 24/1: 124. Donaldson, Lex 1988 In successful defence of organization theory: A routing of the critics. Organization Studies 9/1: 2832.

Donaldson, Lex 1990a The ethereal hand: Organisational economics and management theory. Academy of Management Review 15: 369381. Also in Classics of organization theory, 4th edn, 1996. Jay M. Shafritz, and J. Steven Ott (eds), 340351. Belmont, CA: Wadsworth Publishing, Donaldson, Lex 1990b A rational basis for criticisms of organizational economics: A reply to Barney. Academy of Management Review 15/3: 394401. Donaldson, Lex 1992 The Weick stuff: Managing beyond games. Organization Science 3/4: 461466. Donaldson, Lex 1995a American anti-management theories of organization: A critique of paradigm proliferation. Cambridge: Cambridge University Press. Donaldson, Lex 1995b Contingency theory. History of management thought Vol. 9. Lex Donaldson (ed). Aldershot: Dartmouth Publishing Company. Donaldson, Lex 1996a For positivist organization theory: Proving the hard core. London: Sage. Donaldson, Lex 1996b The normal science of structural contingency theory in The handbook of organization studies. S . R. Clegg, C. Hardy, and W. Nord (eds), Ch. 1.2. London: Sage. Donaldson, Lex 1997a A positivist alternative to the structure-action approach. Organization Studies 18/1: 7792. Donaldson, Lex 1997b Derek Pugh: Scientic revolutionary in organization studies in Advancement in organizational behaviour: essays in honour of Derek S. Pugh. Timothy Clark (ed.), Ch. 3, 2343. Aldershot: Ashgate.

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Donaldson, Lex 2003d A critique of postmodernism in organizational studies in Postmodernism and management: Pros, cons and the alternative. Research in the sociology of organizations Vol. 21. Edwin Locke (ed), 169202. Oxford: JAI Press. Donaldson, Lex, and James H. Davis 1991 Stewardship theory or agency theory: CEO governance and shareholder returns. Australian Journal of Management 16/1: 4964. Also in Robert I. Tricker (1994) International corporate governance: Text, readings and cases. Singapore: Prentice Hall. Donaldson, Lex, and James H. Davis 1993 The need for theoretical coherence and intellectual rigour in corporate governance research: Reply to critics of Donaldson and Davis. Australian Journal of Management 18/2: 213223. Donaldson, L., and Frederick Hilmer 1998 Management redeemed: The case against fads that harm management. Organizational Dynamics, Spring:720. Donaldson, L., and R. Lynn 1976 The conict resolution process: The two factor theory and an industrial case. Personnel Review 5/2: 2128. Donaldson, Lex, and M. Warner 1974a Structure of organisation in occupational interest associations. Human Relations 27/8: 721738. Donaldson, Lex, and M. Warner 1974b Bureaucratic and electoral control in occupational interest associations. Sociology 8/1: 4757. Donaldson, Lex, and M. Warner 1976 Bureaucracy and democracy in occupational interest associations in Organisation structure: Extensions and replications. D. S. Pugh, and D. J. Hickson (eds), 6786. Westmead: Saxon House. Eilon, S. 1977 Structural determinism. Omega, the International Journal of Management Studies 5/5: 499504.

Donaldson, Lex 1998 The myth of paradigm incommensurability in management studies: Comments by an integrationist. Organization 5/2: 267272. Donaldson, Lex 1999 Performance-driven organizational change: The organizational portfolio. Thousand Oaks, CA: Sage. Donaldson, Lex 2000 Design strategy to t strategy in Handbook of principles of organizational behaviour. Edwin A. Locke (ed.), Ch. 20, 291303. Oxford: Blackwell. Donaldson, Lex 2001 The contingency theory of organizations. Thousand Oaks, CA: Sage. Donaldson, Lex 2002 Damned by our own theories: Contradictions between theories and management education. Academy of Management Learning and Education 1/1: 96106. Donaldson, Lex 2003a Neither limitations nor process theories refute the contradictions between theories and management education: Reply to Watson and Chiles. Academy of Management Learning and Education 2/3: 292295. Donaldson, Lex 2003b Organizational theory as a positive science in The Oxford handbook of organization theory: Metatheoretical perspectives. H. Tsoukas, and C. Knudsen (eds), 3962. Oxford: Oxford University Press. Donaldson, Lex 2003c Position statement for positivism in Debating organization: Pointcounterpoint in organization studies. R. Westwood, and S. Clegg (eds), 116127, Oxford: Blackwell.

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Etzioni, Amitai 1961 A comparative analysis of complex organizations: On power, involvement and their correlates, 1st edn. New York: Free Press. Hilmer, Frederick G., and Lex Donaldson 1996 Management redeemed: Debunking the fads that undermine our corporations. New York: Free Press. Also as (1997) Jenseits der Management Mythen: Kontinuitt statt Trendhopping, Landsberg am Lech: Verlag Moderne Industrie; (1997) Management, een herwaardering: Hoe modegrillen het bedrijfsleven ondermijnen, Amsterdam: Nederlandse vertaling; and (1998) Rescatando el Valor de la Gerencia: Mas alla de las modas que desprestigian a nuetras corporaciones, Buenos Aires: Paidos. Hunter, John E., and Frank L. Schmidt 2004 Methods of meta-analysis: Correcting error and bias in research ndings. Thousand Oaks, CA: Sage. Merton, Robert K. 1968 Social theory and social structure. New York: Free Press. Thousand Oaks, CA: Sage. Miller, George A. 1987 Meta-analysis and the culture-free hypothesis. Organization Studies 8/4: 309326.

Miner, John B. 2003 The rated importance, scientic validity, and practical usefulness of organizational behavior theories: A quantitative review. Academy of Management Learning and Education 2/3: 250268. Priem, R. L., and J. Rosenstein 2000 Is organization theory obvious to practitioners? A test of one established theory. Organization Science 11: 509524. Reed, Michael 1985 Redirections in organizational analysis. London: Tavistock Publications. Reed, Michael 1989 Deciphering Donaldson and defending organisation theory: A reply to Lex Donaldsons review of Redirections in organisational analysis. Australian Journal of Management 14/2: 255260. Woodward, Joan 1965 Industrial organization: Theory and practice. London: Oxford University Press. Zwerman, William L. 1970 New perspectives on organization theory: An empirical reconsideration of the Marxian and classical analyses. Westport, CT: Greenwood.

Lex Donaldson

Lex Donaldson is Professor of Organizational Design in the Australian Graduate School of Management, which is a joint venture of the Universities of New South Wales and Sydney. He has a BSc (1968) from the University of Aston, Birmingham, England, and a PhD (1974) from the University of London. Lex has been a visitor at the universities of Aston, Iowa, London, Maryland, Northwestern and Stanford. His current interests are organizational theory, organizational structure and corporate governance. He is presently working on a new theory of organizations. Address: Australian Graduate School of Management, Universities of New South Wales, UNSW Sydney, NSW 2052, Australia. E-mail: lexd@agsm.edu.au

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