Neil Fligstein

“Organizational theories have three origins: Max Weber’s original work on bureaucracies which came to define the theory for sociologists, a line of theory based in business schools that had as its focus, the improvement of management control over the work process, and the industrial organization literature in economics. Unlike many fields in sociology, organizational theory has been a multidisciplinary affair since World War II, and it is difficult to understand its central debates without considering its linkages to business schools and economics departments.”

“The key argument is that managers and owners in firms search for stable patterns of interaction with their largest competitors. Once stable patterns prove to be both legal and profitable, firms set up organizational fields that tend to produce and reproduce those patterns.”

“Organizational and not financial or ownership embeddedness is likely to be a more important cause of actions of firms than anything else in the case of United States. This means efforts should concentrate on specifying models of relations between firms that focus on intra- and interorganizational processes, such as the construction of strategic action and the cultural frames by which such a construction makes sense.”

“Initial formation of policy domains and the rules they create affecting property rights, governance structures, and rules of exchange shape the development of new markets because they produce cultural templates that determine how to organize in a given society.”

“The main problem actors face is uncertainty caused by difficulties in finding suppliers and customers and in controlling their own firm.”

“The key insight of the approach is to consider that social action takes place in arenas, what may be called fields, domains, sectors, or organized social spaces... Fields contain collective actors who try to produce a system of domination in that space. To do so requires the production of a local culture that defines local social relations between actors.”

“Property rights, governance structures and rules of exchange are arenas in which modern states establish rules for economic actors. States provide stable and reliable conditions under which firms organize, compete, cooperate and exchange. The enforcement of the laws affects what conceptions of control can produce stable markets. There are political contests over the content of laws, their applicability to given firms and markets, and the extent and direction of state intervention into economy. Such laws are never neutral. They favor certain groups of firms.”

“The social structures of markets and the internal organisation of firms are best viewed as attempts to mitigate the effects of competition with other firms.”

“[Institutional entrepreneurs must] size up the condition of the organizational field and figure out what kinds of action make sense.”

“The basis of social skill is the ability to relate to the situation of the ‘other.’ This means that whereas a given strategic actor has interests, he or she must take other people’s interests into account… to imaginatively identify with the states of others.”

“The forms of social organization produced the market, not the reverse... Instead of markets calling forth efficient forms of social organization, political and social interactions produced the structuring of sociologically effective markets.”

“The farther afield mergers were, the less likely antitrust authorities were to intervene. Growth through mergers required that finance-oriented managers choose their targets carefully. They sought profitable and growing industries where their capital would earn higher rates of return and avoided mergers where the threat of antitrust prosecution might exist.”

“The marketing director in each department reported directly to the department head and controlled market research and sales. More important, the marketing manager was also responsible for new product development, requesting production schedules, and controlling finished goods inventory.”

“The notion that advertising was a sort of corporate luxury, to be indulged in where there are no demands left over, now seems archaic and quaint. Businessmen are increasingly inclined to view the appropriation as a true capital investment – as much so as a new plant.”

“The firm-as-portfolio model implies both a practice (growth through diversification) and a form (the conglomerate). Unrelated diversification entails buying businesses in industries that are neither potential buyers, suppliers, competitors, or complements to the firm’s current business.”

“The Celler-Kefauver Amendment to Section 7 of the Clayton Act has now been made effective by judicial ratification. The Supreme Court has said that the Act means exactly what it says... It prohibits acquisitions, either stock or assets, where competition in any line of commerce in any section of the country may be substantially lessened.”

“The major reasons for diversification were by this time well established : to employ excess plant capacity, to eliminate seasonal humps, to guard against dependency on one industry, to enter new expanding industries, to supplement existing product lines, to use old products to create new product, and to secure a larger share of business in general.”

“The leaders of the large firms dominated by the manufacturing conception saw the key problem as low prices. This meant that they were intent on controlling prices by cutting production. But once prices were stabilized, they were cautious about increasing production for fear that prices would again collapse. Since their competitors had roughly equal production capacities and costs, all would lose by too rapid an increase in production.”

“The experiences of the war changed both Baruch’s and Wilson’s attitude toward the large firm. Following the war their anti-firm rhetoric was replaced with praise for the large firm’s patriotism and contribution to progress.”

“A leading firm that controlled a large portion of the output of a given organizational field operated as a price setter. To set prices, the actors in that firm had to control their suppliers and marketing in order to increase their own efficiency and have the potential to cut off other firms from supplies or customers.”