Elizabeth Hansen

February 2, 2010
Sociology 224
Fligstein, Neil. 1990. The Transformation of Corporate Control. Cambridge: Harvard
University Press. Chapters 1, 2 and 9.

His contribution is to combine a historical with a social constructionist analysis to

understand the development of large corporations.

He is responding to two sets of theories about the development of large American

corporations:

The first is a market-efficiency theory, a kind of classical economic theory which

predicts that at any given time the market will select the most efficient
organizational forms. He says the key problem with the market-efficiency story of
the rise of large corporations is that it suggests “market processes are outside
social processes and therefore require no explanation” (299). He replaces market
efficiency with the notion of “sociological efficiency” which takes account of the
institutional interactions among powerful corporate actors (corporations, fields, the
state).

He is also responding a kind of rational-actor theory that attributes changes in the

corporate form to purely rational decisions on the parts of managers about how to
efficiency produce and distribute goods.

Instead, he proposes to examine the development of large corporations from the

perspective of three institutional spheres and their interactions: the organizational
field, the state, organizations themselves.

He wants to take a Weberian approach to understanding the worldviews of the

managers in large corporations and how those worldviews (conceptions of control)
result in courses of action which shape organizational fields and the form of the
corporation itself. What are the rationales that managers construct for their
behavior and where do those come from?

Conceptions of control: totalizing worldviews that cause actors to interpret every

situation from a given perspective. These conceptions of control are related not just
to the actions of the state but to internal stakeholders and their relative power:
Direct control of competitors (cartels), manufacturing control (stabilizing produces
process, oligopolies, vertical mergers, functional and unitary forms), sales and
marketing control (finding and creating markets, multidivisional form), finance
control (maximize short-term rates of return, financial tools to measure performace,
diversified multinational firm).

He wants to bring the state into the picture by arguing that the historical
development of the corporate form is not the result of impersonal market
efficiencies (a kind of natural selection) or the result of perfectly rational decisions
by managers but rather the outcome of power struggles between organizations and
Elizabeth Hansen
February 2, 2010
Sociology 224
Fligstein, Neil. 1990. The Transformation of Corporate Control. Cambridge: Harvard
University Press. Chapters 1, 2 and 9.

most importantly between organizations and the state. Ultimately, he wants to

argue, the states shapes the conceptions of control that are possible, and these
conceptions of control are the raw material for creating profitability, stability, and
survival. He is introducing what he calls “sociological efficiency” instead of “market
efficiency” into the study of the development of large corporations.

Progressive story where one conception of control gives way to another in the face
of political and economic changes and results in structural changes to organizations
and organizational fields.

Three critiques:

Has he just replaced one monocausal argument (it’s the market!) with another
monocausal argument (it’s the state!). Ultimately it seems the state is the primary
mover in shaping conceptions of control and thus the state of organizational fields
and forms. Does he miss other stakeholders? He mentions briefly popular political
and economic ideologies, for example, but doesn’t develop that idea. What’s the
relationship between contested ideologies in the electorate for example and the
corporate form? Are organizations still fundamentally reactive under his theory,
though now to the state rather than the market?

What is the role of technology as a force shaping organizational forms and

rationales? Because Chandler focuses on technology he seems allergic to dealing
with technological change and its effects on the corporate form. How did changes in
technology make each successive development of the conception of control and
more importantly the courses of action possible? Managers construct conceptions of
control in response to political constraints but surely also technological constraints.
Technology also allows for innovation which he does not deal with adequately.

In some ways his Weberian analysis is not Weberian enough—he needs to identify
not just the state but the other enabling conditions that made such forms possible.

What blindspots might this theory suffer from because he argues from empirical
evidence on manufacturing alone? Since then, technological advances have
changed the very nature of society—new organizational forms have arisen, the
service economy has boomed, manufacturing in the US has all but died (GM has
become Government Motors)—is his theory robust enough to be extended to the
turn of the 21st century? Problems of internal control are multiplied in a service
firm, as the Marquis article points out.

OTHER QUESTIONS
Elizabeth Hansen
February 2, 2010
Sociology 224
Fligstein, Neil. 1990. The Transformation of Corporate Control. Cambridge: Harvard
University Press. Chapters 1, 2 and 9.

Does the concept “conception of control” do the work it is supposed to? Are we
convinced that this is a use analytical tool in understanding the rise of large
corporations?

He says that his model is not a strictly progressive one and yet the theory he lays
out is a story of evolution and survival. Does the evidence he marshal support this
approach?

What do we make of his focus on stability—that firms seek stability rather than
profit maximization and this is the bedrock upon which fields and organizations are
organized. Do we think he adequately accounts for change? “The difficulty of
establishing a new conception of control is that managers must construct it in the
context of the existing social world” (295).