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The Twenty-First-Century Firm: Changing Economic Organization in International Perspective - Book Review

Paul DiMaggio, ed. Princeton, NJ: Princeton University Press, 2001. 275 pp. $35.00.

Predicting the emergence and nature of novel organizational forms, structures, and strategies has proven to be a challenging task in administrative science. Forecasts regarding these building blocks of organizations run the risk of ascribing undue importance to the cultural contexts, disciplinary orientations, and historical conditions within which analysts are embedded. As a consequence, predictions of large-scale industrial change tend to be doomed to the same fate of cultural obsolescence as the supplanted administrative arrangements that they describe. In this respect, The Twenty-First-Century Firm, a new collection of chapters edited by Paul DiMaggio, is to be commended for its comparative approach, drawing on portraits of changing organizational arrangements in three regions: network arrangements in Western society, particularly the United States and Western Europe (Powell), heterarchy in post-socialist countries such as Hungary and the Czech Republic (Stark), and a multilevel analysis of Japanese enterprise (Westney). These portraits are discussed and critiqued by scholars from four different disciplinary backgrounds, including business law (Kraakman), evolutionary theory (Bryce and Singh), economics (Gibbons), and historical sociology (Tilly). DiMaggio himself situates the analyses in a typology of organizational forms and addresses the legacy of twentieth-century views of the firm, as developed in Weberian perspectives on bureaucracy and Neomarxist conceptions of the firm.

Much of the strength of the volume lies in the comparative chapters on economic organization across different regions, which constitute a veritable travelogue for administrative scholars. At first, the uninitiated reader is tempted to lump organizational arrangements across these contexts--new-economy startups in Silicon Valley, intra-enterprise partnerships in Budapest, horizontal keiretsu in Japan--into the common mold of "network" forms of organization. But, as DiMaggio cautions, the conceptual trichotomy of market, hierarchy, and network arrangements (Powell, 1990; cf. Williamson, 1991) is itself challenged by international comparisons, given variation in the level of domination exercised between networked units and the degree of formal coordination among units. For example, contingent, project-based contracting in American employment systems may involve limited domination and formal coordination, at least relative to traditional bureaucracies (see Barley and Orr, 1997), while the extent of domination and formal coordination in vertical keiretsu is quite extensive (Aoki, 1988). The volume thus cautions against conceptual overgeneralization and monolithic treatment of "networked" organizational forms.

A similar cautionary note is struck by the multidisciplinary chapters, many of which take issue with the recency and impact of network forms of organizations. From a legal standpoint, Kraakman questions whether the corporate form, as a legal entity, is challenged by complex network patterns of cross-ownership. Although Kraakman's emphasis on large-scale business enterprise ignores a number of alternative legal forms (e.g., sole proprietorships, subchapter-S corporations, state-owned enterprises), his central point remains that characteristics of the general corporation, such as limited liability and transferability of shares, are longstanding legal precedents to the development of many network arrangements. Tilly develops a similar argument from a historical standpoint. Reviewing capitalist developments in the seventeenth century--in particular, the early networks of trust that allowed economic cooperation among firms and states--Tilly suggests that we are witnessing a reemergence of old organizational forms that were designed in the context of weak emergence of truly novel administrative arrangements.

On the whole, The Twenty-First-Century Firm is highly successful in unpacking the concept of network forms of organization. But for what audience? Reading through these chapters, I delighted at the prospect of assigning the book to undergraduate or graduate students, taking them from "Silicon Valley to Budapest, and from Budapest to Tokyo; from the advanced-technology companies of the new millennium to the kinship-based enterprises of the seventeenth century ..." (DiMaggio, p. 210). At the same time, I wondered what the travelogue would offer to more advanced scholars of administration, who had no doubt seen many of the descriptions previously. Clearly, such scholars would ask for an explanatory account of the emergence of novel organizational arrangements during the twentieth century, rather than just a description. Traces of this explanatory account are evident throughout this volume--including the evolutionary framework of Bryce and Singh and the typology of hybrid forms offered by DiMaggio--but it requires further theoretical development and empirical examination. Organizational theorists need insights from other fields of the social sciences, such as comparative politics, demographics, and social movements research, to understand why fundamental changes in economic organization occur. The levels of analysis for such explanations of industrial evolution are complex. Recent analytical models of the emergence of new organizational forms have emphasized conventional parallels between industries and forms (Ruef, 2000). It remains to be seen whether such explanations of industrial evolution can be developed for the more diffuse network "meta-forms" discussed in DiMaggio's volume, where forms often extend across industries and national boundaries.

Martin Ruef

Graduate School of Business

Stanford University Stanford, CA 94305


Aoki, M.

1988 Information, Incentives, and Bargaining in the Japanese Economy. New York: Cambridge University Press.

Barley, S. R., and J. Orr

1997 Between Craft and Science: Technical Work in U.S. Settings. Ithaca, NY: ILR Press.

Powell, W. W.

1990 "Neither market nor hierarchy: network forms of organization." In B. M. Staw and L. L. Cummings (eds.), Research in Organizational Behavior, 2: 295-336. Greenwich, CT: JAI Press.

Ruef, M.

2000 "The emergence of organizational forms: A community ecology approach." American Journal of Sociology, 106: 658-714.

Williamson, O.

1991 "Comparative economic organization: The analysis of discrete structural alternatives." Administrative Science Quarterly, 36: 269-296.

COPYRIGHT 2002 Cornell University, Johnson Graduate School
COPYRIGHT 2003 Gale Group

Bibliography for: "The Twenty-First-Century Firm: Changing Economic Organization in International Perspective - Book Review"

Martin Ruef "The Twenty-First-Century Firm: Changing Economic Organization in International Perspective - Book Review". Administrative Science Quarterly. FindArticles.com. 26 Jun, 2011. http://findarticles.com/p/articles/mi_m4035/is_4_47/ai_107762243/

COPYRIGHT 2002 Cornell University, Johnson Graduate School
COPYRIGHT 2003 Gale Group

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