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This paper argues that research in organization theory has seen a shift in orientation from paradigm-driven work to problem-driven work since the late 1980s. A number of paradigms for the study of organizations were elaborated during the mid-1970s, including transaction cost economics, resource dependence theory, organizational ecology, new institutional theory, and agency theory in financial economics. These approaches reflected the dominant trends of the large corporations of their time: increasing concentration, diversification, and bureaucratization. However, subsequent shifts in organizational boundaries, the increased use of alliances and network forms, and the expanding role of financial markets in shaping organizational decision making all make normal science driven by the internally derived questions from these paradigms less fruitful. Instead, we argue that problem-driven work that uses mechanism-based theorizing and research that takes the field rather than the organization as the unit of analysis are the most appropriate styles of organizational research under conditions of major economic change-such as our own era. This sort of work is best exemplified by various studies under the rubric of institutional theory in the past 15 years, which are reviewed here.
Key words: organization theory; social mechanisms; organizational fields; paradigms
Organization theory has found itself at an interesting crossroads at the turn of the century. On the one hand, we are constantly reminded that we live in a world in which large organizations have absorbed society and vacuumed up most of social reality (Perrow 1991). Multinational corporations (MNCs) have transcended political boundaries in their sales and their production processes, and dozens of them have annual revenues that surpass the GDP of all but a few nations. Their employees are like citizens with rights, benefits, and legalistic grievance procedures (Dobbin and Sutton 1998). Just as nation-states in centuries past came to be the dominant locus of power through their monopoly on the legitimate use of physical force, MNCs dominate the world economy (and thus society) through their concentrated control of capital. States are largely stuck with agreed-upon land borders, but MNCs and their mobile investments get to choose their jurisdictions in the marketplace of laws. It hardly seems a fair fight, as large organizations continue their drive to vacuum up whatever is left of social life. This situation locates organization theory as the...