the collective strategy framework: an application to competing predictions of isomorphism

The Collective Strategy Framework: An Application to Competing Predictions of IsomorphismAuthor(s): Christine OliverSource: Administrative Science Quarterly, Vol. 33, No. 4 (Dec., 1988), pp. 543-561Published by: Sage Publications, Inc. on behalf of the Johnson Graduate School of Management,Cornell UniversityStable URL: http://www.jstor.org/stable/2392643 .

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The Collective Strategy Framework: An Applica- tion to Competing Pre- dictions of Isomorphism

Christine Oliver York University

? 1988 by Cornell University. 0001 -8392/88/3304-0543/$1 .00.

The author gratefully acknowledges the comments of Hugh Arnold, Martin Evans, Bob House, Marshall Meyer, and Jitendra Singh. The author also wishes to express her appreciation to Agnes Meinhard and David Tucker for their support in using the data contained in this study and to the ASO editors and anonymous reviewers for their valuable comments.

This paper investigates empirically the competing predictions of three perspectives on the determinants of organizational isomorphism-population ecology, institutionalization, and strategic choice-through a collective strategy framework, which categorizes organizations in an interorganizational field by their relationships with one another. The methodological approach, based on a network analysis of multiple organizational relations in a population of voluntary social service organizations, operationalizes the collective strategy typology and links homogeneity among organizations to their location in the organizational field. The results of the investigation offer strongest support for a strategic choice perspective and suggest that the environment is not highly deterministic in shaping organizational characteristics.'

One of the important concepts that a population-level perspective on organizations has contributed to organization theory is isomorphism in organizational fields (Hawley, 1950, 1968; Hannan and Freeman, 1977; Meyer and Rowan, 1977; DiMaggio and Powell, 1983; Astley, 1985; Scott, 1987), which refers to organizations within the same population pos- sessing similar characteristics. Theoretical interest in the homogeneity among organizations in a population, however, has been generated by the competing arguments offered in the literature to explain it rather than by any empirical evidence to support or refute its occurrence. Hannan and Freeman (1977) argued that isomorphism is the result of competitive pressures that force organizations facing the same set of environmental constraints to adopt similar characteristics relative to one another. DiMaggio and Powell (1983), by comparison, proposed that isomorphism develops from the structuration of an organizational field into an interconnected collectivity that pushes organizations toward homogeneity. Although both explanations attribute causal supremacy to the environmental context of organizations for shaping organizational structure, the former predicts isomorphism from organizational competition, while the latter predicts isomorphism from organizational interconnectedness. To date, the principle of isomorphism has not been tested or contrasted empirically with competing explanations of isomorphism from an institutional point of view, nor have these approaches been compared empirically to a strategic choice perspective (Child, 1972; Hrebiniak and Joyce, 1985; Hambrick and Finkelstein, 1987). Strategic choice advocates argue that organizations possess considerable discretion with respect to the design of their own structures. Based on the assumption that organizations are only loosely linked to their environments (Pfeffer and Salancik, 1978), this perspective implicitly suggests that neither competition nor interaction will necessarily lead to a reduction in organizational diversity.

The collective strategy typology formulated by Astley and Fombrun (1983) provides a useful framework within which to compare competing explanations of isomorphism. This typology categorizes organizations in an interorganizational field by their relationships into four distinct ideal types of organizational collectives- confederate, conjugate, agglomerative, and organic-based on the cross-classification of two interorganizational dimensions: direct versus indirect relations and

543/Administrative Science Quarterly, 33 (1988): 543-561



commensal (competitive) versus symbiotic (mutually advantageous) relations. The agglomerative collective includes competing organizations with no direct interaction; its form is therefore conducive to tests of isomorphism based on the arguments developed by Hannan and Freeman (1977). The confederate and conjugate collectives include both competitive and symbiotic organizations that interact directly; these collectives constitute the interactive field "incorporating both connectedness ... and structural equivalence," as defined by DiMaggio and Powell (1983: 148). The remaining organic collective constitutes organizations that are neither direct competitors nor directly interrelated with one another. This collective serves a useful purpose as a "control group" for comparison to the other collectives. As this study illustrates, evidence of isomorphism within the organic collective also has forceful implications for the role of strategic choice in organizational populations. Lack of evidence of isomorphism in the confederate, conjugate, and agglomerative collectives would imply a weak link between environment and structure, as choice proponents suggest. The occurrence of higher levels of isomorphism in the organic collective would rein- force this view by providing a comparison of the conditions under which environmental pressures are or are not predicted to occur.

The collective strategy typology has not been operationalized to date. The purpose of this study was to test empirically competing predictions of isomorphism, using a collective strategy framework, and to examine the implications of this test for the issue of environmental determinism. The methodological approach based on network analysis used in this study operationalizes the collective strategy framework and links homogeneity of organizational characteristics to the location or position of organizations in a field relative to one another. This methodological approach also operationalizes the notion of organizational forms as those that occupy the same environmental niche or "share a common fate with respect to environmental variations" (Hannan and Freeman, 1977: 929). Although the juxtaposition of competing explanations of isomorphism in this paper is inconsistent with theoretical arguments that advocate a reconciliation of opposing views (Hannan and Freeman, 1984; Hrebiniak and Joyce, 1985; Singh, House, and Tucker, 1986), this study is not intended to discourage future efforts toward theoretical convergence. In- stead, it offers a methodological route to the investigation of untested questions that may help to clarify the extent to which such reconciliations are fundamentally feasible.

COMPETING PREDICTIONS OF ISOMORPHISM

Population Ecology

According to the principle of isomorphism from population ecology (Hawley, 1950, 1968; Hannan and Freeman, 1977), organizations facing similar environmental conditions (i.e., oc- cupying the same niche) within a population tend to be isomorphic to one another by virtue of the similar constraints implied by their equivalent positions. By the same token, to the extent that an organization in a population faces unique environmental constraints, it is hypothesized to adopt a form

544/ASQ, December 1988



Predictions of Isomorphism

or set of characteristics that is unique in comparison with other organizations in the same population.

Since the principle of isomorphism states that like external circumstances create like organizations, it assumes that the environment is highly deterministic in shaping organizational forms and destinies. This perspective is part of a larger natural selection framework in which it is argued that niche overlap among organizations, that is, the confrontation by organizations of a common set of resources and constraints, leads to intense competition for scarce resources. The result is an exclusion of poorer competitors from the field and isomorphism among those remaining organizations that opti- mally fit the shared set of environmental limitations. The selection forces that operate on competing organizations in a field are assumed to be unforgiving of structural variations among those organizations; the competitive exclusion of er- ring maladaptors extinguishes individual opportunties for latitude or choice in the design of organizational structures and ensures homogeneity among those remaining occupants who have been differentially selected for survival within the environmental niche. Variation or organizational diversity is merely the "raw material" from which the environment naturally se- lects adaptive forms for retention. As a consequence of similar external pressures within any niche, the surviving forms are expected to exhibit similarities relative to one another across-all attributes.

Institutionalization

DiMaggio and Powell (1983) posited interconnectedness rather than competition as the underlying causal mechanism of organizational isomorphism. Like population ecologists, these theorists assumed that the environment is deterministic in shaping organizational structure, but homogeneity is induced by institutional rather than competitive forces. The intrinsic interactiveness of field structuration is argued to be at least as significant as selection forces in reducing organizational diversity. DiMaggio and Powell distinguished among three mechanisms of isomorphism: (1) coercive isomorphism, which results from formal or informal pressures exerted by one organization on another; (2) mimetic isomorphism, which induces an organization's imitation of other organizational structures and practices in the field; and (3) normative isomorphism, which is exerted primarily by professional interrelationships (Scott, 1987). As in Meyer and Rowan (1977), the significant determinant of isomorphism is argued to be the interorganizational context within which organizations are institutionally embedded. Accordingly, explanations for isomorphism based on field structuring arguments have looked to the degree of internal cohesion and interaction patterns among population constituents. By comparison, population ecologists have focused on aggregations of competing and noninteracting organizations that are related through their common dependence on, and common vulnerabilities to, external forces in the environment (Astley and Van de Ven, 1983).

Strategic Choice

Whereas the competing predictions of both population ecology and institutionalization theory suggest that external 545/ASQ, December 1988



forces (competitive and interorganizational, respectively) cause homogeneity, a third perspective implicit in the traditional strategy literature suggests that external constraints, whatever their origin, will not necessarily lead to isomorphism at all (Hrebiniak and Joyce, 1985; Hambrick and Finkelstein, 1987). Strategic choice advocates (Child, 1972), in particular, have argued that organizations have the capability to exercise considerable discretion over the design and alteration of their own structures in response to environmental contingencies. Such discretion allows organizational leaders to fashion unique structures relative to others that occupy the same competitive niche because solutions to problems in the environment are presumed to be solvable by organizations in more than one way-Hrebiniak and Joyce's (1985) concept of "equifinality." The strategic choice perspective suggests that proactive adaptability and loose coupling between organizations and environments (Aldrich, 1979) permit structural variations among competitively equivalent organizations and render organizations less susceptible to the homogenizing effects of external forces. Indeed, the effect of competition and interconnectedness, from a strategic perspective, may be to increase rather than decrease diversity in organizational characteristics, through market segmentation, product differentiation, or efforts to represent a unique or distinctive image to clients and customers, relative to competitors.

The assumption that environments accommodate organizational diversity is also consistent with the biological concept of "convergent evolution." Biologists argue that convergent evolution occurs when groups of organisms that are not closely related come to resemble each other as the result of occupation of similar habitats and adoption of similar environmental roles (Keeton, 1980). Like strategic choice advocates in organizational theory, biologists assume that convergence is a potential but not inevitable consequence of niche overlap, because organism-environment interactions are complex, the gene pool is rich, and many traits are polygenic in expression. As with the open-system concept of organizational equifinality, the same environmental constraints are presumed to be solvable by organisms in multiple ways; such latitude is proposed to account for continuing diversity among organisms in the face of common and stable environmental constraints.

Explanations for isomorphism in organizational fields are thus informed by three divergent perspectives in the organizational theory literature. According to natural selection theory, isomorphism among organizations is the direct result of competition among noninteracting organizations for scarce resources. Organizations facing similar external constraints are predicted to exhibit homogeneity to one another in their characteristics because the environmental imperative dictates the development of like organizations from like external circumstances. According to institutionalization theory, isomorphism occurs among interacting organizations linked by commensal or symbiotic relations, and homogeneity is deter- mined by the degree of structuration or interconnectedness of the field within which organizations are institutionally embedded. Finally, the traditional strategy and marketing litera- tures imply that the causal link between isomorphism and environmental forces is, in all likelihood, indeterminate. The





strategic choice of organizational decision makers to design their own structures within an environment that is assumed to be tolerant of organizational variability dilutes the homogenizing processes of competition and institutionalization.

THE COLLECTIVE STRATEGY TYPOLOGY

The collective strategy framework (Astley and Fombrun, 1983) divides interorganizational field relations exhaustively into four distinct idealized types of population collectives: confederate, conjugate, agglomerative, and organic. These four types are based on the cross-classification of two dimensions of interorganizational relations: direct versus indirect relations and commensalistic versus symbiotic relations. Direct relations between organizations would include resource exchanges or joint ventures, while indirect relations are exemplified by little or no interaction among organizations or interactions limited to the exchange of information. Com- mensalism refers to the relations of organizations that compete for similar resources and share common constraints (Hawley, 1950). Symbiosis refers to the relations of organizations that do not compete for similar resources but often de- velop exchanges that are mutually advantageous.

Using the two dimensions of direct versus indirect relations and commensalism versus symbiosis, the four types of interorganizational collectives are constituted as follows: (1) confederate collectives are clusters of organizations that do compete and do interact directly; (2) conjugate collectives are clusters of organizations that do not compete and do interact directly; (3) agglomerative collectives are clusters of organizations that do compete and do not interact directly; and (4) organic collectives are clusters of organizations that do not compete and do not interact directly. This typology provides a concise classification of organizational field structure according to the extent to which organizations interact with one another and the nature of the interaction itself (commensalism versus symbiosis).

The agglomerative collective specifies the type of population grouping within which population ecologists would predict isomorphism to occur, since this cluster approximates the condition of perfect competition within which the principle of isomorphism applies. The confederate and conjugate collectives constitute the interactive conditions under which Di- Maggio and Powell (1983) would predict isomorphism to occur; furthermore, these authors have defined an organizational field as encompassing both the competitive and symbiotic relationships by which organizations become interconnected (p. 148). The constituents of the organic collective do not compete with one another, nor do they interact directly; this collective serves as a control group against which to compare isomorphism in the other collectives. Moreover, to the extent that more isomorphism occurs in this collective relative to the others, strategic choice arguments are strengthened, since such evidence would suggest that neither competitive nor institutional forces necessarily cause isomorphism and that the effect of competition or interaction may be to increase rather than decrease variation among organizations. Figure 1 summarizes the typology and identifies




INTERORGANIZATIONAL INTERACTION YES NO

COMMENSALISM (1) Confederate Collective (3) Agglomerative Collective (COMPETITION) Isomorphism: Isomorphism:

Institutionalization Population Ecology

SYMBIOSIS | (2) Conjugate Collective (4) Organic Collective

(NONCOMPETITION) Isomorphism: Isomorphism: Institutionalization Strategic Choice

Figure 1. The collective strategy typology and competing predictions of isomorphism.

the collective(s) within which each of the three theories would predict isomorphism to occur.

Hypotheses

Based on the framework of the collective strategy typology, the three competing predictions of isomorphism from population ecology, institutionalism, and strategic choice can now be outlined. If, as the population ecology perspective suggests, competition determines the degree of similarity among organizations in a field, then organizations that confront similar external constraints (i.e., those in pure competition with one another or those that occupy the same niche) will be more isomorphic to one another than organizations that are interconnected or organizations that do not compete or interact: Hypothesis 1: If an ecological perspective is supported, then organizations in the agglomerative collective will be more isomorphic than organizations in the confederate, conjugate, or organic collectives.

Support for this hypothesis would substantiate the principle of isomorphism from natural selection theory. If isomorphism emerges out of the structuring of organizational fields, however, as institutional theorists argue, then organizations that are interconnected to one another, either commensally or symbiotically, will be more isomorphic than organizations that are not linked to one another: Hypothesis 2: If an institutional perspective is supported, then organizations in the confederate and conjugate collectives will be more isomorphic than organizations in the agglomerative or organic collectives.

Evidence in support of this hypothesis would fortify the position of institutional theorists who argue that isomorphism is a product of structuration. If, however, strategic choice proponents are correct in assuming that the environment is not highly deterministic in shaping organizational structures, then a group of noncompeting and noninteracting organizations from the same population should exhibit at least as much isomorphism as competitive or interconnected groups of organizations: Hypothesis 3: If a strategic choice perspective is supported, then organizations in the organic collective will be no less isomorphic than organizations in the confederate, conjugate, or agglomerative collectives.





Evidence in support of the third hypothesis would be consistent with theorists who argue that sources of variation in organizational structures are largely attributable to the strategic discretion and decision-making latitude of organizational leaders. From this perspective, environments are viewed less as constraining contexts than as arenas of opportunities that permit organizational diversity and differentiation.

The hypotheses were tested with data from a population of voluntary social service organizations in metropolitan Toronto, Canada. The study used a network analysis to analyze the interorganizational relations among members of the population.

METHOD

Network Analysis

In network analysis, there are two distinct methods by which actors in an interconnected group can be clustered or aggre- gated into subgroups: relational and positional (Burt, 1978; Alba, 1982). Relational methods cluster together actors in a network who are connected to one another by direct relations; these subsets can be defined as a group of highly cohesive actors. The positional approach, by comparison, clusters together actors in a network on the basis of "structural equivalence" or jointly occupied positions (Lorrain and White, 1971). Structurally equivalent actors are those who have a common set of linkages to other actors or who exhibit similarity in their patterns of interactions with other actors in the network (Knoke and Kuklinski, 1982; DiMaggio, 1986). Whereas cohesive actors interact directly with one another, structurally equivalent actors do not necessarily interact with one another at all. Rather, they are identified as a group because they share common relations to other actors in the network. The notion of structural equivalence in network analysis when applied to organizational populations operationalizes the concept of similarity of external constraints (i.e., of occupation of the same niche) because it aggregates organizations into groups that all share the same set of relational constraints with respect to other organizations in the field. Structural equivalence refers to the pattern of relations among organizations and not to the structure of the organizations themselves. From a natural selection perspective, structurally equivalent organizations can be viewed as the operational definition of "organizational forms." As DiMaggio (1986: 360) noted, "[tihe population ecology definition of form as 'common fate with respect to environmental variations' (Hannan and Freeman, 1977: 929) is based firmly in the logic of structural equivalence."

Organizations that are structurally equivalent are those that share common constraints, that is, those that compete or those that occupy the same niche. This notion is used to operationalize the concept of commensalism in the collective strategy typology. Structurally equivalent organizations are those that constitute the confederate and agglomerative clusters; nonequivalent organizations represent the conjugate and organic clusters. The categorization of field structure into directly versus indirectly interacting collectives is operationalized by distinguishing between organizational clusters with intracluster interaction and organizational clusters without in-




tracluster interaction. The operationalization of like versus un- like species as similar versus dissimilar (isomorphic versus nonisomorphic) organizations is more literal than Astley and Fombrun's (1983) distinction between intra- and interindustry firms. In this study, degree of similarity is also empirically investigated rather than included a priori in the classification.

Attribute Similarity, Network Relations, and Control Variables

The organizations selected for study were voluntary social service organizations in metropolitan Toronto, Canada. Volun- tary social service organizations were defined as nonprofit organizations concerned with changing, constraining, and/or supporting human behavior (Singh, Tucker, and House, 1986: 175). None of the literature on isomorphism identifies the specific organizational characteristics across which organizations will be predicted to exhibit isomorphism, but an expec- tation of similarity across all attributes is implied. In the absence of prior empirical tests of isomorphism to guide choice of attributes, this research investigated the degree of similarity among organizations with respect to four main characteristics: (1) goal multiplexity-the number of different identified service areas pursued by the organization; (2) degree of internal specialization-the sum of specialized functions identified in the organization; (3) centralization of decision making-the level at which decisions are made for each of a broad range of decisions occurring within the organization; and (4) degree of formalization-the degree of role specification of different policies and procedures in the organization. The choice of characteristics was based on three cri- teria. First, selection of the attribute should not be "biased" by a priori assumptions that the attribute would be likely to exhibit either resistance or vulnerability to external forces. Second, the attribute should be acknowledged by previous theory to be a relevant and commonly understood variable in structural design. Finally, the attributes should encompass the organizations' features in terms of both structural elements (specialization, centralization, formalization) and range of services (goal multiplexity).

Goal multiplexity was measured by asking respondents to identify from a list of 16 goal areas (e.g., job counselling, research, training, medical advice, other) the services in which they were involved. Internal specialization was measured by asking respondents to indicate from a list of 12 areas of specialization (e.g., dealing with insurance requirements, public relations, advertising) whether or not these functions were specialized. To measure decision-making centralization, a list of 25 decision areas (e.g., salaries of operatives, training methods, buying procedures) was presented to respondents, and they were asked to identify the level at which each decision was made. The formalization measure asked respondents to indicate whether or not the organization had a formal organization chart and written contracts of employment, operating instructions, information booklets, manuals of procedures, policies, schedules, and research programs.

The network analysis was based on the concurrent examination of five separate types of interorganizational relations: (1) personal meetings; (2) exchange of resources, including per-





sonnel, equipment, and funds; (3) board or committee interlocks; (4) joint programs; and (5) written contracts. Organizations were provided with the names of all organizations within the population and were additionally invited to include the name of any organization(s) excluded from the instrument and to report on their relationship with these organizations for each type of tie. No response included additional organizations that might have been overlooked in the original definition of the field. Each organization was asked to report on whether or not it currently had or within a specified period of time had had interrelationships with each of the other organizations in its field with respect to each of the five types of interaction. Respondents were asked, for each organization in the field, whether they had met with a person from the organization, had exchanged resources such as meeting rooms, personnel, equipment, or funds with the organization, had served on the board and/or committees of the organization, had worked jointly with the organization in plan- ning and implementing specific programs and activities, and had written agreements with the organization pertaining to personnel, client referrals, service provision, or other areas of joint activity.

Three additional external factors that might be expected to influence isomorphic processes were also included as control variables in the study: (1) sponsorship of the organization- degree of assistance and funding from outside the network; (2) degree of external regulation imposed on the organization; and (3) membership in formal affiliations or federations beyond the network. The first identifies resource constraints or opportunities over and above those specified by the network. This variable was measured by asking respondents whether or not they had a sponsor and, if yes, the degree and type of assistance provided (e.g., payment of staff, administrative support, contacts). The second variable, regulation, recognizes the important role of legal and regulatory limits on organizations (Aldrich, 1979; DiMaggio and Powell, 1983). Respondents were asked to identify from a list of acts, regu- lations, and departments the number that regulated their organization at municipal, provincial, and federal levels. The third variable, outside affiliation, acknowledges links to external coalitions that are not a part of the population but may nonetheless exert influence on some of its constituents. Out- side affiliation was a bivariate measure in which respondents were asked to indicate whether or not their organization was formally affiliated with any external associations, federations, or coalitions. The control variables were defined separately from the independent variables as factors beyond the network. These factors could conceivably be argued to reflect either additional selection pressures or institutional variables. In order to ensure that their potential effects were assessed without introducing ambiguity into the definition of the conditions under which each framework would predict isomorphism to occur (that is, competition versus embeddedness), these external factors were classified as control variables for inclusion in the analysis.

Data

The analysis of interorganizational relationships and organizational characteristics was based on data collected from a 551/ASQ, December 1988



population of 389 voluntary social service organizations in metropolitan Toronto, Canada for the period 1970-1982. This population comprised all voluntary social service organizations that came into existence in this period. The year 1970 was proposed as the cut-off date to avoid methodological problems of left-censoring and because archival information on voluntary social service organizations prior to 1970 was sparse (Singh, Tucker, and House, 1986: 175). Out of 389 organizations, 107 organizations went out of existence between 1970 and 1982. Data on interorganizational relations were collected at the end of this period (1982) and compared with the most recent data available (1982) on structure. This approach maximized the time span within which isomorphic processes might be expected to occur. These data were collected by means of survey instruments, structured interviews with CEOs, and searches through archival data (Tucker et al., 1984; Singh, House, and Tucker, 1986; Singh, Tucker, and House, 1986). Since this data base constitutes a well- bounded and definable population, it was particularly appropriate for network analysis. The interorganizational data were based on a survey questionnaire to which representatives of 156 organizations responded. Data on the organizations themselves were collected from primary sources, using a structured interview schedule with CEOs of these organizations, and from secondary sources by searches through archival data.

The algebraic treatment of network data chosen for this study was the binary adjacency matrix (Knoke and Kuklinski, 1982) because it possesses two important strengths: it permits computations of the network data for the purposes of structural analysis, and it captures both symmetry and asymmetry (for example, where A sits on B's board but B does not sit on A's board) in network relationships. This involved organizing the data into five separate matrices so that within each matrix the respondent organizations were arrayed in the matrix rows and the total sample of organizations were arrayed in the columns. Survey responses were coded into binary form for each matrix so that the presence of a tie between two organizations was represented by a 1 and the absence of a tie was represented by a 0. The result was a set of five 156 x 156 matrices.

Two limitations were imposed by the data base. First, no data were available to distinguish among different strategic methods or techniques used by each organization. While the exclusion of this information compromises neither the research design nor research findings, detailed information on specific strategies employed by each organization would have shed light on the particular behaviors that organizations pursue in their attempt to reduce vulnerability to environmental contingencies. The second limitation concerns the extent of the interrelationships among organizations. For the purpose of using cluster analysis based on structural equivalence, the data were organized to reflect the absence or presence of a relationship between one network actor and another. The extent of the relationship between any two organizations was not explored. For example, the matrix of resource exchanges indicated only whether or not resources were exchanged, not the specific type of resources or the





extent of the exchange. The portrayal of network ties in terms of the absence or presence of relations simplifies the structural configuration of the network, although it provides a less detailed description of network interrelationships. Obtaining this type of information, however, would dramatically increase the number of questions that need to be posed to any one respondent. Assuming two additional questions on degree of interrelationship, for example, the number of questions to be answered by a single respondent would be (156 x 3 x 5 =) 2,340.

Structural Equivalence and Homogeneity

Ward's minimum-variance method of cluster analysis (Blash- field and Aldenderfer, 1978), using a structural equivalence criterion for network partitioning, was selected over other hierarchical methods to identify commensal organizations because of its reported superior accuracy (Blashfield, 1976) and its ability to handle a large data set. The five binary adjacency matrices were stacked to produce an N(5) x 5 matrix (Arabie, Boorman, and Levitt, 1978), and clustering was done on all five matrices concurrently. Technically, these subgroups would reflect high or low "closeness" or "similarity" if structural equivalence were measured in terms of continuous distance. That is, a "high equivalence" cluster reveals less distance or dissimilarity in its pattern of relations than a "low equivalence" cluster. The distance between organizations i and j (d11 and dji, where distances are symmetric) equals the square root of the sum of squared differences across all third organizations, q:

djj1= djj = j E (Zjq - Zjq)2 + (ZqjZqj)2 d1J~~~~~ = 1jI(Zi

)

where (zjq - zjq) is the difference between the two organizations in the relations they initiate with a third organization (i.e., a pair of elements in rows i and j of the matrix), and (zqi - Zqj)

is the discrepancy in relations received from a third organization (i.e., a pair of elements found in columns i and j of the matrix) (Knoke and Kuklinski, 1982: 61).

A closed (N x N) sample rather than open (N x N) sample (Tichy and Fombrun, 1979: 934) was used in the analysis to permit a reliability check of the data when relations were necessarily symmetrical: personal meetings, joint ventures, and written contracts. The closed sample revealed 91 percent, 89 percent, and 94 percent reliability in these networks, respectively.

In the absence of a perfect response rate, an attempt was made to evaluate the problem of a restricted sample size by comparing the density patterns of the open and closed samples. If the densities in any of the five networks in the closed sample were significantly different from the corresponding densities in any of the networks in the open sample, this would indicate that significant information was lost by excluding those organizations that did not respond to the questionnaire. However, as shown in Table 1, the open sample densities across the five networks were very similar to the closed sample densities.




Table 1

Network Density for Each Type of Interorganizational Tie in the Open and Closed Samples

Type of Interorganizational Tie

Network 1: Network 2: Network 3: Network 4: Network 5: Personal Resource Board Joint Written

Type of sample meetings transfers interlocks programs contracts

Open .21 .30 .12 .27 .10 Closed .22 .31 .10 .29 .08

Using Ward's method, the distance between two clusters is the ANOVA sum of squares between the two clusters added together across all the variables. At each successive combi- nation, the within-cluster sum of squares is minimized by merging two clusters from the previous generation (Ward, 1963; SAS Institute, 1985). This method defines a cluster as a group of entities such that the error sum of squares among the members of each cluster is minimal (Blashfield, 1976). The results of Ward's clustering yield an R2 (squared multiple correlation) for each cluster that indicates the proportion of variance accounted for by the clusters (SAS Institute, 1985: 268).

To test the isomorphism hypotheses, the sample variance of each of the four typology clusters identified by the network analysis was calculated for each of the four attributes. A series of F-tests was conducted on the four organizational attributes, assuming a null hypothesis of equal variances across all four population subgroups at the .05 level of significance.

To assess the effects of the three control variables on homogeneity, four series (corresponding to the four clusters) of four multiple regression analyses were conducted using the attribute scores of each of the four attributes as the dependent variables and the three environmental factors as the independent variables. From these calculations, the variance of the residuals indicated the variance of the attributes after controlling for sponsorship, regulation, and outside affiliations. Since it was predicted that different patterns of network ties (commensalism versus symbiosis and interaction versus non- interaction) would account for attribute variance (isomorphism), at least part of the reason for errors in prediction from the regression analyses was expected to be attributable to the variance caused by network position and interaction. Ac- cordingly, once the residual scores for each case were calculated for each of the four attributes, these residuals were used as the dependent variable for comparing the variance in attributes across the four collectives.

RESULTS

Two internally interconnected population subgroups were identified as exhibiting differences in the degree to which their respective patterns of relations to other network actors were equivalent or similar. The first (Cluster 1) was desig- nated the confederate collective: this cluster revealed a high equivalence level (R2 = .71) and contained an N of 33. The conjugate cluster (Cluster 2), characterized by nonequivalence (R2 = .28), contained an N of 24. The agglomerative cluster, characterized by structural equivalence and no intracluster in-





teraction, corresponded to the first 35 noninteracting organizations that the analysis revealed as an equivalent cluster (R2 = 1.0); this cluster was labelled Cluster 3. The organic cluster (Cluster 4), characterized by nonequivalence and no intracluster interaction, was based on a random subset of 32 noninteracting and nonequivalent organizations from within the larger sample of noninteracting and nonequivalent organizations. The number of organizations included in the variance comparisons needed to be reduced to permit a random sample of noninteracting organizations to be drawn from the sample as a whole. Thirty-two organizations were randomly selected to provide a sample of sufficient size to permit sta- tistically meaningful comparisons across the four clusters. Reduction in set size from 156 to 124 retained subsamples of sufficient size to ensure reliable statistical inferences.

Table 2 presents the results of the multiple regression anal-

Table 2

Multiple Regression Analysis of Effects of Environmental Control Variables on Organizational Attributes for Each Type of Network Collective

Dependent Variables

Independent Goal Internal Decision-making Internal Variables multiplexity specialization centralization formalization

Cluster 1: Confederate (N = 33)

Sponsorship .66 .02 1.63- .18 Regulation - .05 - .03 - .07 - .03 Affiliation 5.67 -.02 7.39 3.49

Intercept - 6.43 14.30 23.57 11.15 R2 .12 .01 .21 .11 Adjusted R2 .03 -.09 .13 .02 F-Value 1.37 .09 2.52- 1.23

Cluster 2: Conjugate (N = 24)

Sponsorship - .12 .36w .02 - .21 Regulation .35 .05 - .06 - .02 Affiliation 8.89 1.17 - 11.35 2.82

Intercept -12.62 4.48 82.03 15.59 R2 .09 .21 .04 .05 Adjusted R2 -.04 .09 -.10 -.09 F-Value .69 1.75 .29 .35

Cluster 3: Agglomerative (N = 35)

Sponsorship 1.06- -.12 -.02 .79- Regulation .03 .17 .45 - .28 Affiliation 4.41 .92 -4.90 2.11

Intercept -11.84 7.74 53.91 11.24 R2 .11 .09 .03 .23 Adjusted R2 .02 .00 -.07 .15 F-Value 1.24 1.01 .31 3.03w

Cluster 4: Organic (N = 32)

Sponsorship .32 .15 1.53 .66- Regulation - .03 .00 - .04 - .16 Affiliation -4.75 .38 -4.07 - .20

Intercept 13.44 10.14 41.13 12.76 R2 .09 .10 .08 .15 Adjusted R2 -.01 .00 -.02 .06 F-Value .87 1.03 .77 1.66

*p < .10; Up < .05.




yses for each of the four types of collectives. The overall pattern of results indicates very clearly that the environmental control variables (sponsorship, external regulation, and outside affiliations) did not have a significant effect on the organizational variables (goal multiplexity, internal specialization, decision-making centralization, and formalization). As Table 2 shows, the overall regression model explained 21 percent of the variance (R2) of decision-making centralization in Cluster 1 (p < .10) and 23 percent of the variance of internal formalization in Cluster 3 (p < .05). The other 14 regression equations did not attain statistical significance. Furthermore, only the independent variable, sponsorship, contributed significantly to the model relative to the other variables, and this occurred in only five of the 16 equations (p < .10). Nevertheless, the variances of the organizational attributes were calculated after controlling for the effects of the three environmental factors on organizational homogeneity.

Table 3 reports the variance of each of the four clusters for each of the four organizational characteristics. The larger the value of the sample variance, the lower the degree of isomorphism within a collective for each attribute. The findings show that organizations within the organic collective exhibited less variance (higher levels of isomorphism) than the other three collectives with respect to three out of four attributes. The agglomerative collective exhibited the most homogeneity in terms of decision-making decentralization.

Table 3

Variance of Organizational Attributes for Each Type of Network Collective

Type of Network Collective

Organizational Confederate: Conjugate: Agglomerative: Organic: Attributes Cluster 1 Cluster 2 Cluster 3 Cluster 4

Goal multiplexity 69.41 88.49 105.07 53.57 Internal specialization 5.13 8.51 3.95 1.77 Decision-making

centralization 129.05 127.08 104.32 231.67 Internal formalization 19.88 20.99 22.69 16.38

The results of the three competing predictions are given in Table 4, which outlines the predicted differences in directions among the four types of collectives associated with each of the three competing hypotheses and presents the results of the attribute variance calculations for each of the four organizational attributes. A high degree of variance among organizations in a particular cluster for a particular organizational attribute reflects a low level of isomorphism, and vice versa. The Yes/No reports in the columns indicate whether or not the predicted direction of isomorphism for each hypothesis relative to the other two is or is not supported. The F-values resulting from tests of differences in attribute variance between the clusters are reported in parentheses. These tests are not completely independent because the same groups are involved in more than one comparison, but they are reported separately because each individual prediction is of interest. The F-values come from the tests of differences in attribute variance between the clusters. For example, .66 under goal multiplexity is the F-value of the test for significant difference





Table 4

Pattern of Support for the Population Ecology, Institutionalization, and Strategic Choice Predictions of Isomorphism*

Organizational Attribute Predicted

direction of Decision- attribute variance Goal Internal making Internal

Hypothesis in clusterst multiplexity specialization centralization formalization

1: Population Cluster 1 > Cluster 3 No (.66) Yes (1.30) Yes (1.24) No (.88) Ecology Cluster 2 > Cluster 3 No (.84) Yes (2.15)- Yes (1.22) No (.93)

Cluster 4 > Cluster 3 No (.51) No (.45) Yes (2.22)- No (.72) 2: Institution- Cluster 3 > Cluster 1 Yes (1.51) No (.77) No (.81) Yes (1.14)

alization Cluster 3 > Cluster 2 Yes (1.19) No (.46) No (.82) Yes (1.08) Cluster 4 > Cluster 1 No (.77) No (.35) Yes (1.80) No (.82) Cluster 4 > Cluster 2 No (.61) No (.21) Yes (1.82) No (.78)

3: Strategic Cluster 3 > Cluster 4 Yes (1.96)- Yes (2.23)- No (.45) Yes (1.39) Choice Cluster 2 > Cluster 4 Yes (1.30) Yes (2.90)- No (.56) Yes (1.21)

Cluster 1 > Cluster 4 Yes (1.65) Yes (4.81)- No (.55) Yes (1.28)

p < .05. * F-values are in parentheses. Yes or No indicates whether difference is or is not in predicted direction. t Cluster 1 = confederate, Cluster 2 = conjugate, Cluster 3 = agglomerative, Cluster 4 = organic.

in goal multiplexity variance between the organizations in Cluster 1 and the organizations in Cluster 3. These tests were based on the comparison of variance between clusters for each individual attribute after controlling for sponsorship, regulation, and affiliation.

The overall pattern of results indicates that the variance comparisons were in the predicted direction for hypothesis 3 for the majority of the attributes. The organic collective aside, results were divided between the first and second hypothesis. Half the attributes demonstrated more isomorphism in the agglomerative collective (specialization and decision-making centralization) and half exhibited more isomorphism in the confederate and conjugate collectives (goal multiplexity and formalization). The results are therefore more consistent with a strategic choice view than an ecological or institutional perspective. If environmental forces were causally profound, the exact opposite results would have been found, that is, greater isomorphism in the conjugate, confederate, and agglomerative collectives than in the organic collective.

DISCUSSION

Neither ecological nor institutional explanations of isomorphism in organizational fields obtained a significant level of support in this study. These findings suggest that organizations possess considerable latitude with respect to the design of their own structures and that organizational environments willingly accommodate structural variation among organizations in direct competition with one another and among organizations that are linked together by single or multiple relationships.

The evidence that organizations are only loosely coupled to their environment is consistent with a strategic choice perspective. However, extended replications of the approach introduced in this study would offer an empirical route to answering several untested questions in ecological, institutional, and strategic choice theory that are raised by these




findings. First, differential support for the various characteristics in this study suggests the alternative explanation, that isomorphic forces may operate with varying effect on different organizational attributes. The principle of isomorphism predicts a unilateral imposition of environmental constraints on organizations as a whole within any niche, but selection processes may operate through the differential selection of specific predictable characteristics of organizations rather than organizations in their entirety. Future replications of this study across a range of characteristics and populations would indicate the level at which selection operates and identify those components of organizations that are particularly vulnerable or resistant to homogenizing pressures.

Second, it can be argued that this study covered an insuffi- cient span of time within which to expect isomorphism to become evident. The organizational diversity apparent in the agglomerative, confederate, and conjugate collectives may thus reflect organizations still in the process of emerging into an isomorphic state or organizations operating in an environment that has not yet become competitively saturated (Astley, 1985). If this were true, the findings supporting the strategic choice perspective would simply represent a prema- ture interpretation of the data set, because environmental forces may not have had enough time to do their work. On the other hand, it is difficult to reject the results of this study on such a basis in the absence of any theoretical speculation on the part of ecologists and institutional theorists about the length of time within which it is reasonable to expect isomorphism to occur. How appropriate is fifty as opposed to fifteen years, for example, as a period of time to await the appear- ance of isomorphism? The question of appropriate time frames is only conclusively solvable by repeated investiga- tions of isomorphic processes across a range of time spans in a variety of populations.

A third area for future investigation is the direct contribution of strategic behavior to organizational variability over time. The results of this study suggest that environments are more forgiving of variability than has been historically assumed by ecological and institutional theorists to date. Direct evidence to support or refute the efficacy of managerial strategies in adapting to environmental constraints must emerge from an examination of the particular organizational responses that contribute to the survival of structurally heterogeneous organizations. Future studies might explore the distinction between specialists and generalists (Hannan and Freeman, 1977; Freeman and Hannan, 1983) across competing conditions or attempt to identify differences among surviving organizations in their use of specific business, corporate, and collective-level strategies in each of the four collectives.

Fourth, future research efforts should be directed toward an examination of the influence of network stratification and status hierarchy on isomorphism (Galaskiewicz, 1979; Boje and Whetten, 1981). For example, if the confederate and organic clusters represent core and peripheral network positions, respectively, greater isomorphism in the organic cluster may reflect the shared characteristics of weaker organizations whose power and influence are impeded by their inability to secure relations with strong central organizations. Centrally





located, cohesive actors, however, might be expected to exhibit more similarity to one another than to network isolates (Perrucci and Pilisuk, 1970), a prediction that is in opposition to this study's findings. Future studies of cohesiveness among central organizations and pressures to conform among peripheral organizations may reveal additional forces toward organizational homogeneity.

Finally, the research conducted here cannot claim to do full justice to the richness and subtleties of the population ecology and institutionalization paradigms as they are applied to the phenomenon of isomorphism. In particular, this study, despite its examination of five different types of interorganizational relations, overlooks both the contributing role of professional and friendship associations to potential isomorphism and the processes by which organizations imitate one another. Such exclusions neglect some of the less measurable but nonetheless important potential sources of homogeneity (DiMaggio and Powell, 1983). Nor did this study investigate how the internal structural inertia of organizations influences organizational diversity. In the attempt to shed light on environmental determinism, this study's investigation was con- fined to external forces toward homogenization. Future studies encompassing these issues would provide a broader base for comparing the predictions of the frameworks tested here.

This study is the first to test competing explanations of isomorphism from population ecology and institutionalization theory and to compare these predictions with a strategic choice perspective. It also introduced a method of operation- alizing the collective strategy typology and applying it to an empirical setting for purposes of comparing different organizational theories. In so doing, it was possible to operationalize organizational forms as defined by Hannan and Freeman (1977: 929) as "sharing a common fate with respect to environmental variations." The approach of this study also constituted an application of DiMaggio's (1986) insightful recommendations for analyzing the structure of organizational fields using structural equivalence.

From a methodological standpoint, this study is the first to apply network analysis based on multiple organizational relationships to any of population ecology's principles. Two particular advantages of the approach introduced here include its ability to link organizational characteristics to the network structure of populations and its ability to take into account methodologically both competition and interaction in an organizational field. Since few populations are purely competitive and organizational interconnectedness appears to be in- creasing in contemporary organizational environments (Pfeffer and Salancik, 1978; Astley, 1984), the need to describe organizational fields empirically in terms of both competition and multiple interdependence appears crucial to a realistic portrayal of organizational populations in the future.

While the results of this study offer support for a strategic choice view of isomorphism, there are limitations to its gen- eralizability. The approach introduced in this study needs to be applied to other types of populations before the principle of isomorphism or the homogenizing effects of field structur-




ation can be seriously questioned. That organizational structures have been shown in this study to exhibit diversity in the face of environmental connectedness and common constraints reaffirms the wisdom of investigating further the issue of environmental determinism versus strategic choice. The notion that organizational leaders possess omnipotent capabilities for subjugating the organization's external context to their own survival strategies may be as unrealistic as the argument that organizations are consistently powerless recip- ients of environmental effects. More research is needed that specifically addresses the extent to which organizations are constrained by environmental pressures.

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the collective strategy framework: an application to competing predictions of isomorphism

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