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Organizational Adaptation: Strategic Choice and Environmental Determinism Author(s): Lawrence G. Hrebiniak and William F. Joyce Source: Administrative Science Quarterly, Vol. 30, No. 3 (Sep., 1985), pp. 336-349 Published by: Sage Publications, Inc. on behalf of the Johnson Graduate School of Management, Cornell University Stable URL: . Accessed: 30/10/2013 03:56 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@. .

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OrganizationaAl daptation: StrategicChoice and Environmental Determinism

Lawrence G. Hrebiniak and William F.Joyce

The prevailing assumption in recent literatureis that strategic choice and environmental determinism represent mutually exclusive, competing explanations of organizational adaptation. The present paper, in contrast, argues that choice and determinism are independent variables that can be positioned on two separate continua to develop a typology of organizational adaptation. The interactions of these variables result in four main types: (1) naturalselection, with minimum choice and adaptation or selection out, (2) differentiation,with high choice and high environmental determinism and adaptation within constraints, (3) strategic choice, with maximum choice and adaptation by design, and (4) undifferentiated choice, with incremental choice and adaptation by chance. These types influence the number and forms of strategic options of organizations, the decisional emphasis on means or ends, political behavior and conflict, and the search activities of the organization in its environment.

? 1985 by Cornell University. 0001-8392/85/3003-0336/$1 .00.

One of the most pervasiveandcentralargumentsinrecent treatmentsof organizationaaldaptationconcernswhether itis manageriallyor environmentallyderived(Astleyand Vande Ven, 1983).At issue is a view of adaptationas a process reflectingchoice andselection versus one inwhich itis a necessary reactionto peremptoryenvironmentaflorces (Child, 1972; Aldrich,1979). Inanalogousterms, the issue is one of the prepotencyof voluntarismorexternaldeterminisminthe strategicchange process (Hannanand Freeman,1977).The present paperarguesthatclassifyingchange as eitherorganizationallyorenvironmentallydeterminedis misleadingand divertsresearchinquiryawayfromthe criticalinteractive natureof organization-environmenrtelationshipsinthe adaptationprocess.

CHOICEVERSUSDETERMINISM

AstleyandVande Ven's (1983)recentexhaustivereview suggests a majordifferenceincurrenttheorybetween a deterministicanda voluntaristicorientationintheories of organizationaal daptation.One of the dimensions intheirtypology is a continuumrangingfromdeterminismto voluntarism, which is dividedto place majorschools of organizationaalnalysis intotwo mutuallyexclusivecategories.Whiletheirplacement of schools of analysisinone categoryorthe otheris intendedsolely to classifythem, itclearlyimpliesthe either-or natureof the debate on the prepotencyof voluntarismor determinism.Majorapproachesto the issue of strategic change oradaptationemphasize mutuallyexclusive anddifferent ends of what is reallya single continuum.

A relatedimplicationinthe existingliteratureis the assumption thata binarydistinctionbetween choice anddeterminism capturesthe realityof organizationabl ehaviorandchange. As popularandintuitivelypleasingas these categories maybe, a relianceon one orthe otherdirectsattentionawayfromthe fact thatbothareessential to an accuratedescriptionof organizationaaldaptation.The importantconceptualandpracticalissues arethe interactionorinterdependenceof events

336/AdministrativeScience Quarterly,30 (1985):336-349

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with individuailnterpretationsof them, andthe resultantdecisions oractions.AstleyandVande Ven (1983: 267),for example,concludedthatthe interestingresearchquestions aboutcomplexorganizationswould (1)admitto bothdeterministicandvoluntaristicviews, and(2)juxtaposethose views to

study theirinteractionsand reciprocalinterdependence

over time.

Thesame view is expressed byWeick(1979),who arguedthat constructionof mutuallyexclusivecategories, relianceon unidirectionalcausation,andfocusingon originsandterminations of variablessuch as "choice"areproblematicanddistortingfor theoristandpractitioneralike.Whatis criticalis anabilityto "thinkincircles"(Weick,1979: 52), to investigatethe process

of interactionormutualcausation,as a reciprocalrelationship between two sets of variablesunfolds.The importantresearch

issue of voluntarismversus determinismis the relationship between them andhow theirinteractionsandresultanttensions culminateinchanges overtime. The issue is how choice is botha cause anda consequence of environmentalinfluences, as cause andconsequence interactandconflictto

resultin noticeableorganizationaaldaptations.

A similarview is expressed instudies on power (e.g., Dahl,

1963; Jacobs, 1974; PfefferandSalancik,1978; Pfeffer, 1981), inwhichthe underlyingdependencies or relativevulnerabilitiesof organizationandenvironmentinteractto create tensions andproducebothorganizationaalndenvironmental

change.The implicitpower modelis one of influenceand countervailingpower,andthe relativepowerof organization andenvironment,i.e., externalstakeholders,overtime is the keyto explainingthe prepotencyof choice ordeterminismin the adaptationprocess. Ifhighorganizationapl owersuggests greaterchoice, while higherpower of stakeholdersresultsin greaterenvironmentadl eterminism,the occasion of a power-

ful organizationconfrontingequallypowerfulstakeholdersindicates thathighchoice andhighdeterminismmaycoexist.

1

Theterm"adaptation"inthe currentliteratureis employedina numberof ways, rangingsimplyfrom"change,"including bothproactiveandreactivebehavior(Miles andSnow, 1978),to a morespecificdenotationof "reaction"to environmental forcesordemands(AstleyandVande Ven, 1983).Theusage inthispaperis more consistentwiththe formermeaning,indicatingchangethatobtainsas a resultof aligningorganizationaclapabilitiews ithenvirornmentcaolntingencies(Hrebiniaaknd Joyce, 1984).Thisview allowsforproactive or reactiveorganizationablehaviorin, anticipationof orreactionto exogenous variables.

The purposeof this paperis to developthis interactiveview of the adaptationprocess inorganizations.1Followingthe advice andleadof AstleyandVande Ven(1983),Weick(1979),and others (Jacobs, 1974), itis arguedthat: (1)choice anddeterminismare notat opposite ends of a single continuumof effect butinrealityrepresenttwo independentvariables,and (2)the interactionorinterdependenceof the two must be studiedto explainorganizationabl ehavior.Thepaperdevelops a typologyof strategicdecision makingthatfacilitatesthe studyof the interactionsbetween voluntarismanddeterminism. Italso allowsfora needed integrationof the diverseand disparateliteraturesinorganizationtheory,management,and economics, whichcurrentlyfocus on the prepotencyeitherof choice orenvironmentadl eterminisminthe adaptation process.

TYPOLOGYOFADAPTATION

The presentargumentis thatorganizationaclhoice andenvironmentaldeterminismcan be positionedas independent variablesinthe adaptationprocess. Individualasndtheirinstitutions can choose indecision-makingcircumstances;they can construct,eliminate,or redefinethe objectivefeatures of an

337/ASQASeptember 1985

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Organizational Adaptation

environment,therebypurposivelycreatingtheirown measures of realityanddelimitingtheirown decisions (Child,1972; Weick,1979).Onthe otherhand,discerniblefeatures of the actualenvironmentarealso important;structuracl haracteristics of industriesordomainsandvariousniches clearlyexist, some of whichare intractableto controlby individualsandtheir organizationsA. ttimes the effects of these are peremptory (Hannanand Freeman,1977; Aldrich,1979; Porter,1980);at othertimes they must at least be consideredinthe strategic decisions of organizations.Usingtwo separate, independent factorsemphasizes thatchoice anddeterminismmust interact orcoalesce to define a causalfabricorcontext eithernurturant of anygiven organizationavlariationor hostileto it(Emeryand Trist,1965).

Thisapproachfollows logicallyfromthe open-systems theory of organizations(Miller,1965; von Bertalanffy1, 968).Anopen system tends towarda state of dynamicequilibriumwith its environmentthroughthe continuousexchange of materials, data,andenergy. Boththe system andits environmentcan affect this process of exchange andtransformations,uggestingtheirindependenceandthe importanceof theirinteractive effects. Moreimportantlyo,pen systems are characterizedby equifinalityt,hatis, the same outcomes can be achievedin multipleways, withdifferentresources,diversetransformationprocesses, andvariousmethods or means. Evenifit is assumed thatthe environmentof an open system is highly deterministic,controllingfullyandpreciselythe ends oroutcomes thataretolerated,organizationaclhoice is stillpossible, due to the controloverandselection of the means bywhich the prescribedoutcomes maybe achieved. Eveninthe most constraininganddebilitatingcase of environmentaldeterminism, equifinalityindicatesthatorganizationaclhoice nonetheless exists as a separate,independentvariableimportanto the developmentof a dynamicequilibriumwiththe externalenvironment.Choice,then, can be separatedfromenvironmental determinismina logicalway, as a necessary definingcharacteristicof the organizationas an open system.

The purposeof the followingdiscussion is to examinethe two variablesininteraction.Choiceanddeterminismcan be represented on axes rangingfromlow to highas shown inFigure1. Eachaxis denotes varianceon levels of assertiveness and potentialto influenceothers (DaftandWeick, 1984).The quadrantshelpto define the domainandscope of power inthe relationshipbetween organizationandenvironment(Dahl, 1963)andthe relativevulnerabilityof each inan interactive setting (Jacobs,1974; Pfeffer,1981).

QuadrantIbasicallyshows the conditionsorassumptions underlyingthe populationecology, naturalselection approach to adaptation- low strategicchoice andhighenvironmental determinism(Hannanand Freeman,1977; Aldrich,1979), in which itis arguedthatorganizationsenjoyvirtuallyno control overexogenous factors.Adaptationis determinedfromwithout, as the environmentselects organizationsandallows only those formswithappropriatevariationsto remain.As Figure1 indicates,proponentsof this view arguethat,underthese conditions,organizationsadaptorareselected out.

338/ASQ,September 1985

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Figure 1. Relation of strategic choices and environmental determinism in organizational adaptation.

High A\

\ Strategic Choice Maximum choice Adaptation by design

11Differentiationor Focus Differentiatedchoice Adaptation within constraints

LU~~~~~~~~~~4

U

0

(n

IV UndifferentiatedChoice

Incrementalchoice

Adaptation by chance

I~~~~~~~~~~~~~~~~~~~~~~~~~~~~

\I NaturalSelection Minimum choice Adaptation or selection out

Low Low

ENVIRONMENTADLETERMINISM

High

Examples of Quadrant Isituations include organizations working under conditions labeled as perfectly competitive. Viewed ruinntche long individualfirms exercise little discretion because market or competitive forces determine the "fair"yreturn that an organization can achieve. Prices are dictated by a market in which demand is perfectly elastic. Differentiating products to command premium prices and excess profits is difvfaigcriue lt, if nwoihtinitmheepnvorsonseinble. Firms t(hJcaobtt do no1t74k;Pefeefep"anabreast of tec33h9n/AoS~ltogicSaeplteamnbedr m198a5rket changes find costs rising above a horizontal demand curve, clearly threatening survival. Quadrant Iwould include mnanysmall organizations, those selling commodity-type products, and simple systems (Herbst, 1957; Aldrich, 1979), as well as large organizations with undifferentiated products or services, conf ronted with low entry and exit barriersand with no way of achieving a lasting competitive

advantage (Bain, 1957; Porter, 1980).

Quadrant Ican also include organizations in imperfectly competitive niches. The niche is important because it defines a population of organizations that face similar, if not identical, political and economic constraints. The oligopoly that is tied to a given niche and finds adaptation to other niches impossible because of entry barriersand resource constraints is highly dependent on the distribution of resources and political

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