How the Iron Cage Evolves: From Accounting to Accountability as the Content of Rationalization

• In Event: 318 - Regular Session. Economic Sociology 2

Abstract

Following Weber (1905), the process of rationalization is usually portrayed as a shift from value-driven, arbitrary, or intuitive decision-making and symbols to calculative means-ends relationships whose efficiency and effectiveness are to be optimized. Organizational sociologists have long used this image of rationalization as a trope with very dramatic properties: “disenchanting,” dehumanizing, and in conflict with a more social orientation of organizations. We depart from this normative, ‘grand’ conception of rationalization, offering instead an empirically motivated interpretation of rationalization. We view rationalization as a social mechanism associated with multiple processes and competing contents. Using a longitudinal study of 200 randomly sampled nonprofit organizations in the San Francisco Bay Area, we demonstrate the fluid meanings of rationalization. Whereas the more rational nonprofits from early in the 21st century were managerial, technocratic, and inward-looking, the rational nonprofits of 2015 are financially transparent, collaborative, and outcome-oriented. Even as external technological and institutional pressures remain potent drivers of change, internal structures make organizations more susceptible to absorb and transform ideas of rationalization. Rather than replacing past practices, new managerial practices become intercalated with the old. In advancing a more fluid account of rationalization’s meaning, we contribute to a deeper understanding of institutional change.

Authors

• Christof Brandtner, Stanford University

• Aaron Horvath, Stanford

• Walter W. Powell, Stanford University