From the Rights Revolution to Reengineering: The Construction of Corporate Departments

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This is a study of emergence and diffusion of new kinds of departments in corporations. Prevailing theories of corporate structure, whether they address the presence of particular departments or the level of internal differentiation, point to functional causes such as size, economic performance, and technical complexity. These theories predict cross-sectional variation well, however they do not predict longitudinal variation at all well. Over the past three decades, many new kinds of departments emerged and diffused among American corporations, from environmental protection to total quality management. Established departments, such as personnel and accounts payable, have been replaced or eliminated entirely. Institutionalists suggest that these changes were brought about by two kinds environmental forces: the federal employment rights revolution and efficiency-oriented management movements. The employment rights revolution of the early 1970s coincided with the civil rights, women's, and environmental movements. In contrast, the Occupational Safety and Health Act and the Pension Reform Act were not associated with social movements. Thus one key question is the significance of new federally established rights versus social movements in leading firms to create equal employment and environmental protection departments. A series of efficiency-oriented management movements between 1965 and 1996 prescribed the creation of new internal departments; chief among them were strategic planning, quality management, and human resource management. Many corporations responded by establishing new departments. Other movements, such as the reengineering and core competence movements, prescribed large-scale elimination of internal departments. A second question, therefore, concerns the significance of these movements in causing change. The answers to these and related questions lie in analysis of where and when particular departments appeared and where and when the wholesale elimination of departments oc curred. For the period 1965-1996, annual data on the vice presidential-level offices of 500 large corporations will be collected from Standard and Poor's directories. These data will be merged with annual financial data and data on corporate networks and analyzed using dynamic methods. Event-history analyses of the adoption, and elimination, of particular departments will be used to evaluate political, economic, and institutional theories of how new structures emerge and diffuse across corporations. Pooled time-series analyses of the level of internal departmental differentiation will be used to evaluate competing theories of how broad structural changes come about. The goal of this project is to improve understanding of the processes by which changes in the corporate environment affect the composition of departments within firms. Thus the findings will contribute to increased organizational effectiveness and better use of human capital resources by American corporations.