Jawn Lam

Co-determined organization

Organizational StructuresForms from other traditions13 min read

Employees hold rights set by law to be informed, consulted, and in some matters to consent, through elected works councils at the workplace and employee representatives on the supervisory board, so management settles many questions by negotiation.

What it is

A co-determined organization keeps whatever operating structure it has and lays over it bodies elected by the employees, with legal rights to be informed, to be consulted, and in some matters to consent: works councils at the establishment, company, and group levels, and in larger firms employee seats on the supervisory board. Management keeps the line and most decisions, but personnel and social matters need the works council's consent, so management negotiates many questions it would otherwise instruct.

The co-determined organization sets an elected works council beside management

Select a unit or the letter to read it; the works council has no reporting line from management, since the employees elect it.

Reports toAdjust to each other directlyMMutual adjustment

NegotiateManagement andcouncilOperatingstructureManagementWorks councilFunctionalunitProduct unitBy function or by productM
NegotiateManagement and councilOperating structureManagersCouncilFunctionProductBy function or by productM
Select a unit or a letter to read it. M, mutual adjustment: People coordinate their own work by informal communication with each other.Management. Layer: Management and council. No single head above it. Keeps the line and most decisions; different decisions go to different places, some to management alone and some to negotiation with elected representatives (our judgment).Works council. Layer: Management and council. No single head above it. Elected by the employees, at the establishment, company, and group levels, with legal rights to be informed, to be consulted, and in some matters to consent; in larger firms employees also hold seats on the supervisory board (Jackson 2005), a matter for Governance & Risk.Functional unit. Layer: Operating structure. Reports to Management. By function or by product. Part of whatever operating structure the firm already has, grouped on a basis the form does not set (our judgment).Product unit. Layer: Operating structure. Reports to Management. By function or by product. A single-line hierarchy may also group by product beneath the representation layer, which adds bodies, not managerial levels (our judgment).M, mutual adjustment. People coordinate their own work by informal communication with each other.
The structure in words
  1. Management and council
    • Management, no single head above it. Keeps the line and most decisions; different decisions go to different places, some to management alone and some to negotiation with elected representatives (our judgment).
    • Works council, no single head above it. Elected by the employees, at the establishment, company, and group levels, with legal rights to be informed, to be consulted, and in some matters to consent; in larger firms employees also hold seats on the supervisory board (Jackson 2005), a matter for Governance & Risk.
  2. Operating structure
    • Functional unit, reports to Management, grouped by function or by product. Part of whatever operating structure the firm already has, grouped on a basis the form does not set (our judgment).
    • Product unit, reports to Management, grouped by function or by product. A single-line hierarchy may also group by product beneath the representation layer, which adds bodies, not managerial levels (our judgment).
  • Management and Works council: adjust to each other directly (Negotiate), coordinated by mutual adjustment.

Management keeps the line and most decisions, but personnel and social matters need the works council's consent, so management negotiates many questions it would otherwise instruct. The form sets no grouping of its own, so the units beneath may be functions or products.

Source: Jackson 2005; Streeck 1984a; Haipeter 2002, one company case study.

The profile is our judgment throughout, since the form sets no structure beneath its layer. Grouping spans function or process to product or purpose. Specialization is medium. Formalization spans medium to high: rights set by law, exercised through formal procedures whose boundaries are reinterpreted over time (Jackson 2005). Centralization is mixed, and layers are moderate, since the layer adds bodies, not managerial levels. Decision rights sit at selective vertical and horizontal decentralization (Mintzberg 1980, a synthesis of earlier research). Coordination is recorded as mutual adjustment, though here it can become negotiation (Streeck 1984; Haipeter 2002). Lateral mechanisms sit at task forces and teams, the nearest level for an elected standing body. Differentiation is moderate; the mode of exchange is bureaucracy (Ouchi 1980, a conceptual article); and permeability is selective, the boundary between management and the workforce opened by statute.

Where the co-determined organization sits on the eleven dimensions

The filled segments are the form's levels; select a row for its reason and sources.

Select a dimension to read why the form sits there, and on what basis.Basis of grouping: Function or process and product or purpose. Basis: Judgment. The form sets no grouping basis of its own and lays its defining layer over whatever structure it finds; the two bases of a single-line hierarchy are recorded as judgment so a reader's profile can still match. Sources: Streeck 1984a; Jackson 2005.Specialization: Medium. Basis: Judgment. Nothing in codetermination sets the band; judgment. Sources: Streeck 1984a.Standardization and formalization: Medium to high. Basis: Judgment. Rights of information, consultation, and codetermination are set by law and exercised through formal procedures, though their boundaries are reinterpreted over time; judgment for the band. Sources: Jackson 2005; Streeck 1984a.Centralization: Mixed. Basis: Judgment. Management keeps most decisions while personnel and social matters need the works council's consent; judgment. Sources: Jackson 2005; Haipeter 2002.Layers and span of control: Moderate. Basis: Judgment. The representation layer at establishment, company, and group levels adds bodies, not managerial levels; judgment. Sources: Jackson 2005.Decision rights and the locus of authority: Selective vertical and horizontal decentralization. Basis: Judgment. Different decisions go to different places: some to management alone, some to negotiation with elected representatives, which moves power outside the line; judgment for the type. Sources: Jackson 2005; Mintzberg 1980.Prime coordinating mechanism: Mutual adjustment. Basis: Judgment. Negotiated coordination between management and elected representatives; at Volkswagen decisions were politicized on a stable countervailing power; judgment for the level, since Mintzberg's mutual adjustment is informal. Sources: Haipeter 2002.Lateral mechanisms: Task forces and teams. Basis: Judgment. Works councils are standing bodies of elected employee representatives that meet management on matters the units share; Galbraith's scale has no level for a representative body, and the nearest is level 3, where representatives of several units form a standing team, so the level is judgment. Sources: Jackson 2005; Streeck 1984a.Differentiation against integration: Moderate differentiation, some integrating roles. Basis: Judgment. Management and the workforce's representatives hold different interests and are joined by negotiation; judgment. Sources: Haipeter 2002; Lawrence and Lorsch 1967a.Mode of exchange and control: Bureaucracy. Basis: Judgment. An employment hierarchy whose rules are partly negotiated under law; judgment. Sources: Jackson 2005; Ouchi 1980.Boundary permeability: Selective. Basis: Judgment. The boundary between management and the workforce is opened by statute; judgment for the band. Sources: Jackson 2005; Ashkenas and colleagues 1995.

All eleven levels are judgment, since the form sets no structure of its own beneath the elected bodies it adds: grouping spans function and product, and coordination is recorded as mutual adjustment, though here it can become negotiation. No row is contested.

Source: Streeck 1984a; Jackson 2005; Haipeter 2002, one company case study; Mintzberg 1980, a synthesis of earlier research, offering propositions without a new test; Lawrence and Lorsch 1967a, a multi-firm comparative field study; Ouchi 1980, a conceptual article; Ashkenas and colleagues 1995.

Where it came from

Jackson (2005), an institutional history, traces the form back past the West German laws. The idea of codetermination (Mitbestimmung) arose in the mid-19th century; the Works Councils Law of 1920 mandated works councils in all establishments with over 20 employees, with codecision rights in personnel affairs; and a law of 1922 let the council send two employee representatives to the supervisory board.

The schools of organization design and the forms' origins, 1900 to now

Each row is a school's era; each square under them is a form at its first year. Select a row or a square to read it; on a form's page, its own square and span are marked, with the schools that treat it.

1900192019401960198020002020Bureaucracy and its criticsClassical administrationHuman relations and System 4Transaction cost economicsCarnegie schoolSocio-technical systemsLabor-managed firmModularity and mirroringStrategy and structureContingency theoryFrench bureaucratic schoolJapanese-firm literatureScandinavian and DutchConfiguration theoryInformation processingLabor processStrategic choiceGerman codeterminationOrganizational economicsInstitutional theoryPopulation ecologyResource dependenceBusiness groupsScandinavian institutionalSocietal effectNetwork perspectiveComputational designNew-forms debateAlgorithmic managementForms by first yearCo-determined organization, 1951 to 1976 (the laws); 1984 to 2022 (themain studies)Now

The forms by first year

1900192019401960198020002020Co-determined organization, 1951 to 1976 (the laws);1984 to 2022 (the main studies)Now

Schools that treat this form: the economics of the labor-managed firm and of enterprise ownership; the Scandinavian and Dutch socio-technical schools; the German codetermination literature; and Societal effect and comparative business systems.

Select a school's row or a form's square to read it.Select a form's square to read it; open a school below.Bureaucracy and its critics1900s to 1950s, revived from the 1990sWhat it claimsWeber held that rational-legal authority exercised through an office hierarchy, written rules, trained officials, and promotion by qualification is technically superior in precision, speed, and reliability. Critics studied its unintended consequences, Michels's iron law sharpest.What it has shownMerton (1940) argued, with no test, that rules can turn from means into ends; case studies followed. The Aston group concluded that the type's dimensions vary independently, and Wagner's meta-analysis (2021) found that many of their interrelationships have weakened.Who disputes itHuman relations and System 4 sets the costs of impersonal rules to motivation and cooperation against the technical superiority Weber stresses.Bureaucracy and its critics in The Schools of Organization DesignClassical administration1910s to 1940s, and in German to the 1970sWhat it claimsThere are general principles of administration, among them division of work, unity of command, a scalar chain of authority, and a limited span of control, and a structure built to them will be efficient in most settings. Taylor added that planners should set work methods.What it has shownThe school offered reasoning and experience, not tests. Woodward (1965) found that the spans and levels of the more successful firms in her sample differed by production system, and Simon (1946) showed that the principles come in pairs that point in opposite directions.Who disputes itStructural contingency theory found that the structure of successful firms varies with technology and environment, where classical writers treat their principles as general.Classical administration in The Schools of Organization DesignHuman relations and System 41920s to 1960sWhat it claimsOutput depends on the social relations of work, the norms of informal groups, and the style of supervision as much as on formal design. Likert's System 4, overlapping work groups joined by linking-pin managers under participative management, outperforms authoritative systems.What it has shownThe founding evidence is the Hawthorne studies, which later reanalyses dispute (Carey 1967; Levitt and List 2011). Likert's support came largely from his own institute's surveys. Wagner (1994) found participation's effects on performance and satisfaction significant but small.Who disputes itLabor process and critical theory reads human relations as a technique of managerial control rather than a change in the distribution of power.Human relations and System 4 in The Schools of Organization DesignTransaction cost economics and the M-form hypothesis1937, then the 1970s to the presentWhat it claimsFirms exist, and are organized as they are, to economize on transaction costs. Hierarchy replaces the market when assets are specific, uncertainty is high, and exchange is frequent, and the multidivisional form should outperform the functional form in large, diversified firms.What it has shownArmour and Teece (1978) found, in United States petroleum firms from 1955 to 1973, a positive relationship between the multidivisional form and profitability while the form was spreading, but not once an equilibrium in organizational form was reached.Who disputes itThe network perspective on organizations: Granovetter argued that the theory undersocializes economic action, which is embedded in networks of personal relations that also produce trust and order.Transaction cost economics and the M-form hypothesis in The Schools of Organization DesignThe Carnegie school and the attention-based view1940s to the presentWhat it claimsPeople in organizations are boundedly rational, so structure matters because it sets the premises of their decisions and channels their attention: who sees which problems, which goals they pursue, and which routines they follow. Ocasio makes structure distribute attention.What it has shownMarch and Simon (1958) drew propositions from the existing literature, and Cyert and March (1963) added process models and simulations. Two studies show hierarchy shaping what is sent up as well as what is chosen (Reitzig and Maciejovsky 2015; Keum and See 2017).Who disputes itOrganizational economics: decision rights, authority, and complementarities models a principal and agents with defined objectives; the Carnegie school, firms as coalitions with unresolved goal conflict.The Carnegie school and the attention-based view in The Schools of Organization DesignSocio-technical systems1950s to 1980sWhat it claimsAn organization is a social system and a technical system that must be designed together. The same technology admits more than one way of organizing work, and groups that own a whole task and control its variances at the source perform better and are more satisfied.What it has shownTrist and Bamforth (1951) found that longwall mechanization broke up self-regulating work groups. A review of 134 experiments found them extremely successful overall, and Stewart (2006) linked team autonomy to performance; studies of socialist brigades and Volkswagen qualify it.Who disputes itLabor process and critical theory: Kelly argued that labor intensification, not joint optimization, accounts for what socio-technical redesign achieved, and that the part of pay incentives was seriously underestimated.Socio-technical systems in The Schools of Organization DesignThe economics of the labor-managed firm and of enterprise ownership1958 to the presentWhat it claimsA firm run by its workers behaves differently from one run for investors: Ward modeled the Yugoslav-style firm as maximizing income per worker. Hansmann argued that an ownership form's success depends on the balance between the costs of market contracting and of ownership.What it has shownBurdín (2014) found a 29 percent lower hazard of dissolution for Uruguayan worker-managed firms than for conventional ones, and Fakhfakh, Pérotin, and Gago (2012) found French labor-managed firms as productive or more so in every industry studied.Who disputes itOrganizational economics (Jensen and Meckling) contrasts the labor-managed firm, in which tradable residual claims are legally prohibited, with cooperatives and partnerships that arise out of voluntary contracting.The economics of the labor-managed firm and of enterprise ownership in The Schools of Organization DesignModularity and the mirroring hypothesis1960s to the presentWhat it claimsComplex systems are built of nearly decomposable parts, and an organization's structure tends to mirror the architecture of what it makes: modular products allow loosely coupled organizations, and tightly coupled products need tightly coupled teams. Conway's law runs in reverse.What it has shownColfer and Baldwin (2016) review the empirical studies and report both support and principled exceptions. Direct tests point both ways: MacCormack, Baldwin, and Rusnak (2012) found open source products more modular than their commercial pairs; dynamic components break the mirror.Who disputes itNo school in the record disputes it head on; it answers information processing, which meets the coordination load inside the organization; mirroring writers locate it in the product's architecture.Modularity and the mirroring hypothesis in The Schools of Organization DesignStrategy and structure1960s to 1980sWhat it claimsStructure follows strategy: firms that diversify by product or geography outgrow the centralized functional structure and, after a lag and usually a crisis, adopt divisions. Chandler drew this from the histories of DuPont, General Motors, Standard Oil of New Jersey, and Sears.What it has shownChandler (1962) is comparative business history of four firms set against a wider survey. Rumelt (1974) related diversification and structure to performance, and Egelhoff (1988), with 34 multinationals, found some of Stopford and Wells's relationships supported and others not.Who disputes itInstitutional theory: in Fligstein's model divisions spread with a product-related or unrelated strategy, presidents from sales or finance, and other firms in the industry changing; strategy was one of three.Strategy and structure in The Schools of Organization DesignStructural contingency theory1960s to the presentWhat it claimsThere is no one best structure. Performance depends on fit between structure and contingencies such as environment, technology, size, and strategy, on an open-system view of the organization. Drazin and Van de Ven separate fit as selection, interaction, and systems.What it has shownBurns and Stalker, Woodward, and the Aston group related structure to context; Drazin and Van de Ven (1985) supported selection and systems fit only. Pennings (1975) found that fit did not explain effectiveness; Schoonhoven (1981) found traditional hypotheses unsupported.Who disputes itStrategic choice: Child argued that contingency theory explains structure by the constraints of context and leaves out the political process by which power-holders choose strategic action, structural forms included.Structural contingency theory in The Schools of Organization DesignThe French bureaucratic school (strategic analysis)1960s to 1980sWhat it claimsA bureaucracy is a system of power relations organized around zones of uncertainty. Impersonal rules and centralization protect members from depending on one another, those who control uncertainties hold power, and, unable to correct its errors, it changes only through crisis.What it has shownLe phénomène bureaucratique (1963; English 1964) rests on two case studies, a clerical agency and a state industrial monopoly. L'acteur et le système (1977; English 1980) is theoretical.Who disputes itSocietal effect and comparative business systems: D'Iribarne argues that national logics of conduct, such as a French logic of honor, explain differences that Crozier attributed to power games.The French bureaucratic school (strategic analysis) in The Schools of Organization DesignThe Japanese-firm literature1960s to the presentWhat it claimsThe large Japanese firm coordinates operating decisions through horizontal information sharing among semi-autonomous shops and uses its ranking hierarchy mainly as an incentive scheme (Aoki). It creates knowledge through middle-up-down management (Nonaka and Takeuchi).What it has shownAoki (1986) is a formal model. Lincoln, Hanada, and McBride (1986) compared 51 Japanese and 55 United States manufacturing plants, and Nonaka and Takeuchi (1995) rest on case studies, chiefly of Japanese firms. Fruin (1994) found the enterprise system defined at three levels.Who disputes itLabor process and critical theory reads shop-floor delegation as control: Sewell and Wilkinson argue that just-in-time and total quality regimes delegate tactical responsibility while centralizing strategic control.The Japanese-firm literature in The Schools of Organization DesignThe Scandinavian and Dutch socio-technical schools1960s to 2000sWhat it claimsThe Scandinavian program sought democracy at work through field experiments with semi-autonomous groups, then through democratic dialogue. The Dutch school's design theory turns complex organizations with simple jobs into simple organizations with complex jobs.What it has shownEmery and Thorsrud reported field experiments in Norwegian industry; Gustavsen (1992) records that they spread less than hoped, his reason for turning to dialogue. Berggren studied work organization in the Swedish auto industry. The Dutch work rests on design cases and argument.Who disputes itThe Japanese-firm literature: defenders of the Toyota system hold that standardized work with employee participation learns faster; Berggren reports Swedish long-cycle plants matching a line plant on productivity.The Scandinavian and Dutch socio-technical schools in The Schools of Organization DesignConfiguration theory1970s to the presentWhat it claimsStructures cluster into a small number of internally coherent configurations whose elements reinforce one another, so organizations move between a few types in large jumps, not small steps. Mintzberg's five configurations each rest on one coordinating mechanism.What it has shownDoty, Glick, and Huber (1993) found that fit to Miles and Snow's ideal types predicted effectiveness while fit to Mintzberg's did not. A meta-analysis of 40 tests (Ketchen and colleagues 1997) found that configuration partly explains performance, more so with broad definitions.Who disputes itStructural contingency theory: Donaldson counters that most organizations sit at intermediate points on a continuum of fits, not in a few configurations, and that studies over time find mostly incremental change.Configuration theory in The Schools of Organization DesignInformation processing1970s to the presentWhat it claimsThe more uncertain the task, the more information must be processed during its execution. An organization either reduces that need, through slack resources or self-contained tasks, or raises its capacity, through vertical information systems or lateral relations up to the matrix.What it has shownGalbraith (1973, 1974) built the framework from cases and from Simon's theory of bounded rationality, and Tushman and Nadler (1978) set it out as an integrating concept for design. Daft and Lengel (1986) argued that structure must reduce equivocality as well as supply data.Who disputes itThe Carnegie school and the attention-based view: Ocasio holds that firm behavior results from how the firm channels and distributes attention, so structure governs where attention goes, not only how much is processed.Information processing in The Schools of Organization DesignLabor process and critical theory1970s to the presentWhat it claimsStructure is above all a system of control over labor. Braverman argued that management deskills work by separating conception from execution; Edwards traced a sequence from simple control by the boss to technical control through machines to bureaucratic control through rules.What it has shownHistorical and theoretical (Braverman 1974; Edwards 1979). Delbridge (1995), observing a Japanese-owned plant in England, found that just-in-time and total quality regimes combined the control of labor with management's economic goals more completely than piece rates had.Who disputes itBureaucracy and its critics: Adler argues that labor process theory ignores the progressive socialization of the labor process, which drives long-term skill upgrading, and disputes deskilling as the trend.Labor process and critical theory in The Schools of Organization DesignStrategic choice1970s to the presentWhat it claimsStructure is the outcome of choices by those with power in the organization, who decide on strategic action, including the structural form, the manipulation of environmental features, and the performance standards to be met. Context constrains but does not determine structure.What it has shownLargely conceptual: Child (1972) built the argument from gaps in contingency findings, and the empirical case rests mostly on the modest share of structural variance contingencies explain. A 2026 review of 42 studies finds upper echelons theory their main theoretical anchor.Who disputes itStructural contingency theory: Donaldson replies that organizations mostly adopt the structures their contingencies dictate, to avoid the loss of performance misfit brings, so choice over structure is at most limited.Strategic choice in The Schools of Organization DesignThe German codetermination literature1970s to the presentWhat it claimsWorks councils and employee board seats form a structural layer through which coordination can become negotiation between management and employees. Defenders argue that it supports long-term employment, training, and cooperation; critics, that it weakens shareholder control.What it has shownJäger, Schoefer, and Heining (2021) found board-level codetermination left wages unchanged and, if anything, raised capital formation. Jirjahn (2011) reports studies pointing to positive works council effects; a meta-analysis found codetermination laws tied to lower productivity.Who disputes itOrganizational economics (Gorton and Schmid) found that firms with equal employee and shareholder representation did worse for their shareholders than firms with one-third employee representation.The German codetermination literature in The Schools of Organization DesignOrganizational economics: decision rights, authority, and complementarities1976 to the presentWhat it claimsDesign is the joint choice of who holds which decision rights, how performance is measured, and how it is rewarded. Rights should be placed where the specific knowledge lies, formal authority differs from real authority, and practices are complements that pay off in clusters.What it has shownIchniowski, Shaw, and Prennushi (1997) found, on 36 steel finishing lines, that lines using a set of innovative work practices achieved substantially higher productivity, consistent with complementarities. Bloom and colleagues found more decentralization where trust was higher.Who disputes itGhoshal argued that management research has shaped managers' worldview with ideologically inspired amoral theories, built on a scientific model that excludes human intentionality and so denies moral considerations.Organizational economics: decision rights, authority, and complementarities in The Schools of Organization DesignInstitutional theory1977 to the presentWhat it claimsFormal structures are often adopted because they are legitimate in the organization's field, as rationalized myths, and then decoupled from the work done. Organizations in a field grow alike through coercive, mimetic, and normative isomorphism, whether or not it is efficient.What it has shownTolbert and Zucker (1983) found that city characteristics predicted early but not later adoption of civil service reform, which they read as institutionalization. Palmer, Jennings, and Zhou (1993) found support for institutional and economic accounts of late M-form adoption.Who disputes itStructural contingency theory: Kraatz and Zajac found little support for neoinstitutional predictions in 631 liberal arts colleges, which grew less alike; the change they studied was curricular, not structural.Institutional theory in The Schools of Organization DesignPopulation ecology1977 to the presentWhat it claimsOrganizations face strong structural inertia, because selection favors the reliability and accountability of stable structures. Change in a population's forms comes mainly from founding and failure, not adaptation, and changing core features resets the liability of newness.What it has shownAmburgey, Kelly, and Barnett (1993) found that the effects of change on the hazard of failure vary by type of change and over time, and that rates of change depend on how often and how recently an organization has changed. Carroll and Hannan (2000) set out the program's methods.Who disputes itFor structural contingency theory, Donaldson argues that ecology understates managers' capacity to adapt structure.Population ecology in The Schools of Organization DesignResource dependence1978 to the presentWhat it claimsOrganizations depend on outside parties for critical resources, and structure follows the management of that dependence: units that cope with critical dependencies gain power, and boundaries are redrawn through cooptation, joint ventures, and mergers to absorb constraint.What it has shownPfeffer and Salancik (1978) assembled studies of boards, mergers, and joint ventures. A meta-analysis of 157 tests (Drees and Heugens 2013) corroborated the main prediction: organizations meet resource dependencies with interorganizational arrangements that raise their autonomy.Who disputes itTransaction cost economics and the M-form hypothesis explains boundaries by efficiency; resource dependence, by power and constraint.Resource dependence in The Schools of Organization DesignThe business-groups literature1978 to the presentWhat it claimsGroups of legally independent firms bound by ownership and social ties are a durable form of their own, neither one firm nor a market. Where institutions function poorly, groups can benefit member firms and can destroy value; they are sometimes paragons, sometimes parasites.What it has shownKhanna and Palepu (2000) found that affiliates of the most diversified Indian groups outperformed unaffiliated firms. A meta-analysis of 141 studies (Carney and colleagues 2011) found that affiliation lowers performance in general, less so where institutions are underdeveloped.Who disputes itOrganizational economics: agency writers read pyramids and cross-holdings as devices that separate control from ownership; Almeida and Wolfenzon offer a financing rationale for pyramids instead.The business-groups literature in The Schools of Organization DesignScandinavian institutionalism1980s to the presentWhat it claimsIdeas of organizing do not diffuse unchanged; they travel and are translated as they are adopted, so a form taken up in one place is not the same form elsewhere. Organizations can also be built of organizations (meta-organizations), which behave differently.What it has shownA discussion paper by Czarniawska and Joerges (1995) contrasts the diffusion of ideas with their translation, drawing on examples such as Swedish municipal reform; the work on meta-organizations (Ahrne and Brunsson 2008) is conceptual.Who disputes itInstitutional theory can read the same processes, seen from a translocal view, as institutional isomorphism, though translation holds that each adopter modifies an idea, so an institution re-created elsewhere is new.Scandinavian institutionalism in The Schools of Organization DesignSocietal effect and comparative business systems1980s to the presentWhat it claimsFirms matched on size, technology, and industry differ systematically by country, because how a society educates, trains, recruits, and promotes its workforce, and its industrial relations, shape how work is divided and supervised, so structure is partly a national product.What it has shownMaurice, Sorge, and Warner (1980) compared closely matched manufacturing units in France, West Germany, and Great Britain and found more pervasive differences in their organization than usually recognized. Whitley (1999) set out a comparative account of business systems.Who disputes itStructural contingency theory stresses culture-free elements of structure; matched comparisons find nationally different shapes of organization.Societal effect and comparative business systems in The Schools of Organization DesignThe network perspective on organizations1985 to the presentWhat it claimsOrganizations and their members are nodes joined by ties, and the pattern of ties shapes what they can do. Economic action is embedded in networks of personal relations (Granovetter 1985), and network forms are a distinct form, not a hybrid of market and hierarchy (Powell 1990).What it has shownPodolny and Page (1998) review the research and find that network forms foster learning, confer status and legitimacy, bring economic benefits, help manage resource dependencies, and give employees considerable autonomy, and they ask for attention to networks' dysfunctions.Who disputes itTransaction cost economics: Williamson treats the hybrid as a third generic form between market and hierarchy; for Powell, network forms are a distinct form, not a mix of the two.The network perspective on organizations in The Schools of Organization DesignComputational organization design and search1990s to the presentWhat it claimsDesign choices interact, so design space is a rugged landscape with many local peaks, and structure affects how well an organization searches it. Decentralizing interdependent decisions can trap units on poor peaks; temporary decentralization, then reintegration, can help.What it has shownMostly simulation, with one field test: Csaszar (2012), with more than 150,000 stock-picking decisions by 609 mutual funds, found that decision-making structure affects the number of initiatives pursued and the omission and commission errors made.Who disputes itNo school in the record disputes it head on; it disputes structural contingency theory, whose bivariate fit, its simulations show, cannot capture how the best design depends on interactions among choices.Computational organization design and search in The Schools of Organization DesignThe new-forms debate1990s to the presentWhat it claimsOrganizations must solve four universal problems (dividing tasks, allocating them, providing rewards, and providing information), and a form is new when it solves them in new ways. Self-managing organizations radically decentralize authority; skeptics hold hierarchy reappears.What it has shownFoss (2003) traced the rise and partial reversal of Oticon's spaghetti organization to the problem of selective intervention. A meta-analysis of 54 studies of 13,914 teams (Greer and colleagues 2018) found that hierarchy within teams on net slightly lowers team performance.Who disputes itBureaucracy and its critics: removing formal structure leaves informal elites whose power is unaccountable (Freeman), and democratic and network organizations are much less hierarchy-free than their labels suggest.The new-forms debate in The Schools of Organization DesignThe algorithmic-management literature2015 to the presentWhat it claimsSoftware does much of the directing, evaluating, and disciplining that managers and rules once did. Kellogg, Valentine, and Christin (2020) call algorithmic control a new contested terrain; Puranam (2021) treats dividing decisions between people and machines as a design problem.What it has shownMostly qualitative field studies of gig work. Wood and colleagues (2019), with 107 interviews in six countries and 679 survey respondents, found that algorithmic management tends to give remote gig workers flexibility and autonomy, but also low pay, isolation, and overwork.Who disputes itLabor process and critical theory reads control at work as contested terrain; Kellogg, Valentine, and Christin take up that view but argue that algorithmic control is distinct from earlier forms.The algorithmic-management literature in The Schools of Organization DesignFunctional structureOrigin: 1911 to 1937.Family: Classical hierarchies.Line and staffOrigin: 1916 to 1943.Family: Classical hierarchies.Multidivisional (M-form) by productOrigin: 1920s practice; named and analyzed 1962 to 1975.Family: Divisionalized forms.Machine bureaucracyOrigin: 1922 (Weber); 1979 (Mintzberg).Family: Classical hierarchies.Divisional by customer or market segmentOrigin: 1937; 2005.Family: Divisionalized forms.Matrix organizationOrigin: 1950s to 1960s practice; analyzed 1971 to 1977.Family: Lateral and multidimensional forms.Co-determined organizationOrigin: 1951 to 1976 (the laws); 1984 to 2022 (the main studies).Family: Forms from other traditions.Socio-technical autonomous work groupsOrigin: 1951 to 1965.Family: Team-based and self-managing forms.Stratified hierarchy (requisite organization)Origin: 1951 to 1989.Family: Classical hierarchies.Cooperative organizationOrigin: 1958 to 1999.Family: Forms from other traditions.Linking-pin organization (System 4)Origin: 1961 to 1967.Family: Team-based and self-managing forms.Divisional by regionOrigin: 1962 to 1972.Family: Divisionalized forms.Adhocracy (innovative organization)Origin: 1968 to 1979.Family: Professional, project, and knowledge forms.J-form (the Japanese firm)Origin: 1968 to 1990.Family: Forms from other traditions.Professional bureaucracyOrigin: 1968 to 1979.Family: Professional, project, and knowledge forms.Holding company (H-form)Origin: 1972 to 1975; 1987.Family: Divisionalized forms.Ambidextrous organizationOrigin: 1976 to 2004.Family: Professional, project, and knowledge forms.Simple structureOrigin: 1979.Family: Classical hierarchies.Hybrid structureOrigin: 1980 to the present.Family: Lateral and multidimensional forms.Missionary (ideological) organizationOrigin: 1980 to 1989.Family: Ideological forms.Network, modular, and virtual organizationOrigin: 1986 to 1990.Family: Network and market-like forms.Transnational and multidimensional organizationOrigin: 1987 to 1989.Family: Lateral and multidimensional forms.Business group (keiretsu, chaebol, family house)Origin: 1988 to 2007.Family: Forms from other traditions.Shamrock organizationOrigin: 1988 to 1989.Family: Network and market-like forms.Federal organizationOrigin: 1989 to 1992.Family: Network and market-like forms.Self-managing organization (less-hierarchical forms)Origin: 1989 to 2017.Family: Team-based and self-managing forms.Boundaryless organizationOrigin: 1990 to 1995.Family: Network and market-like forms.Front-back organizationOrigin: 1990s to 2007.Family: Lateral and multidimensional forms.Professional partnership (P2 form)Origin: 1990.Family: Professional, project, and knowledge forms.The corporate center and shared servicesOrigin: 1991 to 2000.Family: Divisionalized forms.Internal market organizationOrigin: 1993 to 1994.Family: Network and market-like forms.Process (horizontal) organizationOrigin: 1993 to 1999.Family: Lateral and multidimensional forms.Cellular organizationOrigin: 1994 to 1997.Family: Network and market-like forms.Hypertext organizationOrigin: 1994 to 1995.Family: Forms from other traditions.Team-based organizationOrigin: 1995.Family: Team-based and self-managing forms.Project-based organizationOrigin: 2000 to 2006.Family: Professional, project, and knowledge forms.Agile at scaleOrigin: 2001 to 2016.Family: Contemporary and emerging forms.Distributed (all-remote) organizationOrigin: 2002 to 2021.Family: Contemporary and emerging forms.Open-source and community-based organizationOrigin: 2002 to 2007.Family: Contemporary and emerging forms.Algorithmically managed organizationOrigin: 2015 to 2020.Family: Contemporary and emerging forms.Team of teamsOrigin: 2015.Family: Team-based and self-managing forms.

The schools by first year

  1. Bureaucracy and its critics1900s to 1950s, revived from the 1990sWhat it claimsWeber held that rational-legal authority exercised through an office hierarchy, written rules, trained officials, and promotion by qualification is technically superior in precision, speed, and reliability. Critics studied its unintended consequences, Michels's iron law sharpest.What it has shownMerton (1940) argued, with no test, that rules can turn from means into ends; case studies followed. The Aston group concluded that the type's dimensions vary independently, and Wagner's meta-analysis (2021) found that many of their interrelationships have weakened.Who disputes itHuman relations and System 4 sets the costs of impersonal rules to motivation and cooperation against the technical superiority Weber stresses.
  2. Classical administration1910s to 1940s, and in German to the 1970sWhat it claimsThere are general principles of administration, among them division of work, unity of command, a scalar chain of authority, and a limited span of control, and a structure built to them will be efficient in most settings. Taylor added that planners should set work methods.What it has shownThe school offered reasoning and experience, not tests. Woodward (1965) found that the spans and levels of the more successful firms in her sample differed by production system, and Simon (1946) showed that the principles come in pairs that point in opposite directions.Who disputes itStructural contingency theory found that the structure of successful firms varies with technology and environment, where classical writers treat their principles as general.
  3. Human relations and System 41920s to 1960sWhat it claimsOutput depends on the social relations of work, the norms of informal groups, and the style of supervision as much as on formal design. Likert's System 4, overlapping work groups joined by linking-pin managers under participative management, outperforms authoritative systems.What it has shownThe founding evidence is the Hawthorne studies, which later reanalyses dispute (Carey 1967; Levitt and List 2011). Likert's support came largely from his own institute's surveys. Wagner (1994) found participation's effects on performance and satisfaction significant but small.Who disputes itLabor process and critical theory reads human relations as a technique of managerial control rather than a change in the distribution of power.
  4. Transaction cost economics and the M-form hypothesis1937, then the 1970s to the presentWhat it claimsFirms exist, and are organized as they are, to economize on transaction costs. Hierarchy replaces the market when assets are specific, uncertainty is high, and exchange is frequent, and the multidivisional form should outperform the functional form in large, diversified firms.What it has shownArmour and Teece (1978) found, in United States petroleum firms from 1955 to 1973, a positive relationship between the multidivisional form and profitability while the form was spreading, but not once an equilibrium in organizational form was reached.Who disputes itThe network perspective on organizations: Granovetter argued that the theory undersocializes economic action, which is embedded in networks of personal relations that also produce trust and order.
  5. The Carnegie school and the attention-based view1940s to the presentWhat it claimsPeople in organizations are boundedly rational, so structure matters because it sets the premises of their decisions and channels their attention: who sees which problems, which goals they pursue, and which routines they follow. Ocasio makes structure distribute attention.What it has shownMarch and Simon (1958) drew propositions from the existing literature, and Cyert and March (1963) added process models and simulations. Two studies show hierarchy shaping what is sent up as well as what is chosen (Reitzig and Maciejovsky 2015; Keum and See 2017).Who disputes itOrganizational economics: decision rights, authority, and complementarities models a principal and agents with defined objectives; the Carnegie school, firms as coalitions with unresolved goal conflict.
  6. Socio-technical systems1950s to 1980sWhat it claimsAn organization is a social system and a technical system that must be designed together. The same technology admits more than one way of organizing work, and groups that own a whole task and control its variances at the source perform better and are more satisfied.What it has shownTrist and Bamforth (1951) found that longwall mechanization broke up self-regulating work groups. A review of 134 experiments found them extremely successful overall, and Stewart (2006) linked team autonomy to performance; studies of socialist brigades and Volkswagen qualify it.Who disputes itLabor process and critical theory: Kelly argued that labor intensification, not joint optimization, accounts for what socio-technical redesign achieved, and that the part of pay incentives was seriously underestimated.
  7. The economics of the labor-managed firm and of enterprise ownership1958 to the presentWhat it claimsA firm run by its workers behaves differently from one run for investors: Ward modeled the Yugoslav-style firm as maximizing income per worker. Hansmann argued that an ownership form's success depends on the balance between the costs of market contracting and of ownership.What it has shownBurdín (2014) found a 29 percent lower hazard of dissolution for Uruguayan worker-managed firms than for conventional ones, and Fakhfakh, Pérotin, and Gago (2012) found French labor-managed firms as productive or more so in every industry studied.Who disputes itOrganizational economics (Jensen and Meckling) contrasts the labor-managed firm, in which tradable residual claims are legally prohibited, with cooperatives and partnerships that arise out of voluntary contracting.
  8. Modularity and the mirroring hypothesis1960s to the presentWhat it claimsComplex systems are built of nearly decomposable parts, and an organization's structure tends to mirror the architecture of what it makes: modular products allow loosely coupled organizations, and tightly coupled products need tightly coupled teams. Conway's law runs in reverse.What it has shownColfer and Baldwin (2016) review the empirical studies and report both support and principled exceptions. Direct tests point both ways: MacCormack, Baldwin, and Rusnak (2012) found open source products more modular than their commercial pairs; dynamic components break the mirror.Who disputes itNo school in the record disputes it head on; it answers information processing, which meets the coordination load inside the organization; mirroring writers locate it in the product's architecture.
  9. Strategy and structure1960s to 1980sWhat it claimsStructure follows strategy: firms that diversify by product or geography outgrow the centralized functional structure and, after a lag and usually a crisis, adopt divisions. Chandler drew this from the histories of DuPont, General Motors, Standard Oil of New Jersey, and Sears.What it has shownChandler (1962) is comparative business history of four firms set against a wider survey. Rumelt (1974) related diversification and structure to performance, and Egelhoff (1988), with 34 multinationals, found some of Stopford and Wells's relationships supported and others not.Who disputes itInstitutional theory: in Fligstein's model divisions spread with a product-related or unrelated strategy, presidents from sales or finance, and other firms in the industry changing; strategy was one of three.
  10. Structural contingency theory1960s to the presentWhat it claimsThere is no one best structure. Performance depends on fit between structure and contingencies such as environment, technology, size, and strategy, on an open-system view of the organization. Drazin and Van de Ven separate fit as selection, interaction, and systems.What it has shownBurns and Stalker, Woodward, and the Aston group related structure to context; Drazin and Van de Ven (1985) supported selection and systems fit only. Pennings (1975) found that fit did not explain effectiveness; Schoonhoven (1981) found traditional hypotheses unsupported.Who disputes itStrategic choice: Child argued that contingency theory explains structure by the constraints of context and leaves out the political process by which power-holders choose strategic action, structural forms included.
  11. The French bureaucratic school (strategic analysis)1960s to 1980sWhat it claimsA bureaucracy is a system of power relations organized around zones of uncertainty. Impersonal rules and centralization protect members from depending on one another, those who control uncertainties hold power, and, unable to correct its errors, it changes only through crisis.What it has shownLe phénomène bureaucratique (1963; English 1964) rests on two case studies, a clerical agency and a state industrial monopoly. L'acteur et le système (1977; English 1980) is theoretical.Who disputes itSocietal effect and comparative business systems: D'Iribarne argues that national logics of conduct, such as a French logic of honor, explain differences that Crozier attributed to power games.
  12. The Japanese-firm literature1960s to the presentWhat it claimsThe large Japanese firm coordinates operating decisions through horizontal information sharing among semi-autonomous shops and uses its ranking hierarchy mainly as an incentive scheme (Aoki). It creates knowledge through middle-up-down management (Nonaka and Takeuchi).What it has shownAoki (1986) is a formal model. Lincoln, Hanada, and McBride (1986) compared 51 Japanese and 55 United States manufacturing plants, and Nonaka and Takeuchi (1995) rest on case studies, chiefly of Japanese firms. Fruin (1994) found the enterprise system defined at three levels.Who disputes itLabor process and critical theory reads shop-floor delegation as control: Sewell and Wilkinson argue that just-in-time and total quality regimes delegate tactical responsibility while centralizing strategic control.
  13. The Scandinavian and Dutch socio-technical schools1960s to 2000sWhat it claimsThe Scandinavian program sought democracy at work through field experiments with semi-autonomous groups, then through democratic dialogue. The Dutch school's design theory turns complex organizations with simple jobs into simple organizations with complex jobs.What it has shownEmery and Thorsrud reported field experiments in Norwegian industry; Gustavsen (1992) records that they spread less than hoped, his reason for turning to dialogue. Berggren studied work organization in the Swedish auto industry. The Dutch work rests on design cases and argument.Who disputes itThe Japanese-firm literature: defenders of the Toyota system hold that standardized work with employee participation learns faster; Berggren reports Swedish long-cycle plants matching a line plant on productivity.
  14. Configuration theory1970s to the presentWhat it claimsStructures cluster into a small number of internally coherent configurations whose elements reinforce one another, so organizations move between a few types in large jumps, not small steps. Mintzberg's five configurations each rest on one coordinating mechanism.What it has shownDoty, Glick, and Huber (1993) found that fit to Miles and Snow's ideal types predicted effectiveness while fit to Mintzberg's did not. A meta-analysis of 40 tests (Ketchen and colleagues 1997) found that configuration partly explains performance, more so with broad definitions.Who disputes itStructural contingency theory: Donaldson counters that most organizations sit at intermediate points on a continuum of fits, not in a few configurations, and that studies over time find mostly incremental change.
  15. Information processing1970s to the presentWhat it claimsThe more uncertain the task, the more information must be processed during its execution. An organization either reduces that need, through slack resources or self-contained tasks, or raises its capacity, through vertical information systems or lateral relations up to the matrix.What it has shownGalbraith (1973, 1974) built the framework from cases and from Simon's theory of bounded rationality, and Tushman and Nadler (1978) set it out as an integrating concept for design. Daft and Lengel (1986) argued that structure must reduce equivocality as well as supply data.Who disputes itThe Carnegie school and the attention-based view: Ocasio holds that firm behavior results from how the firm channels and distributes attention, so structure governs where attention goes, not only how much is processed.
  16. Labor process and critical theory1970s to the presentWhat it claimsStructure is above all a system of control over labor. Braverman argued that management deskills work by separating conception from execution; Edwards traced a sequence from simple control by the boss to technical control through machines to bureaucratic control through rules.What it has shownHistorical and theoretical (Braverman 1974; Edwards 1979). Delbridge (1995), observing a Japanese-owned plant in England, found that just-in-time and total quality regimes combined the control of labor with management's economic goals more completely than piece rates had.Who disputes itBureaucracy and its critics: Adler argues that labor process theory ignores the progressive socialization of the labor process, which drives long-term skill upgrading, and disputes deskilling as the trend.
  17. Strategic choice1970s to the presentWhat it claimsStructure is the outcome of choices by those with power in the organization, who decide on strategic action, including the structural form, the manipulation of environmental features, and the performance standards to be met. Context constrains but does not determine structure.What it has shownLargely conceptual: Child (1972) built the argument from gaps in contingency findings, and the empirical case rests mostly on the modest share of structural variance contingencies explain. A 2026 review of 42 studies finds upper echelons theory their main theoretical anchor.Who disputes itStructural contingency theory: Donaldson replies that organizations mostly adopt the structures their contingencies dictate, to avoid the loss of performance misfit brings, so choice over structure is at most limited.
  18. The German codetermination literature1970s to the presentWhat it claimsWorks councils and employee board seats form a structural layer through which coordination can become negotiation between management and employees. Defenders argue that it supports long-term employment, training, and cooperation; critics, that it weakens shareholder control.What it has shownJäger, Schoefer, and Heining (2021) found board-level codetermination left wages unchanged and, if anything, raised capital formation. Jirjahn (2011) reports studies pointing to positive works council effects; a meta-analysis found codetermination laws tied to lower productivity.Who disputes itOrganizational economics (Gorton and Schmid) found that firms with equal employee and shareholder representation did worse for their shareholders than firms with one-third employee representation.
  19. Organizational economics: decision rights, authority, and complementarities1976 to the presentWhat it claimsDesign is the joint choice of who holds which decision rights, how performance is measured, and how it is rewarded. Rights should be placed where the specific knowledge lies, formal authority differs from real authority, and practices are complements that pay off in clusters.What it has shownIchniowski, Shaw, and Prennushi (1997) found, on 36 steel finishing lines, that lines using a set of innovative work practices achieved substantially higher productivity, consistent with complementarities. Bloom and colleagues found more decentralization where trust was higher.Who disputes itGhoshal argued that management research has shaped managers' worldview with ideologically inspired amoral theories, built on a scientific model that excludes human intentionality and so denies moral considerations.
  20. Institutional theory1977 to the presentWhat it claimsFormal structures are often adopted because they are legitimate in the organization's field, as rationalized myths, and then decoupled from the work done. Organizations in a field grow alike through coercive, mimetic, and normative isomorphism, whether or not it is efficient.What it has shownTolbert and Zucker (1983) found that city characteristics predicted early but not later adoption of civil service reform, which they read as institutionalization. Palmer, Jennings, and Zhou (1993) found support for institutional and economic accounts of late M-form adoption.Who disputes itStructural contingency theory: Kraatz and Zajac found little support for neoinstitutional predictions in 631 liberal arts colleges, which grew less alike; the change they studied was curricular, not structural.
  21. Population ecology1977 to the presentWhat it claimsOrganizations face strong structural inertia, because selection favors the reliability and accountability of stable structures. Change in a population's forms comes mainly from founding and failure, not adaptation, and changing core features resets the liability of newness.What it has shownAmburgey, Kelly, and Barnett (1993) found that the effects of change on the hazard of failure vary by type of change and over time, and that rates of change depend on how often and how recently an organization has changed. Carroll and Hannan (2000) set out the program's methods.Who disputes itFor structural contingency theory, Donaldson argues that ecology understates managers' capacity to adapt structure.
  22. Resource dependence1978 to the presentWhat it claimsOrganizations depend on outside parties for critical resources, and structure follows the management of that dependence: units that cope with critical dependencies gain power, and boundaries are redrawn through cooptation, joint ventures, and mergers to absorb constraint.What it has shownPfeffer and Salancik (1978) assembled studies of boards, mergers, and joint ventures. A meta-analysis of 157 tests (Drees and Heugens 2013) corroborated the main prediction: organizations meet resource dependencies with interorganizational arrangements that raise their autonomy.Who disputes itTransaction cost economics and the M-form hypothesis explains boundaries by efficiency; resource dependence, by power and constraint.
  23. The business-groups literature1978 to the presentWhat it claimsGroups of legally independent firms bound by ownership and social ties are a durable form of their own, neither one firm nor a market. Where institutions function poorly, groups can benefit member firms and can destroy value; they are sometimes paragons, sometimes parasites.What it has shownKhanna and Palepu (2000) found that affiliates of the most diversified Indian groups outperformed unaffiliated firms. A meta-analysis of 141 studies (Carney and colleagues 2011) found that affiliation lowers performance in general, less so where institutions are underdeveloped.Who disputes itOrganizational economics: agency writers read pyramids and cross-holdings as devices that separate control from ownership; Almeida and Wolfenzon offer a financing rationale for pyramids instead.
  24. Scandinavian institutionalism1980s to the presentWhat it claimsIdeas of organizing do not diffuse unchanged; they travel and are translated as they are adopted, so a form taken up in one place is not the same form elsewhere. Organizations can also be built of organizations (meta-organizations), which behave differently.What it has shownA discussion paper by Czarniawska and Joerges (1995) contrasts the diffusion of ideas with their translation, drawing on examples such as Swedish municipal reform; the work on meta-organizations (Ahrne and Brunsson 2008) is conceptual.Who disputes itInstitutional theory can read the same processes, seen from a translocal view, as institutional isomorphism, though translation holds that each adopter modifies an idea, so an institution re-created elsewhere is new.
  25. Societal effect and comparative business systems1980s to the presentWhat it claimsFirms matched on size, technology, and industry differ systematically by country, because how a society educates, trains, recruits, and promotes its workforce, and its industrial relations, shape how work is divided and supervised, so structure is partly a national product.What it has shownMaurice, Sorge, and Warner (1980) compared closely matched manufacturing units in France, West Germany, and Great Britain and found more pervasive differences in their organization than usually recognized. Whitley (1999) set out a comparative account of business systems.Who disputes itStructural contingency theory stresses culture-free elements of structure; matched comparisons find nationally different shapes of organization.
  26. The network perspective on organizations1985 to the presentWhat it claimsOrganizations and their members are nodes joined by ties, and the pattern of ties shapes what they can do. Economic action is embedded in networks of personal relations (Granovetter 1985), and network forms are a distinct form, not a hybrid of market and hierarchy (Powell 1990).What it has shownPodolny and Page (1998) review the research and find that network forms foster learning, confer status and legitimacy, bring economic benefits, help manage resource dependencies, and give employees considerable autonomy, and they ask for attention to networks' dysfunctions.Who disputes itTransaction cost economics: Williamson treats the hybrid as a third generic form between market and hierarchy; for Powell, network forms are a distinct form, not a mix of the two.
  27. Computational organization design and search1990s to the presentWhat it claimsDesign choices interact, so design space is a rugged landscape with many local peaks, and structure affects how well an organization searches it. Decentralizing interdependent decisions can trap units on poor peaks; temporary decentralization, then reintegration, can help.What it has shownMostly simulation, with one field test: Csaszar (2012), with more than 150,000 stock-picking decisions by 609 mutual funds, found that decision-making structure affects the number of initiatives pursued and the omission and commission errors made.Who disputes itNo school in the record disputes it head on; it disputes structural contingency theory, whose bivariate fit, its simulations show, cannot capture how the best design depends on interactions among choices.
  28. The new-forms debate1990s to the presentWhat it claimsOrganizations must solve four universal problems (dividing tasks, allocating them, providing rewards, and providing information), and a form is new when it solves them in new ways. Self-managing organizations radically decentralize authority; skeptics hold hierarchy reappears.What it has shownFoss (2003) traced the rise and partial reversal of Oticon's spaghetti organization to the problem of selective intervention. A meta-analysis of 54 studies of 13,914 teams (Greer and colleagues 2018) found that hierarchy within teams on net slightly lowers team performance.Who disputes itBureaucracy and its critics: removing formal structure leaves informal elites whose power is unaccountable (Freeman), and democratic and network organizations are much less hierarchy-free than their labels suggest.
  29. The algorithmic-management literature2015 to the presentWhat it claimsSoftware does much of the directing, evaluating, and disciplining that managers and rules once did. Kellogg, Valentine, and Christin (2020) call algorithmic control a new contested terrain; Puranam (2021) treats dividing decisions between people and machines as a design problem.What it has shownMostly qualitative field studies of gig work. Wood and colleagues (2019), with 107 interviews in six countries and 679 survey respondents, found that algorithmic management tends to give remote gig workers flexibility and autonomy, but also low pay, isolation, and overwork.Who disputes itLabor process and critical theory reads control at work as contested terrain; Kellogg, Valentine, and Christin take up that view but argue that algorithmic control is distinct from earlier forms.

The forms by first year

  1. Functional structure: 1911 to 1937
  2. Line and staff: 1916 to 1943
  3. Multidivisional (M-form) by product: 1920s practice; named and analyzed 1962 to 1975
  4. Machine bureaucracy: 1922 (Weber); 1979 (Mintzberg)
  5. Divisional by customer or market segment: 1937; 2005
  6. Matrix organization: 1950s to 1960s practice; analyzed 1971 to 1977
  7. Co-determined organization: 1951 to 1976 (the laws); 1984 to 2022 (the main studies)
  8. Socio-technical autonomous work groups: 1951 to 1965
  9. Stratified hierarchy (requisite organization): 1951 to 1989
  10. Cooperative organization: 1958 to 1999
  11. Linking-pin organization (System 4): 1961 to 1967
  12. Divisional by region: 1962 to 1972
  13. Adhocracy (innovative organization): 1968 to 1979
  14. J-form (the Japanese firm): 1968 to 1990
  15. Professional bureaucracy: 1968 to 1979
  16. Holding company (H-form): 1972 to 1975; 1987
  17. Ambidextrous organization: 1976 to 2004
  18. Simple structure: 1979
  19. Hybrid structure: 1980 to the present
  20. Missionary (ideological) organization: 1980 to 1989
  21. Network, modular, and virtual organization: 1986 to 1990
  22. Transnational and multidimensional organization: 1987 to 1989
  23. Business group (keiretsu, chaebol, family house): 1988 to 2007
  24. Shamrock organization: 1988 to 1989
  25. Federal organization: 1989 to 1992
  26. Self-managing organization (less-hierarchical forms): 1989 to 2017
  27. Boundaryless organization: 1990 to 1995
  28. Front-back organization: 1990s to 2007
  29. Professional partnership (P2 form): 1990
  30. The corporate center and shared services: 1991 to 2000
  31. Internal market organization: 1993 to 1994
  32. Process (horizontal) organization: 1993 to 1999
  33. Cellular organization: 1994 to 1997
  34. Hypertext organization: 1994 to 1995
  35. Team-based organization: 1995
  36. Project-based organization: 2000 to 2006
  37. Agile at scale: 2001 to 2016
  38. Distributed (all-remote) organization: 2002 to 2021
  39. Open-source and community-based organization: 2002 to 2007
  40. Algorithmically managed organization: 2015 to 2020
  41. Team of teams: 2015

Twenty-three of the 29 schools run to the present, and 16 of those began in the 1970s or later. The forms arrive in waves: 14 of the 41 first appear between 1985 and 1994.

Source: Fayol 1949; Weber 1978; Mayo 1933; Trist and Bamforth 1951, an interview-based field study in one industry; Burns and Stalker 1961, a field study of twenty firms; Mintzberg 1979; Child 1972a; Coase 1937; Meyer and Rowan 1977; Hannan and Freeman 1977; Galbraith 1973; Jensen and Meckling 1976; Crozier 1963; Emery and Thorsrud 1969; Yoshino 1968; Streeck 1984a; Kellogg and colleagues 2020, a review of earlier research through one theoretical lens, with no new data; Puranam and colleagues 2014, a conceptual argument; Chandler 1962, several independent case histories by a historian; Pfeffer and Salancik 1978; Simon 1946; Maurice and colleagues 1980, a comparison of matched factories in three countries; Levinthal 1997; Simon 1962; Braverman 1974; Hamilton and Biggart 1988, a comparison of three economies by scholars; Ward 1958; Czarniawska and Joerges 1995; Granovetter 1985.

In 1951 parity on the supervisory board came to coal and steel; the Works Constitution Act of 1952 gave labor one third of board seats elsewhere; reforms in 1972 formalized new rights for works councils; and a 1976 revision widened board representation, though it stayed weaker than the coal and steel model (Jackson 2005). The 1976 Act brought near-parity to firms of more than 2,000 employees, half the seats with a shareholder chair to break ties (Jäger, Schoefer, and Heining 2021). The problem the laws answered was how to give employees a formal voice in decisions without employee ownership. The sector of origin is coal and steel, where, Jackson notes, coal mining was important in developing the model; the car industry enters through later studies. Streeck (1984), FitzRoy and Kraft (1993), Gorton and Schmid (2004), and Jackson (2005), among others, studied the laws.

Where it fits

Here one rating, size, rests on evidence and is contested; eleven are judgment, nine of them partial at every level. A partial counts as neither Fit nor Strain, so size, age, and uncertainty decide the form's count.

The co-determined organization against the twelve contingency factors

Each factor at its three levels, Fits, Partial, or Strain; select a row for its reason, sources, and grade.

Select a factor to read its reason, sources, basis, and grade.Size. The law scales the representation layer with size; the strongest negative finding, worse results for shareholders, attaches to the parity boards of the largest firms, and newer research finds board-level codetermination can raise productivity and profitability. Basis: Evidence. Grade: a multi-firm empirical study or several independent case studies by scholars. Sources: Gorton and Schmid 2004; Jirjahn 2011; Jäger and colleagues 2022; Jäger and colleagues 2021. View 1: Small fits, Medium fits, Large partial. Near-parity boards, which the law sets for firms with more than 2,000 employees (workers elect half the seats and a shareholder chair can break ties), went with worse results for shareholders than one-third representation. Sources: Gorton and Schmid 2004. View 2: Small fits, Medium fits, Large fits. Newer research suggests that board-level codetermination can raise productivity and, under certain conditions, profitability, so the layer need not strain large firms. Sources: Jirjahn 2011.Age. The layer works through relationships between management and elected representatives that are built over years. Basis: Judgment. Sources: Haipeter 2002; Streeck 1984a; Jackson 2005.Environmental uncertainty (unpredictability, dynamism). Negotiation with elected representatives shapes management's response to market change and politicizes decisions; that sharp shifts make the response slower is our judgment. Basis: Judgment. Sources: Haipeter 2002; Jäger and colleagues 2022; Pennings 1975.Environmental complexity. Negotiated voice is set by law and applies under any environment; nothing read ties it to complexity. Basis: Judgment. Sources: Jirjahn 2011.Munificence and hostility. Under market pressure codetermination made management's response a negotiation, though it could not stop market-driven control; nothing read says whether that helped or hurt. Basis: Judgment. Sources: Haipeter 2002.Diversity of products and markets. Works councils and board seats apply under any business mix; nothing read ties codetermination to diversity. Basis: Judgment. Sources: Jirjahn 2011.Strategy type. A representation layer sits over any operating structure, so it does not settle which strategy type the firm pursues. Basis: Judgment. Sources: Jackson 2005.Technology and routineness. Works councils and board seats overlay the operating structure, so how routine the work is does not decide the form. Basis: Judgment. Sources: Jackson 2005.Interdependence. Negotiated voice concerns personnel and social matters across the whole firm, not the workflow links between units. Basis: Judgment. Sources: Jackson 2005.Knowledge intensity and professionalization. Works councils and board seats are set by law whatever the workforce's training, and no work read ties the form's fit to training levels. Basis: Judgment. Sources: Streeck 1984a; Jackson 2005.Global integration pressure. Codetermination is set by national law, and no work read ties the form to integration pressure across countries. Basis: Judgment. Sources: Streeck 1984a.Local responsiveness pressure. Codetermination is itself a national legal requirement, and no work read sets the form against responsiveness to the countries a firm serves. Basis: Judgment. Sources: Streeck 1984a; Jackson 2005.

Counting the one contested cell, size, by its first view, the 36 settings read Fits at 6 and Partial at 30, with no strain; the other view of size fits a large firm as well. Eleven of the twelve cells rest on judgment.

Source: Gorton and Schmid 2004, a statistical study of many German firms; Jirjahn 2011, a review of many independent econometric studies; Jäger and colleagues 2022, a review of research on the German model, mainly in economics; Jäger and colleagues 2021, a natural experiment across many German firms; Haipeter 2002, one company case study; Streeck 1984a; Jackson 2005; Pennings 1975, a quantitative field test of the structural-contingency model.

Your own situation against the co-determined organization

Set any factor to outline its cell in the strip above; the lines under the switches give the counts, the form's place among the 41, and the misfit rules that fire.

Size
Age
Environmental uncertainty (unpredictability, dynamism)
Environmental complexity
Munificence and hostility
Diversity of products and markets
Strategy type
Technology and routineness
Interdependence
Knowledge intensity and professionalization
Global integration pressure
Local responsiveness pressure

Set: 0 of 12 factors. Fits on 0, Partial on 0, Strain on 0, Contested on 0.

Its place in the explorer's rankingEvery factor is on Any: all 41 forms tie, and the explorer lists them alphabetically.1st of 411st of 41, tied with one other1st of 41, tied with 0 othersSunk by a misfit rule: 1st of 41Sunk by a misfit rule: 1st of 41, tied with one otherSunk by a misfit rule: 1st of 41, tied with 0 others

  • Flagged (its sources disagree): A prospector bound by heavy rules. Disputed: Burton and Obel 2004; against it, Sine and colleagues 2006; Adler and Borys 1996.
  • Flagged (its sources disagree): A small organization with a large one's rules. Disputed: Burton and Obel 2004; against it, Sine and colleagues 2006.
  • Flagged (its sources disagree): Nonroutine work bound by procedures. Disputed: Burton and Obel 2004; against it, Adler and colleagues 1999; Adler and Borys 1996; against it, Hickson and colleagues 1969; Child and Mansfield 1972.
  • Flagged (its sources disagree): Heavy rules in an unpredictable environment. Disputed: Burton and Obel 2004; against it, Sine and colleagues 2006; Bigley and Roberts 2001; Adler and Borys 1996.
  • Flagged (its sources disagree): Reactor: a defender's structure kept after the environment changed. Disputed: Miles and Snow 1978; Burton and Obel 2004; against it, Sine and colleagues 2006; Bigley and Roberts 2001; Adler and Borys 1996.

Ranking rule: by count of Fits on the factors the reader has set, then fewest Strains, then alphabetical; a fired misfit rule that no source disputes sinks the form to the bottom when every level of the form's profile meets it, a disputed one, or one that meets the form only through one end of a spanned level, one view of a contested profile cell, or one part of a two-part form, is flagged on the row (with both views where it is disputed), and a misfit between two of the reader's own settings is shown once above the list; a contested cell counts only where its views agree at the reader's level, and otherwise shows as Contested; factors on "Any" count for nothing; with every factor on "Any" the list is alphabetical and says so.

Open these settings in the explorer

The misfit rules that can fire for this form

  • A prospector bound by heavy rules fires when Strategy type at Prospector (exploration): flagged (its sources disagree). Disputed: Burton and Obel 2004; against it, Sine and colleagues 2006; Adler and Borys 1996.
  • A small organization with a large one's rules fires when Size at Small: flagged (its sources disagree). Disputed: Burton and Obel 2004; against it, Sine and colleagues 2006.
  • Nonroutine work bound by procedures fires when Technology and routineness at Nonroutine: flagged (its sources disagree). Disputed: Burton and Obel 2004; against it, Adler and colleagues 1999; Adler and Borys 1996; against it, Hickson and colleagues 1969; Child and Mansfield 1972.
  • Heavy rules in an unpredictable environment fires when Environmental uncertainty (unpredictability, dynamism) at Unpredictable: flagged (its sources disagree). Disputed: Burton and Obel 2004; against it, Sine and colleagues 2006; Bigley and Roberts 2001; Adler and Borys 1996.
  • Reactor: a defender's structure kept after the environment changed fires when Strategy type at Defender (exploitation) and Environmental uncertainty (unpredictability, dynamism) at Unpredictable: flagged (its sources disagree). Disputed: Miles and Snow 1978; Burton and Obel 2004; against it, Sine and colleagues 2006; Bigley and Roberts 2001; Adler and Borys 1996.

Of the 39 contingency misfit rules, five can fire for this form, all against heavy rules, which meet only the high end of its formalization span. All five are disputed, so each would only flag the form; none would sink it.

Source: Burton and Obel 2004; Burton and colleagues 2020a.

  • Size. Contested. Fits small and medium, partial large: near-parity boards, workers electing half the seats past 2,000 employees and a shareholder chair breaking ties, went with worse results for shareholders than one-third representation (Gorton and Schmid 2004, a statistical study of many German firms), though size effects are hard to separate from representation. Or fits at every size: newer research suggests that board-level codetermination can raise productivity, and under certain conditions profitability, with heterogeneous results (Jirjahn 2011, a review of many independent econometric studies, mostly of works councils). The Jäger studies concern one-third seats in small new stock corporations (2021) and the few direct effects of board seats (2022). The ranking counts small and medium as fits and shows large as Contested.
  • Age. Partial young, fits established and old, our judgment: the layer runs on relationships built over years. No work tests age; the premises are Haipeter (2002), one company case study, and Jackson (2005), an institutional history, ungraded here.
  • Environmental uncertainty. Fits stable and shifting, partial unpredictable, our judgment, with Haipeter (2002), one company case study, as the premise: negotiation politicizes management's response to market change, but Haipeter reports no slowness. Pennings (1975), a quantitative field test of the structural-contingency model, found environment and structure fit failing to explain effectiveness, though Donaldson (2001) traces such failures to method; it names no form and sets no level here.
  • Munificence and hostility. Partial throughout: under market pressure codetermination made the response a negotiation but could not stop market-driven control (Haipeter 2002), and nothing read says whether that helped or hurt.
  • Knowledge intensity, global integration, and local responsiveness pressure. Partial throughout: the layer is set by national law whatever the workforce's training, and no work read ties it to either pressure (Streeck 1984; Jackson 2005).
  • Complexity, diversity, strategy, technology, and interdependence. Partial throughout: the layer overlays any operating structure and concerns personnel and social matters, not workflow links (Jirjahn 2011; Jackson 2005).

What it does well

Firm-level codetermination creates cooperative dialogue between employers and workers (Jäger, Noy, and Schoefer 2022, a review of research on the German model, mainly in economics).

Its measured gains sit mostly with the works councils. Jirjahn (2011), a review of many independent econometric studies, reports positive profitability and employment effects, larger when the councils' endogeneity is taken into account.

In one company case study, at Volkswagen in the 1990s, the layer did not only resist change; it shaped it (Haipeter 2002). Under shareholder-value pressure, Jackson (2005), an institutional history, reports works councils granting cost-cutting concessions to secure investment in core plants as codetermination's boundaries shrink.

Jäger, Schoefer, and Heining (2021), a natural experiment across many German firms, found that if anything shared governance increased capital formation in new stock corporations of up to 500 employees, with no effect on wages or the labor share.

What it costs

Decisions take a second route. Questions a hierarchy would settle by instruction are negotiated, and at Volkswagen decisions became politicized (Haipeter 2002); that responses slow is our judgment, not the case's finding.

Doucouliagos (1995), a meta-analysis of 43 published studies, found mandated codetermination associated with lower productivity, and worker participation in decisions, profit sharing, and worker ownership associated with higher. These are correlations from studies up to the early 1990s; neither publication bias nor the endogeneity of participation is ruled out, and newer board-level results run against this association (Jirjahn 2011).

Near-parity boards went with worse results for shareholders (Gorton and Schmid 2004, a statistical study of many German firms), though the law sets representation by size, so other size effects must be separated from it.

Jensen and Meckling (1979), a theoretical analysis, set codetermination, participation required by law, against cooperatives and partnerships that arise from voluntary contracting.

How it fails

How the co-determined organization fails, and the coordination failures behind it

The entry's failure modes at the left, each tied to the Coordination Failures patterns it names at the right; a pattern links its entry there.

Veto deadlockSubsystem self-perpetuationOversight-body failure
Veto deadlockSubsystem self-perpetuationOversight-body failure

How many ties the failure has. Highest: Negotiation stalls a decision that cannot waitNear-parity boards may pull management away from the ownersThe representative bodies hollow outVeto deadlockSubsystem self-perpetuationOversight-body failure

Select a failure to read its place in the network.Negotiation stalls a decision that cannot wait. Degree 1Near-parity boards may pull management away from the owners. Degree 1The representative bodies hollow out. Degree 1Veto deadlock. Degree 1Subsystem self-perpetuation. Degree 1Oversight-body failure. Degree 1
FailureDegree
Negotiation stalls a decision that cannot wait1
Near-parity boards may pull management away from the owners1
The representative bodies hollow out1
Veto deadlock1
Subsystem self-perpetuation1
Oversight-body failure1

Three failure modes name three patterns, one each: veto deadlock, subsystem self-perpetuation, and oversight-body failure. Every tie is our reading; no study recorded here shows the first, and the second is disputed.

Source: Haipeter 2002, one company case study; Gorton and Schmid 2004, a statistical study of many German firms; Jirjahn 2011, a review of many independent econometric studies; Cathcart 2013; Jackson 2005.

Negotiation stalls a decision that cannot wait. Where consent is needed and the two sides' acceptable terms do not overlap, the decision waits, close to veto deadlock (our reading). No study recorded here shows it; Haipeter (2002), one company case study, reports politicized decisions, not stalled ones.

Near-parity boards pull management away from the owners. Gorton and Schmid (2004), a statistical study of many German firms, found equal-representation boards going with management incentives not conducive to shareholders' interests and longer payrolls, close to subsystem self-perpetuation (our reading); representation follows size, so size effects must be separated from it. It is disputed: Jirjahn (2011), a review, reads newer research as suggesting board-level codetermination can raise productivity and, under certain conditions, profitability, with heterogeneous results.

The representative bodies hollow out. At the John Lewis Partnership, Cathcart (2013), a study of one firm from 2004 to 2007, ungraded here, reports degeneration of the democratic structures, among its signs the removal of voting rights in the majority of Branch Forums, close to oversight-body failure (our reading); yet in April 2009 the Council voted down a proposal to leave trading-hours decisions with store heads, the check the mode says fails. For statutory works councils the evidence runs both ways: in Kotthoff's study of 55 firms as Jackson (2005) reports it, one typical pattern among firms with effective works councils in 1975 was stagnation and growing irrelevance followed by a revitalization, and 53 percent of firms with deficient interest representation in 1975 had moved to a more effective and cooperative pattern by 1990.

None of the misfit rules, propositions from Burton and Obel (2004), the most developed scholarly fit model, or our judgment, names this form; five meet its profile, all only at high formalization, the top of its span, and all are disputed, so each flags the form and none sinks it. One is our judgment: a defender keeping a rule-bound structure after its environment turns unpredictable resembles Miles and Snow's (1978) third route to the reactor; its rule-bound half meets the same three dissents as the unpredictable rule below.

The other four are Burton and Obel's, against heavy rules in a prospector, a small organization, nonroutine work, and an unpredictable environment. Sine and colleagues (2006), a quantitative study of new ventures in one sector, found more formalized founding teams outperforming (the prospector, small, and unpredictable rules); Adler and Borys (1996), a conceptual argument, separate enabling from coercive formalization (all but the small rule); Bigley and Roberts (2001), one inductive case study, found a bureaucratic incident command system flexible and reliable (the unpredictable rule). Against the nonroutine rule, Adler, Goldoftas, and Levine (1999), one case study of a single plant, found NUMMI handling nonroutine tasks inside a bureaucracy, and in the Aston reappraisal technology bore only on the parts of structure closest to the workflow (Hickson, Pugh, and Pheysey 1969, a multi-organization comparative survey), while size related to structure far more than technology did (Child and Mansfield 1972, a multi-firm comparative study).

What the research found

Doucouliagos (1995), a meta-analysis of 43 published studies, found mandated codetermination associated with lower productivity, and Gorton and Schmid (2004), a statistical study of many German firms, the near-parity discount, with representation set by size as its limit.

Later work runs against the meta-analysis, though no failed replication is recorded. Jirjahn (2011), a narrative review in German of many independent econometric studies, reads newer board-level research, unlike older studies, as suggesting gains in productivity and, under certain conditions, profitability, with heterogeneous results; its positive works council effects are conditional, and their wage effects very heterogeneous. Jäger, Schoefer, and Heining (2021), a natural experiment across many German firms, found no wage effect of one-third board seats in small new stock corporations, not under Gorton and Schmid's near-parity.

Jäger, Noy, and Schoefer (2022), a review of research on the German model, mainly in economics, is the most recent study recorded: board representation has few direct effects, owing to the worker representatives' minority vote share, while works councils, with substantive powers, may have more. The search for recent work (2010 to 2026, in English and German, in economics and industrial relations journals) found Jirjahn (2011), both Jäger studies, and Nyland, Bruce, and Burns (2014), a documentary history of two organizations: the Taylor Society's leaders worked with the International Labor Organization to internationalize participatory management.

Inside the firm the evidence is case work: Haipeter (2002), one company case study, on Volkswagen; Kotthoff's 55 firms, as Jackson (2005) reports them, on councils stagnating and reviving; and Cathcart (2013), a study of one firm, ungraded here, on John Lewis.

In the German codetermination literature, defenders credit the layer with long-term employment, training, and cooperation, and critics charge it with weakening shareholder control. The societal-effect school holds structure partly national: Maurice, Sorge, and Warner (1980), a comparison of matched factories in three countries, found more pervasive differences in organization than usually recognized, against Hickson and colleagues (1974), a multi-firm study in three countries, who found relations between context and structure consistent across 70 organizations. Scandinavian socio-technical writers value participation in itself, lean-production defenders as an input to efficiency (Emery and Thorsrud 1976, four field experiments in Norwegian firms, reported by the program's researchers; Adler and Cole 1993, ungraded here).

The evidence ledger holds 7 studies filed under this form.

In practice: one published case

Volkswagen is the subject of Haipeter (2002), one company case study, published in German in the journal Industrielle Beziehungen with an English abstract.

During the 1990s Volkswagen introduced, through a series of reorganizations, a market-driven system for controlling and coordinating its decentralized units, a system driven by product markets and financial markets. The works council and management negotiated that system, which Haipeter calls a negotiated management system (ausgehandelte Marktsteuerung). Decisions were politicized, and codetermination was extended, substantially in Haipeter's account, on the basis of a stable countervailing power inside the firm.

Haipeter concluded that codetermination decisively shaped management's response to market changes. It could negotiate nuances (ambivalences, in the German abstract) and avoid straightforward concession bargaining, though it could not stop the logic of market-driven management.

The search behind the case read Haipeter's German and English author abstracts in the record of SSOAR, the social science open-access repository. Streeck (1984), a case study of the car industry whose library subject headings name Volkswagenwerk, was found, but its text was not read for the case. A reissue of an earlier Volkswagen case study, whose original year could not be confirmed, and Eurofound's practitioner reports of 2001 on Volkswagen's Auto 5000 agreements were found and not used.

Source: Haipeter 2002. Chancen und Risiken der Mitbestimmung: das Beispiel Volkswagen, Industrielle Beziehungen 9(3), 319 to 342 (German, with an English abstract; no English translation); one company case study.

Variants and near relatives

Works councils (Rogers and Streeck 1995; Freeman and Lazear 1995; Jirjahn 2011): elected workplace bodies with rights of information, consultation, and codetermination over personnel and social matters.

Board-level codetermination (Jackson 2005; Gorton and Schmid 2004): employee representatives on the supervisory board, at the shares the laws above set; its detail belongs to Governance & Risk.

Negotiated management system (ausgehandelte Marktsteuerung): Haipeter's (2002) term for Volkswagen in the 1990s, where negotiating market-driven control with the works council extended codetermination and did not displace it.

Constitutional voice in a trust-owned firm (the John Lewis Partnership): the same layer, granted by the firm's own constitution and not by statute. Held in trust for its workers since 1929, it has an elected Partnership Council, which elects five of the Board's directors and can dismiss the Chairman, and an elected Branch Forum in each store (Cathcart 2013). Paranque and Willmott (2014), ungraded here, find its democratic member control hard to realize. The trust and profit sharing belong to Governance & Risk and People & Talent.

The Cooperative organization is the nearest neighbor: its members own the enterprise and hold final authority one member, one vote. In the statutory form employees gain voice by statute without owning the firm; in the cooperative they gain it by owning it. The John Lewis Partnership is held by a trust, not by its members.

Socio-technical autonomous work groups (Emery and Thorsrud 1976) sought democracy at work through semi-autonomous groups, not a representative layer; the self-managing organization removes the manager-subordinate authority relationship from the formal structure, where this form keeps the line beside elected bodies. The stratified hierarchy's Glacier system (Brown 1960) also joined formal employee representation to the line.

The co-determined organization beside its nearest neighbor, the cooperative

Select a number to fill what it marks in both drawings; the list under them gives the dimensions on which the two profiles differ.

Employees gain voice by statute without owning the firm, where in the cooperative they gain it by owning it.

Co-determined organization

NegotiateManagement andcouncilOperatingstructureManagementWorks councilFunctionalunitProduct unitBy function or by productM123
NegotiateManagement and councilOperating structureManagersCouncilFunctionProductBy function or by productM123

Reports toAdjust to each other directlyMMutual adjustment

Cooperative organization

ElectsAppoints and overseesMembersGoverningcouncilManagementOperating lineGeneralassemblyGoverningcouncilManagementFunctionalunitProduct unitBy function or by productDN12233
ElectsAppoints and overseesMembersGoverning councilManagementOperating lineAssemblyCouncilManagersFunctionProductBy function or by productDN12233

Reports toDDirect supervisionNStandardization of norms

  1. Employees elect a works council that holds legal rights without owning the firm. In the cooperative, the members own the enterprise and hold final authority, one member, one vote.
  2. The works council stands beside management with no reporting line between them, whereas the council the cooperative's members elect stands above management, appointing and overseeing it.
  3. Management and the council coordinate by mutual adjustment, which can become negotiation; the cooperative's management supervises directly, and shared norms hold across the whole.

Differs on 4 of 11 dimensions

  • Standardization and formalization Medium to high; Cooperative organization: Medium
  • Decision rights and the locus of authority Selective vertical and horizontal decentralization; Cooperative organization: Vertical and horizontal decentralization
  • Prime coordinating mechanism Mutual adjustment; Cooperative organization: Direct supervision and standardization of norms
  • Mode of exchange and control Bureaucracy; Cooperative organization: Bureaucracy and clan

As in the cooperative, people elect a body that acts for them while management runs the line, and the operating structure sets the grouping beneath. Employees gain that voice by statute without owning the firm; a cooperative's members gain it by owning it.

Source: Jackson 2005; Streeck 1984a; Haipeter 2002, one company case study; Hansmann 1996; Whyte and Whyte 1988.

Moving into or out of it

For the statutory form, moving in follows law and size: under the 1976 Act a firm reaches near-parity by growing past 2,000 employees. No study recorded here follows a firm into or out of the form.

The nearest test is of founding with or without the mandate, not of leaving it. A 1994 reform ended the one-third mandate for stock corporations incorporated on or after 10 August 1994 with at most 500 employees; above that line both cohorts face the same mandate. Comparing them, Jäger, Schoefer, and Heining (2021), a natural experiment (intent to treat), found no wage effect in the new firms.

Reorganizing runs through the layer. At John Lewis, changing the Constitution needs two thirds of the Council (Cathcart 2013, ungraded here). Hannan and Freeman (1984), ungraded here, argued that attempts at reorganization raise death rates and that reorganization sets the liability-of-newness clock back toward zero; Amburgey, Kelly, and Barnett (1993), a quantitative study of organizational change and failure rates, found that the effect of change on failure varies by the type of change and over time. How a reorganization is run belongs to Change & Transformation.

The thinking behind it

Wolfgang Streeck (1984): the form in the car industry; with Joel Rogers (1995), works councils across countries. Gregory Jackson (2005): codetermination changing through reinterpretation at its boundaries. Gary Gorton and Frank Schmid (2004): firm value under near-parity. Simon Jäger and Benjamin Schoefer (2021, 2022): board seats and the German model. Felix FitzRoy and Kornelius Kraft (1993): the economic effects of codetermination. Uwe Jirjahn (2011): the conditional gains of works councils. Thomas Haipeter (2002): the layer and market-driven control. Richard Freeman (1995, with Edward Lazear): a theoretical analysis of works councils. Chris Doucouliagos (1995): mandated codetermination against other participation. Michael Jensen (1979, with William Meckling): voice by statute against voice by contract. Marc Maurice and Arndt Sorge (1980): structure as partly national, against Hickson's culture-free context (1974). Fred Emery and Einar Thorsrud (1976): industrial democracy through work groups. Wilfred Brown (1960): the Glacier system.

Henry Mintzberg and William Ouchi (both 1980): the profile's decentralization type and mode of exchange. Richard Burton and Børge Obel (2004): the misfit rules, with Raymond Miles and Charles Snow (1978) on the reactor and the dissents of Wesley Sine (2006), Paul Adler (1996, 1999), Gregory Bigley and Karlene Roberts (2001), David Hickson (1969), and John Child (1972). Michael Hannan and John Freeman (1984) and Terry Amburgey (1993): what change does to survival.

Also called

Mitbestimmung, in the title of Jirjahn's (2011) review, which calls the board-level half Unternehmensmitbestimmung; codetermination, the usual English term; the works council model; and the German model of industrial relations, the title phrase of Jäger, Noy, and Schoefer (2022). Jäger, Schoefer, and Heining (2021) write of shared governance and of labor in the boardroom.

Works cited

On this page, “read” means read by this series: where a line says a work, or part of one, was not read, the series did not read it.

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