The Dynamics of Rules: Change in Written Organizational Codes - Book Review

Administrative Science Quarterly, Sept, 2002 by John Usher

James G. March, Martin Schulz, and Xueguang Zhou. Stanford, CA: Stanford University Press, 2000. 228 pp. $49.50, cloth; $24.95, paper.

This is a book about rules, not just any rules, but the academic and administrative rules that have guided Stanford University from a fledgling institution of 500 students and 37 faculty members in 1891 to a complex bureaucracy of 12,524 students and 1,335 faculty members in 1987. Given its focus on a single organization, this is a case study, as the authors freely admit, but it is a case study rich with well-documented events occurring over the course of 97 years of history. Adopting event history analysis and the ecological approach of studying births, deaths (suspensions), and change (revision), the authors consider the relevant influences, patterning, and interplay of 343 births, 672 revisions, and 88 suspensions of academic rules during the period 1891 through 1987. Administrative rules are studied for the relatively shorter period of 1961 to 1987, but event counts are still substantial: 217 births, 567 revisions, and 92 suspensions. For some analyses, academic rules are further subdivided into four subp opulations: those applicable to students (grading rules) and those applicable to faculty (tenure rules), with each being examined during two separate academic rule regimes, the Academic Council regime (1891-1967) and the Faculty Senate regime (1968-1987). Similarly, administrative rules are reconstituted into six subpopulations: organization charts, personnel rules, accounting rules, external property rules, procurement rules, and service rules. Curiously, however, not a single one of these hundreds of rules is reproduced in the book. Perhaps we all agree what we are talking about, but the degree of abstraction from the phenomenon under consideration is at times disturbing.

Still, there is much here to work with, and the authors' analyses yield some counterintuitive findings, and their interpretations, some valuable insights. For example, in contrast to a general expectation that rules will proliferate linearly, if not exponentially, as organizations increase in size and their environments grow more complex, the birth rate of rules is found to be strongly affected by the population density of existing rules within a problem area. Thus, within a given regime of decision makers, the creation of new rules increases, but at a decreasing rate, exhausting the problem space in much the same way that a population of biological entities might respond to the depletion of its resource space. Cognizant of this analogy, the authors speak of the "carrying capacity" of rules and, in a very nice link to the politics of decision making, point out that new regimes likely attract problem instigators (who create rules), "because they provide fresh arenas for status and power enhancement" (p. 165). This idea fits well with advice that the politically astute in organizations should strive for maximum discretion and seek out areas of uncertainty to enter and resolve.

Observing the "life of rules" in this and other ways allows the authors to question arguments that would link rule phenomena too strongly to either the contingent designs of rational actors or the isomorphic forces of institutional environments. Rule histories and ecological contexts are the stronger influences here. The residue of past rules can have a large impact on the functioning of linkages between current technical and environmental demands and current rules. In some cases, such residue may act as a useful inventory of prior solutions, but it is also apparent that the tendency to rely on past solutions presages the classic competency trap. Fortunately, it appears that the ecological effects of rules on the population dynamics of other rules are both spatially and temporally limited. As the authors note, ". . . rule changes are contagious, but the contagion does not produce general epidemics" (p. 195).

Of interest to researchers concerned with the effects of age on organizations, the study decomposes rule age into two components. In the first, the time between the birth of the rule and its last previous revision measures the knowledge content of the rule. To explain a negative association with rule change, the authors argue that the longer a rule has been in existence, the more refined its accumulated wisdom and, hence, the less likely it is to be revised. But that is not to say that rule obsolescence does not occur, for, in examining the second component of rule age, the time that has passed since the last rule revision, it is apparent that this variable is positively associated with rule change.

The analyses of the available data are complex, generally well executed, and extensive, with separate chapters on method, rule birth, and rule change. For the reader disinclined to wade through this material, however, chapter 7 gives a succinct summary of the findings, and chapter 8 provides insightful discussion and conclusions.

The study is not without its faults, however. The authors, with accompanying calls for further research, own up to some limitations, such as drawing conclusions about a highly contextualized phenomenon from the quantitative analysis of a single organization. But other questions and concerns remain. Perhaps the most disturbing is the choice to fold together rule suspensions (deaths) and rule revisions into the single category of rule changes. While the authors avow that this is due at least partly to the small number of suspensions, their contention that "theoretical predictions about the incidence of the two events are indistinguishable" is more problematic. Surely, these events deserve separate consideration, and there is useful theory that relates specifically to the erosion and extinguishing of rules. Deinstitutionalization theory (Oliver, 1992), for example, provides a rich set of hypotheses in this regard. There are several sources of insight into the dynamics of rules that would seem to have informed th is study more fully at the front end. Despite the book's exclusive focus on written rules, 170 pages pass by before the word "formalization" is used, and even then, the implication is that previous researchers may have drawn conclusions about the concept based on a spurious relationship between size and rule production. One of the classic structural dimensions of organization design deserves better. Also useful might have been a discussion of where rules might fit into an ecological hierarchy populated by routinized (but not formalized) behaviors, strategies, systems of meaning, organizations, communities of practice, etc. The authors hint at this as a limitation, but a few pages to position their study in this way would not have gone astray. Finally, as the creation and revision of rules is at the heart of decision making, a highly contextualized, longitudinal analysis of that topic, such as that provided by Mintzberg, Raisinghani, and Theoret (1976), might have provided useful insights.