An organizational sociology of Stanford's organization theory renaissance

In 1981, W. Richard (Dick) Scott of Stanford's sociology department described a paradigmatic revolution in organizational sociology that had occurred in the preceding decade. In Organizations: Rational, Natural, and Open Systems (Scott, 1981), he depicted the first wave of organizational theory as based in rational models of human action that focused on the internal dynamics of the organization. He described the second wave, found in human relations theory and early institutional theory, as based in natural social system models of human action but still focused on the internal “closed system.” A sea change occurred in organizational theory in the 1970s as several camps began to explore environmental causes of organizational behavior. The open-systems approaches that Scott sketched in 1981 were still seedlings, but all would mature. What they shared was an emphasis on relations between the organization and the world outside of it. The roots of these new paradigms can be traced to innovations of the 1960s. Contingency theorists Paul Lawrence and Jay Lorsch (1967) had argued that firms add new practices and programs largely in response to external social demands and not simply to internal functional needs. James Thompson (1967) argued that organizations come to reflect the wider environment and particularly the regulatory environment.