The Size Imperative? Longitudinal Tests

Abstract

The theory of size as a cause of administrative intensity (the A/P ratio) is perhaps the most heavily researched topic in the study of organizations. Blau's version of this theory, like most others, is based on cross-sectional data. Using new panel data collected from 48 heterogeneous Japanese manufacturing firms in 1976 and 1983, this paper shows that prior size and complexity explain little of the variance in 1983 administrative intensity. We also find that in Japanese factories, as in U.S. school districts studied over time by previous researchers, changes in A/P ratios in declining size organizations are not simply the mirror image of what happens to personnel components in growing organizations. We conclude with a discussion of power versus efficiency explanations of this 'ratchet effect' and with a strong appeal that causal inferences in organization research be based more on longitudinal and panel data.