Socio-economic Systems and Organizational Management: An Institutional Perspective on the Socialist Firm

Abstract

In this article the necessary links between the macro-logic of socialist socio- economic systems and key organizational features are explored. The ideal types of capitalist and socialist systems are first described and their implications for organizations are later discussed. Socialist socio-economic systems are conceptu alized as highly institutionalized environments which are postulated to be key causal influences on firms operating within them. The key characteristics of social ist firms are shown to be the following: the isomorphic relationships between socialist enterprises and the state caused by the structural and political-ideolo gical dependence of the former upon the latter; the prevalence of ceremonial management; the systematic decoupling of the formal system from actual organ izational practices and behaviours, as well as the disjuncture of the actions of economic units from their consequences. In addition, the structurally generated reliance of socialist firms on rules and hierarchies for organizational decision- making is noted. Socialist socio-economic systems also generate multiple lines of authority in enterprises which are managed through a combination of particip ative management, ideological campaigns, and coercion.