Organizational Positions and the Social Structure of Exchange A thesis presented by Christopher Owen Wheat to the Committee for Business Studies in partial fulfillment of the requirements for the degree of Doctor of Philosophy in the subject of Organizational Behavior Harvard University Cambridge, Massachusetts May 2005
Copyright 2005 by Wheat, Christopher Owen All rights reserved.
Organizational Positions and the Social Structure of Exchange Advisor: Joel Podolny Author: Christopher Owen Wheat ABSTRACT The idea of an organizational position a bounded context populated by organizations that share common outcomes figures centrally into a wide variety of organizational theories. While economic sociologists frequently employ this idea in theoretical and empirical work about organizations, these studies rarely approach the definition of these positions in a methodologically and theoretically rigorous way. This dissertation incorporates the theoretical development of the organizational position idea into a specific methodological approach grounded in the logic of probability theory in order to define the boundaries of the contexts that comprise these positions. I employ two key ideas in defining the boundaries of organizational positions. The first idea concerns the network theoretic idea that organizations should be assigned to positions on the basis of the similarity their relationships to other organizational actors, a logic captured by the predictive modeling technique of stochastic blockmodeling. The second idea concerns the information theoretic concept of stochastic complexity. The stochastic complexity modeling approach provides a method grounded in probability theory of appropriately balancing the complexity of a structural model against its accuracy. Taken together, these two ideas form the basis of the stochastic structure modeling approach used in this dissertation to empirically assess the boundaries of organizational positions. I use these ideas to address substantive questions from two distinct domains, each of which is based on the largely assumption that the boundaries organizational positions can be determined. I first use the stochastic structure modeling approach to define the boundaries of industries as the contexts that shape the degree of competition and constraint faced by organizations. I then show how these boundaries are implicated in defining a set of organizational positions that are consistent with the theory of structural autonomy. I also use the stochastic structure modeling approach to address the definition of economic locations in the world system of economic exchange. I identify the number of positions in the world system, show how the idea of a social role can be empirically contrasted with that of a social position within world system research, and assess the stability of the structure of international exchange over time. iii
TABLE OF CONTENTS Abstract Acknowledgements iii vi Chapter 1 - The Organizational Position Metaphor 1 1.1 Organizational Positions and Social Structure 2 1.2 A Pervasive Metaphor 3 1.3 Closeness, Boundaries, and the Position Metaphor 6 1.4 Assessing Organizational Positions 10 1.5 Boundary Assessment and its Consequences 16 1.6 Conclusions and Overview 17 Chapter 2 - Modeling Organizational Positions 22 2.1 Social Structure as a Theoretical and Methodological Problem 23 2.2 Descriptive Modeling Approaches 26 2.3 Predictive Modeling Approaches 35 2.4 Conclusions 44 Chapter 3 - Stochastic Complexity and Model Selection 47 3.1 Assessing Model Complexity 48 3.2 The Stochastic Complexity Approach 49 3.3 Alternative Approaches to Model Selection 60 3.4 Conclusions 62 Chapter 4 - Assessing Industrial Boundaries 63 4.1 Introduction 64 4.2 An Empirical Assessment of the Structure of American Industry 65 4.3 Conclusions 76 Chapter 5 - Industry Boundaries and Performance 79 5.1 Introduction 80 5.2 Positional Boundaries and Competitive Dynamics 80 5.3 Evaluating the Performance Propositions 89 5.4 Conclusions 98 Chapter 6 - Roles and Positions in International Exchange 100 6.1 Introduction 101 6.2 World System Locations as Organizational Positions 102 6.3 Assessing the Structure of the World System 107 6.4 A Stochastic Structural Analysis of Exchange in the World System 126 6.5 Discussion and Conclusions 151 iv
Chapter 7 - Conclusions 155 7.1 Conclusions 156 7.2 Summary of Findings 156 7.3 Implications for the Empirical Study of Social Structure 161 7.4 Limitations and Future Research Directions 167 Appendix A - Industrial Aggregation 172 Appendix B - Estimating Industrial Concentration 189 Appendix C - Assignments of States to World System Locations 194 Bibliography 271 v
ACKNOWELDGEMENTS Having just finished writing the longest document of my life, I find myself quite surprised by the trepidation with which I approach writing these few pages of acknowledgements. Surely I will leave out people who have been very important to me through this process, or I will fail to characterize the contribution that someone has made as completely as I would like to. For these omissions and failures I apologize, and I hope that these are recognized as my shortcomings and not those of the many people who made this project possible. I first of all would like to acknowledge my dissertation committee. I truly cannot imagine having a more helpful set of people to work with. I should say that prior to becoming a doctoral student, I had been prepared to have many trying experiences with my committee, and in fact I know a number of people for whom this has been the case. As such, I feel truly fortunate to have had such an overwhelmingly pleasant and supportive experience. Joel, your ability to look at a jumble of my ideas and distill what is interesting about it has been truly incomparable, and I thank you for your active engagement in my progress as a scholar. Nitin, thank you for sticking with me through two dissertation proposals and for convincing me that other people might be at all excited by my ideas. Peter, you have been an invaluable teacher and an amazingly close reader of my work. From my paper in your social networks class, to the qualifying paper that you advised, to this dissertation, your questions and comments have made me a much better methodologist, writer, and hopefully generally more thoughtful about the sociology of organizations. In addition to my dissertation, there are several other faculty members who have been instrumental to the development of this project, and my growth as a scholar. I owe a particular debt of gratitude to David Gibson and Mary Brinton. Both of you showed extreme generosity of both your time, your insights, and not insignificantly, your data. While it turned out that this dissertation would have been impossible to complete while incorporating your ideas, thinking about these issues with you played a fundamental role in shaping the work I present here. I look forward to working with both of you on these projects in the very near future. I also would like to acknowledge Robin Ely and David Thomas. Both of you managed to look past my many flaws and continue to show me support in more ways than I can count. I only hope that you know how much I appreciate your support. I would be remiss not to thank two people who I think of as my intellectual godparents, Kathy Williams and Damon Phillips. The two of you are the reason that I found my way into the study of organizational behavior, and you both gave me a tremendous amount of support in applying to graduate school, getting through, and importantly, getting out. I thank you for your feedback on my ideas and for your support throughout the years, for good jazz, and for good catfish. I would be quite proud to be able to follow in your sizeable footsteps. vi
I also owe a great deal of thanks to a number of students in the Organizational Behavior Ph.D. program without whom this project would never have been possible. Andy, Sandy, David and Misiek each of you has been a mentor to me in a different way, and I wouldn t have been able to make it through without your advice. Thanks to each of you for making sure that I did what I needed to do to get going, and to get finished with this dissertation. Linda, you have been an amazing friend to me throughout this program, reading my papers, commiserating about conference deadlines and the general woes of being a graduate student, trekking back and forth across the river, and letting me use your rice cooker. Qingxia, you ve been a great officemate, from William James to Morgan to Sherman to the Law School Library. I will miss our conversations and your always probing questions about exactly what it is that I think I m doing. There are a number of other people that I have had the opportunity to meet while at Harvard that I absolutely have to acknowledge. While they contributed in less direct ways to this particular project, there is no way I would have been able to maintain my sanity for the last several years without their support. Jason, Barrington and Gant, thanks for being friends with me, even when I was a vegetarian, and for staying friends long enough for us to enjoy many pork-filled meals together. Terrence, Raquel, Renée, Dorinda, Heather, Rodrick, Lou, Reggie, Patricia, Dania, and all of the rest of the members of The DOFC, you guys literally have been the soundtrack to this experience, and I am deeply indebted to each of you for it. I also especially would like to thank Ramone Sharpe and the rest of the guys from the noontime basketball run at HBS. You guys didn t have to run up the score like that in that last IM game, but even still, I know I wouldn t have made it through were it not for our time together just about every Tuesday and Thursday afternoon. And Linda, what can I possibly say? You re high fashion and you love bacon? I can t imagine a more extraordinary combination. Thank you so much for your friendship throughout the years. To my friends that are more like family, you guys have been my base forever, and everything I do I owe in some small (or maybe not-so-small) part to each of you. Adam, we ve been friends literally almost as long as I can remember, and it s meant the world to me that you ve been with me here in one way or another through this process. Ed and Jason, y all know you hold it down for Chi-Town. No matter where we meet up in the world, it will always be home (and the locals will always be in trouble!) Thanks for your support for the last seven years. Corregan, Damon and Marcel, I ve learned more from each of you than I will ever learn in class or in a library. You ve been unbelievable friends since our hazy days in New Jersey. Of course, none of this would have been possible if I hadn t had the support of my wonderful family. To my parents Howard Earl and Audrey Pelt Wheat how could I possibly thank you in this limited space? Your unwavering support has truly been incredible. I never would have thought that I would make it through this process if the two of you had not spent the better part of my childhood convincing me that I could do anything I wanted to. And Karyn Wheat? Best sister ever. Enough vii
said except to say that your words of advice as I prepared to leave for college don t let it go to your head have stayed with me ever since. I hope they have served me well. Thank you so much for being such a great friend. And finally, to my grandmothers Ruby Lee Butler and Mildred Pelt Booker, I thank you for your guidance to the beginning of this journey, and only I wish that we could have been together to celebrate its completion. Also, to Owen Dunbar Pelt and Robert Moore, though I never had the opportunity to meet either of you, I know that your spirit played a role in shaping who I have become. I dedicate this work to each of your memories. viii