Lauren Edelman, Working Law: Legal Endogeneity and the Managerialization of Civil Rights Chapter 2 The Endogeneity of Law

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1 Lauren Edelman, Working Law: Legal Endogeneity and the Managerialization of Civil Rights Chapter 2 The Endogeneity of Law We tend to think of law and organizations as separate spheres, when in fact they are highly interconnected. Modern organizations are awash in a sea of law. They are born through the legal act of incorporation; they die or change form through the legal acts of bankruptcy, merger, or acquisition; they form relationships through legal contracts; they innovate and protect their market power through patent and copyright laws; they form their identities form through trademark and intellectual property law; they expand their markets or seek to constrain the markets of others using antitrust law; they hire and govern within the sphere of labor and employment law; they produce products or services under health and safety law; and they expel waste according to environmental law. Just as organizations are fundamentally legal institutions, law is fundamentally a bureaucracy that is the product of organized interests. Law tends to emerge from the efforts of lobbying organizations or social movement organizations, and to die at their behest. Lawyers work predominantly in and for organizations. The U.S. court system is a highly complex bureaucracy, as are individual courts. 1 Similarly legislatures, administrative agencies, and criminal and juvenile justice systems are all complex bureaucratic organizations. 2 Organized professions in particular the judiciary and the legal profession are the primary actors in the legal order, and frequently interact with organizations, especially in their roles as adjudicators, litigants, and lobbyists. Beyond the formal organization of the legal profession, lawyers are arrayed in a complex social ordering with well-defined patterns of interaction and both modes of and obstacles to mobility. 3 Even the definitions of law and organizations are intertwined. Organization theorists generally understand organizations as formally structured and bounded collectivities that pursue relatively specific goals in a largely routinized manner. 4 Although organization scholars recognize a wide range of 1 Wolf Heydebrand and Carroll Seron, Rationalizing Justice: The Political Economy of Federal District Courts. (Albany, NY: State University of New York Press, 1990). 2 Donald Clemmer, The Prison Community (Boston: Christopher, 1940); Gresham M. Sykes, The Society of Captives: A Study of a Maximum Security Prison (Princeton, NJ: Princeton University Press, 1958); Gresham M. Sykes et al., "Theoretical Studies in Social Organization of the Prison," Social Science Research Council 15 (1960); Aaron V. Cicourel, The Social Organization of Juvenile Justice (New York: John Wiley and Sons, 1968); Thomas P. Wilson, "Patterns of Management and Adaptations to Organizational Roles: A Study of Prison Inmates," American Journal of Sociology 74 (1968); W. Richard Scott, "Law and Organizations," in The Legalistic Organization, ed. Sim B. Sitkin and Robert J. Bies (Thousand Oaks, CA: Sage Publications, 1994). 3 John P. Heinz and Edward O. Laumann, Chicago Lawyers: The Social Structure of the Bar (New York: Russell Sage Foundation, 1977); Robert L. Nelson, Partners with Power: Social Transformation of the Large Law Firm (Berkeley, CA: University of California Press, 1988); Marc Galanter and Thomas Palay, Tournament of Lawyers: The Transformation of the Big Law Firm (Chicago: University of Chicago Press, 1994); Mark C. Suchman and Mia L. Cahill, "The Hired Gun as Facilitator: Lawyers and the Suppression of Business Disputes in Silicon Valley," Law and Social Inquiry 21 (1996); John P. Heinz, Urban Lawyers: The New Social Structure of the Bar (Chicago: University of Chicago Press, 2005). 4 Lauren B. Edelman and Mark C. Suchman, eds., The Legal Lives of Private Organizations (Burlington, VT: Ashgate Publishing Company, 2007). 1

2 organizational forms, including social movements, 5 markets, 6 networks, 7 and clans, 8 the bulk of the work focuses on work organizations, which are the subject of this book. Weber s well-known definition of bureaucracy highlights the role of rational-legal authority in organizations, referring to the law-like character of modern organizational rules and governance. 9 In Law, Society, and Industrial Justice, Philip Selznick understands organizations as private governments in which moral and legal values tend to evolve from the public legal order. 10 Selznick emphasizes the natural evolution toward legality or the reduction of arbitrariness in organizations. Law & society scholars understand law broadly as a normative order that includes both formal state mandates, less formal social norms, and a broad collection of practices and beliefs that regulate and reflect social behavior. Just as Selznick saw organizations as microcosms that mirror the public legal order, 11 law & society scholars understand law as reflecting the social order. 12 Although law and organizations are highly interconnected, there is no comprehensive theory of their interaction that accounts both for how organizations respond to law and for how law responds to organizations. In fact, the literature to date focuses almost entirely on organizational response to law with very little attention to how law is itself responsive to organizations. For example, much literature addresses the impact of regulation on organizations, the nature of organizational compliance or noncompliance, and the reasons for noncompliance. 13 Scholars began to think about the impact of organizations on law, however, beginning in the 1990s when scholars called attention to the role of organizations in shaping the form and definition of compliance. 14 Legal endogeneity theory moves 5 Gerald F. Davis and Doug McAdam, "Corporations, Classes, and Social Movements after Managerialism," Research in Organizational Behavior 22 (2000); Lauren B. Edelman, Gwendolyn Leachman, and Doug McAdam, "On Law, Organizations, and Social Movements," Annual Review of Law and Social Science 6 (2010). 6 Oliver E. Williamson, "Comparative Economic Organization: The Analysis of Discrete Structural Alternatives," Administrative Science Quarterly 36 (1991). 7 Walter W. Powell, "Neither Market nor Hierarchy: Network Forms of Organization," in Research in Organizational Behavior, ed. L.L. Cummings and B.M. Shaw (Greenwich, CT: JAI Press, 1990). 8 William G. Ouchi, "Markets, Bureaucracies, and Clans," Administrative Science Quarterly 25 (1980). 9 Max Weber, "Bureaucracy," in Essays in Sociology (New York: Oxford University Press, 1946). 10 Philip Selznick, Law, Society, and Industrial Justice (New York: Russell Sage Foundation, 1969). 11 Ibid. 12 Lawrence Friedman, The Legal System: A Social Science Perspective (New York: Russell Sage Foundation, 1975); Eugen Ehrlich, Fundamental Principles of the Sociology of Law (Transaction Publishers, 1936). 13 Christopher D. Stone, Where the Law Ends: The Social Control of Corporate Behavior (New York: Harper & Row, 1975); Keith Hawkins, Environment and Enforcement: Regulation and the Social Definition of Pollution. (Oxford: Clarendon Press, 1984); Diane Vaughan, Controlling Unlawful Organizational Behavior: Social Structure and Corporate Misconduct (Chicago: University of Chicago Press, 1983); Robert A. Kagan, Neil Gunningham, and Dorothy Thornton, "Explaining Corporate Environmental Performance: How Does Regulation Matter?," Law & Society Review 37 (2003); Justin O'Brien, Private Equity, Corporate Governance and the Dynamics of Capital Market Regulation (London: Imperial College Press, 2007). 14 Lauren B. Edelman, "Legal Environments and Organizational Governance: The Expansion of Due Process in the Workplace," American Journal of Sociology 95 (1990); "Legal Ambiguity and Symbolic Structures: Organizational Mediation of Civil Rights Law," American Journal of Sociology 97 (1992); Lauren B. Edelman, Steven E. Abraham, and Howard S. Erlanger, "Professional Construction of Law: The Inflated Threat of Wrongful Discharge Doctrine," Law & Society Review 26 (1992); Frank Dobbin et al., "Equal Opportunity Law and the Construction of Internal Labor Markets," American Journal of Sociology 99 (1993); John R. Sutton et al., "The Legalization of the Workplace," American Journal of Sociology 99 (1994); Frank Dobbin and John R. Sutton, "The Strength of a Weak 2

3 beyond this work by explicitly theorizing the interplay between law and organizations and by providing an explanation of how organizations shape the meaning of law. In so doing, legal endogeneity theory also provides an explanation for the limited effectiveness of civil rights law in work organizations. 2.1 Organizational Fields, Legal Fields, and Legal Environments Drawing upon neo-institutional theory in sociology, I conceptualize law and organizations as overlapping social fields, which I call legal fields and organizational fields, respectively. 15 I refer to the overlapping area between those two social fields as the legal environment of organizations. The construct of a social field comes from Pierre Bourdieu, who understood fields as a social setting with a structure (a system of social positions or power relations) and common understandings of the organization of the field. 16 The idea of a social field has proved very helpful in sociology for explaining social action at the meso-level (between the individual and society) in which actors (individuals and organizations) have shared understandings of social relationships, power structures, and forms of behavior that are understood as legitimate and/or rational. 17 Organizational scholars have also conceptualized the areas of overlap (or sometimes interstices between social fields) as arenas of shared social ideas that tend to produce social change. 18 State: The Rights Revolution and the Rise of Human Resource Management Divisions," American Journal of Sociology 104 (1998); Lauren B. Edelman, Christopher Uggen, and Howard S. Erlanger, "The Endogeneity of Legal Regulation: Grievance Procedures as Rational Myth," American Journal of Sociology 105 (1999); Lauren B. Edelman and Stephen Petterson, "Symbols and Substance in Organizational Response to Civil Rights Law," Research in Social Stratification and Mobility 17 (1999); Lauren B. Edelman and Mark Suchman, "When the Haves Hold Court: The Internationalization of Law in Organizational Fields," Law & Society Review 33 (1999); Sally Riggs Fuller, Lauren B. Edelman, and Sharon Matusik, "Legal Readings: Employee Interpretation and Enactment of Civil Rights Law," Academy of Management Review 25 (2000); Edelman and Suchman, The Legal Lives of Private Organizations; Frank Dobbin, Inventing Equal Opportunity (Princeton, NJ: Princeton University Press, 2009); Lauren B. Edelman et al., "When Organizations Rule: Judicial Deference to Institutionalized Employment Structures," American Journal of Sociology 117 (2011). 15 Pierre Bourdieu, Outline of a Theory of Practice (New York: Cambridge University Press, 1977); John W. Meyer and Brian Rowan, "Institutionalized Organizations: Formal Structure as Myth and Ceremony," American Journal of Sociology 83 (1977); Paul J. DiMaggio and Walter W. Powell, "The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields," American Sociological Review 48 (1983); John. W. Meyer and W. Richard Scott, Organizational Environments: Ritual and Rationality. (Beverly Hills, CA: Sage, 1983); Pamela S. Tolbert and Lynne G. Zucker, "Institutional Sources of Change in the Formal Structure of Organizations: The Diffusion of Civil Service Reform, ," Administrative Science Quarterly 28 (1983); Edelman, "Legal Environments and Organizational Governance: The Expansion of Due Process in the Workplace." 16 Pierre Bourdieu, The Field of Cultural Production: Essays on Art and Literature (London: Polity Press, 1993). 17 Fligstein and McAdam (2012) define a social field (which they call a strategic action field ) as a mesolevel social order in which actors (who can be individual or collective) are tuned to interact with one another on the basis of shared (which is not to say consensual) understandings about the purposes of the field, relationships to others in the field (including who has power and why), and the rules governing legitimate action in the field. Neil Fligstein and Doug McAdam, A Theory of Fields (New York: Oxford University Press, 2012). 18 Lauren B. Edelman Overlapping fields and constructed legalities: the endogeneity of law. In Private Equity, Corporate Governance, and the Dynamics of Capital Market Regulation, ed. J O Brien, pp London: Imperial Coll. Press (2007); Calvin Morrill Institutional change through interstitial emergence: the growth of alternative dispute resolution in American law, Work. Pap., Cent. Study Law Soc., Sch. Law, Univ. 3

4 The construct of organizational field is now well known in the organizational literature: it refers to the subset of the environment that is most closely relevant to a given organization, including suppliers, customers, and competitors as well as flows of influence, communication, and innovation. 19 Courts or regulatory agencies are often recognized as relevant, but peripheral, elements of organizational fields. But although legal institutions may be peripheral to the fields that are organized around a given set of business organizations, they may also be understood as central to a separate, but overlapping, legal field. 20 Legal fields are not unlike the fields of private goods- or service- producing organizations; they consist of flows of influence, communication, and innovation among the various organizations and professions that interact with legal institutions. Principal actors in legal fields are judges, lawyers, legislators, administrative agency personnel, court clerks, and regulatory inspectors. Just as legal actors and institutions are peripheral elements to organizations, organizations and organizational actors are peripheral elements in legal fields. 21 Both legal and organizational fields comprise institutions, structures, actors, and consciousness. A legal field is made up of legal institutions (courts, legislatures, administrative agencies; prosecutors offices; police departments), legal structures (statutes, rules of civil and criminal procedure, judicial opinions, administrative orders), legal actors (judges, lawyers, court clerks, police, litigants, and the subjects of regulation), and legal consciousness (law-related ideas and understandings such as ideas about rights or due process, conceptions of legality or the fairness of the legal order, understandings about the meaning of law and compliance, ideas about how to make use of legal rules and rights). Similarly, an organizational field is made up of institutions (organizations that are linked through supply or production relationships, competitive relationships, interlinked boards of directors), organizational structures (formal rules, informal practices, offices, functionaries, procedures), organizational actors (executives, managers, workers, shareholders, customers, clients), and managerial (or business) consciousness (beliefs or ideas about technology, governance, management, efficiency and the like). As shown in Figure 2.1, legal and organizational fields overlap. I refer to the area of overlap as the legal environments of organizations. 22 It is within the legal environments of organizations that organizational and legal institutions, structures, actors, and consciousness come together to produce new forms of organizational compliance with law that become accepted and eventually institutionalized within both Calif., Berkeley (2009); Lauren B. Edelman, Gwendolyn Leachman, and Doug McAdam, On Law, Organizations, and Social Movements Anuual Review of Law and Social Science Vol. 6 (2010): DiMaggio & Powell (1983) define an organizational field as those organizations that, in the aggregate, constitute a recognized area of the institutional life: key suppliers, resource and product consumers, regulatory agencies, and other organizations that produce similar services or products." DiMaggio and Powell, "The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields." Similarly, Scott and Meyer (1983) discuss the concept of a societal sector and Hirsch (1972) discusses an industry system. Meyer and Scott, Organizational Environments: Ritual and Rationality; Paul M. Hirsch, "Processing Fads and Fashions: An Organization-Set Analysis of Cultural Industry Systems," American Journal of Sociology 77 (1972). 20 Lauren B. Edelman, "Overlapping Fields and Constructed Legalities: The Endogeneity of Law," in Private Equity, Corporate Governance, and the Dynamics of Capital Market Regulation, ed. Justin O'Brien (London: Imperial College Press, 2007). 21 Ibid. 22 Lauren B. Edelman, Legal Environments and Organizational Governance: The Expansion of Due Process in the American Workplace. American Journal of Sociology 95(6): (1990). 4

5 organizational and legal fields. Although my focus is on the civil rights legal environment, it is important to note that organizations may encounter multiple legal environments that correspond to different legal arenas, such as civil rights, privacy, consumer protection, and antitrust. These legal environments may be largely overlapping or they may be somewhat separate depending on how organizational actors characterize the demands of law and its relevance for organizations. Figure 2.1: The Blurring of Logics in Legal and Organizational Fields Legal environments are highly complex. As my colleague Mark Suchman and I have argued, legal environments comprise regulatory constraints, procedural tools, and constitutive constructs that influence how employers govern and relate to their employees, and how both employers and employees conceptualize legal rights. 23 Further, because legal environments comprise elements of both legal and organizational field, they include not only the formal legal rules, procedures, and constructs that evolve within legal fields but also the informal norms, practices, and meanings that evolve within organizational fields and society generally. More specifically: regulatory constraints include formal statutes, administrative rulings, and judicial decisions but also informal norms that evolve around those formal regulatory constraints; procedural tools include formal vehicles for using or influencing law such as contracts or litigation but also informal strategies that evolve around those tools such as business 23 Mark Suchman and I (Edelman and Suchman 1997 [add full cite] discuss in more detail the regulatory, facilitative, and constitutive facets of the legal environment. Cf. Ann Swidler 1986 (culture as toolbox); William H. Sewell Jr., A Theory of Structure: Duality, Agency, and Transformation. American Journal of Sociology 98:

6 norms, agreements, and negotiation; and constitutive constructs include constructs that have formal legal meaning but also informal rituals and categories that evolve around law. With respect to the civil rights legal environment in particular, the formal regulatory constraints are themselves particularly complex in part because they derive from the myriad statutes, administrative orders and regulations, and judicial decisions, concerning civil rights, and also from business and societal norms about consistent treatment of employees or related concepts like diversity. The primary statutes in the civil rights arena include: Title VII of the 1964 Civil Rights Act (42 U.S.C. 621 et. Seq), the 1963 Equal Pay Act (add cite) the Age Discrimination in Employment Act of 1967 (add cite) the Rehabilitation Act of 1973 (add cite) the Americans with Disabilities Act of 1990 (42 U.S.C et seq), the Family and Medical Leave Act (add cite), Section 1981 of Title 42 (42 U.S.C. 1981) which protects individuals from discrimination based on race in the making or enforcement of contracts, and Section 1983 of Title 42 (42 U.S.C. 1983), which prevents agents of the state from depriving any individual of rights under the Constitution, as well as various amendments to these laws. Key executive orders include EO issued by President Johnson in 1965 which, like Title VII, prohibits federal contractors and subcontractors from discriminating in employment decisions, but unlike Title VII, requires contractors and subcontractors to take affirmative action to ensure that equal opportunity is provided in all aspects of their employment (30 F.R , issued September 28, 1965). Administrative regulations and guidelines include a multitude of rules and advice issued by the EEOC and state agencies. Because many of these formal legal rules are highly ambiguous and politically charged, informal business norms help to concretize or to fill in the lacunae left by ambiguous legal language in statutes, administrative rules, and judicial rulings. Procedural tools in the civil rights legal environment include the employment contract on the formal side as well as organizational policies, employee handbooks, and clauses in application forms on the informal side. Given the power imbalance inherent in the employment relationship, employers generally have more ability to specify the terms of employment contracts than do employees, and employers have substantial authority to dictate the terms of employment through policies, handbooks, and application forms. Within each of these tools, employers insert provisions designed to avoid legal situations that employers view is harmful to business interests. For example, as I discuss in more detail below, employers may specify that employees work at will and may be terminated with or without good cause. Employers may also use these tools to require employees to waive certain legal rights or agree in advance of any disputes to particular modes of dispute resolution. Tools become relevant to other actors as well: for example, insurance companies design policies that specify actions employers must take in order to meet the terms of insurance policies. And again, in addition to formal contracts, policies, and handbooks, informal negotiations in the shadow of law, where formal lawsuits often loom as a threat, also mobilize procedural components of the legal environment. 24 Constitutive constructs within the civil rights legal environment include a variety of definitional categories, labels, and ideas that subtly play a role in how civil rights law becomes relevant to various 24 (Mnookin & Kornhauser 1979; Macaulay 1963). 6

7 organizational actors. Categories such as public/private, independent contractor/employee, exempt/nonexempt, and full-time/part-time as well concepts such as race, gender, labor pool, applicant, qualified, merit, and disability also derive meaning and impact in part from civil rights legal environment. This more constitutive element of the legal environment can affect assumptions that employers make about the importance or fairness of legal regulations as well as about employees qualifications, race, or gender, and it can affect how employers respond to allegations of rights violations or unfair treatment. The legal environment, and more specifically its regulatory constraints, procedural tools, and constitutive constructs, become the arena in which ideas from the legal field flow into the organizational fields, are interpreted and transformed by compliance professionals, and ultimately, flow back into legal fields rendering law endogenous. Legal endogeneity theory extends neo-institutional scholarship in sociology 25 and work on the interplay between law and organizations 26 by specifying not only on how the cultural ideas and symbolic meanings within legal environments of organizations affect organizations but also how the ideas and meanings that come to characterize organizational fields flow into legal fields and ultimately shape the behavior of courts and other legal institutions. In the following section, I describe the engines of legal endogeneity the legalization of organizational fields and the managerialization of law. Then in Section 2.3, I turn to the specific mechanisms through which these processes take place. 2.2 The Engines of Legal Endogeneity As Figure 2.1 illustrates, the overlap between legal and organizational fields engenders both a legalization of organizations (in which legal logic over time permeates organizational fields) and a managerialization of law (in which managerial logic over time permeates legal fields). Legal logic is centered on what is often called the rule of law or the idea that law legitimately governs all social actors and constrains arbitrary behavior by rulers, including organizational rulers. Legal logic more broadly includes attention to legal principles such as due process (fair hearing), equal access to law, and equal protection of law. Managerial logic is centered on the idea that organizational rulers (business owners but also the managers to whom they have designated control) have legitimate authority to set workplace rules, to control workers, and to resolve disputes that arise within organizations John W. Meyer and Brian Rowan, "Institutionalized Organizations: Formal Structure as Myth and Ceremony," American Journal of Sociology 83 (1977); DiMaggio and Powell, "The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields."; W. Richard Scott, Organizations: Rational, Natural, and Open Systems Perspectives (Englewood Cliffs, NJ: Prentice-Hall, 1987).. 26 Edelman, "Legal Environments and Organizational Governance: The Expansion of Due Process in the Workplace."; "Legal Ambiguity and Symbolic Structures: Organizational Mediation of Civil Rights Law."; Edelman, Abraham, and Erlanger, "Professional Construction of Law: The Inflated Threat of Wrongful Discharge Doctrine."; Lauren B. Edelman, Howard S. Erlanger, and John Lande, "Internal Dispute Resolution: The Transformation of Civil Rights in the Workplace," Law & Society Review 27 (1993); Dobbin et al., "Equal Opportunity Law and the Construction of Internal Labor Markets."; Mark C. Suchman, "Conceptualizing the Legal Environments of Organizational Activity," in Conference on Organizations (Stanford 1993); Sim B. Sitkin and Robert J. Bies, The Legalistic Organization (Newbury Park, CA: Sage, 1993); Sutton et al., "The Legalization of the Workplace." 27 Neo-institutional scholars often refer to the logics of social fields, that is, the predominant ways of thinking that circulate throughout the field. Early accounts emphasized institutional isomorphism that resulted in a dominant logic within a field. Tolbert and Zucker, "Institutional Sources of Change in the Formal Structure of 7

8 Managerial logic includes attention to business principles such as the efficiency and rationality of markets. Neither legal nor organizational fields have ever had a purely legal or managerial logic; field logics in general tend to be multiple, contested, and changing. 28 But over time, one sees greater attention to legal principles such as due process in organizational fields, and greater attention to the value of managerial discretion and control in legal fields. Thus, the legalization of organizations and the managerialization of law are the dual engines of legal endogeneity, or the processes that result in the meaning of law deriving from the organizational fields that it seeks to regulate The Legalization of Organizations I define the legalization of organizations as the process through which elements of law and legal principles become relevant to organizations and motivate the creation of law-like structures and the Organizations: The Diffusion of Civil Service Reform, "; Edelman, "Legal Environments and Organizational Governance: The Expansion of Due Process in the Workplace." More recently, scholars have emphasized that fields often include multiple, contradictory logics. Roger Friedland and Robert R. Alford, "Bringing Society Back In: Symbols, Practices and Institutional Contradictions," in The New Institutionalism in Organizational Analysis, ed. Walter W. Powell and Paul J. DiMaggio (Chicago: University of Chicago Press, 1991); Carol A. Heimer, "Competing Institutions: Law, Medicine, and Family in Neonatal Intensive Care," Law & Society Review 33 (1999); Robin Stryker, "Legitimacy Processes as Institutional Politics: Implications for Theory and Research in the Sociology of Organizations," Research in the Sociology of Organizations 17 (2000); W. Richard Scott et al., Institutional Change and Healthcare Organizations: From Professional Dominance to Managed Care (Chicago and London: University of Chicago Press, 2000); Marc Schneiberg, "Organizational Heterogeneity and the Production of New Forms: Politics, Social Movements and Mutual Companies in American Fire Insurance, ," Research in the Sociology of Organizations 19 (2002); Michael Lounsbury, Mark Ventresca, and Paul M. Hirsch, "Social Movements, Field Frames and Industry Emergence: A Cultural Political Perspective on U.S. Recycling," Socio-Economic Review 1 (2003); Mark Schneiberg and Sarah Soule, "Institutionalization as a Contested, Multi-Level Process: The Case of Rate Regulation in American Fire Insurance," in Social Movements and Organization Theory: Building Bridges, ed. Jerry Davis, et al. (Cambridge: Cambridge University Press, 2004). Scholars have also found that actors who transcend or span field boundaries play a role in bringing disparate field logics to bear in ways that promote institutional change. Huseyin Leblebic et al., "Institutional Change and the Transformation of Interorganizational Fields: An Organizational History of the U.S. Radio Broadcasting Industry," Administrative Science Quarterly 36 (1991); Elisabeth S. Clemens, "Organizational Repertoires and Institutional Change: Women's Groups and the Transformation of Us Politics, ," American Journal of Sociology 98 (1993); The People's Lobby: Organizational Innovation and the Rise of Interest Group Politics in the United States, (Chicago: University of Chicago Press, 1997); John L. Campbell, "Institutional Analysis and the Role of Ideas in Political Economy," Theory and Society 27 (1998); Heimer, "Competing Institutions: Law, Medicine, and Family in Neonatal Intensive Care."; Lauren B. Edelman, Sally Riggs Fuller, and Iona Mara-Drita, "Diversity Rhetoric and the Managerialization of Law," American Journal of Sociology 106 (2001); Daniel Lee Kleinman and Steven P. Vallas, "Science, Capitalism, and the Rise of the Knowledge Worker : The Changing Structure of Knowledge Production in the United States," Theory and Society 30 (2001); Schneiberg, "Organizational Heterogeneity and the Production of New Forms: Politics, Social Movements and Mutual Companies in American Fire Insurance, " 28 Work in organization theory emphasizes that field logics tend to be multiple, complicated, contested, and changing. Neil Fligstein, The Transformation of Corporate Control (Cambridge, MA: Harvard University Press, 1990); Kim Voss, The Collapse of a Social Movement: The Interplay of Mobilizing Structures, Framing, and Political Opportunities in the Knights of Labor (New York: Cornell University Press, 1996); Schneiberg, "Organizational Heterogeneity and the Production of New Forms: Politics, Social Movements and Mutual Companies in American Fire Insurance, "; Gerald Berk and Marc Schneiberg, "Varieties in Capitalism, Varieties of Association: Collaborative Learning in American Industry, 1900 to 1925," Politics and Society 33 (2005). 8

9 infusion of law-like ideas into organizational governance. The legalization of organizations involves mimicry of legal institutions, legal structures, and legal actors, albeit not in exact form. As this occurs, one also sees a shift in consciousness as legal ideas tend to infuse the collective thinking of actors in organizational fields. Organizational fields over time confer legitimacy upon organizations that incorporate policies like legal statutes, grievance resolution mechanisms that look like legal adjudication, and a variety of compliance positions that loosely mimic public law enforcement. This in turn tends to spur greater legal consciousness or awareness and acceptance of the logic of rules and rights. The process of legalization usually begins as compliance professionals call attention to elements of legal fields, thus making them salient parts of the legal environment of organizations. Compliance professionals emphasize the passage (or anticipated passage) of new laws, from judicial decisions or administrative actions that are perceived as threatening, or from social movement pressure. Organizations that are most vulnerable to the perceived legal threat or pressure are generally the first to act and, as law-like structures appear more rational or successful, other organizations follow suit. Thus legalization is a process that occurs over time as fields legitimate and organizations adopt more forms of governance and ways of thinking that increasingly mimic the public legal arena. Because of managerialization (see infra 2.2.2), however, legalization does not guarantee substantive commitment to legal ideals. My processual view differs from several earlier statements about legalization. In his classic volume: Law, Society, and Industrial Justice (1969), Philip Selznick defines the legalization of organizations as the process through which elements of the public legal order are introduced into private organizational governance, generally furthering the achievement of "legality," or the progressive reduction of arbitrariness. I adopt the first part of his definition, but not the assumption that legalization necessarily reduces arbitrariness because, as I demonstrate in this book, legalization also has the potential to mask and therefore to facilitate arbitrariness. In contrast to DiMaggio and Powell 29 who associate legal rules with coercive isomorphism, I suggest that the introduction of legal authority is experienced by organizations more as an ambiguous norm than in a coercive manner. The presence of law in organizations is rarely experienced as a clear mandate like a stop sign or a ban on smoking. Laws that regulate work organizations tend to be general and are often vague, such as civil rights laws that mandate nondiscrimination or accommodation of disability without clearly defining what those terms mean. Even when laws seem clear initially, it is almost inevitable that disputes will develop over time as new problems expose new ambiguities. In contrast to Sitkin and Bies, who define legalization as a process that encompasses the diffusion of legalistic reasoning, procedures, and structures as a means of sustaining or enhancing the legitimacy of the organization (or organizational subunit) with critical internal or external constituencies, 30 I do not see legalization as necessarily legalistic because, as I demonstrate in this book, law in organizations tends to take on a managerial as opposed to a law-like character. Further, although I agree with Sitkin and Bies that sustaining or enhancing legitimacy is a frequent motivation for legalization, I do not think it is the only motivation. Organizations may also 29 DiMaggio and Powell, The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields. 30 Sitkin and Bies, The Legalistic Organization. 9

10 respond to law because it has become a routinized response or because they understand that response to be good for economic reasons. Thus, like Scott (1994), who emphasizes the need to maintain a neutral understanding of legalization, I do not include the rationale for legalization within the definition The Managerialization of Law I define the managerialization of law as the infusion of managerial or business values and ideas into law. 31 The managerialization of law begins in organizational fields, as organizations respond to their legal environments by constructing the meaning of law and compliance and creating new policies, practices and structures that infuse legal ideals with managerial values and consciousness. As those managerialized policies, practices, and structures become institutionalized components of the legal environment, organizational and legal actors alike tend to develop a consciousness that associates those practices with rationality and compliance. Thus, managerialized forms of law and compliance flow through legal environments back into legal fields, where they eventually become legitimated through judicial decisions that condone them. The managerialization of law is thus spurred by the legalization of organizations. As managerial professionals respond to perceived or actual legal threats or rules, they are necessarily influenced by the organizational settings in which they work, by their training, and by their aspirations toward promotion or mobility or power. Compliance professionals see legal rules through a managerial lens and seek responses that appear rational within the context of organizational routines and goals. As compliance professionals bring law into the organizational realm, they naturally look for ways to adapt ambiguous legal requirements to the needs of the organization or to reframe legal constructs in terms more conducive to managerial interests. Thus legal rules tend to be reconceptualized in terms of general principles of good management such as consistent treatment, efforts to avoid conflict, and ensuring the continuity of organizational services or manufacturing. Although individual managers may elevate legal logic or the focus on rules and rights above managerial ideals, collectively law tends to be reimagined in ways that elevate managerial logic or the focus on managerial control and discretion above legal ideals. The same interplay between legal fields and organizational fields that promotes a legalization of organizations also carries the managerialized constructions of law back into legal fields. As managerial understandings of law become more prevalent, those understandings influence the framing of legal claims and responses to those claims. Lawyers for both employees and employers either consciously or unwittingly assume the validity of managerialized conceptions of law. Over time, judges, administrative officials, and legislators also incorporate and ultimately legitimate managerialized conceptions of law. 31 Edelman, Fuller, and Mara-Drita, "Diversity Rhetoric and the Managerialization of Law."; Edelman, "Overlapping Fields and Constructed Legalities: The Endogeneity of Law."; Edelman et al., "When Organizations Rule: Judicial Deference to Institutionalized Employment Structures." 10

11 2.2.3 The Blurring of Logics The legalization of organizations, which is the focus of many scholarly books and articles, 32 is only half the story. Legalization and managerialization together drive civil rights law and determine its form and impact in society. The managerialization of law in particular helps to explain the limited effectiveness of civil rights law and the continuing forms of discrimination and inequality that are documented by legal scholars and sociologists alike. 33 But legalization and managerialization are descriptions of the general process. I now turn to a more specific discussion of the stages of legal endogeneity, or the mechanisms through which law becomes endogenous. The early stages involve predominantly legalization whereas the later stages involve predominantly managerialization. And throughout the entire process, the blurring of legal and managerial logics impacts the legal consciousness of both organizational and legal actors at each stage. 2.3 The Stages of Legal Endogeneity in the Context of Civil Rights I begin my discussion of the stages of legal endogeneity with the ambiguity of the 1964 Civil Rights Act and subsequent civil rights statutes. One could begin discussing legal endogeneity with a discussion of social norms, political interests, and social structures that influenced the formation of ambiguous statutes in the first place. 34 But beginning with the ambiguity of civil rights legislation allows me to focus on challenging the traditional view of regulation, which sees law as essentially coercive and regulation as primarily a top down phenomenon. In this view, organizations may tweak the law at the margins by lobbying for change or negotiating with regulatory agencies or filing amicus briefs in lawsuits but they are essentially the subjects of regulation. In contrast, legal endogeneity theory posits important ways in which organizations subtly shape the meaning of law and the nature of compliance. I end my discussion of the stages of legal endogeneity with judicial decision-making. Legal endogeneity also has the potential to affect legislation and administrative rulemaking, but I focus on judicial decisionmaking in order to challenge the premise that is implicit in both liberal legal and lay understandings of 32 Frank Dobbin et al., "The Expansion of Due Process in Organizations," in Institutional Patterns in Organizations, ed. Lynne G. Zucker (Cambridge, MA: Ballinger, 1988); Edelman, "Legal Ambiguity and Symbolic Structures: Organizational Mediation of Civil Rights Law."; Edelman, Erlanger, and Lande, "Internal Dispute Resolution: The Transformation of Civil Rights in the Workplace."; Dobbin et al., "Equal Opportunity Law and the Construction of Internal Labor Markets."; Sutton et al., "The Legalization of the Workplace."; John David Skrentny, The Ironies of Affirmative Action: Politics, Culture, and Justice in America (Chicago: University of Chicago Press, 1996); Erin Kelly and Frank R. Dobbin, "How Affirmative Action Became Diversity Management," American Behavioral Scientist 41 (1998); Dobbin, Inventing Equal Opportunity; Charles R. Epp, Making Rights Real: Activists, Bureaucrats, and the Creation of the Legalistic State (Chicago: University of Chicago Press, 2009). 33 Devon W. Carbado and Mitu Gulati, "Working Identity," Cornell Law Review 85 (1999); John A. Bargh, Mark Chen, and Lara Burrows, "Automaticity of Social Behavior: Direct Effects of Trait Construct and Stereotype Activation on Action," Journal of Personality and Social Psychology 71 (1996); Kevin Stainback and Donald Tomaskovic-Devey, Documenting Desegregation: Racial and Gender Segregation in Private Sector Employment since the Civil Rights Act (New York: Russell Sage Foundation, 2012). 34 Ehrlich, Fundamental Principles of the Sociology of Law; Friedman, The Legal System: A Social Science Perspective; Bronislaw Malinowski, Crime and Custom in Savage Society (Totowa, NJ: Littlefield, Adams & Co., 1972). 11

12 the judiciary that courts are the most independent and impartial of legal institutions. 35 Political scientists, of course, have shown that judges social backgrounds, political views and attitudes, and strategic considerations influence judicial decision-making, 36 but legal endogeneity theory identifies organizations and organizational fields as an unrecognized influence upon the judiciary. As shown in Figure 2, there are six stages to the endogeneity of law: (1) the creation of ambiguous law; (2) managerial construction of the legal environment; (3) the construction and diffusion of symbolic forms of compliance; (4) the managerialization of law within organizations; (5) the mobilization of managerialized law; and (6) judicial legitimation of managerialized conceptions of law. The legalization of organizations (and organizational fields) takes place primarily in stages 2 and 3, and to some extent in stage 4, all of which occur centrally within organizations and the fields they comprise. The managerialization of law takes place in stages 4 through 6, first within organizational fields and then within legal fields. In addition, as shown in the center of Figure 2, each stage both encourages and is responsive to a managerialization of legal consciousness or the ways in which people think about law and compliance. Because legal consciousness is a rather abstract construct and because I see legal consciousness as evolving throughout the stages, I treat it not as a distinct stage but rather as a factor that influences the progression of law through the stages. Because the managerialization of legal consciousness is not a discrete stage, I discuss it as an interlude between Stages 4 and 5 because legal consciousness probably plays the greatest role at that point. But legal consciousness is both responsive to and constitutive of each of the stages of legal endogeneity. In the remainder of this chapter, I lay out the stages of legal endogeneity. This chapter serves both as a statement of legal endogeneity theory and as an overview of the remaining chapters. Organized according to the stages of legal endogeneity, the remaining chapters provide greater detail and offer empirical examples of each of the stages. 35 Martin Shapiro, Courts: A Comparative and Political Analysis (Chicago: University of Chicago Press, 1986); Stephen B. Burbank, "The Architecture of Judicial Independence," Southern California Law Review 72 (1998). 36 Jeffrey A. Segal and Albert D. Cover, "Ideological Values and the Votes of U.S. Supreme Court Justices," American Political Science Review 83 (1989); Keith E. Whittington, "Legislative Sanctions and the Strategic Environment of Judicial Review," International Journal of Constitutional Law 1 (2003); Christina L. Boyd, Lee Epstein, and Andrew D. Martin, "Untangling the Causal Effects of Sex on Judging," American Journal of Political Science 54 (2010). 12

13 Legaliza on of Organiza ons Managerializa on of Law Figure 2: The Stages of Legal Endogeneity Ambiguous Law Professional Construc on of the Legal Environment Judicial Legi ma on of Managerialized Law Managerializa on of Legal Consciousness Construc on and Diffusion of Symbolic Legal Structures Mobiliza on of Managerialized Law Managerializa on of Law within Organiza ons Stage 1: Ambiguous Law Rules that regulate organizations tend to be broad and ambiguous, and in some cases, subject to considerable controversy. Legal ambiguity has many sources. In some cases, the ambiguity derives from the original statutes. In other cases, legal ambiguity develops over time through political contest, inconsistent or ambiguous judicial opinions, judicial opinions that regulate procedure but not substance, or judicial interpretations that give organizations greater discretion in determining the definition of compliance. In still other cases, ambiguity derives from the fragmentation of federal policy into federal, state, and local rules, federal and state judicial opinions, and federal and state regulatory policy. 37 In the context of civil rights law, the statutes creating new rights are broad and ambiguous, leaving organizations wide latitude to construct the meaning of compliance. Neither Title VII of the 1964 Civil Rights Act nor subsequent civil rights statutes clearly define the meaning of discrimination, the key concept that civil rights legislation seeks to proscribe. Political debate over the meaning of equal employment opportunity and, in particular, affirmative action has exacerbated the ambiguity of the original statutes. Moreover, a number of trends in civil rights jurisprudence have created further 37 Erin L. Kelly, "The Strange History of Employer Sponsored Child Care: Interested Actors, Uncertainty, and the Transformation of Law in Organizational Fields," American Journal of Sociology 109 (2003). 13

14 ambiguity or potential for organizations to be creative in how they respond to the law. For example, initial case law establishing what is now known as disparate impact doctrine, 38 which precludes facially neutral policies that adversely impact protected groups of employees, appeared to interpret civil rights law in a way that could have constrained any organizational policies that disadvantaged a protected group of workers. But subsequent decisions narrowed disparate impact doctrine and turned the focus to disparate treatment doctrine, 39 which focuses on employer intent rather than on the consequences of employment policies. The focus on intent is itself a source of ambiguity since intent is not directly observable but rather must be inferred from circumstantial evidence. Similarly, contradictory judicial trends on the legality of affirmative action, evolving rules on the circumstances under which employers can obtain summary judgments; 40 the conditions under which mandatory arbitrary clauses can trump employees statutory rights; 41 what is required for employees to prove retaliation; 42 and the circumstances under which employers may be held strictly liable for the actions of managers 43 all create new sources of legal ambiguity. Ambiguity in statutory law and in the legal environment generally enhances the potential for managerialized constructions of law to enter legal fields and to affect judicial rulings on civil rights law. Ambiguous statutes leave organizations wide latitude to fill in the gaps or construct the ambiguous terms. Ambiguity or contradictions in judicial doctrine interpreting statutes can subsequently create latitude for organizational construction of law. When either the original statutes or later interpretations of law emphasize the procedural as opposed to substantive requirements, organizations can more easily construct the law to conform procedurally in the absence of substantive change. Similarly, when either original statutes or later interpretations render compliance or noncompliance dependent upon traits that are difficult to observe, such as employer intent, organizations have greater potential to create symbols of good faith that do not necessarily guarantee of substantive change. Political controversy creates ambiguity by highlighting multiple possible interpretations of law. Similarly, fragmented government creates ambiguity as different agencies or branches of government make different assumptions or offer varying interpretations of legal requirements. Even weak enforcement by regulatory agencies can create ambiguity by clouding the circumstances under which organizations are likely to be held accountable. Legal ambiguity, in short, can derive from many sources and can change over time. But irrespective of how it evolves, legal ambiguity facilitates organizational constructions of law that may, in turn, influence legal institutions. Chapter 3 offers more detail on the nature of legal ambiguity in civil rights law, both in the initial statutes and through subsequent developments in civil rights jurisprudence. 38 Griggs v. Duke Power Co., 401 U.S. 424 (1971) 39 McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973) 40 Celotex Corp. v. Catrett, 477 U.S. 317 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986); and Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) 41 American Express Company v. Italian Colors Restaurant, 570 U.S. (2013), No ; June 20, University of Texas Southwestern Medical Center v. Nassar, U.S. (2013), No ; June 24, Vance v. Ball State University, U.S. (2013), No ; June 24,