THE ELITE QUESTION Toward a Normative Elite Theory of Organization

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1 ADMINISTRATION Farazmand / THE ELITE & SOCIETY QUESTION / July 1999 This article reviews different theoretical perspectives on elite theory, raises the long neglected elite question as a central issue in the analysis of power structure in modern organizations, and offers, for the first time, a normative elite theory of organization that is both descriptive and prescriptive and that has predictive as well as prescriptive powers. Noting the deficiencies of the traditional theories of organization premised on instrumental rationality and void of normative dimensions of politics and power structure, the article stresses the need for research in the neglected area of organizational elite to understand better and predict organizational behavior for the elites and nonelites, especially in the age of rapid structural changes that affect billions of people around the globe. Discussions cover the concept and assumptions of organizational elite, the macro and micro levels of organizational elite analysis, the concept of organizational elite cohesion, and the significance and implications of the theory of organizational elite to organization theory and behavior in modern society. THE ELITE QUESTION Toward a Normative Elite Theory of Organization ALI FARAZMAND Florida Atlantic University Throughout the world, public, private, and nonprofit organizations are undergoing significant changes. These changes include structural adjustments, organizational reconfiguration, and process improvements to maximize rationality and bottom-line concepts. A radical feature of these changes is the massive downsizing of organizations almost everywhere, with the effect of massive social and economic displacement. Giant corporations and governmental organizations alike have led a crusade of turning the table upside down in organizational life. They have embarked on a major structural change in government-society-market relations that not only has altered decades of policy on state functions but also has created a chaotic and unpredictable future for all peoples around the globe. This structural change will most likely continue to persist in the foreseeable future with fundamental consequences for society and implications for ADMINISTRATION & SOCIETY, Vol. 31 No. 3, July Sage Publications, Inc. 321

2 322 ADMINISTRATION & SOCIETY / July 1999 public and private management. Privatization, downsizing, reorganization, and redefinition of public and private spheres of organization and administration are but a few of the structural changes that have had profound impacts on society. Chaos, disruption of traditions, and unpredictability seem to be permeating life around the globe, causing anxiety and stress. Behind these chaotic changes appears to be a strong ideological, market-based, conservative trend with a pursued manifest mission of antibureaucratic character and of trimming big governments with out-ofcontrol bureaucracies. Proponents of these trends claim they improve service delivery, increase efficiency, and promote high performance in response to citizens demands for accountability, transparency, responsiveness, and cost control. These trends also are said to adapt to changing environmental pressures that affect organizational survival, competitiveness, and effectiveness. Adaptation and effectiveness have become keywords for survival and development. When explaining the necessity for organizations to adapt to environmental and technological changes, organization theorists have followed the traditional academic line. However, what is often overlooked or avoided in all these discussions in the organizational literature is the issue of the strategic position of the elites who exercise power in setting longterm directions for organizations. Theorists have avoided the question of who makes these decisions that affect millions of people inside and outside modern organizations. People do not downsize themselves; organizational elites do. Common people do not privatize government functions; public organizational elites do. Furthermore, most organization theorists have long avoided focusing on the central normative issues of power, control, and politics in administration as well as the political culture that affects organizations from the outside. Finally, theorists have avoided the key subject of inquiry regarding the cohesiveness or harmony with which these strategic and significant decisions are made in public and private organizations and the ways in which strategic elites direct and redirect societal allocations of resources and powers. Exceptions are few; they may be found in the literature on sociology and political economy. Generally, mainstream organization theorists have treated the normative issues of power, politics, and control as internal phenomena that exist only within organizations, except for the acknowledgment of an external influence that organizations should adapt to or accommodate. The singular role of technical rationality has been emphasized in explaining collective action and organizational behavior. These theorists have focused on

3 Farazmand / THE ELITE QUESTION 323 instrumental rationality as a means to achieve organizational ends or goals. But how these organizational goals, especially the long-term strategic ones, are determined is a central question that often is overlooked, or even ignored, in the studies of organization. Exceptions are few (see, for example, Farazmand, 1994; Fischer, 1984; Kaufman, 1964; Michels, 1959, 1964; Ott, 1989; Perrow, 1986; Pfeffer & Salankik, 1978; Waldo, 1978; Weber, 1947). Rarely have organization theorists embraced political theory in the development of organization theory (Kaufman, 1964). Political and organization theories have been developed in parallel, one without considering the other. As Kaufman (1964, in Gorthner, Mahler, & Nicholoson, 1989) points out, if there is any conscious agreement between the two fields, it is on their separateness from each other (p. 91). Drawing on different disciplines and grounds, political theorists are frankly normative; organization theorists generally believe their work is value-free. Exclusion of political theory from organization theory also is explained by other social scientists and organizational theorists (see, for example, Miles, 1980; Schein, 1977; Waldo, 1978). According to Miles, organizations have dual realities: technical rationality and political rationality or irrationality. Exclusion of political theory from organizational theory results in a presentation of only one side of the organizational reality, the technical rationality. Political rationality or irrationality constitutes the other side of all organizations, especially public organizations of all types. As Miles (1980) notes, the second reality of organizational life is that purely rational conditions seldom obtain (p. 157). Power is not used by itself in organizations and in administration; it is exercised by organizational and administrative elites. Similarly, political theorists have avoided a discussion of organization theory. This separation of organizational and political theorists actually has impaired rather than enhanced both bodies of knowledge about the ways society is organized and administered (Farazmand, 1994; Fischer, 1984; Kaufman, 1964). It is surprising to see this negligence despite the fact that organization and administration are central to political systems and, as Matthew Holden (1997) reminds us, administration is power. Centrality of administration and organization is beyond doubt. It is through organization that power is exercised, and a long history of political changes and administrative continuity, dating back to ancient times Babylon, Persia, Rome, and others has proved this over and over (Eisentadt, 1963; Jacoby, 1973; Waldo, 1980/1992).

4 324 ADMINISTRATION & SOCIETY / July 1999 The purpose of this article is to present a discussion of elite theory as it relates to organizational elite, a long-neglected area of organizational research. Political rationality is brought back in for prescriptive as well as descriptive explanations. The discussion will attempt to develop a model of organizational elite as a preliminary step toward building a normative theory of organization. The suggestive normative organizational elite theory is, therefore, both descriptive and prescriptive, offering the advantages of both explanatory and predictive powers. Elite theory and the concept of power elite, as opposed to the Marxist notion of ruling class, is well established in the disciplines of political science, sociology, and economics (see for example, Balbus, 1971; Burch, 1981; Domhoff, 1983, 1990; Dye & Zeigler, 1990; Etzioni-Halevi, 1992; Field & Higley, 1973, 1980; Higley & Burton, 1989; Higley & Moore, 1981; Hunter, 1953, 1959; Jones, 1987; Lindblom, 1990; Macpherson, 1987; Mills, 1956; Mosca, 1939; Parenti, 1988; Prewitt & Stone, 1973; Schumpeter, 1942/1976). Surprisingly, however, even the elite theorists have neglected in their research the centrality of organizational elite. Little has been published on this important, if not central dimension of elite theory (see Domhoff & Dye, 1987, for an exception). Other exceptions include recent works on interorganizational networks and interlocking boards of directorate in connection with corporate power elites (see, for example, Aldrich & Pfeffer, 1976; Domhoff, 1971; Mintz & Schwartz, 1981b; Mizruchi, 1980; Pfeffer & Salankick, 1978; Useem, 1984). However, despite these studies, no study has focused on the concept of organizational elite. This is a grossly neglected area of research on modern organizations, a fact that is admitted by elite theorists as well as mainstream organization theorists (DiTomaso, 1980; Domhoff & Dye, 1987; Gorthner et al., 1989; Perrow, 1986). This article addresses this neglected area of organization theory. Such negligence is regrettable because it has closed the doors of opportunities for researchers in social science in general and the students of organization theory and public administration in particular. By addressing the key and neglected area of elites, the article presents a novel approach to the study of modern organizations, their management, and performance. It will open up an invitation to elite theory in the study of modern organization and administration, hence filling in a major gap in the literature of organization theory.

5 Farazmand / THE ELITE QUESTION 325 RATIONALE, JUSTIFICATION, AND THE NOVELTY OF THE NEW THEORY The significance and rationale of the article are discussed in some detail toward the end of this article. Briefly noted here is that studying organizational elites is important for several reasons. First, we live in an organizational society. Modern society and civilization function and flourish through organization (Harmon & Mayer, 1986; Presthus, 1962). Billions of people live and die through organizations, and governments and their political, social, and economic systems rise and fall through organizational structure and performance. Organization is a collective action, and collective action is an exercise of power, which in turn is central to administration and politics. Therefore, organizations are indispensable to those who exercise power, power is exercised through organizations, and it is organizations through which administration is practiced. As Holden (1997) asserts, administration is power, which is central to effective governance (p. 126). Therefore, centrality of organization as well as of power is both acknowledged and emphasized almost invariably by all elite theorists as well as nonelite theorists of organization. For example, in his analysis of the biology of organizations, Bertrand Russell (1938) stressed organizations as necessary social institutions for the exercise of power. Power is dependent upon organizations in the main, but not wholly. Purely psychological power, such as that of Plato or Galileo, may exist without any corresponding social institution. But as a rule even such power is not important unless it is propagated by a church, a political party, or some analogous social organism. (p. 158) Second, as discussed below, almost all definitions of elite theory have invariably stressed the word organization as a central means of exercising power by those holding the elite power. Similarly, nonelite theorists have long stressed the importance of organizations for the exercise of power as well as the importance of power within organizations (see, for example, Long, 1949; Pfeffer, 1981; Scott & Hart, 1989). Third, organizational elites are instrumental to the realization of the will of the elites in government, business, and society. They are the translators of power elites abstract ideas into practical realities. Organizational elites socioeconomic and political backgrounds reflect the representative

6 326 ADMINISTRATION & SOCIETY / July 1999 interests of the power elites in society. Organizations serve this and other similar purposes. Downsizing, reform and reorganization, and privatization are some of the strategic organizational decisions that are made by organizational elites to reflect the will of the overall power elites in society. These are some of the hot issues that are transforming societies, governments, labor, and peoples lives at local, national, and global levels. Globalization is a process that is directed primarily by the corporate and governmental strategic elites, whose decisions are translated into operational behaviors by organizational elites across the globe. Fourth, organizational elites perform unique functions of maintaining the invisibility shielding of the power elites from the public eye, making them unaccountable for failures and taking credit for good performance. Fifth, the theory of organizational elites presents a novel dialectical approach toward studying significant strategic issues about organizations, administration, and governance in society. Studying and understanding such issues as elite cohesion and unity, elite disunity, rivalry and settlement, elite configuration and reconfiguration, interelite competition, elite-nonelite rivalry and fighting, elite recruitment and retention, and elite crisis management provide opportunities to develop a deeper understanding of the ways in which organizational elites behave, to predict those behaviors. Such a knowledge of organizational elites helps managers manage organizational behaviors more effectively, responding to environmental demands and pressures from the public citizenry according to the prescribed rules of conduct in organizational behavior. Similarly, studying organizational elites helps citizens, employee unions, and clienteles to understand and predict elites behaviors and preferences and to find appropriate ways to exert pressures on elites and/or influence policy choices through both decision making and organizational implementation. This counterelite or mass-based organization of pressures from below is extremely important for the citizenry in its attempt to alter or modify power elites behaviors. Organizational elite theory provides a useful conceptual framework for such studies and understandings for citizens, managers, and employees in organizational systems. No other models or theories of organization offer such a novel approach to the study of organization and administration in society (further justifications and rationales are given in a later part of this article under Significance and Implications ). The concept, assumptions, and implications of a suggestive theory of organizational elite are presented here as a step toward developing a normative theory of organization. This is done at two levels of analysis: (a)

7 Farazmand / THE ELITE QUESTION 327 macro-organizational power environment, including the interorganizational level; and (b) micro-, intra-organizational level. First, a background on elite theory is provided to clarify the concept and to prevent any confusion with similar or contending theories of organization. Then, models of elite theory are presented and discussed. This is followed by a discussion of the organizational elite, including the characteristics of elites and sources of elite cohesion, solidarity, and unity. Then, an analysis is made to present possible contributions to a normative theory of organization and to identify some implications for public administration and modern governance. BACKGROUND TO ELITE THEORY No organization, public or private, operates in a vacuum. All organizations and institutions perform in a political or power environment through which the broad parameters are more or less defined, and any organizational action contradicting rather than enhancing, or conforming to, that environmental power structure is sanctioned by institutional means of the state, whether autonomous, dependent, mediating, or weak in dealing with powerful transnational corporations (TNCs), which are becoming state-indifferent (Mandel, 1975, p. 328; see also Held et al., 1983; Jessop, 1982; King, 1986; Miliband, 1969; and Skocpol, 1979; for a discussion on state theories, and Korten, 1995, on the role of transnational corporations). Peter Dobkin Hall s (1984) The Organization of American Culture, describes and documents the process of Puritanism s secular influence and cultural survival. Private organizations took the place of both the state, the family, and the locality in conducting fundamental economic and cultural activities. Therefore, the rise of private corporations brought about political, economic, and cultural nationality (Hall, 1984, p. 1; also quoted in Johnson, 1988, p. 586). According to Hall, culture is defined neither on Weberian terms nor based on moral ethos of bureaucracy, but rather as a set of social values and institutions used by people in organizing the entire range of their fundamental activities (p. 8). Hall focuses on the role of religion in shaping society; the reshaping of religion by society; the development of the notion of character; the bureaucratization of business, government, and society; and the role of elites in reorganizing American culture. According to Hall, the story of the organization of

8 328 ADMINISTRATION & SOCIETY / July 1999 the American culture is essentially the story of developing bureaucratic elites in the service of economic and social nationality (quoted in Johnson, 1988, p. 593). Arguing that the culture of a political system is inextricably bound up with the existing governmental structure, Gorthner et al. (1989) correctly state that the power structure of a society influences the procedures around and in the bureaus [public organizations] established to carry out [public] policy (p. 79). In other words, the political and power environment or structure determines the broad parameters in and around public organizations. Actually, this also may be true of all organizations, private and nonprofit. Gorthner et al. then state, Therefore, theories of about how the political system works, who has access where, and what is considered proper within the political sphere are vital to understanding how public structure develops and is maintained (p. 79). Similarly, systems theorists emphasize the role of environment in shaping organizational structure and process (Ackoff, 1974; Katz & Kahn, 1966/1978; Thompson, 1967), but they do not focus on the power structure in or out of organizations. It is this understanding that is essential to explaining properly the nature and functions of modern organizations. Of the competing theories of politics and democracy, the Marxists, the pluralists, and the elitists tend to have occupied more space in the academic arena than any others in the field. All three theories may be useful in explaining how organizations, especially public organizations, attempt to operate as actors in the political system (Gorthner et al., 1989, p. 79). Traced to the works of Benthly (1908), Truman (1951), and Dahl and Lindblom (1953), the pluralist or group theory generally espouses that dispersed, fragmented, and independent groups, individuals, and organizations pursue their interests in the governmental system. An interest group is a shared-attitude group that makes certain claims upon other groups in the society. If and when it makes its claims through any of the institutions of government, it becomes a political interest group (Truman, 1951, p. 37). In a critique of the ruling elite model, Dahl (1958) rejects the notion of elite consensus and homogeneity in decision goals. He argues that power is dispersed, that no one group is capable of determining the outcomes of decisions made in government and society in a consistent or persistent manner. As will be seen below, even pluralists, including Dhal and Lindblom, do not reject the notion of elites in society. The Marxist and neo-marxist theories of politics and economics assert that a ruling capitalist class dominates society, including its government, business, and other social institutions. Accordingly, organizations, public

9 Farazmand / THE ELITE QUESTION 329 or private, are instruments of class domination, exploitation, and control for the purpose of maintaining and enhancing the capitalist system controlled by the ruling class (see, for example, Marx, 1966; Miliband, 1969; Poulantzas, 1969; Tucker, 1978). Similarly, the conservative neoclassical public choice or market theory posits that organizations, like individuals, are rational decision makers and always tend to maximize their selfinterests by minimizing costs and maximizing benefits in a marketplace. According to the market or public choice theory, competition and overlaps characterize modern organizations. In the political system, they are dispersed, not centralized or concentrated. Most other traditional organization theories fall under the instrumental rationality of the pluralist and market theories of politics, economics, and democracy (see, for example, Buchanan & Tullock, 1962; Downs, 1967; Niskanen, 1971; Ostrom, 1974; Stocky & Zekhauser, 1978; Williamson, 1981, 1983, 1985). The elitist theory of politics is as old as history, but the first presentation of it as a model of local government in the United States can be traced to Hunter [1953] (Gorthner, et al., 1989, p. 80). The elitist democratic politics, not the same as Marxist ruling class theory, asserts that a few individuals or groups make the most commanding decisions in society, and they do this outside of the formal governmental structures. This theory holds that Few have power and many do not; the few allocate values and resources in society, and the masses do not decide on these strategic value choices; the few who govern are not typical of the mass of people. The elite are drawn disproportionally from the upper socioeconomic strata of the society. The elite-nonelite movement must be slow to preserve the structure and nature of the system. Elites share a consensus on the basic values of the social system and tend to preserve those values, and their disagreements are on a narrow range of dispersed issues. Public policy does not reflect the preferences of the masses, but rather the interests of the elite, and changes in public policy are incremental rather than radical or revolutionary. Elites influence masses more than masses influence elites. (Dye & Zeigler, 1984, p. 6; 1993, p. 5) Elites, not masses govern all societies. (Dye & Zeigler, 1993, p. 3) This theory also holds that the masses are generally frustrated by the self-perpetuating status quo but are unable to alter it incrementally. The only viable option is for the counterelites to take over elite power or to

10 330 ADMINISTRATION & SOCIETY / July 1999 stage revolutions. For further assumptions of elite theory and of the suggestive organizational elite theory, see Farazmand, 1994, pp MODELS OF ELITE THEORY The above assumptions by elite theory may be vague and subject to divergent perspectives on the concept of elite. However, a few definitions may help in understanding the true meaning of the term elite as opposed to Marx s ruling class. DEFINING ELITE There is no single definition of the concept of elite. What the literature reflects is a divergent array of definitions of the term. The lack of a unified meaning of elite emanates from the scope and limit of those included in the spectrum of elite rank, given the universality of the accepted meaning of the term itself. Therefore, various definitions arise and different models and constructs develop as frames of analysis. Despite the differences in definitions, all elite theorists seem to agree on one thing: the powerful position of a small group of individuals or groups who either shape or influence decisions that affect national outcomes. Thus, all actors occupying key positions in the political, economic, military, governmental, cultural, and administrative institutions and organizations are considered members of the elite because they affect the national outcomes. First, let s settle the definition issue at hand. According to Mosca (1939), In all societies, from less developed to the most advanced, two classes of people appear, a class that rules and a class that is ruled.... The class that rules is few, whereas the second, the more numerous class, is directed at and controlled by the first, in a manner that is now more or less legal, now more or less arbitrary and violent. (p. 50) The few elites acquire a stake in preserving the organization and their position in it. This motive gives leaders a perspective different from that of the organization s members. An elite is then inevitable in any social organization (Dye & Zeigler, 1993, pp. 2-3). To Michels (1915, 1962), he who says organization, says oligarchy (p. 70), and government is

11 Farazmand / THE ELITE QUESTION 331 always government by the few, whether in the name of the few, the one, or the many (Lasswell & Lerner, 1952, p. 7). According to Gwen Moore (1979), the term political elite refers to persons who by virtue of their institutional positions have a high potential to influence national policy making (p. 674). Therefore, it includes politicians, government officials, and the leaders of various interest groups, which attempt to influence the allocation of values in society (Moore, 1979; see also Parry, 1969, p. 13). More clearly, Higley and Burton (1989) define national elites as persons who are able, by virtue of their authoritative positions in powerful organizations and movements of whatever kind, to affect national political outcomes regularly and substantially (p. 18). In defense of elite theory, and signifying the importance of the organizational context of elites, Higley, Burton, and Field (1973) maintain that they have consistently followed Weber and Michels in conceiving of elites as rooted in bureaucratic organization. Movement leaders are elites only to the extent that the movements are bureaucratically structured and thus powerful on a sustained basis. Those leaders then can affect political outcomes regularly and substantially (Higley, Burton, & Field, 1990, pp ). Dogan and Higley (1996) define elites as the few hundred or at most few thousand persons who head the major institutions, organizations, and movements in a society and who are therefore able to impel or impede political decisions on a regular basis. Elites consist, therefore, of the top leaders of political parties, governmental bureaucracies, large and/or pivotally located business firms and large unions, the military, the media, professional, religious, educational, and other major organizations, as well as the leaders of powerful interest groups and mass movements. (pp. 3-4) Because these definitions are too broad, inclusive, and confusing, they are subject to interpretations and challenges, such as the one offered by Alan Knight (1996) in his extensive and provocative analysis of elite theory. To Hunter (1959), elites are the top leaders who shape and control the power structure, whereas to Mills (1956), they are the power elite, composed of men whose positions enable them to transcend the ordinary environments of ordinary men and women; they are in positions to make decisions having major consequences. Whether they do or do not make

12 332 ADMINISTRATION & SOCIETY / July 1999 such decisions is less important than the fact that they do occupy such pivotal positions: their failure to act, their failure to make decisions, is itself an act that is often of greater consequence than the decisions they do make, for they are in command of the major hierarchies and organizations of modern society. They run the big corporations. They run the machinery of the state and claim its prerogatives. They direct the military establishment. They occupy the strategic command posts of the social structure, in which are now centered the effective means of the power and the wealth and the celebrity which they enjoy. The power elite are not solitary rulers. Advisors and consultants, spokesmen and opinion makers, are often the captains of their higher thought and decision. Immediately below the elite are the professional politicians of the middle levels of power, in the Congress and in the pressure groups, as well as among the new and old upper classes of town and city and region. (pp. 3-4) Mills s definition of the concept of power elite is both clear and comprehensive in that it includes not only the macro elites, but also the micro elites who operate the organizations and institutions controlled by the power elite. This view is shared by the more contemporary elite theorists who focus in their studies on interlocking organizational networks of the elites. Despite the common tenets emphasized in these definitions, the following perspectives on elite theory may be discerned. ELITE MODELS Different models of elite theory emerge when one examines the above definitions, deriving from the fact that different perspectives represent the elite concept. Higley and Moore (1981, pp ) identify four elite models based on the two dimensions or criteria: (a) inclusiveness of personal interactions among top position holders and major elite groups and (b) the structure of interaction that facilitates contacts between these individuals and groups. These models are the consensually integrated elite model(s), the plural elite model, the power elite model, and the ruling class model(s). To these models, I propose to add a fifth, an organizational elite model, using the same dimensions or criteria offered by Higley and Burton (1989), for the reasons provided below. Before discussing these elite models, it is useful to understand the terms inclusiveness and structure of elite as given by Higley and Burton (1989). Their criteria also include the terms fragmentation and integration, referring to elite disunity and unity. This is important, according to elite theorists, especially for elite cohesion in determining national

13 Farazmand / THE ELITE QUESTION 333 outcomes and for regime or political system survival (for a detailed discussion of these terms, see Higley & Burton, 1989; Higley & Moore, 1981). Consensually Integrated Elite Model In this elite model, there is an inclusive network of formal and informal communication, friendship, and influence welding among top position holders in all major elite groups, i.e., business, trade union, political governmental, mass media, voluntary association, academic, etc. (Higley & Moore, 1981, p. 584). Prominent formal organizational positions as well as centers of national policy making are the locus of interactions among these elites. As decision structures, political-governmental decision centers attract the most powerful actors for their ready accessibility. The consensually integrated elites come to consensus based on a variety of system s factors, which they all share. However, this group is relatively small and markedly centralized, with frequent interaction among its members. These elites are integrated after perhaps a long process of fragmentation but have come to unity through consensus and settlement. Countries such as the United States, Australia, Britain, France, and Canada are mentioned as examples (Higley & Moore, 1981). Plural Elite Model Like the consensus elite model, the plural model is based on interest groups, organizations, and the prominent leaders or elite groups present in the interaction networks located on different decision centers. This model depends on prominent positions and involvement in significant policymaking areas. Class membership or other background characteristics are not major criteria for elite interaction (Dahl, 1958, 1961, 1979; McConnel, 1966; Rose, 1967). The plural elite model is postulated on the premise that no single elite group dominates the structure, that interaction among elite groups is generally less frequent and not consciously centralized in an inner circle or core group, and that interaction occurs on specific issues. Intrasectoral elite interaction is greater than intersectoral interaction, and direct intersectoral elite interaction is only frequent with governmental elites. Therefore, public organizational elites are the targets of most frequent interaction and serve as the conduit to all other elite sectors for interest articulation and consensus building.

14 334 ADMINISTRATION & SOCIETY / July 1999 Power Elite Model Unlike the pluralist model, in the power elite model an informal yet a clear hierarchy of power and influence exists among elite groups. At the apex of this hierarchical elite structure are business, political, and perhaps military elites. It is not an inclusive model, the interaction network is small and concentrated, and interaction is frequent among the uppermost elites only (Hunter, 1959; Mills, 1956; Porter, 1965). Shared objectives, values, wealth, and educational and social backgrounds hold the power elite groups together. There are extensive positional overlaps, interlocks, and interchanges among the uppermost elites. Business elites hold the primacy, and top military and government position holders also occupy a core, but the former group is the determining and most powerful actor of the circle. The executive Cabinet members and top political elites appear to be centrally located, with legislators and high-level politically appointed officials taking secondary seats just below the first inner circle group. The first group of uppermost elites generally sets the broad parameters and boundaries of the political and governmental system, allowing the secondary level of non-inner circle elites to interact and function on the plural model. Should the secondary level elites step beyond the boundary limit, they will be subject to sanctions, including removal from membership. Whereas the first group of uppermost elites includes the boundary setters, the second elite groups are the operational decision makers and implementers of the directives of the former. Autonomy of the first elite group from the state is expected, and the state actually is dependent on this elite. Mills (1956) calls this group the power elite, whereas Hunter (1953) calls it the power structure, which conditions the structural parameters and their boundaries in society. Empirically, this model can be applied to many countries in the developed and developing world, but it does not seem to apply to some, especially revolutionary societies such as Iran, Nicaragua under the Sandanistas, and elsewhere, where the lower middle class, including members of the peasantry and some professional groups, actually governs the society and dominates the politics and administration, although the economic elite may still hold considerable bargaining power. However, the masses of people especially the working and lower classes who exercise influence on the governing elite also have strong demand on and expectations of the government they legitimize, and their claims cannot be

15 Farazmand / THE ELITE QUESTION 335 ignored. Therefore, the viability of the governing elite depends on the support it receives from the lower strata of the mass people, whereas at the same time, it must accommodate the collective body of the bourgeoisie/capitalist class. However, the revolutionary government in Iran, for example, has not hesitated to act against the latter in favor of policies benefiting the former (Farazmand, 1989, 1996). Ruling Class Model Similar to the power elite model is the ruling class elite model. The apex of the elite hierarchy is occupied by the business class and some political ruling classes. Much controversy exists surrounding this model, but what is clear about the ruling class model is the unambiguous position of those uppermost elites who are present in most significant decisions, and choices of nondecision, made in society. Different configurations may develop over time in the ruling class elite, but eventually the configurations must gravitate toward and around the center elite, or ruling class. The number of people in this circle is small, and their less powerful positions are delegated to the secondary elite groups, whose functions include translation of policy preferences and choices of the ruling class elite or adoption of policy choices that do not contradict the will of the ruling class. This is the second stratum elite the plural elites, or even some members of the power elites, or both (see, for example, Connel, 1977; Domhoff, 1967, 1970, 1974, 1978, 1983, 1990; Espingo-Anderson, Friedland, & Wright, 1976; Miliband, 1969; Mosca, 1939; Therborn, 1978). Although both the ruling class and power elite models are similar in description, they are different in the level of interpretation (Higley & Moore, 1981, p. 585) and the degree of deterministic power in society. Organizational Elite Model In each of these elite models, the centrality of key organizations and their position holders is emphasized as a necessary institutional mechanism through which elites act and exercise power. It is this necessity that leads us to conceive of a fifth model, a model of organizational elite. These elites operate organizationally and in organizational contexts. It is this area on which even the elite theorists concede that research has been neglected (see DiTomaso, 1980; Domhoff & Dye, 1977).

16 336 ADMINISTRATION & SOCIETY / July 1999 ORGANIZATIONAL ELITE Implicit and explicit in all elite theories is the centrality of key organizations for the exercise of power and control by elites. This is especially emphasized by contemporary elite theorists (see, for example, Higley et al., 1990, p. 422). CONCEPT OF ORGANIZATIONAL ELITE The concept of organizational elite refers to the idea that organizations, public or private, small or large are directed, controlled, and dominated by a few whose decisions and nondecisions not only affect the entire organization and its members but also are in accordance with the political and economic elite s overall goals and directions. There is general harmony among the elite sectors in their overall policy directions, strategic considerations, and political as well as economic philosophies. The organizational elite then operates in an environment in which the ordinary people or the mass of lower social classes constantly strive to and struggle for elite positions, which entail special power, prestige, privileges, and economic benefits. The elite is separated from the masses of ordinary members of organizations and responds to their demands only when such demands exert irresistible pressures. The overriding rationale and goal of the elite are to maintain and enhance itself. To maintain itself, the elite system of organization responds to potential challenging demands of the masses with different methods and styles coercion, reform, bonuses, motivation, persuasion, manipulation, elite membership recruitment, and adaptation but never by abdication of its power unless forced by formidable pressures. Abdication of power is more likely to happen in developing nations, but it can happen in advanced industrialized societies as well. This also is true regarding the bureaucratic elite. Through its position and interlocking membership in political, economic, and administrative elite circles, the bureaucratic elite only enhances its own position and the interests of the organization as well as of the larger system of which it is a part. Drawing on political science, economics, psychology, social psychology, sociology, cultural anthropology, history, and administration and management, the elite theory of organization, therefore, is interdisciplinary and concerned with allocation, distribution, and exercise of power and the consequential conflicts and decisions that may arise from those activities in organizations.

17 Farazmand / THE ELITE QUESTION 337 ASSUMPTIONS AND FOUNDATIONS The major assumptions of the organizational elite theory are as follows: First, organizations are creations of people, but a few people control and dominate them once created (Wamsley & Zald, 1976). Second, organizations operate in a sociopolitical and economic environment of which they are a part, but the role of the political and economic elites determines the directions and processes of most organizations (Farazmand, 1994; Selznick, 1957). Third, this leads to the major limitations of the pure rationality often claimed by other theorists to be the only instrumentality in organizing and achieving societal goals. Fourth, even the purest and most businesslike enterprise is, by nature, also political, because its processes and structures contribute to the maintenance and enhancement of the existing political and economic system (Farazmand, 1982; Lindblom, 1990; Miles, 1980). Fifth, conflicts arise among members of organizations as a result of human nature and social class, the former being reconcilable whereas the latter is extremely difficult if not impossible to reconcile, because the elite will not abdicate its power and privileges (Dye & Ziegler, 1993; Fischer, 1984; Michels, 1915, 1959, 1962, 1984; Mills, 1956; Mosca, 1939). Sixth, to gain compliance, the elite must convince the masses who are prone to withdraw their legitimacy. Legitimacy, however, is not always given to the elite, and the masses are not always free to exercise such a right, for it is already conditioned and controlled by the elite in organizations (Perrow, 1986; Scott & Hart, 1989). Seventh, the elite sits on many interlocking boards and resides in leadership positions to which the masses and the average individual members of organizations do not have access (Moore, 1979; Perrow, 1986; Useem, 1979, 1984). Accessibility to elite membership is limited and controlled by numerous gatekeepers whose primary function is to serve the elite s interests rather than those of the ordinary people. Organizations then become the private realms of a small number of significant people. Secrecy is a central and essential operational feature of the elite power structure (Farazmand, 1994; Michels, 1915, 1959, 1984; Scott & Hart, 1989). This phenomenon is prevalent in the private corporate sector and in large government organizations of the administrative state, making citizens captives of the modern state (Korten, 1995; Nachmias & Rosenbloom, 1980; Parenti, 1988; Rosenbloom, 1993). Eight, the elite may extend membership to the masses for two reasons: to recruit potential members as managers to do its job, for which the elite is

18 338 ADMINISTRATION & SOCIETY / July 1999 the primary beneficiary, thus rewarding the manager for his or her loyalty; and to obtain further legitimacy and technical expertise (Perrow, 1986; Scott & Hart, 1989; Selznick, 1953). Co-optation is a good example. Ninth, average individuals have little to say in the organization s elite decision-making and strategic directions, but they may form pressure groups to influence or cause minor adjustments or changes in elite decisions, as purported by the pluralist elite theorists. Finally, the top managerial/organizational elite is considered part of the elite because it serves the interests of the strategic apex elite, and it acts and behaves like an elite. It also is separated from the rank and file in terms of its lifestyle, its compensations and reward systems, as well as the ideology it perpetuates and serves, consciously or unconsciously. Here, the elite theory combines instrumental rationality with political rationality in ruling and controlling the masses in general and organizational domains in particular. Any attempt on the part of the masses to join the elite circle must include proof of system loyalty and economic, ideological, and personal qualifications. Qualifications are not checked formally through interviews; rather, they are generally checked by the norms and values of inclusion institutionalized through socialization in society, a process in which the strategic power elite plays the key determining role. Organizations become centrally essential to elite domination of society. Society must adapt to these large powerful organizations dominated by the elites, who enjoy a shield of elitist invisibility (Scott & Hart, 1989). Elite invisibility shielding takes place in several forms, making its members invisible, unrecognizable, and unaccountable. First, most modern capitalist organizations are run legally and formally by managers who are separate from the owners, whose identity is shielded by the managerial class. Ordinary people almost never see or know who the key strategic owners are and who actually controls and dominates organizations. Second, it is often said that organizations behave this or that way, but we always seem to forget that individuals make the decisions, not organizations. This takes responsibility away from the elite members and depersonalizes values and morality. The elitist invisibility makes it extraordinarily difficult to hold high level, strategic managers public or private accountable for their actions (Hershman, 1977). Other forms of elite invisibility shielding include their expertise, which ordinary members of organizations do not understand (Scott & Hart, 1989), and instrumental rationality and efficiency criteria (Farazmand, 1994), but perhaps the most important method of elite shielding is that the value system of modern organizations has developed behind closed doors, so to speak....

19 Farazmand / THE ELITE QUESTION 339 Ordinary people are not privy to the intricacies of the value system, leading to a widening gap between the popular beliefs about organizations and the actual practices of managers in modern organizations (Scott & Hart, 1989, p. 37). Secrecy prevails in almost all modern organizations (Michels, 1984; Weber, 1984). Finally, the environmental and strategic decisions made by the elite in organizing and reorganizing activities have consequential outcomes for the ordinary people, inside and outside of organizations. This especially is true with regard to organizations with low-skilled personnel, but even high-skilled members of organizations cannot afford to rock the boat. Similarly, ambitious careerists may play a role of perfection, intentionally or unintentionally, for sociopolitical and economic advancement, but will eventually find that doors at the top are usually closed (Farazmand, 1994, p. 39). The result is increasing alienation on the part of the masses, who have lost confidence not only in the modern organizational elite but also in the political and economic elites that tolerate and promote it. Hence, there is a problem of legitimacy in corporate and governmental sectors, including in the administrative state (Denhardt, 1981; Habermas, 1975; Lipset, 1987; O Connor, 1973; Ostrom, 1974; Thayer, 1981). Massive downsizing, elimination of employee benefits, and other unilateral decisions by organizational elites to create a leaner and meaner workforce only exacerbate this legitimacy problem, which tends to spill over to other areas of society, economy, and politics. But, modern organizations and people remain indispensable to governance, politics, and administration of society and economy. ORGANIZATIONAL IMPERATIVE Many nonelite theorists emphasize the role of organizations in society (Harmon & Mayer, 1986; Kaufman, 1989; Perrow, 1986; Presthus, 1962; Waldo, 1978, 1980/1992). But all elite theorists emphasize the centrality of modern organizations in the exercise of power and control by the elites. Specifically, Higley et al. (1990, p. 422) stress the necessity of organization for the elites to channel their wills into action and for the nonelite masses to channel their demands and pressures on the elites. Mass mobilizations are not possible unless they are organized (Dogan & Higley, 1996). The emphasis on organizational necessity in elite theory also is provided by Robert Michels (1964) and Max Weber (1946). To Michels and Weber, modern organizations are major institutional structures for the

20 340 ADMINISTRATION & SOCIETY / July 1999 exercise of power by elites. In his analysis of oligarchy, Michels states: Democracy is inconceivable without organization. Be the claims economic or be they political, organization appears the only means for the creation of a collective will (in Fischer & Sirianni, 1984, p. 48). Organization implies the tendency to oligarchy. In every organization, whether it be a political party, a professional union, or any association of the kind, the aristocratic tendency manifests itself very clearly. The mechanism of the organization, while conferring the solidity of structure, induces serious changes in the organized mass, completely inverting the respective position of the leaders and the led. As a result of organization, every party or professional union becomes divided into a minority of directors and a majority of directed (Michels, 1964, 1984, pp ). Similarly, Weber s (1946) position on the concepts of power and organizational elite is emphasized (implicitly on the elite). Everywhere the modern state is undergoing bureaucratization. But whether the power of bureaucracy within the polity is universally increasing must remain an open question.... The fact that bureaucratic organization is technically the most highly developed means of power in the hands of the man who controls it does not determine the weight that bureaucracy as such is capable of having in a particular social structure. (Weber, 1984, p. 37) This statement indicates clearly that bureaucratic organizations, however indispensable they may be to society and the power elite, are only means or channels for exercise of power by those who hold it. Weber (1984) further explains that, under normal conditions, the power position of a fully developed bureaucracy is always over-towering (p. 37). The political master finds himself in the position of the dilettante, who stands opposite the expert, facing the trained official who stands within the management of administration. This holds whether the master whom the bureaucracy serves is a people, or a parliament. It holds whether the master is an aristocratic, collegiate body, legally or actually based on self-recruitment, whether he is a popularly elected president, a hereditary and absolute or constitutional monarch (Weber, 1946, 1984, p. 38). Finally, Weber (1984) asserts emphatically, Therefore, as an instrument for socializing relations of power, bureaucracy has been and is a powerful instrument of the first order for the one who controls the bureaucratic apparatus (p. 35). Immediately, four fundamental inferences can be drawn from these statements by Weber: First, once established, bureaucracies are the