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Opening Systems Theory: A Note on the Recent Special Issue of Organization

Anders la Cour, Steen Vallentin, Holger Hjlund, Ole Thyssen and Betina Rennison Organization 2007 14: 929 DOI: 10.1177/1350508407082267 The online version of this article can be found at: http://org.sagepub.com/content/14/6/929

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Volume 14(6): 929938 ISSN 13505084 Copyright 2007 SAGE (Los Angeles, London, New Delhi and Singapore)

Opening Systems Theory: A Note on the Recent Special Issue of Organization

Anders la Cour
Copenhagen Business School

Steen Vallentin
Copenhagen Business School

Holger Hjlund
Copenhagen Business School

Ole Thyssen
Copenhagen Business School

Betina Rennison
Copenhagen Business School

Abstract. Organization recently devoted a special issue to Niklas Luhmanns systems theory. Since Luhmanns work remains relatively unknown in the English-speaking world, the issue was an important opportunity to introduce Niklas Luhmanns contribution to organization theory to this audience. Unfortunately, the primarily theoretical approach to systems theory presented in the issue may leave the reader wondering what, if anything, Luhmanns work might contribute to empirical research into organizations. This note is an attempt to draw attention to the potential of Luhmanns approach in this regard. Key words. applicability; autopoietic closure; critic; methodological application; observation; organization theory; self-reference; system theory; theoretical and empirical opening

DOI: 10.1177/1350508407082267

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Organization 14(6) Connexions As researchers applying Niklas Luhmanns systems theory to the study of organizations, we were happy to see that Organization recently devoted a special issue to his work. Luhmanns theory has the potential to provide new insights and alternative approaches for organizational research and deserves exposure to a wider, English-speaking audience. Unfortunately, Luhmanns ideas are notoriously difcult to understand (an American colleague of ours has even begun to call any theory he cant easily grasp a Luhmanian thing). Luhmann is often read in closed circles, well within the connes of a highly specialized systems theoretical discourse. The reception of his theories exhibits its own autopoietic closure and often succumbs to theoretical self-absorption. This may be interesting for those involved but it is not conducive to a fruitful dialogue with other theories. As it turns out, the special issue on Luhmann was unable to overcome precisely this difculty. The purpose of this note is, rst, to raise this problem and, second, to offer some practical suggestions as to how this might be ameliorated in future issues of the Journal. The problem of theoretical self-absorption is hardly a unique characteristic of systems theory. However, it is reinforced by the fact that Luhmann presents a comprehensive sociological theory with universal ambitions universal in the sense that it deals with everything social and not just sections (Luhmann, 1995: xlvii). Since the theory is itself part of the society it observes, it cannot just focus on a subject-matter but must also address its own relation to that subject matter. Here we meet the intricate and puzzling topic of self-reference, so important in Luhmanns theory. There is a lot of general and abstract theorya multitude of intricately related conceptsto be explained, and it is tempting to stop here, devoting ones efforts (and all the pages of the special issue of a journal) to a purely conceptual exercise in theory construction. By making this pedagogical effort, however, no specic insights into the social life of organizations are produced. We would instead point to the need to open systems theory up, that is, for systems theory to engage in dialogue with other theoretical perspectives. Here we may distinguish between a theoretical opening and an empirical opening (we will focus especially on the challenges and promises of the latter kind). A theoretical opening is about exploring ways in which systems theory can be used alongside, in tandem with and not just in opposition to, other theories. How can systems theory contribute to other theoretical approaches? And how can insights provided by other theories and perspectives be put to use in systems theory? What we would encourage here is a less puritan, more eclectic approach to systems theory (for examples of such an approach see Andersen, 2003; Gibson et al., 2005; Stheli, 2000). An empirical opening is about methodological application of systems theory in empirical studies. Systems theory represents a program for observing observations as observations, its ambition is to irritate and disturb the self-descriptions of these systems by providing alternative observations (Andersen, 2003). Such application necessarily constitutes not just one but several openings. It initiates a general discussion of methodology and

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Opening Systems Theory Anders la Cour et al. acknowledges challenges from other, alternative theoretical perspectives that could just as well have been applied to the study of the subject matter at hand. Empirical studies need to be able to defend the contributions they make in light of the possible contributions of alternative theoretical/ conceptual approaches. Unfortunately, the applicability of Luhmanns theory to empirical studies is rarely emphasized (for a few exceptions see Bakken and Hernes, 2003; Seidl and Becker, 2005). The contributions of the specic issue are almost exclusively concerned with theory. They are mostly concerned with general systems theory, not Luhmanns organization theory or its relations to organization theory in general. Surprisingly few pages are dedicated to presenting or elaborating Luhmanns many contributions to organization theory, although Luhmann himself started his theoretical career as an organization theorist and wrote a large monograph on the topic (Luhmann, 2000). Also, the matter of empirical applicability is seriously marginalized throughout the issue. To be specic: the introductory paper by the editors, David Seidl and Kai Helge Becker, provides a brief overview of the dening characteristics of the organization as seen through a systems theoretical lens, but the aim of their paper is primarily to present Luhmanns general theory and the key concepts and distinctions that constitute the basis of his theoretical work. Organizations are dealt with only in very general and abstract terms. The paper by Luhmann himself only mentions the term organization oncein the context of presenting the very basic distinction between society, interaction and organization as different types of social systems. The contribution by Robert Cooper does not mention organization at all, except in order to describe autopoiesis as a form of self-organization. Instead, the paper explores the concept of autopoiesis and its implications for our understanding of human affairs in general. Only the last two papers of the special issue deal specically with organizations. Will Martens arguably provides the most comprehensive exploration of Luhmanns organization theory. In his highly theoretical paper, which draws almost exclusively on systems theoretical literature, Martens discusses the possibility of making culture, which already occupies a prominent place in mainstream organization theory, a key concept in a systems theoretical approach. This discussion is especially interesting in the present context when seen in the light of Luhmanns own attempts to marginalize the concept of culture in sociology. Dirk Baecker presents a theoretical model of the rm based on systems theory and Spencer-Browns calculus of distinctions, but makes it abundantly clear that his aim is not to integrate approaches already present or apply his theory to empirical matters, but to provide a new start. So the output of the special issue is as follows: one paper that focuses on Luhmanns general social systems theory rather than his theory of organizations, two papers that are not about organization at all (leaving the problem of translating their conceptual insights into something useful for organizational analysis entirely to the reader), and two highly abstract

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Organization 14(6) Connexions theoretical papers that, their merits notwithstanding, show little regard for connecting their insights to traditional and modern versions of organizational theory. All the papers seem to play the tune of dogmatic systems theory: take it or leave it, but do not accept compromises, and maintain the distance to empirical matters. We nd that there are more productive ways of demonstrating the potential and promise of a systems theoretical approach to organizational studies. In the following section, we will present three different examples, drawing from our own research praxis, of how Luhmanns theory can be applied in empirical studies of organizations. Each emphasizes one of the following decisive aspects of system theory: emergence, codication and paradoxes. In doing so, the examples challenge other approaches, while accepting the possibility of being challenged themselves. The three examples have an important feature in common, however. None of them take the organization for granted. Using systems theory, it is not possible for any of them to start with the assumption that there is an organization at all, even though the communication is rife with names and self-descriptions that should make such a question unnecessary. Instead, the examples suggest how the organization emerges as such within three very different empirical elds.

Emergent Organizations
Our rst example deals with distribution of welfare. The creation of public markets (or markets of public goods) has called upon severe interest among political scientists and other researchers intent on observing the changing form of the welfare state. Some observers have talked about the hollowing of the state (Milward et al., 1993; Milward and Provan, 2000), while others have spoken more optimistically of reinvented institutions of the public sector (Ejersbo and Greve, 2005). Regardless of these differences, there has been an almost unspoken agreement that something new has emerged. The public welfare organizations have adopted radically new forms. Taking systems theory as the theoretical point of departure, it is impossible simply to proceed from this consensus. Rather than naturalizing the question of emergence, it is placed in the centre of analysis. In the area of welfare analysis, this means analysing how the public sector, by introducing market semantics and technologies, does just not emerge all of a piece as a changed organization, but also with a continuous capacity to reinventing itself. Whether it comes to installing premises for competition between private suppliers or freedom of choice for user groups it has do to with the instalment of the very organizational capacity for emergence. A clear-cut, although minimal, denition of systems as differenceproducing entities allows systems theory to accept all organizational parameters as variables and, consequently, to analyse a wide range of welfare changes according to this. According to systems theory, change in welfare organizations is determined by the ability of the organizations to envision different environments so that changes become indispensable.

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Opening Systems Theory Anders la Cour et al. As a contemporary example one can look at the widespread market reforms using freedom of choice as principle (Kuhnle, 2000; Taylor-Gooby, 1999). Here the public consumer is constructed as an external point of reference. By assuming that members of the pulic have consumption habits (among others a need for free choice of public goods) a new market environment for the welfare organization is created. It, in turn, calls for emergent structures in the organization it self. The freedom-of-choice reforms are interesting because they exemplify the logic of emergence in at least two ways. First, they illustrate the logic of constructing persons with ctive identities calling for certain structures of decision making. Second, it shows how the emergence of an organization takes place when the system installs a difference between itself and the environment. Public reforms and modernization processes in the last 20 years have to a large extent been a matter of invoking new environments for public welfare organizations, i.e. talking them into being. The installation of the rational decision maker in this way constitutes an example of how organizations create their own transformation. The reforms illustrate political attempts to change and reframe the autonomous (and systemically closed) decisionmaking processes of the welfare organizations by framing their activities in particular contexts.

Multi Coding Within Human Resource Management

Our second example pertains to emerging personnel management issues. The literature of human resource management (Guest, 1999; Sisson and Storey, 2003), employment relations (Beaumont, 1995; Farnham, 2000; Gennard and Judge, 2002) and pay systems (Akerlof, 1984; Deci, 1975; Frey, 1997) traditionally adopts a behaviouristic position focusing on the essential behaviour of actors and is guided by a normative ambition to discover ways of improving this behaviour by diverse managerial technologies (including skill-based and performance-related pay). Systems theory here offers a very different perspective. Rather than focusing on action as an objective point of reference, action is seen as a communicative attribute, made possible via communicative constructions. Rather than seeing management, personnel and pay as ideal type phenomena, it allows us to take a step back and look at the categories themselves, their ways of being constructed and their position in organizational communication. Instead of just observing organizations, what we are observing is observation itself, as a organizing phenomenon. And rather than forming an immediate normative judgement of a new technology (e.g. a pay system), we are forced to take a more historical view of the way it emerges, and of the consequences this has for the communicative life of the organization, e.g. the changing meaning of the notion of employees. This approach has already proven its worth in empirical analyses of a new pay system in the public sector of Denmark, where it has been able

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Organization 14(6) Connexions to demonstrate how this new technology is communicated in different organizations (Rennison, 2007a, 2007b). In this view, communication of pay systems is framed by different functional systems, the legal system, the economical system, the pedagogical system and the intimate system. Each functional system struggles for it own way of constructing pay and personnel. Compared to other versions of social constructivism, especially discourse analysis, a Luhmanian framework makes it possible to observe how communication differentiates horizontally in completely diverse forms constructing meaning in diverse ways, often resulting in conicts and creative misunderstandings. The legal system codes the communication about payment in the medium of law, showing pay as a legal right, and the employee simply as a legal object preoccupied with legal rights and obligations. The economic system codes in the medium of money, constructing pay as a payment for a job done, and the employee as a wage earner calculating quid-pro-quo balances of cost and benets. The pedagogical system codes in the medium of learning, thereby constructing pay as a mark of merit, and the employee as a pupil t for learning progress and perfection. Finally, the system of intimacy which operates through the medium of love views pay as a highly personal declaration of love and constructs the employee as a committed partner, living for and anticipating the needs of the organization as the signicant other. These different codications set the scene for a complex process of communication in which different codes push and pull in different directions. This inghting has constitutive consequences not just for the particular phenomenon (the what of the communication) but also for the who for whom the communication is articulated as relevant or irrelevant, thereby activating the distinction between inclusion and exclusion. In this communicative game, we see how the organization is produced and reproduced in the game between different codications, while creating a variety of opportunities for management as an unpredictable outcome of the struggle between the codes.

Paradoxes in the Organization

Our last example of empirical systems theoretical research is the organization of voluntary activities. The literature on voluntary organizations, especially that within organization theory, has been stressing paradoxes in the broad sense of the wordfor some time. This happens especially in studies of the relation between the voluntary organization and the volunteers doing social work. Some literature concentrates on the paradox that volunteers are paid nothing even when working in professional organizations (Pearce, 1993). Others focus on the paradox that while the voluntary organization can make long-term commitments, the volunteer within it cannot (Litwalk, 1985). Others again focus on the paradoxical

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Opening Systems Theory Anders la Cour et al. relation between the autonomy of the voluntary practice and its need for coupling the practice to a voluntary organization (Grossman, 2001; Taylor and Lansley, 2000). But Manzall Mitchel perhaps stated it most clearly when she described voluntary social work as something that exist in the middle: The volunteer becomes the person in the middle, whose focus is on the client but whose behavior, unlike the embedded informal network member, is bound by institutional policy and expectation, but to a lesser degree than the professional (Mitchel, 1986). Working with Luhmanns system theory, however, makes it possible to arrive at a different understanding of these supposed paradoxes (la Cour and Hjlund, 2007). This is done by constructing voluntary social care as a specic kind of communication. The rst question to be asked is how this kind of communication is organized? On the basis of eld work and in-depth interviews with professional leaders, volunteers and users, it is possible to construct voluntary social work as a specic kind of communication operating through a paradoxical operation. Using Luhmanns concepts of interaction and organization, voluntary social work can be seen not as an interaction system nor as an organizational system, but as a communication form that oscillates between these two kinds of social systems. In the rst place, voluntary social action is a face-to-face service that is covered by Luhmanns concept of interaction as communication between persons physically present, allowing the communication an on-site exibility. In the second place, this kind of action is coupled to a formal organization embracing goals, rules and so forth. That means that the established expectations are permanently irritated and troubled because they are created in the tension between interaction and organization. Voluntary social work, then, only seems to result in paradoxes. In fact, it is based on a paradoxical operation from the outset. Its communication invisibly oscillates between two kinds of social systems with very different expectations. This oscillation, which systems theory has the capacity to make visible, opens up interesting empirical analyses of different ways of handling this oscillation and of the structural tensions between the two kinds or communication within the voluntary organization. In concrete cases it can be shown how voluntary organizations, through their decision processes, try to deparadoxify their communication and avoid the cramps caused by conicting expectations. This is done by either referring to voluntary social work as an interaction system with an autonomy of its own, or by referring to the very same voluntary work as a part of the organization committed to formal organization decisions. These tensions give rise to conicting stories in voluntary organizations about long-term commitment, different denitions of quality within voluntary social work, and how decisions can be made, instead of seeing the paradox as something that creates restlessness and dynamics and thereby making room for exibility and innovation.

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Conclusion
The three examples demonstrate that by applying Luhmanns systems theory researchers can develop their sensitivity for the many different ways that organizations emerge as a phenomenon. In presenting them, we wanted to demonstrate that this can only happen in an ongoing interplay between empirical observations and theoretical informed reections, not through a deductive subordination to the theory. We dont see Luhmanns theory as a straitjacket, but as a varied and consistent tool box with analytical concepts. We do not wish to deny the intrinsic beauty of Luhmanns theory, nor the very real temptation to present it, again and again, in the unadulterated form of its structural skeleton. We know the feeling. We simply wish to register our disappointment upon seeing that our colleagues have succumbed to this temptation even when given an almost ideal opportunity to show that systems theory can be applied in concrete empirical studies of social organization. We hope that future issues of Organization will esh out the rather schematic introduction to Luhmann that its readers have so far been offered.

References
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Kuhnle, Stein, ed. (2000) Survival of the European Welfare State. London: Routledge. Litwalk, Eugene (1985) Helping the ElderlyThe Complementary Roles of Informal Networks and Formal Systems. New York, NY: The Guilford Press. Luhmann, Niklas (2000) Organisation und Entscheidung. Wiesbaden: Westdeutscher Verlag. Luhmann, Niklas (1995) Social Systems. Stanford, CA: Stanford University Press. Milward, Brinton H., Provan, Keith G. and Else, Barbara (1993) What Does the Hollow State Look like?, in Barry Bozeman (ed.) Public ManagementThe State of the Art. San Franscisco, CA: Jossey-Bass. Milward, Brinton H. and Provan, Keith G. (2000) Governing the Hollow State, Journal of Public Administration Research and Theory 10: 35979. Mitchel, Manzall (1986) Utilizing Volunteers to Enhance Informal Social Networks, Social Casework: Journal of Contemporary Social Work 67: 29098. Pearce, Jonel (1993) VolunteersThe Organizational Behaviour of Unpaid Workers. New York, NY: Routledge. Rennison, Betina (2007a) Cash, Codes and ComplexityNew Adventures in the Public Management of Pay Scales, Scandinavian Journal of Management 23(2). Rennison, Betina (2007b) Intimacy of ManagementCodied Constructions of Personalized Selves, Philosophy of Management, in press. Seidl, David and Becker, Kai Helge, eds (2005) Niklas Luhmann and Organization Studies. Copenhagen: Copenhagen Business School Press. Sisson, K. and Storey, J. (2003) The Realities of Human Resource Management, Managing the Employment Relationship. Buckingham: Open University Press. Stheli, Urs (2000) Sinnzusammenbrche. Eine dekonstruktive Lektre von Niklas Luhmanns Systemtheorie. Weilerswist. Velbrck: Wissenschaft. Taylor, Marilyn and Lanstey, John (2000) Relating the Central and the Local: Options for Organizational Structure Nonprot Management and Leadership 10(4): 397421. Taylor-Gooby, Peter (1999) Markets and Motives Trust and Egoism in Welfare Markets, Journal of Social Policy 28: 97114.

Anders la Cour is an Associate Professor at the Department of Management, Politics and Philosophy, Copenhagen Business School. His areas of research include the welfare society, welfare markets, welfare technologies, voluntary organizations, management and system theories. Recent publications include The Concept of Environment in System Theory and Cybernetics and Human Knowing. A forthcoming publication is Voluntary Social Work as Paradox (With Holger Hjlund) due to be published in March 2008. Address: Department of Management, Politics and Philosophy, Copenhagen Business School, Porcelaenshaven 18A 2000, Frederiksberg, Denmark. [email: al.lpf@cbs.dk] Steen Vallentin is an Associate Professor of Corporate Social Responsibility (CSR) at Copenhagen Business School. His research interests include, besides CSR, valuesbased management, socially responsible investing, and the conceptualization of relationships between corporations and society in general. His theoretical point of departure is sociological systems theory (Luhmann) and modern social theory. Recent publications focus on the relationships between corporations, the public and

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mass media in debates about corporate responsibilitieswith particular emphasis on the concept of public opinion and how it relates to corporate policy. Address: Department of Management, Politics and Philosophy, Copenhagen Business School, Porcelaenshaven 18A 2000, Frederiksberg, Denmark. [email: sv.lpf@cbs.dk] Holger Hjlund is an Assisstant Professor at the Deparment of Management, Politics and Philosophy, Copenhagen Business School. His theoretical interests range from sociology of comsumers to system theory and poststructuralism. He has published articles on public management, quality development and consumerism in the social sektor and in health. Holger Hjlund is co-editor of Distinction, Scandinavian Journal of Social Theory. Address: Department of Management, Politics and Philosophy, Copenhagen Business School, Porcelaenshaven 18A 2000, Frederiksberg, Denmark. [email: hoh.lpf@cbs.dk] Ole Thyssen is a Professor at the Department of Management, Politics and Philosophy, Copengagen Business School. His areas of research include systems theory, organizational ethics, organizational aesthetics and globalization theory. His recent publications have been on organizational identity, epistemology and communication theory and globalization. Address: Department of Management, Politics and Philosophy, Copenhagen Business School, Porcelaenshaven 18A 2000, Frederiksberg, Denmark. [email: thyssen@cbs.dk] Betina Rennison is an Associate Professor at Copenhagen Business School (CBS), Department of Management, Politics and Philosophy. Research interests include public sector reforms, organizational change and different aspects of management and leadership in and around organizations; wage setting, gender-relations, integration of ethnical minorities. Recent publications include Cash, Codes and ComplexityNew Adventures in the Public Management of Pay Scales, Scandinavian Journal of Management, June 2007 and Historical Discourses of Public Management in DenmarkPast Emergence and Present Challenge, Management & Organizational History 2(1): 2007. Address: Associate professor, Department of Management, Politics and Philosophy, Copenhagen Business School, Porcelaenshaven 18A 2000, Frederiksberg, Denmark. [email: br.lpf@cbs.dk]

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