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

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http://org.sagepub.com/content/14/6/929The online version of this article can be found at:

DOI: 10.1177/1350508407082267

2007 14: 929OrganizationAnders la Cour, Steen Vallentin, Holger Hjlund, Ole Thyssen and Betina Rennison

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

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Volume 14(6): 929938ISSN 13505084

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Opening Systems Theory:A Note on the Recent SpecialIssue of OrganizationAnders la CourCopenhagen Business School

Steen VallentinCopenhagen Business School

Holger HjlundCopenhagen Business School

Ole ThyssenCopenhagen Business School

Betina Rennison

Copenhagen Business School

Abstract. Organization recently devoted a special issue to Niklas Luhmannssystems theory. Since Luhmanns work remains relatively unknown inthe English-speaking world, the issue was an important opportunity tointroduce Niklas Luhmanns contribution to organization theory to thisaudience. Unfortunately, the primarily theoretical approach to systemstheory presented in the issue may leave the reader wondering what, ifanything, Luhmanns work might contribute to empirical research intoorganizations. This note is an attempt to draw attention to the potential ofLuhmanns approach in this regard.Key words. applicability; autopoieticclosure; critic; methodological application; observation; organizationtheory; self-reference; system theory; theoretical and empirical opening

DOI: 10.1177/1350508407082267 http://org.sagepub.com

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Organization 14(6)Connexions

As researchers applying Niklas Luhmanns systems theory to the study oforganizations, we were happy to see that Organization recently devoted aspecial issue to his work. Luhmanns theory has the potential to providenew insights and alternative approaches for organizational research and

deserves exposure to a wider, English-speaking audience. Unfortunately,Luhmanns ideas are notoriously difficult to understand (an Americancolleague of ours has even begun to call any theory he cant easily grasp aLuhmanian thing). Luhmann is often read in closed circles, well withinthe confines of a highly specialized systems theoretical discourse. Thereception of his theories exhibits its own autopoietic closure and oftensuccumbs to theoretical self-absorption. This may be interesting for thoseinvolved but it is not conducive to a fruitful dialogue with other theories.As it turns out, the special issue on Luhmann was unable to overcomeprecisely this difficulty. The purpose of this note is, first, to raise this prob-

lem and, second, to offer some practical suggestions as to how this mightbe ameliorated in future issues of the Journal.The problem of theoretical self-absorption is hardly a unique character-

istic of systems theory. However, it is reinforced by the fact that Luhmannpresents a comprehensive sociological theory with universal ambitionsuniversal in the sense that it deals with everythingsocial and not justsections (Luhmann, 1995: xlvii). Since the theory is itself part of the societyit observes, it cannot just focus on a subject-matter but must also address itsown relation to that subject matter. Here we meet the intricate and puzzlingtopic of self-reference, so important in Luhmanns theory. There is a lot of

general and abstract theorya multitude of intricately related conceptstobe explained, and it is tempting to stop here, devoting ones efforts (and allthe pages of the special issue of a journal) to a purely conceptual exercisein theory construction. By making this pedagogical effort, however, nospecific 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 openingand an empiricalopening(we will focus especially on the challenges and promises of thelatter kind). A theoretical opening is about exploring ways in which systems

theory can be used alongside, in tandem with and not just in oppositionto, other theories. How can systems theory contribute to other theoreticalapproaches? And how can insights provided by other theories and per-spectives be put to use in systems theory? What we would encourage hereis a less puritan, more eclectic approach to systems theory (for examples ofsuch an approach see Andersen, 2003; Gibson et al., 2005; Stheli, 2000). Anempirical opening is about methodological application of systems theoryin empirical studies. Systems theory represents a program for observingobservations as observations, its ambition is to irritate and disturb theself-descriptions of these systems by providing alternative observations

(Andersen, 2003). Such application necessarily constitutes not just onebut several openings. It initiates a general discussion of methodology and

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Opening Systems TheoryAnders la Cour et al.

acknowledges challenges from other, alternative theoretical perspectivesthat could just as well have been applied to the study of the subject matterat hand. Empirical studies need to be able to defend the contributionsthey make in light of the possible contributions of alternative theoretical/

conceptual approaches. Unfortunately, the applicability of Luhmannstheory to empirical studies is rarely emphasized (for a few exceptions seeBakken and Hernes, 2003; Seidl and Becker, 2005).

The contributions of the specific issue are almost exclusively concernedwith theory. They are mostly concerned with general systems theory, notLuhmanns organization theory or its relations to organization theory ingeneral. Surprisingly few pages are dedicated to presenting or elaboratingLuhmanns many contributions to organization theory, although Luhmannhimself started his theoretical career as an organization theorist and wrotea large monograph on the topic (Luhmann, 2000). Also, the matter of em-

pirical applicability is seriously marginalized throughout the issue.To be specific: the introductory paper by the editors, David Seidl andKai Helge Becker, provides a brief overview of the defining characteristicsof the organization as seen through a systems theoretical lens, but the aim oftheir paper is primarily to present Luhmanns general theory and the keyconcepts 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 organizationoncein the context of presenting the very basic distinction betweensociety, 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 implicationsfor our understanding of human affairs in general.

Only the last two papers of the special issue deal specifically withorganizations. Will Martens arguably provides the most comprehensiveexploration of Luhmanns organization theory. In his highly theoreticalpaper, which draws almost exclusively on systems theoretical literature,Martens discusses the possibility of making culture, which already occu-pies a prominent place in mainstream organization theory, a key concept

in a systems theoretical approach. This discussion is especially interestingin the present context when seen in the light of Luhmanns own attemptsto marginalize the concept of culture in sociology. Dirk Baecker presents atheoretical model of the firm based on systems theory and Spencer-Brownscalculus of distinctions, but makes it abundantly clear that his aim is notto integrate approaches already present or apply his theory to empiricalmatters, but to provide a new start.

So the output of the special issue is as follows: one paper that focuses onLuhmanns general social systems theory rather than his theory of organ-izations, two papers that are not about organization at all (leaving the

problem of translating their conceptual insights into something usefulfor organizational analysis entirely to the reader), and two highly abstract



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theoretical papers that, their merits notwithstanding, show little regardfor connecting their insights to traditional and modern versions of organ-izational 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 toempirical matters. We find that there are more productive ways of demon-strating the potential and promise of a systems theoretical approach toorganizational studies. In the following section, we will present threedifferent examples, drawing from our own research praxis, of howLuhmanns theory can be applied in empirical studies of organizations.Each emphasizes one of the following decisive aspects of system theory:emergence, codification and paradoxes. In doing so, the examples challengeother approaches, while accepting the possibility of being challenged them-selves. The three examples have an important feature in common, however.

None of them take the organization for granted. Using systems theory, it isnot possible for any of them to start with the assumption that there is anorganization at all, even though the communication is rife with names andself-descriptions that should make such a question unnecessary. Instead,the examples suggest how the organization emerges as such within threevery different empirical fields.

Emergent Organizations

Our first example deals with distribution of welfare. The creation of publicmarkets (or markets of public goods) has called upon severe interest amongpolitical scientists and other researchers intent on observing the changingform of the welfare state. Some observers have talked about the hollowingof the state (Milward et al., 1993; Milward and Provan, 2000), while othershave spoken more optimistically of reinvented institutions of the publicsector (Ejersbo and Greve, 2005). Regardless of these differences, there hasbeen an almost unspoken agreement that something new has emerged. Thepublic welfare organizations have adopted radically new forms.

Taking systems theory as the theoretical point of departure, it is impos-sible simply to proceed from this consensus. Rather than naturalizing thequestion of emergence, it is placed in the centre of analysis. In the area ofwelfare analysis, this means analysing how the public sector, by introducingmarket semantics and technologies, does just not emerge all of a piece as achanged organization, but also with a continuous capacity to reinventingitself. Whether it comes to installing premises for competition betweenprivate suppliers or freedom of choice for user groups it has do to with theinstalment of the very organizational capacity for emergence.

A clear-cut, although minimal, definition of systems as difference-producing entities allows systems theory to accept all organizational para-meters as variables and, consequently, to analyse a wide range of welfarechanges according to this. According to systems theory, change in welfareorganizations is determined by the ability of the organizations to envisiondifferent environments so that changes become indispensable.



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As a contemporary example one can look at the widespread market re-forms using freedom of choice as principle (Kuhnle, 2000; Taylor-Gooby,1999). Here the public consumer is constructed as an external pointof reference. By assuming that members of the pulic have consumption

habits (among others a need for free choice of public goods) a new marketenvironment for the welfare organization is created. It, in turn, calls foremergent structures in the organization it self.

The freedom-of-choice reforms are interesting because they exemplifythe logic of emergence in at least two ways. First, they illustrate the logic ofconstructing persons with fictive identities calling for certain structures ofdecision making. Second, it shows how the emergence of an organizationtakes place when the system installs a difference between itself and theenvironment.

Public reforms and modernization processes in the last 20 years have to a

large extent been a matter ofinvokingnew environments for public welfareorganizations, i.e. talking them into being. The installation of the rationaldecision maker in this way constitutes an example of how organizationscreate their own transformation. The reforms illustrate political attemptsto change and reframe the autonomous (and systemically closed) decision-making processes of the welfare organizations by framing their activitiesin 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 andStorey, 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 theessential behaviour of actors and is guided by a normative ambition todiscover ways of improving this behaviour by diverse managerial tech-nologies (including skill-based and performance-related pay). Systemstheory here offers a very different perspective. Rather than focusing onaction as an objective point of reference, action is seen as a communicative

attribute, made possible via communicative constructions. Rather than see-ing management, personnel and pay as ideal type phenomena, it allows usto take a step back and look at the categories themselves, their ways of beingconstructed and their position in organizational communication. Insteadof just observing organizations, what we are observing is observationitself, as a organizing phenomenon. And rather than forming an immediatenormative judgement of a new technology (e.g. a pay system), we are forcedto take a more historical view of the way it emerges, and of the consequencesthis has for the communicative life of the organization, e.g. the changingmeaning of the notion of employees.

This approach has already proven its worth in empirical analyses of anew pay system in the public sector of Denmark, where it has been able



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to demonstrate how this new technology is communicated in differentorganizations (Rennison, 2007a, 2007b). In this view, communication ofpay 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 andpersonnel. Compared to other versions of social constructivism, especiallydiscourse analysis, a Luhmanian framework makes it possible to observehow communication differentiates horizontally in completely diverseforms constructing meaning in diverse ways, often resulting in conflictsand creative misunderstandings.

The legal system codes the communication about payment in themedium of law, showing pay as a legal right, and the employee simply asa legal object preoccupied with legal rights and obligations. The economicsystem 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 bal-ances of cost and benefits. Thepedagogical system codes in the mediumof learning, thereby constructing pay as a mark of merit, and the employeeas a pupil fit for learning progress and perfection. Finally, the system ofintimacywhich operates through the medium of love views pay as a highlypersonal declaration of love and constructs the employee as a committedpartner, living for and anticipating the needs of the organization as thesignificant other.

These different codifications set the scene for a complex process ofcommunication in which different codes push and pull in different dir-

ections. This infighting has constitutive consequences not just for theparticular phenomenon (the whatofthe communication) but also for thewho for whom the communication is articulated as relevant or irrelevant,thereby activating the distinction between inclusion and exclusion. Inthis communicative game, we see how the organization is produced andreproduced in the game between different codifications, while creating avariety of opportunities for management as an unpredictable outcome ofthe struggle between the codes.

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



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relation between the autonomy of the voluntary practice and its need forcoupling the practice to a voluntary organization (Grossman, 2001; Taylorand Lansley, 2000). But Manzall Mitchel perhaps stated it most clearlywhen she described voluntary social work as something that exist in the

middle: The volunteer becomes the person in the middle, whose focus ison the client but whose behavior, unlike the embedded informal networkmember, is bound by institutional policy and expectation, but to a lesserdegree than the professional (Mitchel, 1986).

Working with Luhmanns system theory, however, makes it possible toarrive at a different understanding of these supposed paradoxes (la Courand Hjlund, 2007). This is done by constructing voluntary social care as aspecific kind of communication. The first question to be asked is how thiskind of communication is organized? On the basis of field work and in-depthinterviews with professional leaders, volunteers and users, it is possible

to construct voluntary social work as a specific kind of communicationoperating through a paradoxical operation. Using Luhmanns concepts ofinteraction and organization, voluntary social work can be seen not as aninteraction system nor as an organizational system, but as a communicationform that oscillates between these two kinds of social systems. In the firstplace, voluntary social action is a face-to-face service that is covered byLuhmanns concept of interaction as communication between personsphysically present, allowing the communication an on-site flexibility. Inthe second place, this kind of action is coupled to a formal organizationembracing goals, rules and so forth. That means that the established

expectations are permanently irritated and troubled because they arecreated 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 communicationinvisibly oscillates between two kinds of social systems with very differentexpectations. This oscillation, which systems theory has the capacity tomake visible, opens up interesting empirical analyses of different ways ofhandling this oscillation and of the structural tensions between the twokinds or communication within the voluntary organization. In concretecases it can be shown how voluntary organizations, through their decisionprocesses, try to deparadoxify their communication and avoid the crampscaused by conflicting expectations. This is done by either referring to volun-tary social work as an interaction system with an autonomy of its own, orby referring to the very same voluntary work as a part of the organizationcommitted to formal organization decisions.

These tensions give rise to conflicting stories in voluntary organizationsabout long-term commitment, different definitions of quality within volun-tary social work, and how decisions can be made, instead of seeing theparadox as something that creates restlessness and dynamics and thereby

making room for flexibility and innovation.



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Conclusion

The three examples demonstrate that by applying Luhmanns systems theoryresearchers can develop their sensitivity for the many different ways thatorganizations emerge as a phenomenon. In presenting them, we wanted

to demonstrate that this can only happen in an ongoing interplay betweenempirical observations and theoretical informed reflections, not througha deductive subordination to the theory. We dont see Luhmanns theoryas a straitjacket, but as a varied and consistent tool box with analyticalconcepts.

We do not wish to deny the intrinsic beauty of Luhmanns theory, nor thevery real temptation to present it, again and again, in the unadulterated formof its structural skeleton. We know the feeling. We simply wish to registerour disappointment upon seeing that our colleagues have succumbed tothis temptation even when given an almost ideal opportunity to show

that systems theory can be applied in concrete empirical studies of socialorganization. We hope that future issues of Organization will flesh outthe rather schematic introduction to Luhmann that its readers have so farbeen offered.

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Economic Review74: 7983.Andersen, Niels kerstrm (2003) Discursive Analytical StrategiesUnderstanding

Foucault, Koselleck, Laclau, Luhmann. Bristol: Policy Press.Bakken, Tore and Hernes, Tor (2003) Autopoietic Organization TheoryDrawing onNiklas Luhmanns Social Systems Perspective.Herndon: Copenhagen BusinessSchool Press.

Beaumont, P.B. (1995) The Future of Employment Relations. London: SAGE.Cour, Anders la and Hjlund, Holger (2007) Social Work as Paradox, Acta

Sociologica 51(1).Deci, E.L. (1975) Intrinsic Motivation. New York, NY: Plenum.Ejersbo, Niels and Greve, Carsten (2005) Contracts as Reinvented Institutions in

the Public Sector. Copenhagen: Quorom Books.Farnham, D. (2000) Employee Relations in Context. London: Institute of Personnel

and Development.Frey, B. S. (1997) Not Just for the Money: An Economic Theory of Personal

Motivation. Cheltenham: Edward Elgar Publishing.Gennard, J. and Judge, G. (2002) Employee Relations. London: Institute of Personnel

and Development.Gibson, Barry, Gregory, Jane and Robinson, Peter G. (2005) The Intersection

Between Systems Theory and Grounded Theory: The Emergence of the GroundedSystems Observer, Qualitative Sociology Review1(2): 311.

Grossman, Allen and Rangan, V. Kasturi (2001) Managing Multisite Nonprofits,Nonprofit Management and Leadership 11(3): 32139.

Guest, D. E. (1999) Human Resource ManagementThe Workers Verdict, HumanResource Management Journal9(9): 525.

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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 InformalNetworks and Formal Systems.New York, NY: The Guilford Press.

Luhmann, Niklas (2000) Organisation und Entscheidung. Wiesbaden: WestdeutscherVerlag.

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 Stateof 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 Theory10: 35979.

Mitchel, Manzall (1986) Utilizing Volunteers to Enhance Informal Social Networks,Social Casework: Journal of Contemporary Social Work67: 29098.

Pearce, Jonel (1993) VolunteersThe Organizational Behaviour of Unpaid Workers.

New York, NY: Routledge.Rennison, Betina (2007a) Cash, Codes and ComplexityNew Adventures inthe Public Management of Pay Scales, Scandinavian Journal of Management23(2).

Rennison, Betina (2007b) Intimacy of ManagementCodified Constructions ofPersonalized Selves, Philosophy of Management, in press.

Seidl, David and Becker, Kai Helge, eds (2005) Niklas Luhmann and OrganizationStudies. 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 Nonprofit Management and Leadership10(4): 397421.

Taylor-Gooby, Peter (1999) Markets and Motives Trust and Egoism in WelfareMarkets,Journal of Social Policy28: 97114.

Anders la Cour is an Associate Professor at the Department of Management, Politicsand Philosophy, Copenhagen Business School. His areas of research include thewelfare society, welfare markets, welfare technologies, voluntary organizations,

management and system theories. Recent publications include The Conceptof Environment in System Theory and Cybernetics and Human Knowing. Aforthcoming publication is Voluntary Social Work as Paradox (With HolgerHjlund) due to be published in March 2008. Address: Department of Management,Politics and Philosophy, Copenhagen Business School, Porcelaenshaven 18A 2000,Frederiksberg, Denmark. [email: [email protected]]

Steen Vallentin is an Associate Professor of Corporate Social Responsibility (CSR) atCopenhagen Business School. His research interests include, besides CSR, values-based management, socially responsible investing, and the conceptualization ofrelationships 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 emphasison 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: [email protected]]

Holger Hjlund is an Assisstant Professor at the Deparment of Management, Politicsand Philosophy, Copenhagen Business School. His theoretical interests rangefrom sociology of comsumers to system theory and poststructuralism. He haspublished articles on public management, quality development and consumerismin 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: [email protected]]

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. Hisrecent publications have been on organizational identity, epistemology andcommunication theory and globalization. Address: Department of Management,Politics and Philosophy, Copenhagen Business School, Porcelaenshaven 18A 2000,Frederiksberg, Denmark. [email: [email protected]]

Betina Rennison is an Associate Professor at Copenhagen Business School (CBS),Department of Management, Politics and Philosophy. Research interests includepublic sector reforms, organizational change and different aspects of managementand leadership in and around organizations; wage setting, gender-relations,integration of ethnical minorities. Recent publications include Cash, Codesand ComplexityNew Adventures in the Public Management of Pay Scales,Scandinavian Journal of Management, June 2007 and Historical Discoursesof Public Management in DenmarkPast Emergence and Present Challenge,Management & Organizational History2(1): 2007. Address: Associate professor,Department of Management, Politics and Philosophy, Copenhagen Business School,Porcelaenshaven 18A 2000, Frederiksberg, Denmark. [email: [email protected]]

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

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