Testing Macro Organizational Theories in Laboratory Experiments

Abstract

Laboratory experiments provide the most rigorous method of testing scientific theories. However, their current use in organizational research is primarily limited to testing micro organizational theories where actors are individuals. I suggest the conditions under which one can test macro organizational theories in laboratory experiments, using human subjects in the role of organizations. I discuss two sequential stages of behavior (decision making and execution) and two different types of groups (democratic and dictatorial). I argue that the process of decision making in democratic groups is the only place where a logical justification is necessary for the use of human subjects in testing macro organizational theories. Using the Condorcet Jury Theorem, I demonstrate that, when four conditions are met, laboratory experiments with human subjects represent statistically conservative tests of macro theories. The four conditions are: (1) two alternative choices; (2) mean individual competence greater than .5; (3) individual decisions not too highly positively correlated; and (4) simple majority decision rule. I illustrate my argument with Hannan and Carroll's (1992) density dependence theory of organizational foundings and delineate one potential experimental design for testing the theory. Academic Press

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“…In 1962, the "Double Auction Mechanism" experiment of Vernon L. Smith transformed experimental economics into an independent discipline 16 . In research fields, such as game theory 17 , public administration 18,19 , and industrial organization 20 , controlled laboratory experiments had become essential. In experimental economics, they had become commonplace.…”