High-Risk Technologies and Organizations

Conceptual Overview

Technology is the means by which organizations convert input to output. Inputs include raw materials, human labor, financial capital, and various skills and competencies. Outputs include valuable goods, products, and services. The conversion process might rely on simple procedures, such as youth squeezing fruit for their lemonade stand, or highly elaborate and interrelated systems, such as the production of advanced pharmaceutical or aerospace materials. The degree of technological sophistication employed by an organization has been modeled by theorists such as Joanne Woodward, in her studies of technological complexity, Eric Trist, in his studies of sociotechnical integration, Charles Perrow, in technological analyzability and variability, James Thompson, in technological interdependence, and Philip Anderson and Mike Tushman, in technological change. Technology is seen as riskier when it is more complex, disconnected, variable, and nonroutine, intensive, and radical. Together they sketch a multidimensional array of technological risk-facing organizations.

Risk is the probabilistic chance of success or failure in an endeavor. For example, wagering on the toss of a coin carries a 1-in-2 likelihood of success. Less risky endeavors have a greater chance of positive outcome whereas riskier endeavors, such as wagering on a longshot horse or stock, have a lesser chance. Greater risks are often accompanied by greater potential rewards. Organizational actors do not, however, always consider risks from a purely mathematical choice-optimization perspective and frequently employ heuristics, or shortcuts, to make sense of risky situations. Daniel Kahneman and Amos Tversky showed that the manipulation of reference points or targets influenced tendencies toward risk-seeking or risk-averse behavior. James March and Zur Shapira showed that managers' attention influences their decisions. Philip Bromley linked strategic risk taking to past organizational performance. Gerte Hofstede reconciled risk-taking patterns with cultural values and posited that some societies are generally more comfortable with risk than others. Together these dimensions show that organizations and managers have subjective and imperfect approaches to managing risk.

Overall, technology presents organizations with various types of risk, such as

• Society-level and physical risk
• Industry-level and market risk
• Strategic and competitive risk
• Administrative and knowledge risk
• Level of product/process and profitability risk
• Level of individual and job risk

An example of a societal risk from high-risk technology that affects organizational environments would be the cases of nuclear, biochemical, or nanotechnological business. Charles Perrow and Scott Sagan contrast high reliability theory—predicting that redundancy, controls, safety checks, and learning mechanisms can mitigate risk—from the normal accidents theory—arguing that tightly coupled and increasingly complex[Page 594] systems cannot be completely controlled by boundedly rational and politically motivated actors and can even escalate small glitches into major failures. The thrust of the reasoning is that failure that can arise “normally” in systems by virtue of the interdependent nature of the components of the system itself, concluding that as technologies become more complex, the probability of tragic results increases. This logic has been subsequently extended to other organizational endeavors such as information technology, computer viruses, health care, large-scale construction projects, space exploration, and highway design and regulation.

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