Elite theory is a sociological and political theory that posits societies are governed by a small group of individuals or organizations who hold power and influence disproportionate to their numbers. Elite theorists argue that political power is concentrated in the hands of a ruling elite, often composed of wealthy individuals, corporate executives, government officials, and other influential actors who control key institutions and decision-making processes.
The purpose of Elite Theory is to analyze patterns of inequality, governance, and social change in contemporary societies by examining the role of elite groups in shaping political and economic outcomes. The scope of Elite Theory encompasses the study of power dynamics, social stratification, and elite formation across different historical contexts and cultural settings.
Principal Concepts
Ruling Elite: Elite theory focuses on the concept of a ruling elite, which refers to a small group of individuals or organizations who hold disproportionate power and influence in society, often through control of economic resources, political institutions, and cultural institutions.
Power Structures: Elite theory examines power structures within society, including formal institutions (e.g., government, corporations) and informal networks (e.g., social clubs, exclusive societies), to understand how elites maintain and exercise their authority over others.
Pluralism vs. Elitism: Elite theory contrasts with pluralist theories of democracy, which posit that power is distributed among multiple competing groups and interests, by emphasizing the dominance of a ruling elite in shaping political outcomes and policy decisions.
Theoretical Foundations of Elite Theory
Elite Theory draws on principles from various theoretical perspectives, including:
Classical Sociology: Elite theory has roots in classical sociology, particularly the works of theorists such as Vilfredo Pareto, Gaetano Mosca, and Robert Michels, who explored the role of elites in society and the persistence of power inequalities across different historical periods.
Conflict Theory: Elite theory shares similarities with conflict theory, which highlights the role of social conflict and power struggles in shaping social structures and institutions, by emphasizing the role of elites in maintaining and perpetuating systems of inequality and oppression.
Methods and Techniques for Elite Theory
Elite Theory projects employ a variety of methods and techniques:
Historical Analysis: Conducting historical analysis of power structures, elite networks, and social movements to trace the evolution of elite dominance and resistance in different societies and periods.
Interviews and Surveys: Using qualitative and quantitative research methods, such as interviews and surveys, to study the attitudes, behaviors, and characteristics of elite individuals and groups in contemporary society.
Applications of Elite Theory
Elite Theory has diverse applications across disciplines, sectors, and domains:
Political Science: Elite Theory is applied in political science to analyze the role of elites in shaping political institutions, policies, and governance structures, by examining patterns of political participation, lobbying, and influence.
Economics: Elite Theory is used in economics to study the concentration of wealth and income among elite individuals and families, as well as the impact of economic policies on social mobility and income inequality.
Industries Influenced by Elite Theory
Elite Theory has influenced a wide range of industries and sectors, including:
Finance and Banking: Elite Theory informs research and policy debates in finance and banking, particularly regarding the regulation of financial markets, corporate governance practices, and wealth distribution among elite investors and executives.
Media and Entertainment: Elite Theory is relevant to the study of media and entertainment industries, where elite-owned conglomerates and media outlets shape public discourse, cultural trends, and political agendas.
Advantages of Elite Theory
Critical Perspective: Elite Theory provides a critical perspective on power dynamics and social inequality, by highlighting the disproportionate influence of elite groups in shaping political, economic, and cultural outcomes.
Analytical Framework: Elite Theory offers an analytical framework for understanding patterns of elite formation, recruitment, and reproduction, as well as strategies of resistance and mobilization among non-elite groups.
Challenges and Considerations in Elite Theory
Despite its benefits, Elite Theory presents challenges:
Simplistic Assumptions: Elite Theory has been criticized for its simplistic assumptions about power dynamics and social change, by oversimplifying complex social phenomena and neglecting the agency of non-elite groups in shaping political and economic outcomes.
Empirical Validity: Elite Theory faces challenges in empirically testing its hypotheses and concepts, particularly regarding the identification and measurement of elite groups, their characteristics, and their impact on society.
Integration with Broader Sociological and Political Theories
To maximize the benefits of Elite Theory, it should be integrated with broader sociological and political theories:
Structural Functionalism: Integrating Elite Theory with structural functionalism, which emphasizes the interdependence of social institutions and their functions in maintaining social order, to understand how elites contribute to the stability or instability of society.
Critical Theory: Incorporating Elite Theory into critical theory perspectives, which critique power relations and social inequalities, to analyze the role of elites in perpetuating systems of domination and exploitation in capitalist societies.
Future Directions in Elite Theory
As Elite Theory continues to evolve, future trends may include:
Globalization and Transnational Elites: Examining the emergence of transnational elite networks and power structures in the context of globalization, where elite individuals and organizations operate across national borders and influence global governance and economic policies.
Digital Technologies and Elite Formation: Investigating the impact of digital technologies, social media platforms, and information networks on elite formation, recruitment, and communication strategies, as well as the implications for democracy, privacy, and social cohesion.
Conclusion
Elite Theory provides a valuable framework for understanding power dynamics, social inequality, and governance structures in contemporary societies, by highlighting the role of elite groups in shaping political, economic, and cultural outcomes. While Elite Theory has been criticized for its pessimistic view of democracy and oversimplified portrayal of power dynamics, it remains influential in analyzing patterns of elite dominance, resistance, and social change. By integrating perspectives from sociology, political science, and economics, Elite Theory offers insights into the mechanisms and consequences of elite power, informing research, policy, and activism aimed at promoting social justice, equality, and democratic governance.
In a functional organizational structure, groups and teams are organized based on function. Therefore, this organization follows a top-down structure, where most decision flows from top management to bottom. Thus, the bottom of the organization mostly follows the strategy detailed by the top of the organization.
In a flat organizational structure, there is little to no middle management between employees and executives. Therefore it reduces the space between employees and executives to enable an effective communication flow within the organization, thus being faster and leaner.
Project portfolio management (PPM) is a systematic approach to selecting and managing a collection of projects aligned with organizational objectives. That is a business process of managing multiple projects which can be identified, prioritized, and managed within the organization. PPM helps organizations optimize their investments by allocating resources efficiently across all initiatives.
Harvard Business School professor Dr. John Kotter has been a thought-leader on organizational change, and he developed Kotter’s 8-step change model, which helps business managers deal with organizational change. Kotter created the 8-step model to drive organizational transformation.
The Nadler-Tushman Congruence Model was created by David Nadler and Michael Tushman at Columbia University. The Nadler-Tushman Congruence Model is a diagnostic tool that identifies problem areas within a company. In the context of business, congruence occurs when the goals of different people or interest groups coincide.
McKinsey’s Seven Degrees of Freedom for Growth is a strategy tool. Developed by partners at McKinsey and Company, the tool helps businesses understand which opportunities will contribute to expansion, and therefore it helps to prioritize those initiatives.
Mintzberg’s 5Ps of Strategy is a strategy development model that examines five different perspectives (plan, ploy, pattern, position, perspective) to develop a successful business strategy. A sixth perspective has been developed over the years, called Practice, which was created to help businesses execute their strategies.
The COSO framework is a means of designing, implementing, and evaluating control within an organization. The COSO framework’s five components are control environment, risk assessment, control activities, information and communication, and monitoring activities. As a fraud risk management tool, businesses can design, implement, and evaluate internal control procedures.
The TOWS Matrix is an acronym for Threats, Opportunities, Weaknesses, and Strengths. The matrix is a variation on the SWOT Analysis, and it seeks to address criticisms of the SWOT Analysis regarding its inability to show relationships between the various categories.
Lewin’s change management model helps businesses manage the uncertainty and resistance associated with change. Kurt Lewin, one of the first academics to focus his research on group dynamics, developed a three-stage model. He proposed that the behavior of individuals happened as a function of group behavior.
OpenAI is an artificial intelligence research laboratory that transitioned into a for-profit organization in 2019. The corporate structure is organized around two entities: OpenAI, Inc., which is a single-member Delaware LLC controlled by OpenAI non-profit, And OpenAI LP, which is a capped, for-profit organization. The OpenAI LP is governed by the board of OpenAI, Inc (the foundation), which acts as a General Partner. At the same time, Limited Partners comprise employees of the LP, some of the board members, and other investors like Reid Hoffman’s charitable foundation, Khosla Ventures, and Microsoft, the leading investor in the LP.
Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.
The Amazon organizational structure is predominantly hierarchical with elements of function-based structure and geographic divisions. While Amazon started as a lean, flat organization in its early years, it transitioned into a hierarchical organization with its jobs and functions clearly defined as it scaled.
The Coca-Cola Company has a somewhat complex matrix organizational structure with geographic divisions, product divisions, business-type units, and functional groups.
Costco has a matrix organizational structure, which can simply be defined as any structure that combines two or more different types. In this case, a predominant functional structure exists with a more secondary divisional structure.
Costco’s geographic divisions reflect its strong presence in the United States combined with its expanding global presence. There are six divisions in the country alone to reflect its standing as the source of most company revenue.
Compared to competitor Walmart, for example, Costco takes more a decentralized approach to management, decision-making, and autonomy. This allows the company’s stores and divisions to more flexibly respond to local market conditions.
Dell has a functional organizational structure with some degree of decentralization. This means functional departments share information, contribute ideas to the success of the organization and have some degree of decision-making power.
eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams are based on the main corporate functions (like HR, product management, investor relations, and so on).
Goldman Sachs has a hierarchical structure with a clear chain of command and defined career advancement process. The structure is also underpinned by business-type divisions and function-based groups.
Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.
IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.
McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.
McKinsey & Company has a decentralized organizational structure with mostly self-managing offices, committees, and employees. There are also functional groups and geographic divisions with proprietary names.
Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.
Nestlé has a geographical divisional structure with operations segmented into five key regions. For many years, Swiss multinational food and drink company Nestlé had a complex and decentralized matrix organizational structure where its numerous brands and subsidiaries were free to operate autonomously.
Nike has a matrix organizational structure incorporating geographic divisions. Nike’s matrix structure is also present at the regional and sub-regional levels. Managerial responsibility is segmented according to business unit (apparel, footwear, and equipment) and function (human resources, finance, marketing, sales, and operations).
Patagonia has a particular organizational structure, where its founder, Chouinard, disposed of the company’s ownership in the hands of two non-profits. The Patagonia Purpose Trust, holding 100% of the voting stocks, is in charge of defining the company’s strategic direction. And the Holdfast Collective, a non-profit, holds 100% of non-voting stocks, aiming to re-invest the brand’s dividends into environmental causes.
Samsung has a product-type divisional organizational structure where products determine how resources and business operations are categorized. The main resources around which Samsung’s corporate structure is organized are consumer electronics, IT, and device solutions. In addition, Samsung leadership functions are organized around a few career levels grades, based on experience (assistant, professional, senior professional, and principal professional).
Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.
Starbucks follows a matrix organizational structure with a combination of vertical and horizontal structures. It is characterized by multiple, overlapping chains of command and divisions.
Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.
Toyota has a divisional organizational structure where business operations are centered around the market, product, and geographic groups. Therefore, Toyota organizes its corporate structure around global hierarchies (most strategic decisions come from Japan’s headquarter), product-based divisions (where the organization is broken down, based on each product line), and geographical divisions (according to the geographical areas under management).
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
