
Michels proposed an "iron law of oligarchy" where organisations become controlled by a small group who use it to further their own interests rather than for members as a whole. The capacity for internal democracy is constrained and certain objectives are selectively pursued.
Groups of owners, managers, workers, traders, criminals, accountants (formal or informal) assemble around shared values and ideas to define issues and sway events. The Masons, the Round Table, a regional branch of chartered accountants, Greenpeace and an Executive Breakfast club are obvious examples. Coalitions may pursue divergent interests to the organisational mainstream.
Each coalition partner balances benefits of membership and what they must put into a coalition against such factors as their position as may be seen by members of other coalitions. A mainstream coalition may offer better opportunities for patronage from key members. Thus the individual may adopt their personal values and attitudes and take care not to be seen to join an "out" group.
Sectional Interests, Bounded Rationality and Stereo-typing
In functionally segmented organisations, sectional interests can converge or diverge. An operating unit's performance imperatives usually unify the internal coalition whose rationality becomes bounded by functional pre-occupations - marketing people stress marketing objectives, computing people dwell on 'their systems'. If one group experiences a tension with another group then the rivals may become the butt of jokes. Their members may be caricatured in ways which enable the stereo-typers to believe in their own strength and righteousness.
Where inter-departmental, functional objectives clash sub-optimisation may occur. Optimal decisions may suffer from compromise and satisficing i.e. "we haven't won everything we wanted, but the result is better than nothing". The decisions whilst not the best at least allow the organisation to function. Competing interests are mediated and the negotiated formula has at least accommodated the objective of agreement.