economics and deconstruction
So, last week, I presented at the Oliver Williamson seminar on institutional analysis, based in the Haas School of Business at UC-Berkeley. (This week, I presented for Labor Studies here at IU. How’s that for variety?) It was a great experience and a smart crowd–predominantly made up of economists, and playing by economists’ rules for talks. I was glad to make it through the bulk of the material I wanted to share, and thankful that the intellectual sparring (which I even mildly enjoyed) wasn’t hostile. I heard “we don’t usually get sociologists” several times. I was actually surprised that the worlds of “business and public policy” (primarily economists) and “management of organizations” (more psychologists and sociologists) don’t overlap so much, at least in this particular setting.
One side reflection….
…Economists are pretty damn quick and agile when it comes to using notions about signaling and agency theory to undercut arguments about cultural categories in markets.
Here, that occurred when I talked about Love and Kraatz’s interesting finding that corporate downsizing in the 1980s had negative effects on firms’ reputations (relative to their competitors). Love and Kraatz show that these effects are robust to controls for financial and market performance and argue that they represent an evaluation of firms’ “character” and trustworthiness. It’s a nice paper and interesting argument, which differs from neo-institutionalist lines about conformity with the dominant institutional logic (in this case, of shareholder value). The economist counter-argument was that downsizing is really a signal that the firm knows it will be in trouble in the future–and therefore provides valuable information about the firm’s market value. This isn’t picked up in measures of market performance because it’s really a forecast of performance to come, not a reflection of curent performance.
In a discussion a few years ago, something similar happened when I used Zuckerman’s ”categorical imperative” findings to demonstrate the effects of legitimacy. Then, the counter-argument, if I remember correctly, was that the real problem with firms that don’t fit the expected categories is that they are scattered in such a way that generates agency problems that ultimately devalue them.
My goal is not to argue about which interpretation is right. In my view, these two papers are super-high quality and go to great lengths to establish their findings. The point is that it’s amazing how quick one can be to undermine a rigorously developed argument with a wave of the hand. From one perspective, this could be an indication of the power of a strong paradigm. But I think it also reflects a tendency toward deconstruction in that paradigm…and I mean this in something not too terribly far from the Derrida/Foucault sense. All that is solid melts into thin air. Arguments become increasingly hard to operationalize, models become impossible to properly specify, and therefore more falls back on the paradigmatic assumptions. My sense is that sociologists are more pragmatist in their orientation: Build with what you have; talk, talk, talk to sort it out.
Just a scattered thought, which maybe has implications for Mark’s earlier post about org theory and institutional economics.
Next step, coming soon…a more substantive post….no more mentions of Williamson, I promise.