studying the world’s largest corporation
Paul Ingram, Lori Yue, and Huggy Rao have a paper in a recent issue of AJS that looks at the success of community activists who protest the openings of Wal-Mart stores in their neighborhoods. The article begins with these intriguing facts:
During the period starting from 1998 and ending in 2005, Wal-Mart floated 1,599 proposals to open new stores. Wal-Mart successfully opened 1,040 stores. Protests arose on 563 occasions, and in 65% of the cases in which protests arose, Wal-Mart did not open a store.
It’s pretty astonishing that local activists were able to thwart Wal-Mart’s efforts to open a store 65% of the time. Wal-Mart, the world’s largest corporation, surely has the political capital to win many more of these battles, and yet they frequently succumb to activist pressures. Why? The article explains that we can better understand this outcome if we think of the interaction between Wal-Mart and its activist nemeses as a sort of strategic dance in which Wal-Mart probes its environment to test the level of community support for a store and retracts when it views protests as a signal of potential regulatory costs and weak customer enthusiasm. One reason I like the study is because it promotes the idea that activists protests are a sort of market signal that shapes producer entry and adaptation to local consumer demands. In this sense, protests and other forms of public activism indirectly shape market supply.
Another reason to like the study is that it is one of the few organizational studies of Wal-Mart. It is surprising that there is so little organizational research on Wal-Mart given its dominance in the global market, its prominent position in American consumer society, and its broad political influence. It’s also a relatively unique organizational phenomenon. Part of what allowed it to capture the global retail market is because it was more quickly able to adapt to the new market environment where global supply chains became a source of competitive advantage. Wal-Mart is the GM of contemporary capitalism, and yet compared to GM in the 40s-60s, organizational scholars have yet to really make it a primary object of study.
As Jerry Davis has pointed out (see, for example, the comments in this post), our theories of organizations are not well suited to studying these new sorts of organizations that dominate the current market. Wal-Mart would seem like a good place to start. I expect orgheads to fill me in on what I’m missing here (e.g., dissertations being written, articles I haven’t yet noticed).
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