blame the consumers

Who should be held accountable for tragedies like the Bangladesh factory collapse that killed so many garment industry workers? Jerry Davis, writing in the Sunday New York Times, says that consumers need to recognize their blame in the global marketplace.  Consumers demand cheap products, which forces companies to pressure their suppliers to cut costs at every corner. The loser is the laborer who makes the initial products in the supply chain.

Our willingness to buy garments sewn under dangerous conditions, chocolate made from cocoa picked by captive children, or cellphones and laptops containing “conflict minerals” from Congo create the demand that underwrites these tragedies….If we want to see fewer tragedies like the one in Bangladesh, we as consumers need to reward the companies that make the effort to verify their supply chains and shun those that do not. Make it unprofitable to be unsafe.

While I agree with Jerry, in principle, that consumers’ demand for low-cost items will inevitably lead to these sorts of problems, consumers are actually very inertial creatures. If we put all our hopes in changing the global marketplace in the wallets of people like Joe Schmoe from Brownsburg, Indiana, we’re not likely to see much change. Most changes in supply chain management begin with a few committed activists who are willing to go out and pressure the company through “naming and shaming” tactics.  Public humiliation still seems to work.

 

delegitimization as a new world order

Imagine going to the ATM and discovering you can’t withdraw your money because the ATM is out of cash. Not only that, but the bank is closed because of a national holiday so you can’t use the bank teller to withdraw money, electronic transfers of funds are frozen, and the stores refuse to accept credit cards out of concerns that electronic payments won’t be made. If you are able to get to your money, you learn that 6.75% of your funds (or 9.95% if you are a lucky ducky with over 100K euros in your account) will be converted into bank shares under a compulsory levy intended to prop up the banking system. The mortgage payment that you scheduled, the student loan check that you deposited to pay for your education, the vendors that you need to pay for your small business – all are up in the air.

Even if you are told “nevermind, we’re re-evaluating that policy, back to the drawing board!”, what’s the rational thing to do? Most likely, you as a depositor will lose trust in the banking system and pull out as much as you can. If you are in an adjoining country with a shared currency, the mattress, precious metals, and alternate currencies are looking like more attractive places to keep your money. This is the scenario currently unfolding for residents in Cyprus and those who were parking their money in what seemed like a safe haven.

Less than a year ago, Greece was in a similar situation and is still dealing with the consequences. Now, it’s Cyprus’s turn. These supposedly one-off, “unique” situations involving untested interventions are becoming regularities as banking and governance systems around the world are becoming more tightly coupled together. Although Chick Perrow‘s Normal Accidents: Living with High Risk Technologies discusses nuclear plants and chemical plants, his concept of how reactions, once started, are hard to stop (much less understand) in tightly coupled systems, is a helpful read. Add to his concept the erosion of a shared understanding and belief in institutions for a potent mix – that is, the delegitimization processes of trust in banking and governance that we may be seeing in the EU.

For those of us who have been living under the various rocks of committee work/teaching/research/other commitments, a little background reading: Dealbreaker’s take, with plenty of links to others’ analysis, Reuters,and Zero Hedge’s mordant posts.

blog-worthy blog posts

If you’re needing new orgtheory related content and we’re too slow to provide it (I keep telling Fabio he needs to post more!!), then I have a couple of suggestions for you. Over at Charisma – a new-to-me blog about consumer studies – David Stark has a post about how people’s unique standpoint relative to the market influences their reactions to and valuation of market assets. He points to three papers, two of which he coauthored and another by Elena Esposito, that focus on different aspects of people’s observation of markets.  In the last paper, he and Matteo Prato refer to the “viewpoints effect” as the tendency for people’s attention to certain salient attributes to determine how they’ll react to other assets.

One’s assessment of an issue is shaped by one’s viewpoint, given by one’s contingent portfolio of attention. We hypothesize, specifically, that two actors who assess a given situation vis-à-vis a similarly (differently) composed portfolio of other situations are more likely to autonomously converge (diverge) in their interpretations of the given situation.

Over at the very new Organizations and Social Change blog, my coauthor Ed Carberry writes about the relationship between executive compensation and corporate tax deductions, noting that Facebook received a tax refund by simply deducting executive stock options as an expense.  He notices that this is a standard accounting practice that allows companies to get a big tax break. He also, rightly I think, observes the unfairness of this particular tax deduction.

Interestingly, three leading scholars of compensation, in conjunction with the Center for American Progress, have put forward a very simple proposal relating to taxes and stock-based compensation practices like stock options. They call it “inclusive capitalism.” Essentially, the idea is that if a company does not provide stock-based compensation for most of its employees, it cannot deduct any gains that any of its employees receive from this type of compensation, including executives. Sounds like a socialist plot to intervene in the free market? Think again. Health care and retirement benefits currently operate according to the same rules. If a company wants to grant health care to only its executives, that is completely legal. However, if it does so, it cannot deduct that cost from the company’s taxable income. We can do the same exact thing with stock-based compensation. This will either dramatically increase federal tax revenues or propel a more equitable distribution of stock-based pay.

Both posts are worth reading.

thank you john padgett and woody powell

I’d like to take a moment to thnk our February guest bloggers – Woody Powell and John Padgett. They wrote about their new book The Emergence and Organization and Markets. You can their blog posts here.

Adverts: From Black Power/Grad Skool Rulz

it’s official – facebook is a waste of time

Recent research has shown a change in Facebook use. While users tend to retain accounts, people are now reducing their use of the website. The reasons? From a recent NY Times survey of Facebook users:

The main reasons for their social media sabbaticals were not having enough time to dedicate to pruning their profiles, an overall decrease in their interest in the site, and the general sentiment that Facebook was a major waste of time.

This may indicate that we’ve hit “peak Facebook,” in terms of the site’s popularity level. It’s now a standard tool for networking, but the novelty has worn off. People don’t feel the obligation to use it. Now, the main users will be people who really enjoy networking – young people, businesses/orgs and extroverted people. Still, a huge market, but far short of the all encompassing vision of some. Probably the time to dig deep into that “platform” strategy we were talking about.

Adverts: From Black Power/Grad Skool Rulz 

the emergence of organizations and markets, part 2: a guest post by john padgett and woody powell

A guest post by John Padgett and Woody Powell about their new book The Emergence of Organizations and Markets. Read post #1 here:

Single autocatalytic networks generate life, but they do not generate novel forms of life. There is nothing outside of a single decontextualized network to bring in to recombine with what is already there. Self-organizing out of randomness into an equilibrium of reproducing transformations, the origin of life, was a nontrivial accomplishment, to be sure. But this is not quite speciation, which is emergence of one form of life out of another.

Transpositions and feedbacks among multiple networks are the sources of organizational novelty. In a multiple-network architecture, networks are the contexts of each other. Studying organizational novelty places a premium on measuring multiple social networks in interaction because that is the raw material for innovation. Subsequent cascades of death and reconstruction may or may not turn initial transpositions (innovations) across networks into system-wide invention.

Through fifteen empirical case chapters, Padgett and Powell extracted eight multiple-network mechanisms of organizational genesis:

emergence of organizations and markets, part I by padgett & powell

A guest post by John Padgett and Woody Powell about their new book The Emergence of Organizations and Markets:

Innovation in the sense of product design is a popular research topic today, because there is a lot of money in that. Innovation, however, in the deeper sense of new actors—new types of people, new organizational forms—is not even much on the research radar screen of contemporary social scientists, even though “speciation” (to use the biologists’ term for this) lies at the heart of historical change over the longue durée, both in biological evolution and in human history. Social science—meaning mostly economics, political science and sociology—is very good at understanding selection, both at the micro level of individual choice and at the macro level of institutional regulation and lock-in. But novelty, especially of actors but also of alternatives, has first to enter from off the stage of our collective imaginary for our existing theories to be able to go to work. Our analytical shears for trimming are sharp, but the life forces that push up novelty to be trimmed tend to escape our attention, much less our understanding. If this book accomplishes anything, we at least hope to put the research topic of speciation—the emergence of new organizational forms and people—on our collective agenda.

inequality and the sociological narrative

This is the fourth and final post in a blog forum about inequality and organizational theory (see parts 1, 2, and 3). Michael Piore of MIT’s Sloan School of Management and the Department of Economics wrote the post, and Brayden King provided a rather long-winded commentary.

Michael Piore

I share the concerns which a number of commentators have expressed here about the increasing inequality of income in the United States, but I see the income distribution as a symptom of a far more fundamental problem, the way in which we in the United States think about the economy and the capacity to manage and direct it through public policy.      Two basic ideas now dominate our thinking: The notion of human behavior as motivated by individual self-interest (usually the maximization of monetary rewards) and the competitive market as a template for organizing all social activity.  These are the starting point of standard economics, the foundations of a program of scientific research.  But in the United States they have become the foundations of a political program as well.  In  most of the rest of the world, that political program is called neo-liberalism, but the tenets upon which it rests are so buried in contemporary American consciousness that we don’t even have a particular word for this way of thinking.  They are widely accepted on the left and on the right of the political spectrum.  If there is a difference, it is that the left is willing to revisit and revise the distribution of income through taxes and transfers once the market has played itself out, although it has had only limited success in doing so.

It is not that the insights of economics, even as refracted through the neoliberal lens, are wrong; it is that they are so limited (and in those limits so constraining).  Sociology starts from a different set of insights about individual motivation and about social organization, and thus promises to open to the way toward a different set of visions about how we might structure the world in which we live, without sacrificing economic prosperity.  And for me at least, the main reason for drawing sociologists into economic debates is to expand those limits.

As an economist, it perhaps ill-behooves me to say exactly what the alternative sociological perspective is.  Indeed, there are probably several different perspectives that emerge out of the sociological vision.  But the version which appeals to me is that the behavior of individual actors in a social system is directed by the actors’ conceptions of their personal identities; that those identities are, in turn, embedded in a set of narratives which link the stories that individuals tell themselves about their own personal  lives to the identities (and historical narratives) of the organizations in which they live and work; and that these organizational narratives are ultimately linked to each other through a set of narratives about the larger society.  It is the attempt to be the persons that these narratives identify, to act out the roles which they define, that motivates the actors in the economy.  And it is these interlocking narratives—in addition to or possibly in place of, the market—which give the economy cohesion and direction.  This “sociological understanding” suggests that what holds together and permits the current income distribution is the narrative of neoliberalism.  What we need to create a more equitable and humane distribution is first the conviction that an alternative set of narratives is possible, and second to identify what such an alternative might be.

I worry that sociology is doing neither, that it has become distracted by a debate with economists about what determines individual incomes and is engaged in a project of showing that the market does not explain individual outcomes and that something else is at stake here (e.g., discrimination, social capital, even institutional isomorphism).  I worry that in the absence of a broader perspective—about how sociology explains individual behavior and social coherence—and an alternative narrative, the answer to the critique will simply be policies to increase the pressures of the competitive market until outcomes which conform to it are achieved.

Income Inequality and the Management of Organizations

This post is the first part of a blog forum about inequality and organizational theory. Bruce Kogut and Jerry Kim of Columbia University wrote the post, and Shamus Khan, also of Columbia, wrote the commentary.

Bruce Kogut and Jerry Kim

Why should we care about income inequality?  For many, an egalitarian society is a just society.  The argument for this belief ranges from  “I just think that” to sophisticated reasoning about declining marginal utilities and the distribution of natural abilities and the tradeoffs between efficiency and equity.  And for those troubled by such tradeoffs, this latter reasoning boils to the hoped-for compromise that ‘we can get a lot more equity at very little sacrifice in efficiency’.  Arguing about that claim, economics has spilled a lot of the proverbial ink.

But why should we in management and organizational theory care about income inequality in the context of what we study and teach?   The short answer is that the primary source for the massive growth in inequality in the US is due to the greater share going to those who are the top managers of public and private firms.  The share of total income in the US earned by the top 1 percent of income earners has gone from 9 percent in 1970 to 23.5 percent in 2007.   While an increase in inequality is to be found in many rich countries, the US distribution is remarkably more skewed.

If we take a closer look at this 1% (which was approximately for incomes greater than $400,000 in 2007), a substantial number of high-income earners are managers. In fact, according to a recent analysis of individual tax return data, close to half of the top 0.1%—those that make upwards of $2 million—can be categorized as non-finance executives, supervisors or managers.   What is it about business organizations today that are distributing such wealth to their top managers?

book spotlight: climbing the charts by gabriel rossman

We are clearly living in a golden age of sociology of culture. We have the works of Richard Petersen. We have the works of Jenn Lena, whose book we discussed in detail last Spring. Now, we have Climbing the Charts is a new book by guest blogger and UCLA sociologist Gabriel Rossman. What these books have in common is a very careful examination of how cultural industries are created and how they change.

Rossman’s book is a study of how some songs become hits on the radio. The problem is that there are lots of nice stories about how this happens, but it’s hard to prove if any of them are true. For example, you might think that the dominant firm, Clear Channel, just chooses hits and then everyone follows them. You might also think that songs diffuse through a network of stations or promoters. The third option is simply that radio stations do what the record industry tells them. These are nice stories, but how do you tell which one is true?

Rossman has a simple, but powerful, idea. The different stories imply different diffusion curves (graphs that map market saturation vs. time). Each story comes with a different curve. The “lightning in a bottle” story (hot songs diffuse through market networks) has a classical S-shaped curve. Promotion by the record industry has a discontinuous step function.

Using new data on play time, Rossman shows there’s a lot of evidence that pop music is built by the record industry. You may say, “duh!” But remember, there are other equally obvious hypothesis that have conflicting predictions. It’s a real testament to Rossman that he was able to test these different stories with this great data set.

This book is a great example of bread and butter social science. The ideas are simple, the hypotheses sound obvious. But they can’t all be true. It’s hard to find data to test different ideas. Thus, the social scientist is a sort of Sherlock Holmes who roles up her sleeves and does the messy work of assembling the relevant facts to find an answer. This book is a testament to empirical social science and is highly recommended to anyone who is interested in the economics and politics of cultural markets.

Seriously, buy these books: From Black Power/Grad Skool Rulz

corporate social responsibility, reputation, and activist targeting

My paper with Mae McDonnell about the relationship between CSR, reputation, and activist targeting has been spotlighted on the Harvard Law School Forum. The paper shows that contrary to conventional wisdom, firms that have positive reputations and that do a lot of socially responsible actions are not less likely to become targets of anti-corporate activists. Just the opposite is true. Companies that have built positive reputations and that engage in a lot of CSR activities are actually more likely to become the focus of activist campaigns.  Why is that? Well, because social movement activists thrive on media attention – that’s how they shape the public agenda and put pressure on companies to change their behaviors – and high reputation companies that are known for doing good are more likely to attract media attention when activists expose their less-than-virtuous practices. Thus, developing a positive reputation has a big downside.

Reputation, in this sense, has become an important liability for firms. Once a firm develops a positive reputation, they are obligated to maintain it. From the activist perspective, there is much to gain by forcing firms to defend their reputations. Not only do they generate more attention to their cause by targeting high reputation firms (King 2011), but the net social impact is also positive. As these firms do more prosocial activities to renovate their image after the boycott, they subsequently dedicate more resources and strategic focus on CSR. A virtuous circle, at least from the perspective of the activist, follows. More CSR practices leads to an improved (or at least maintained) reputation, which causes the firm to continue to be a target of activism, the consequence of which is more commitment to CSR. From the point of view of the company, however, having a good reputation can be a “double edged sword” or at least a potential liability when facing activists who seek the public limelight (Rhee and Haunschild 2006).

You can download the complete paper now on SSRN.

 

From Embeddedness to Relational Work

Sociological perspectives on the economy are undergoing another transformation. The embeddedness perspective of Granovetter now faces a challenge from the relational work of Zelizer. This challenge has led to several questions; for example, what exactly is relational work, and what does its emergence mean for scholars of embeddedness? Is it a complementary perspective or is it meant to overtake territories long held by the Granovetterians? Over the next two weeks, a number of scholars will address these and other questions, including Viviana Zelizer, Fred Block, Kieran Healy, Gabe Rossman, Josh Whitford, and the two of us. (Longer discussions of some of these perspectives can be found in the 2012 special volume on relational work published in Politics and Society 40, no. 2, edited by Fred Block.)

In the morning (on Tuesday), you’ll hear from Fred Block.

Stay tuned.

–Nina Bandelj and Fred Wherry

activism, corporate targets, and risk

Bogdan Vasi and I have a paper, forthcoming in the American Sociological Review, that examines the relationship between different kinds of corporate-targeted activism and perceptions of risk. We show that firms facing more environmental activism from shareholders are seen as having greater environmental risk. We define environmental risk as “audiences’ perceptions that a firm’s practices or policies will lead to greater potential for an environmental failure or crisis that could expose it to financial decline.” Interestingly, the effect of activism on risk is independent of observable differences in actual environmental performance.   Not all firms that have bad environmental policies or practices are seen as having the same risk exposure. Activists draw attention to bad policies and make analysts aware of the risks that those firms are taking on.  Here’s the abstract:

Although risk assessments are critical inputs to economic and organizational decisionmaking, we lack a good understanding of the social  and political causes of shifts in risk perceptions and the consequences of those changes. This article uses social movement theory to explain the effect of environmental activism on corporations’ perceived environmental risk and actual financial performance. We  define environmental risk as audiences’ perceptions that a firm’s practices or policies will lead to greater potential for an environmental  failure or crisis that would expose it to financial decline. Using data on environmental activism targeting U.S. firms between 2004 and  2008, we examine variation in the effectiveness of secondary and primary stakeholder activism in shaping perceptions about  environmental risk. Our empirical analysis demonstrates that primary stakeholder activism against a firm affects its perceived environmental risk, which subsequently has a negative effect on the firm’s financial performance.

If you’re interested in reading more, here is the paper.

all the art in the world

The European Art Foundation released a report that estimates the total volume of the global fine arts trade. They surveyed auction houses, consultants, and deals to get an estimate. Doesn’t sound like they focused on crafts and low  status art. Total? $60.8 billion. Roughly speaking every person on earth chips in about $10 for fine art. Obviously, some chip in more than others.

Other facts:

• global art commerce ($60bn) is a less than 10% of the total US defense budget ($739bn)
• there’s a ton of auctioneers dealing in the super hot Chinese art market
•  the average high art item is sold for about $1,2000
• London and New York account for 60% of the total.

Interesting reading.

Adverts: From Black Power/Grad Skool Rulz

upcoming book forum: lena’s banding together

Next week, we’ll be reading Jenn Lena’s Banding Together. Required reading for culturistas. Get your copy today!

Adverts: From Black Power/Grad Skool Rulz

contested reputations

Via Marginal Revolution – why the Internet lacks reliable reviews of doctors.

[G]etting in the faces of the previously untouchable professional class has inevitably led to legal threats. He says he gets about one each week over negative reviews and receives subpoenas every month or two for information that can help identify reviewers, who believe they are posting anonymously.

Over at Angie’s List, service providers have sued reviewers, whose names are known to the company, “a handful” of times, according to the company. Angie’s List has paid their legal fees in the past, but a co-founder of the site, Angie Hicks, said she could not commit to doing that in every case in the future.

None of the litigants at Angie’s List have been doctors so far, but that doesn’t mean they are thrilled with her health reviews. “They told me that ‘patients aren’t smart enough to figure out whether I’m a good doctor,’ ” she said. “But I told them that these conversations have been happening all along.” The only difference with the site, she pointed out, is that the doctors get to listen in.

Some doctors have silenced patients anyway. Several years ago, a physician reputation management service called Medical Justice developed a sort of liability vaccine. Doctors would ask patients to sign an agreement promising not to post about the doctor online; in exchange, patients would get additional privacy protections.

This struck me as the height of audacity, and when I shared my feelings with the company, I was informed that the agreements had outlived their usefulness. What neither its vice president of marketing, Shane Stadler, nor its founder and chief executive, Jeffrey Segal, told me, however, was that the company had retired the agreements in the wake of a lawsuit related to them and a complaint filed with the Federal Trade Commission.

Medical Justice has now turned 180 degrees and embraced the review sites. It helpfully supplies its client doctors with iPads that they can give to patients as they are leaving. Patients write a review, and Medical Justice makes sure that the comments are posted on a review site.

Health services industries need to be reviewed. Patients would benefit tremendously by getting more high quality information about how doctor’s offices work (e.g., how long is the wait? do you see a different doctor every time?).  I remember when my family moved to Evanston finding it really difficult to locate a good doctor’s office that met all of our family’s needs. I’m still not completely happy with our doctor, but the switching costs are sufficiently high that behavioral inertia has taken over.

Accountability in the medical field is a problem, especially now that doctors offices have begun to fully embrace the market logic, which means that from the patient’s perspective you’re treated more as a customer and less as an individual. But doctor’s resistance to monitoring, as could be had with anonymous review sites, is completely understandable from their perspective. They want the profits that the market logic/business model brings, but they also want to maintain their professional autonomy and discretion. Once you introduce patient feedback into that process, the profession begins to lose some of its autonomy.

getting big stuff done: is this an organizational problem?

I’m a sucker for nutty futurist speculations.  So bear with me on this one.

A few nights ago I was watching Neal Stephenson’s talk on “getting big stuff done,” where he bemoans the lack of aggressive technological progress in the past forty or so years.  There’s obviously some debate about this, though he makes some good points.  He raises the question of why, for example, we haven’t yet built a 20km tall building despite the fact that it appears to be technologically very feasible with extant materials.  Nutty.  But an interesting question.  From a sci-fi writer.

Stephenson ends his talk on an organizational note and asks:

What is going on in the financial and management worlds that has caused us to narrow our scope and reduce our ambitions so drastically?

I like that question.  Even if you think that ambitions have not been lowered, I think all of us would like to see the big problems of the world addressed more aggressively.  (Unless one subscribes to the Leibnizian view that we live in the “best of all possible [organizational] worlds.”)  Surely organization theory is central to this.  This is particularly true in cases where technologies and solutions for big problems seemingly already exist – but it is the social technologies and organizational solutions that appear to be sub-optimal.  So, how can more aggressive forms of collective action and organizational performance be realized?   I don’t see org theorists really wrestling with these types of questions, systematically anyways.  It would be great to see some more wide-eyed speculation about the organizational forms and theories that perhaps might facilitate more aggressive technological, social and human progress.

I can see several reasons for why organization theorists don’t engage with these types of, “futurist” questions.  First, theories of organization tend to lag practice.  That is, organizational scholars describe and explain the world (in its current or past state), though they don’t often engage in speculative forecasting (about possible future states).  Second, many of the organizational sub-fields suited for wide-eyed speculation are in a bit of a lull, or they represent small niches.  For example, organization design isn’t a super “hot” area these days (certainly with exceptions) — despite its obvious importance.  Institutional and environmental theories of organization have taken hold in many parts, and agentic theories are often seen as overly naive.  Environmental and institutional theories of course are valuable, but they delimit and are incremental, and are perhaps just self-fulfilling and thus may not always be practically helpful for thinking about the future.

That’s my (very speculative) two cents.

spring 2012 book foum – jenn lena’s banding together

Spring is almost here – and it is time to announce our next book forum. We’ll be discussing Jenn Lena’s new book, Banding Together: How Communities Create genres in Popular Music. The book explains how musical genres are built from cultural boundaries, networks, and local scenes. It’s an honor to discuss Jenn’s book because she’s a former guest blogger and a leading sociologist of culture. So, please buy a copy (or two!) and we’ll get started in the first week of April.

Adverts: From Black Power/Grad Skool Rulz

conference for orgtheory in developing regions

Writing from the home office in Switzerland, Tim draws my attention to a conference for management PhD scholars interested in development. From the call for papers for the UNDP Development Academy:

The oikos UNDP Young Scholars Development Academy 2012 provides PhD students and young scholars working on poverty, sustainable development, and the informal economy from an Organisation and Management Theory perspective a platform to present and discuss their on-going research projects with fellow students and senior faculty.

Research on inclusive business models, market development and sustainability between the informal and formal economy is a promising and challenging field for young researchers and PhD students. It calls for a multitude of methods, combination of disciplines in strategy, organisation studies, sociology, anthropology and economics, and new research designs, e.g. market ethnography in organisation studies.

Great opportunity for orgtheory PhD students and tenure track/post docs. Check it out.

Adverts: From Black Power/Grad Skool Rulz

where your iphone comes from

The latest episode of This American Life is a breathtaking first-person account of a Mac aficionado’s visit to an electronics manufacturing plant in Shenzhen, China. Here he meets some of the workers who put iPhones together and discovers that the entire manufacturing process is done by hand! He learns of the incredible toll this process of constructing little electronics goods has on their health and lives. The account, partly due to Mike Daisey’s engaging monologue style, is really unforgettable and disturbing. One of my favorite lines from Daisy’s account:

How often do we wish more things were hand-made? Oh, we talk about that all the time, don’t we? I wish it was like the old days. I wish things had that human touch. But that’s not true. There are more hand-made things now than there have ever been in the history of the world. Everything is hand-made. I know, I have been there. I have seen the workers laying in parts thinner than human hair, one after another after another. Everything is hand-made.

In typical TAL style, they try to get the other side of the story and the last ten minutes of the episode really grapple with the effects of sweatshop labor on economic mobility. Still, the voices that will remain in your head after the podcast are those of the mistreated workers whose bodies are souls are slowly being sacrificed on the factory line.

a sociology of Steve Jobs

Hosted over on my own blog, mostly because it’s a little long, here’s A Sociology of Steve Jobs.

the new auto industry (is almost here)

I test drove a Nissan Leaf this weekend. It’s a nice little car. It’s also the future of cars in America because the Leaf is an all electric car. For years, people have been promising that electric cars would be here. But now it’s happened. The technical issue was making a battery that was cheap, light weight enough, and didn’t take forever to charge. The problem is now solved.  Also, there is now an incentive to create charging stations. Major firms, like Walgreen’s and Ikea, have ordered tons of chargers. While you are shopping, you can charge the car for free.

Now, I want to discuss the long term consequences of electric cars for the auto industry. Currently, there’s an iron triangle that defines the auto world: manufacturers and the people who make specific parts; the oil industry; and dealers. The electric car will revolutionize how this triangle works.

The oil companies will take a big hit. Electricity is extremely cheap. Charging a car costs about 10% of the price of gas. It’s so cheap that, as I noted above, that merchants will give you electricity for free if you promise to shop at their store.

The real change, though, is in the nature of auto sales and the dealerships. Electric cars are made very differently than gas powered cars, which will upend the system of dealerships. Right now, dealers and auto manufacturers make their money off of maintenance. The price of a new car is subsidized pay all the repairs done by dealers.

Electric cars will change the system because electric cars have very few parts. The Nissan Leaf is essentially a big stack of batteries, which spin the axles. There are no belts, no injectors, no spark plugs, no gaskets, no oil. It’s like a kid’s toy car. That means there is almost no later maintenance. Thus, you can charge more at purchase (which the auto firm soaks up) because you will pay a lot less on gas and parts. The result? Dealerships will massively shrink.

This new system will take about 10 years to fully take hold. Once a few major cities have a bunch of charging ports, the model will be viable. Gas powered cars will be old cars or cars reserved for long distance trips where you are time sensitive and need to gas up quickly. Bottom line: The engineers have solved the battery problem and now the rest of the industry is set to change.

organ markets

Duke University’s Kenan Institute for Ethics has a nice interview with our friend Kieran. The topic is organ markets. A few choice clips:

But what is really wrong with having a market—a system for buying and selling—our own organs? Certainly, there’s little doubt that it would have some unpleasant aspects. There would be many cases where a wealthy individual bought a kidney from someone much poorer. The prospect of the poor literally giving up their bodies to the rich is enough to make many people recoil in disgust.

If such market exchange of organs is exploitative, there are two solutions: you can ban it, or you can try to ensure people aren’t in a position where they feel forced to sell their organs. A ban may consign people to an even worse fate (death) than being exploited. The second solution, meanwhile, raises big questions of social justice that go well beyond a market in kidneys.

Recommended.

deunionization and growth in inequality

Bruce Western and Jake Rosenfeld published an important paper in the American Sociological Review that shows that deunionization has significantly contributed to increases in economic inequality. They make the case that the effect of deunionization on inequality growth is partly the result of a change in norms surrounding equity. Unions “contribute to a moral economy that institutionalizes norms for fair pay, even for nonunion workers.” When unions are less powerful and as those norms fade, even the the wages of nonunion workers decline.

A variance decomposition analysis estimated the effect of union membership decline and the effect of declining industry-region unionization rates. When individual union membership is considered, union decline accounts for a fifth of the growth in men’s earnings inequality. Adding normative and threat effects of unions on nonunion pay increases the effect of union decline on wage inequality from a fifth to a third. By this measure, the decline of the U.S. labor movement has added as much to men’s wage inequality as has the relative increase in pay for college graduates. Among women, union decline and inequality are only related through the link between industry- region unionization and nonunion wage dispersion. Union decline contributes just half as much as education to the overall rise in women’s wage inequality. These results suggest unions are a normative presence that help sustain the labor market as a social institution, in which norms of equity shape the allocation of wages outside the union sector (532-33).

An interesting comparison is the paper by DiPrete et al. (2010), who showed that increases in CEO pay are the result of firms “leapfrogging” their compensation benchmarks. Firms first identify peer groups, and they then try to match or exceed what their peers pay their executives. Continual leapfrogging of peers leads to an escalation in CEO compensation. The same kind of benchmarking was happening with union wages, but the pattern was moving in the opposite direction. Nonunion firms essentially pegged their wages to those of union firms. As unions lost negotiating power, they no longer had the ability to set wage targets, and nonunion firms were not forced to raise their employees’ wages at the same pace they had in prior years.  This lack of normative pressure to keep up with the Joneses gradually eroded notions of fair pay.

patent trolls and innovation

Other than financial measures (like ROA) I can’t think of another firm-level variable that is more commonly used in organizational studies than patent activity. Patents are used to track everything from innovation to technological niches to social networks among scientists.  Patents are an all-purpose measure because we think they are tightly linked to creativity and knowledge production, the engine that drives both science and capitalist enterprise. But what if this is increasingly not true? What if patent use is becoming decoupled from creativity?

This is one of the questions posed made by last week’s This American Life, my favorite NPR show and one of the most consistently interesting programs of journalism out there. The show talked about patent trolls – companies or individuals who acquire patents for the primary purpose of suing other actors who might use technology that potentially infringes on that patent.  The show focused on the firm, Intellectual Ventures, and its founder Nathan Myhrvoid. Through a couple of interesting vignettes and sly investigations, they showed how the company uses lawsuits, brought by a number of shell companies, to get large settlements out of technology companies, some of which are struggling enterpreneurial groups.  The show demonstrates how, rather than protect and promote innovation, increasingly patents are being used to stifle innovation by wiping out or financially weakening companies that are actually trying to bring innovation to the marketplace. Meanwhile, patent trolls sit on those patents and do nothing to advance the innovations.

This must have some implications for our current understanding of patents as indicators of creativity and innovation. One of the startling revelations in the program was just how much redundancy there is in the patent system. The number of patents issued that cover the same basic function is often in the thousands, especially in the software industry. Patents may be more indicative of turf wars than they are of real innovation.

Even if you’re not a technology scholar, I highly recommend that you listen to the podcast of the show.

sociology, casinos, organizations, and more

Hi org-theory-ers, and thanks for the invite to guest-blog.  As Brayden mentioned, I’m Jeff Sallaz, a sociologist at the U of Arizona.  I’m actually hoping this may prove curative for my current case of reverse culture-shock.  I returned last weekend from a half-year stint as a Fulbright scholar in the Philippines.  My grant was to study how the country has displaced India to become “back office to the world,” that is, the global leader in voice-based BPO services.  But like the call center workers I studied, in my personal life I quickly learned to think of “the internet” as a precious resource.  Given frequent power outages, crowded internet cafes, and home service that made one yearn for dial-up, I had to become strategic about my internet use.  Email mom or peruse ESPN.com?  Respond to my chair or catch up on Kieran’s blog?  Well I’m back now to an embarrassment of bandwidth, and look forward to blogging to my heart’s content.

I have a lot to say about BPO, but I know that Nadeem recently guest-blogged on the subject.  So instead I’ll discuss my research stream on the gambling industry.  (Plus, what better way to get stoked for the inaugural ASAs in Las Vegas, AKA Lost Wages!)  A brief background.  When I was in grad school at Berkeley, I discovered that Erving Goffman had done fieldwork in Nevada casinos.  For various reasons, this work didn’t become as well-known as his asylum studies.  But I used it as a taking-off point from which to do an ethnography of the global casino business.  At various points I  dealt craps in Vegas, designed casino adverts in South Africa, and pit bossed a Tribal casino in California.

What’s my general take?  Well, on one hand, we can view casinos (and other gambling enterprises) as ordinary organizations.  You need capital to start one; you must employ people to run it; you compete with other producers for market share; and so on.  But on the other hand, casinos belong to a special subset of organizations, insofar as they sell a good/service that is considered problematic by significant segments of society.  Gambling exists in what I call a liminal zone—neither completely proscribed nor accepted (cannabis and kidneys are other entities to have recently entered this zone).   Historically in fact, gambling charters were reserved for “non-profit” institutions (the Catholic Church; Harvard; the Seminole Nation, etc); only recently has it become accepted for private parties, let along PTCs, to sell gambling.  Much as Goffman documented how “stigmatized” people go about their everyday lives, I want to know how stigmatized organizations go about theirs.

Here are some of the questions I’ve addressed in my writings, and that I’d like to explore further at org-theory.

The labor of luck.  What is the precise nature of gambling as a commodity?  How is it produced and exchanged in practice?

Labor markets and modernity.  Up until the 1970, you pretty much saw only Italian-American men working in Las Vegas casinos.  At ASA, you’ll see a much more diverse workforce.  How and why did this change?

Market-making.  Since the late 1980s, the gambling business has boomed worldwide.  Why?  Who were the actors involved in this project and what exactly were they up to?

Gambling and governmentality.  Related to the above, how are we to understand the underlying logics by which states regulate gambling?  Is there an organizational story here?

The Gambler.  The field of gambling studies is dominated by a psychological discourse (those who gamble too much are addicts, they need to be analyzed and/or medicated).  How could we do a proper sociology of gambling, and especially heavy gambling.

cognition as networks

With the increasing interest in the cognitive structures that underlie organizational and market activity, I think it is important to take a step back and think more carefully about the constructs and how they are used.  A quick glance at the literature reveals a long inventory of cognitive structures used in research – categories, frames, schemas, logics, scripts, recipes, etc …  Currently within organizational theory there is much emphasis on categories and how they constrain and enable market behavior.  While there certainly is good reason why categories should matter, we should ask ourselves if categories are the right unit of analysis.

Let me propose that a more tractable way of thinking about cognition is to treat categories as embedded within a broader network of other categories through a series of relationships – essentially what is called a schema.  Empirically, this means capturing the nouns/phrases as categories and the verbs as relations that connect them.  See Kathleen Carley and colleagues efforts to draw such cognitive maps.  In my own work, with Christopher Bingham, we have applied this technique to analyze how the insurance industry conceptualized the early business computer.  But, what do we gain by looking at the network as opposed to the individual categories?

One reason why considering the conceptual network is important is that cognitive mechanisms, such as analogies, leverage the relational structure and not the category structure.  Gentner and colleagues have characterized analogies as mapping a relational structure between something familiar and the new concept.  Something new is familiar because of the shared relational structure as opposed to sharing the same category. In fact, in our work with the computer, we observe two distinct analogies – one comparing the computer to existing office machinery and the other, to the human brain.   Just focusing on categories would miss this powerful mechanism to expand and develop new categories.

the penguin and the leviathan: yochai benkler on cooperation

Here’s a SFI lecture by Yochai Benkler that might interest orgtheoristas – “the penguin and the leviathan: the science and practice of cooperation.”  It appears there is also a forthcoming book titled The Penguin and the Leviathan: How Cooperation Triumphs Over Self-interest.

My two cents?

I’m afraid the lecture (and I’m guessing book as well) features some econ-bashing and lots of wikipedia exuberance.  It would be nice to hear some orgtheory-informed discussion and novel arguments related to markets, hierarchies and hybrid organizational forms.  Theoretically there is quite a bit of recycling (which Benkler recognizes: see his review of disparate disciplines on matters of self-interest and cooperation) – it appears that the book is largely targeted toward non orgs specialists.  So it may not necessarily be meant as a new-new scholarly contribution – we’ll see.  The lecture is worth watching nonetheless (e.g., some interesting data and Q&A/public policy discussion at the end).

More on the book once it comes out.

crowdfunding academic research?

I really like what companies like kickstarter are doing — they provide a “crowdfunding”-type platform for artists.  Artists and budding entrepreneurs can post project ideas and needs onto the web site and readers can pledge funds to help realize these projects (based on a threshold funding system).  The projects range from hundreds of thousands of dollars to much smaller ones. (Warning: thumbing through the various projects is pretty addicting.)  The wikipedia site for “crowdfunding” lists other such companies (e.g., kiva.org, sponsume, pledgemusic).

As NSF funding for the social sciences appears to be under threat, it would be great to see a crowdfunding model for academic research as well.  There seem to be lots of potential benefits: a new source of funds could be tapped, researchers wouldn’t have to chase funds as funders might find them instead, new populations would be introduced to research, etc, etc.  Lots of benefits, downsides of course too.

Here’s someone who has thought about some of these issues.

institutions and political economy

Good stuff: Timur Kuran talks to Douglass North about efficient institutions and political economy.

has the public corporation reached its twilight?

I think the nexus of law and organization is a fascinating area.  While doing some searches in this space, I ran into former guest blogger Jerry Davis’s recent, provocative article on the matter – arguing that the public corporation has reached its twilight:

ABSTRACT

During the five decades after Berle and Means published The Modern Corporation and Private Property in 1932, their analysis became the dominant understanding of the American corporation. Social scientists, policymakers, and the broader interested public knew about the separation of ownership and control, the potentially fraught relations between shareholders and managers, and the image of the corporation as a social institution. Berle and Means’s view of an economy dominated by a handful of ever-larger corporations run by an unaccountable managerial class inspired scholarship from sociologists (who were convinced they were right) to financial economists (who wanted to prove them wrong) to lawyers (who contemplated the rights and obligations implied by this system).

A decade into the twenty-first century, however, the public corporation may have reached its twilight in the United States. The “shareholder value” movement of the past generation has succeeded in turning managers into faithful servants of share price maximization, even when this comes at the expense of other considerations. But the shareholder value movement also brought with it a series of changes that have undone many core features of the Berle and Means corporation. Corporate ownership is no longer dispersed; the concentration of assets and employment have been in decline for three decades; and today’s largest corporations bear little resemblance to the companies analyzed by Berle and Means. Moreover, there are far fewer of them than there used to be: the United States had half as many publicly traded domestic corporations in 2009 as it did in 1997. In another generation, the Berle and Means corporation may be just a memory, overtaken by new forms of organization and financing.

Here’s the link and full citation:

Gerald F. Davis, 2011. The Twilight of the Berle and Means Corporation, Seattle University Law Review.

.

Be sure to check out the other articles in this “Berle and Means” special issue.

.

theories of risk

Early last month Charles Perrow, as one of the leading experts on organizational accidents, had something to say about the Japan nuclear crisis:

Currently our approach to risk is “probabilistic,” and the probability of a tsunami seriously damaging the Fukushima Daiichi plant was extremely small. But we should also consider a worst-case approach to risk: the “possibilistic” approach, as Rutgers University sociologist Lee Clarke calls it in his 2005 book Worst Cases: Terror and Catastrophe in the Popular Imagination. In this approach, things that never happened before are possible. Indeed, they happen all the time.

In what should be considered a classic case of the failure to take a possibilistic approach, consider this statement by Tsuneo Futami, a nuclear engineer who was the director of Fukushima Daiichi in the late 1990s: “We can only work on precedent, and there was no precedent. When I headed the plant, the thought of a tsunami never crossed my mind.”

Futami was not alone in his thinking. Experts throughout the nuclear industry and government regulatory agencies not only failed to predict the likelihood of a giant earthquake and tsunami, but also failed to examine the vulnerabilities of Fukushima Daiichi’s design to a natural disaster of this scale. Instead, they relied on a history of successful operation as an assurance of future safety. As a result, they ignored or underestimated a number of major risks that have since doomed the plant.

where is power elite theory when you need it?

When I was in grad school, power elite theory seemed antiquated, an explanation founded on paranoid underpinnings. It was an undergrad-ish view of the world. Sure, Domhoff was fun to read in your SOC 101 class, but as an explanation for state behavior it sucked. Skocpol said so. Sociologists weren’t getting jobs selling power elite stories. People on the job market talked about status dynamics, social movements, categories, and other important stuff.

And then the financial crisis happened, and the government bailed out a bunch of firms and through good journalism we learned that a lot of that money directly funded the investment projects of Wall Street executives’ wives. And we learned that Goldman Sachs never rests and never loses. And we figured out that ex-Goldman executives are now basically running our economy (and perhaps the world). And we found out that grass roots movements are covertly being funded by the super wealthy Koch brothers.  It turns out that the power elite has been really busy while sociologists have been off studying other things.

To be fair, not all sociologists stopped engaging with elite theory. The holdout Mark Mizruchi, for example, hasn’t stopped (even though even he thinks that the elite has become fragmented, causing individual firms to pursue  their own business interests more vigorously).  His work and the research of others like him (e.g., Val Burris) makes me feel silly for ever doubting the power of the elite. I encourage you to read Mark’s excellent 2004 article from Theory and Society, “Berle and Means revisited: The governance and power of large U.S. corporations.”  It’s a great scholarly article that will rejuvenate your interest in elite theory while also making the classic work of Berle and Means (written in 1932) seem very contemporary and sexy. Perhaps there will be a resurgence in this area of economic and political sociology in the next few years.

markets as…

OK, this is admittedly very, very loose — but here are some different characterizations of markets, sort of a rough and naive meta-taxonomy of markets:

• markets as price
• markets as aggregation
• markets as mechanism
• markets as governance
• markets as organizational form
• markets as institutions
• markets as collective action
• markets as process
• markets as information
• markets as social exchange
• markets as embedded structures
• markets as networks
• markets as categories
• markets as social constructions
• markets as culture
• markets as moral orders
• markets as politics
• markets as machinery and technology
• markets as performance
• markets as metaphor
• markets as ideology

The interactions between the above “markets as…” conceptions are of course also very interesting.

The list could probably be very long (and some interesting dimensions could be super-imposed on it, thus allowing for fascinating comparisons) — but what are other “markets as…” characterizations that come to mind?

speaking of unlikely budgets

Via John Gruber, Philip Greenspun asks how on earth the New York Times spent $40 million on its new paywall:

… my biggest question right now is how the NY Times spent a reported $40-50 million writing the code (Bloomberg; other sources are consistent). Google was financed with $25 million. The New York Times already had a credit card processing system for selling home delivery. It already had a database management system for keeping track of Web site registrants. What did they spend the $40-50 million on?

And what do you get for $40m besides a wall that can be trivially circumvented?