Archive for the ‘markets’ Category
People keep predicting the death of BlackBerry. And it’s obvious they lost the mobile battle, though the recent phones do have fans and work well. Just too little, too late. So what’s the deal? Is it just the pile of cash? How are they alive after revenue dropped by $1 BILLION?
Federal grant agencies have asked people who receive grants to make the results of their work “public access.” In other words, if the public pays for it, the public should get to read it. Turns out that the ASA is against this policy. In a letter dated January 9, 2012 (about two years ago), Sally Hillsman, executive officer of the ASA makes a strong argument against public access. Here is the letter and some key clips. Please read the letter yourself (open_access_hillsman):
It remains unclear why the federal government should spend scarce taxpayer dollars appropriated for scientific research to add to existing dissemination avenues. This is what scientific societies such as the ASA and our private sector publishing partners have done for over a century, and continue to do extremely well today. The national and international marketplace demonstrates that non-‐profit and profit-‐making scientific publishers in collaboration with scholarly societies have responded vigorously and competitively to expand access to scientific knowledge as new demands for content and sophisticated communication technologies have emerged. This success suggests that federal science agencies should invest taxpayer dollars in the research itself, especially as federal dollars that support scientific innovation fail to keep up with the pace of research.
There are no empirical studies that I know of which support the notion that free access to the scientific research literature will increase research productivity or economic growth in the United States.
ASA spends nearly $600,000 annually on journal editorial office expenses alone (which does not include administrative costs, printing and mailing expenses, editor honoraria, legal or overhead costs). ASA does not pay peer reviewers, but in return we sacrifice some revenue by a long-‐standing policy of keeping our university library subscription prices low (averaging well under $300 in 2011) in explicit recognition of the contribution university faculty make as peer reviewers, editors, and editorial board members.
Comments: First, it seems that the main issue in Dr. Hillsman’s response is that they are concerned about the income stream. I think this is a legitimate concern. But it should lead to a few sensible questions. For example, in an age of electronic publishing, why does one need $600,000 for a journal office? At the AJS, of which I was an editor, we had (1) a full time manager (call it $50k), (2) some part time staff ($50k), (3) office space (say $5k month – $60k per year) and toss in $50k for postage, computers, etc. That totals about $210k per year. If we give Andy a nice fat bonus for running the joint ($50k), you get up to $260k. I am not sure why we need to wrack up hundreds of thousands more in administrative costs.
But there are deeper questions. What is preventing the ASR from going all electronic and printing paper versions on demand for a few readers? Or going free access, but having advertisements or the “freemium” model? In other words, this argument seems to be a rear guard defense of an older publishing model, not an attempt to creatively think about how the ASR can be read by the widest audience possible.
Second, I don’t think Dr. Hillsman’s letter gets at the main point – the Federal government, sensibly, doesn’t want the results of funded research to be hidden behind pay walls. The pay wall for ASR may not be a barrier to social scientists who have university accounts, but $300 is a barrier for many other readers. But the Federal government’s argument isn’t directed at the ASA. It’s directed at other publishers who charge thousands of dollars for a journal subscription. If you are a lay person, a poor person, or someone from another country, this is a real barrier.
We are now living in an exciting era of journal publishing. We have traditional models, the egalitarian PLoS One model, and the “up or out” Sociological Science model. I say let us experiment, not drift into rent seeking defenses of a 19th century approach to science.
Therefore, what does it happen if the artworks, that once circulated mostly thanks to art magazines (supported by gallerists) and exhibition catalogues, are now instantly available online to everyone?
A preliminary answer to this difficult question would be that a lot of people will simultaneously recognize a same kind of “physiological” beauty. Then they will try to buy it, if they can, driven by the idea that they are not alone, but part of a relatively large number of people who love that artist’s work. That is why – as not only Claudia Cargnel says – the request of certain artworks is extraordinary high, even if the curriculum vitae of the artist has no exhibitions, prizes or bibliography on it. It could be just a trend, due to the internet surfers’ appetite for money, but it may also mean something else. It could be the evidence that social networks, blogs and auction houses’ web sites are now informing art people definitely more than traditional art magazines and museums (generally supported by collectors).
Indeed. One can get a pretty decent education in contemporary art by just reading a few blogs and magazines obsessively. The art world may be getting ready for the next stage of evolution after the rise of the art fair model.
I was recently listening to the podcast, Bad at Sports, which covers the contemporary art world. This episode is a long interview with dealer, writer, and provacteur Matt Gleason. A lot of good stuff, but this caught my ear. Gleason claims that one of the major reasons that Jeffrey Deitch was disruptive as director of LAMOCA was that he pursued “post-curator art.” What does that mean? My translation:
Over the last 50 years, the art world has institutionalized. Museums are run by professionals, artists get MFA, and the art market is centralizing around art fairs. What is so disruptive about Dietch was that rejected the institutionalization of the curator – the people who pick art, stage exhibitions, and manage collections.
In other words, in a world of professionalization, Dietch said: “Screw it, my kid can do this.” And he did it. Dietch fired one of the main curators, had celebrities do shows, and curated many shows himself. Very “post.”
I once asked an art professional what he learned from interacting with Dietch, and he said something like, “I learned that you can hand over an art gallery to teenagers and it’ll work.” Metaphor perhaps, but it captures the spirit. People with degrees don’t have a monopoly over good taste. Gleason notes that this is self-serving. A museum with poor finances, like LAMOCA, might not have the cash for carefully curated shows and it would be easy to have some SoCal celebrity show work. But still, the comment is telling. The art world has institutionalized, but it rests on jello foundations.
A lot of sociologists buy into the theory of “sponsored mobility,” which means that elites pick who gets the mobility. So I think there should be a lot of sympathy for recent research showing that mentorship (communicating with more advanced people) does not have an effect on career advancement but sponsors (people who pick you, push you, and get benefit from it) do have an effect. Robin Hanson reviews a book by economist Sylvia Ann Hewett that makes this claim:
In a new book, economist Sylvia Ann Hewlett uses data to show that mentorship, in its classic wise-elder-advises-younger-employee form, doesn’t produce statistically significant career gains. What does however, her research found, is something she has termed “sponsorship”—a type of strategic workplace partnering between those with potential and those with power. … -
And there is an important implication for the study of gender and inequality:
Women are only half as likely as men to have a sponsor—a senior champion at work who will basically take a bet on them, tap them on the shoulder, and really give them a shot at leadership. Women have always had mentors, friendly figures who give lots of advice. They’re great. They’re good for your self-esteem; they’re good for your personal development. But no one’s ever been able to show that they do anything to help you actually move up. …
We find that women in particular often choose the wrong people. … They seek out a senior person they’re very comfortable with. … For a sponsor, you should go after the person with power, because you need someone who has a voice at those decision-making tables. You need to respect that person, you need to believe that person is a fabulous leader and going places, but you don’t need to like them. You don’t need to want to emulate them.
If true, this forces me to modify my views. I have always believed that sponsored mobility is important in academia, but I believe that mentorship matters as well. If Hewett is right, my belief is misplaced. It’s really about sponsored mobility. So, if you care about women or minorities advancing in some career track (like academia), then forget the nice lunches. Administrators should double down on matching people with power players. A bit rude, but it might be one concrete way to chip away at inequality in the leadership of the academy.
Dissertation topic for up and coming orgheads: Facebook’s complete dominance over the field of friendship based social networking creates an interesting opportunity for the study of organizational identity. Usually, when a firm comes to completely rule an industry, a few firms pick up the scraps and the rest just go under.
But there is another, less explored path. Losers can change their identity. Social networking is a great example. Friendster just gave up its original business model and is now marketed as a gaming web site. MySpace also abandoned its role as a serious player in social networking and reverted to its original goal of serving musicians that reach out to their fans.
Here’s some questions I would ask: 1. What % of loser firms change identity? 2. What conditions enable identity change in firms? 3. What conditions enable successful identity change, in the sense that the firm now accomplishes its goal because of its new identity? My hunch is that corporate culture is going to be a big factor. To pull this off, you’ll need a group of people who can be managed in a way that they won’t bail on the org as it redefines, or have management that won’t just sell the firm for spare parts rather than find a new home for it. Please use the comments to prove/disprove the hypothesis.
Two weeks ago, my organizations class discussed a chapter from Nicole Woolsey Biggart’s classic study of direct selling organizations (DSOs) as charismatic organizations. DSOs rely upon people using their personal networks to recruit customers and, more importantly, new members who distribute products and services. Members share a portion of their sales with sponsors, or those who recruited them to the organization; such sponsors derive most of their income from recruited members’ sales. DSOs’ techniques are more commonly known as multi-level marketing, which have been criticized by some.
In past years’ discussions of the DSO reading, students listed familiar examples of DSOs like Tupperware, Cutco, Amway, and Mary Kay. This time, students named a new DSO that I wasn’t familiar with: Primerica. Two said that they had studied for their license to sell Primerica life insurance. After class, I looked up Primerica’s business model. One of the summary articles (bonus: 300 page prospectus) noted Primerica’s origins (citigroup) and flagged one of its sources of revenues as the $199 license fee that members-in-training front, along with a recommended monthly fee.
In the financial sector, another DSO Herbalife has been the epicenter of an unusually vocal feud between two hedge fund managers, one of whom is shorting Herbalife’s stock and the other of whom is going long. In explaining the rationale for their fund’s position on Herbalife, Bill Ackman and his analyst Shane Dineen gave a 3 hour-long presentation with a 300-plus slide Powerpoint analysis that claims that “Herbalife Displays Indicators of Being a Pyramid Scheme.” During the presentation, Ackman and colleagues argued that Herbalife is primarily about recruiting people for a “business opportunity” rather than selling products or services. For example, the presentation describes how the top 1% of distributors claim 88% of Herbalife’s compensation. Not surprisingly, in a subsequent cnbc interview, the Herbalife CEO countered Ackman’s analysis as an attempt to “manipulate our stocks.”
Ackman’s analysis inspired at least one blogger to journey to Queens to visit a Herbalife nutrition club’s meeting and post about his impression. On the other hand, a Herbalife distributor who has been disappointed by his business opportunity results has filed a suit using claims similar to Ackman’s contentions. An executive summary version of Ackman and Dineen’s Powerpoint analysis underscores the potential impact of DSOs upon distributors’ networks:
Recruiting family members, friends, work and church acquaintances and others in their communities into a rigged game, one that is highly likely to exact financial and emotional harm on those loved and trusted by them, has an impact that cannot be repaired or recompensed with dollars alone.
In class discussions over the years, students have made similar conclusions, with some sharing experiences about how they no longer can socialize with relatives and friends who are members of DSOs because of the relentless pressure to buy and join. Others continue to do part-time work as DSO members who were recruited by family.
Teaching resources on DSOs
Here are recent studies of DSO practices:
- Paid to Party: Working Time and Emotion in Direct Home Sales by Jamie L. Mullaney and Janet Hinson Shope (Rutgers, 2012)
- Making Up the Difference: Women, Beauty, and Direct Selling in Ecuador by Erynn Masi de Casanova (University of Texas Press, 2011)
- The Hard Sell: An Ethnographic Study of the Direct Selling Industry by John Bone (Ashgate, 2006)
- The Tupperware! documentary is a great complement for teaching Biggart’s work
More on Ackman vs. Ichan
Despite the cnbc announcer’s attempts to steer discussion towards the two callers’ opposing positions on Herbalife, Ackman and Carl Icahn revisited an old disagreement, with traders ohhhing in the background. A Vanity Fair article delves into the origins of their feud and other feuds over what sound like spot agreements gone sour. Word on the street is that Ackman may have another presentation on the ready.
Detail of William Powhida’s “A Subjective Classification of Things” (2013) (all images courtesy the artist and Charlie James Gallery) - linked from Hyperallergic
Background: For about 20 years, Art Chicago was one of the most important art fairs in the world. So important, that the New York auction houses would move their sales to as not to conflict with the fair. Then, around 2000, the fair lost its mojo. Competitors showed up, in droves. Budget problems cropped up, then a near shut down, followed by a fire sale. The last two or three editions of the fair were held at the Merchandise Mart. Less than amazing art, held in a claustrophobic space. Then, the fair shut down permanently in 2011.
Some recent articles from Industrial and Corporate Change, which I usually find quite interesting:
- An Interpretive History of Challenges to Neoclassical Economics and How they Fared by Mazzeloni and Nelson
- Do entrepreneurs really learn? Or do they just tell us that they do? by Frankish et al.
- University entrepreneurship and professor privilege by Damsgaard and Thursby
- Billionaires by Sanadaji and Leeson
- They just fade away: mortality in the US venture capital industry by Rider and Swaminathan
Check it out.
Inside Higher Education ran an article on new numbers released by the Council of Graduate Schools. The big news? Humanities enrollments are up 7%. Scott Jaschik asked me about this and, frankly, I was puzzled. I was quoted in the article as saying it is puzzling because it is open knowledge that humanities PhD’s are very risky.
A few possibilities:
- Skepticism: This is statistical noise, or an artifact of how the Council computed this number.
- Shrinking opportunities for educated low productivity workers: In the old economy, there were lots of options for people with humanities degrees. In the new economy, the college premium disproportionately goes to people in finance, economics, or STEM fields.
- Debt avoidance: Stay in school forever and hope that inflation eats away at the debt you acquired.
- Cultural change: Maybe people just value scholarly careers more than they did before and are more accepting of risk. In an era where Wall Street and the law have taken big hits in the eyes of the public, maybe more people are turning to the academy.
For now, I’d wait one or two more years to rule out #1. Then, the list reflects my beliefs, which changes in the labor market first and cultural change last.
There’s a recent study by researchers at Northwestern showing that part time instructors do better than tenured full timers. A few clips from an Inside Higher Ed piece addressing the issue:
A major new study has found that new students at Northwestern University learn more when their instructors are adjuncts than when they are tenure-track professors.
The study — released this morning by the National Bureau of Economic Research (abstract available here) — found that the gains are greatest for the students with the weakest academic preparation. And the study found that the gains extended across a wide range of disciplines. The authors of the study suggest that by looking at measures of student learning, and not just course or program completion, their work may provide a significant advance in understanding the impact of non-tenure-track instructors.
In the past couple of weeks, two journalists who I enjoy reading wrote controversial diatribes about the travesties of contemporary higher education. Both Matt Taibbi and Thomas Frank, each in their own brilliantly polemical ways, compared higher education to the housing bubble that led to our last serious financial crisis. Both writers attacked the integrity and ethics of the administrators of the current regime of academia. Both bashed a system that would allow students to acquire more debt than they could possibly pay given the job prospects for which their education prepares them. These are real nuggets that academics ought to consider seriously. Ignore, if it offends you, the abrasive rhetoric, but at the heart of both of their arguments is a logic that ought to resonate with our sociological sensibilities.
Here is Taibbi:
[T]he underlying cause of all that later-life distress and heartache – the reason they carry such crushing, life-alteringly huge college debt – is that our university-tuition system really is exploitative and unfair, designed primarily to benefit two major actors.
First in line are the colleges and universities, and the contractors who build their extravagant athletic complexes, hotel-like dormitories and God knows what other campus embellishments. For these little regional economic empires, the federal student-loan system is essentially a massive and ongoing government subsidy, once funded mostly by emotionally vulnerable parents, but now increasingly paid for in the form of federally backed loans to a political constituency – low- and middle-income students – that has virtually no lobby in Washington.
Next up is the government itself. While it’s not commonly discussed on the Hill, the government actually stands to make an enormous profit on the president’s new federal student-loan system, an estimated $184 billion over 10 years, a boondoggle paid for by hyperinflated tuition costs and fueled by a government-sponsored predatory-lending program that makes even the most ruthless private credit-card company seem like a “Save the Panda” charity.
The Tesla has attracted a great deal of attention because it has achieved an important technical breakthrough – a fully charged battery will support 300 (!) miles of driving. In other words, daily charging is enough for most people most of the time. That’s a huge breakthrough – the Nissan Leaf only promises about 100 miles per full charge, which a lot of people would use up just commuting.
Here’s a question – what allowed Tesla to pull this off? A few hypotheses:
- Luck. Tesla isn’t any different, it just so happened that the engineers got lucky.
- Tweaking. Tesla just kept tweaking a design that was already there. Maybe they just work a bit faster, or they had more money to throw at the problem.
- Semi-marginality. Tesla is not tied to the auto industry, so it is easier for them to think outside the box.
Anyone have insight on this? Other theories?
The usual advice about art and investing is “don’t bother.” Buy it because you love it, but don’t expect a decent return. Well, that’s not exactly true. There are at least two ways to consistently make money from art, but neither is easy:
- The Vogel Strategy: Named after the Vogels, who spent their lives collecting art on a postman’s salary, the idea is simple – immerse yourself in art and buy up lots of cheap stuff. But you can’t buy any old art. You go to the cultural center, hang out with impoverished artists, and buy cheap.
- The fussy value buyer: As discussed in a recent Art Market Monitor article, art investment funds do actually manage a decent rate of return. The way they do it is to avoid the fancy auctions and look for somewhat undervalued works by artists that are already on track to having good historical reputations. For example, if Bacon is already famous, go for his lesser known buddy Frank Auerbach. Good work, but probably under-appreciated.
The tricky part with the Vogel strategy is that you need to invest in a lot of stuff, much of it goofy. Most people don’t have the patience or taste needed to spot how today’s bizarre avant-garde might be featured in tommorrow’s history book. The trick with the Moneyball strategy is that you go for people who are relatively cheap, but still expensive in absolute terms. You need a lot of capital to even contemplate this strategy. Also, you need to be confident and ignore the hype that often surrounds “hot artists.” That is hard to do for many investors.
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.
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.
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:
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.
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.
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? Read the rest of this entry »
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.
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.
- 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.
[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.
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 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.
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.
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.