orgtheory.net

hermit crab organizations and new institutional theory

For several years I have been harping about the declining significance of the organizations that organization theorists write about in the US.  Much of the field seems to imagine a society comprised of countable organizations, like an urn filled with balls of different colors, even as the organizations we encounter turn out to be Potemkin Village facades. (Fabio recently addressed the conundrum of sampling organizations.)  I’ve described instances of this in previous posts about OEM medical research, pet food, blood thinner, and CIA assassinations.

On occasion, real organizations with actual employees disappear, but like the aroma of an adolescent male who’s been gulled by Axe commercials, their scent lingers on in the form of “brand equity.”  This morning’s New York Times Magazine gives an example of such a ghost organization: Linens ‘n Things, a large US retail chain that was recently liquidated and all its 589 outlets shuttered. As is often the case, the brand name itself was auctioned off in the liquidation, and is now attached to an online retail site operated by a generic e-commerce contractor.  According to the article, “Linens ‘n Things itself now has few direct employees, or even a full-time chief executive.”  (Something similar happened to Circuit City, which went from good to great to liquidation last fall, shedding 34,000 employees. Its brand was purchased by Systemax Inc. and now graces another website.)

We might think of this as the hermit crab approach to organizations.  There are several examples of well-known manufacturers that have effectively disappeared but left behind familiar brand names that were profitably re-purposed (cobbled together? recombinated? bricolaged?).  Memorex had a memorable ad campaign for blank audiotapes in the 1970s (“Is it live, or is it Memorex?”), and enough consumers remembered it that it was worth attaching the name to blank CDs and USB drives.  Polaroid’s dormant label was also floating out there for re-use in electronic products unrelated to instant photography, like portable DVD players.  And Westinghouse, founded in 1886 in Pittsburgh and long the major American rival of GE in businesses such as power generation, morphed into CBS in the 1990s, losing its industrial businesses along the way. (It was subsequently acquired by Viacom, then spun off again.)  You can now buy a “Westinghouse” LCD television at an online “Circuit City” store, although the product bears no relation whatsoever to the old Westinghouse Electric company.

The generic infrastructure for producing and distributing goods has become so well-articulated that creating a firm is now a lot like snapping together an Ikea project.  As Meyer and Rowan (1977: 345) put it, “the building blocks for organizations come to be littered around the societal landscape; it takes only a little entrepreneurial energy to assemble them into a structure.”  My favorite example is Vizio, which is one of the three largest flat-panel television “producers” in the US.  It was created a few years ago by a Taiwanese-born entrepreneur in Irvine who recognized that flat-panel TVs are largely built from commodity parts, so he pitched Costco on a low-priced product to be built by a Taiwanese contract manufacturer that one of his friends had founded.  Vizio is now distributed through several chains, including Costco and Sam’s Club.  It turns out that a half-dozen employees can be enough to build a major business that competes with Sony and Samsung. 

 There are still some brand names floating free out there.  It might be a fun class project for orgtheory to buy the Pontiac brand, work out a distribution deal with AutoNation or Penske, and find an up-and-coming Chinese maker of electric autos to supply product.  It won’t bring any jobs back to Detroit, but it might show a practical application of new institutional theory.

Advertisements

Written by Jerry Davis

August 30, 2009 at 3:02 pm

Posted in uncategorized

6 Responses

Subscribe to comments with RSS.

  1. Ad Age is a good place to find more examples of the kind of thing you’re talking about.

    Like

    gabrielrossman

    August 30, 2009 at 4:16 pm

  2. Hm. Just this morning, I read an old essay by your dear friends from across the pond – Callon and Latour – about “Unscrewing the Big Leviathan: how actors macrostructure reality and how sociologists help them to do so.” In that piece, Callon and Latour ask how macro-level actors (companies, states, etc.) get built up, and argue that they do so on top of smaller bits that get forced into black boxes, never quite perfectly. Macro-actors exist because we make them exist, we fight into them being by combining all sorts of technical, social, cultural and natural bits.

    So, from an ANT-ish perspective, I’m not sure exactly what’s different between, say, Vizio and Sony. It’s not simply that one is a “true” organization and the other is some impostor. Rather, it has to do with the types of associations, the kind of network one has versus the other. Vizio has similar sorts of smaller components – marketers, distributors, R&D folks, assembly plants, whatnot – but it has them enrolled in a different kind of network. It’s not a half dozen people that rival Sony, it’s a huge network enrolled by a half-dozen individuals (much as the Board and chief executives enroll their networks). The trick seems to be that – as you suggest with the Hermit Crab metaphor – we don’t realize or recognize that Vizio is a new type of network masquerading as the old sort. So, is our task now is to study how these old pieces are being combined in new ways? Or perhaps we should just keep helping actors (your B-school students?) macrostructure away!

    Like

    Dan Hirschman

    August 30, 2009 at 4:41 pm

  3. […] 2 comments Jerry Davis’s new book will certainly challenge your way of thinking, especially if you’re a dyed in the wool organizational theorist. His book, along with his article […]

    Like

  4. […] the key insights I picked up from Jerry’s book (see ealier posts on Jerry’s book here, here, and here) is that the large organization is no longer the central unit of society. By saying that […]

    Like

  5. […] the idea of a society of organizations in the US.  One is the disaggregation of production into an OEM model, where the parts needed to create a (temporary) organization are widely available (even to a guy in […]

    Like

  6. […] this is such a bad thing. It really depends on what you think about the modern American economy. If, like Jerry Davis, you think that transition to securitized virtual firms is bad, then this is just another symptom of the problem. If you think that the economy is now different […]

    Like


Comments are closed.

%d bloggers like this: