Archive for the ‘corporate governance’ Category
As some of our dear orgtheory readers know, I am always on the look-out for interesting articles about how organizations use collectivist or participatory-democratic practices. One recent publication I would like to highlight involves a collectivist group fueled by a common love of cola, coffee, and beer.
Fans of a caffeinated soft drink, frustrated by Afri-Cola new owner’s refusal to change the recipe back to the original*, become the new owners and producers of the drink. Not only did they band together to revive the original product using what they considered to be more ethical market standards, they organized using the practice of decision-making by consensus.**
Participatory-democracy invariably elicits conflicts that might be avoided or suppressed under more hierarchical organizations. Members have to learn how to manage contention if they wish to stay cohesive. Premium Cola‘s members had to learn how to do this via a discussion email list.
Husemann, Ladstaetter, and Luedicke’s (2015) “Conflict Culture and Conflict Management in Consumption Communities” examines the types of conflicts and actions taken to address these conflicts within Premium Cola. The authors note the generative qualities of routinized conflict, including the reaffirmation of commitment to a collective mission:
When analyzing the Premium community’s conflicts, we found that the community’s conflict culture involved a limited set of routinized and recurring conflict behaviors. Members use behaviors such as inviting conflict, showing respect for otherness, or releasing aggressions to argue different topics, but use them in similar ways. Many of these behaviors are known from normative conflict sociology as conflict cultivation practices, i.e. routinized behaviors that conflict parties use to perform conflicts in civilized and productive, rather than destructive, ways. Through inventing, selecting, abandoning, enacting, or improving such routinized conflict behaviors, Premium community members are able to produce value rather than destroy value through uncontrolled or abusive conduct.
In contrast, transgressive conflict, in which participants break multiple norms, can lead to abusive interactions. These lead to more active interventions, including the eventual expulsion of a member over his repeated sexist comments about the hiring of a female intern and insults of other members. While the exchanges threatened corrosion, the subsequent actions taken reaffirm Premium Cola’s identity and commitment to community.
* The original recipe had less sugar and more caffeine than the newer recipe.
**More about the fascinating history and ethos of Premium Cola is available here, where the Ladstaetter and Luedicke describe Premium Cola as follows:
…the Premium Cola community can be seen as a group of “productive activists,” e.g.,
prodactivists, that combines the roles of producers, consumers, and social activists to promote change in the capitalist market system by demonstrating how market exchange can be both successful and ethical.
With Fabio on much-deserved blogcation, I’m going to try to throw up some more frequent short posts over the next couple of weeks to keep the ball rolling. Although I’m 100% sure I’m not going to pull off daily posting. It turns out, though, that blogging is a lot like other kinds of writing deadlines, in that the longer you wait, the better the job you feel you have to do to make up for having taken so long.
So with that in mind, a little poetry of the corporation to start your weekend — particularly apt in light of the recent Hobby Lobby decision and debates about corporate personhood, h/t Professor Mondo.
by Archibald MacLeish
The Oklahoma Ligno and Lithograph Co.
Of Maine doing business in Delaware, Tennessee,
Missouri, Montana, Ohio and Idaho,
With a corporate existance distinct from that of the
Secretary, Treasurer, President, Directors or
Majority stockholders, being empowered to acquire
As principal, agent, trustee, licensee, licensor,
Any or all, in part or in parts or entire –
Etchings, impressions, engravings, engravures, prints,
Paintings, oil-paintings, canvases, portraits, vignettes,
Tableaux, ceramics, relievos, insculptures, tints,
Art-treasures or master-pieces, complete or in sets –
The Oklahoma Ligno and Lithograph Co.
Weeps at a nude by Michelangelo.
According to wiki, poet Archibald MacLeish was also instrumental in starting the Research and Analysis Branch of the Office of Strategic Services during WWII. The Research and Analysis Branch, as it happens, was one of the places to be if you were an academic during World War II. In economics, it housed Ed Mason, Walt Rostow, Moses Abramowitz, Carl Kaysen, Wassily Leontif, among others. So it all comes around.
lifting the crimson curtain: Manufacturing Morals: The Values of Silence in Business School Education
As a grad student, I always found crossing the bridge over the Charles River from Harvard University to the Harvard Business School (HBS) to be a bit like approaching Emerald (or more appropriately, Crimson) City. On the Allston side, the buildings seemed shinier (or, as shiny as New England vernacular architecture allows), and the grounds were undergoing constant replantings, thanks to a well-heeled donor. In addition, HBS has loomed large as an institution central to the dissemination of organizational theory and management practices, including Elton Mayo’s human relations.
HBS has certain peculiarities about teaching and learning, like the use of case studies which follow formulaic structures as the basis for directed class discussion.* Moreover, instructors follow a strict grading break-down: mandatory “III”s assigned to the lowest-performing students of classes – a source of concern, as students with too many IIIs must justify their performance before a board and possibly go on leave.** To help instructors with grading, hired scribes document student discussion comments.***
Such conditions raise questions about the links, as well as disconnects, between classroom and managerial leadership, so I was delighted to see a new ethnography about business school teaching at the UChicago Press book display at ASAs.
With his latest book, Michel Anteby lifts the crimson curtain from HBS with his new book Manufacturing Morals: The Values of Silence in Business School Education (University of Chicago Press, 2013).
Here’s the official blurb:
“Corporate accountability is never far from the front page, and as one of the world’s most elite business schools, Harvard Business School trains many of the future leaders of Fortune 500 companies. But how does HBS formally and informally ensure faculty and students embrace proper business standards? Relying on his first-hand experience as a Harvard Business School faculty member, Michel Anteby takes readers inside HBS in order to draw vivid parallels between the socialization of faculty and of students.
In an era when many organizations are focused on principles of responsibility, Harvard Business School has long tried to promote better business standards. Anteby’s rich account reveals the surprising role of silence and ambiguity in HBS’s process of codifying morals and business values. As Anteby describes, at HBS specifics are often left unspoken; for example, teaching notes given to faculty provide much guidance on how to teach but are largely silent on what to teach. Manufacturing Morals demonstrates how faculty and students are exposed to a system that operates on open-ended directives that require significant decision-making on the part of those involved, with little overt guidance from the hierarchy. Anteby suggests that this model-which tolerates moral complexity-is perhaps one of the few that can adapt and endure over time.”
Check it out! And while you’re at it, have a look at Anteby’s previous book, Moral Gray Zones (2008, Princeton University Press).
Is there any relationship between accusations of corporate deviance and the diffusion of new practices? My coauthor, Ed Carberry, and I think so. In a new paper that just came out in the Journal of Management Studies we show that firms began using stock option expensing, a practice that used to be seen as quite problematic and undesirable by executives and boards, after a series of scandals rocked the corporate world in the early 2000s, causing firms to look for new ways to restore their credibility. Stock option expensing became a tool that companies could use to distance themselves from the stigma associated with corporate scandal. Our analyses show that firms facing media scrutiny around claims of corporate fraud and firms that were targets of shareholder activism around corporate governance were much more likely adopt stock option expensing. Firms that faced both intense media scrutiny and shareholder activism were especially likely to adopt the practice. We argue that in the period directly following the Enron scandal stock option expensing became seen as an impression management tactic that firms could use to restore confidence in their accountability to the public.
The title of the paper is “Defensive Practice Adoption in the Face of Organizational Stigma: Impression Management and the Diffusion of Stock Option Expensing.” You can download the paper on my website. Here is the abstract.
Although most diffusion research focuses on firms adopting new practices to maintain their legitimacy, this paper examines a setting in which firms adopted a controversial practice to defend themselves against relating to corporate deviance. We argue that understanding defensive adoption requires attending to both the dynamics of organizational stigma and impression management, and test our theoretical claims by analysing the diffusion of an accounting practice, stock option expensing (SOPEX), following the Enron scandal. We first provide evidence that the media and shareholder activists transformed the practice into a defensive device by theorizing it as a solution to problems relating to corporate fraud and corporate governance. Using event history analysis, we then show that corporations that became targets of stigma- inducing threats were more likely to adopt SOPEX and that the media were a key force channeling these threats.
The theme for this year’s ASA meeting is “Real utopias,” and Erik Wright commissioned a bunch of us to write up utopian blueprints for our particular domains. Erik wanted the essays to be posted months in advance in order to encourage people to read, think about, and comment on them. The annual meeting could then be spent in productive discussions rather than one-way transfers.
My session, “Re-imagining the corporation,” may be of interest to orgtheory types. It’s a morose chronicle of the collapse of the corporation as a social institution in the US, followed by a more cheerful account of how we might deal with apocalyptic climate change and societal collapse using the shrewd insights of organization theory.
The essay is posted at the Real Utopia website, and the session will take place Saturday 12:30-2:10 in the ever-popular “Room TBA.” Hope to see some people there.
Here is an executive summary:
The big news in academic circles recently is the resignation of Teresa Sullivan as the president of the University of Virginia. I’ve been slow to catch on to the importance of this topic and have to admit that I don’t understand the complex politics motivating this move. What compelled the Board of Visitors to ask for her resignation?
The story I’ve heard from a number of news sources is that certain members of the board, and clearly not all since the move was initiated without a vote from the full board, were unhappy with Sullivan’s “incremental” pace in creating change to the institution. But what changes did they want? Based on the emails of board members involved in the ouster, one of the topics that keeps coming up is online education. But that can’t be the real or entire reason for worrying about Sullivan’s strategy. Every university in the country is aware of the potential that online education offers, but none of the elite institutions have yet figured out how it’s going to play out in the long run. Some universities are experimenting with online offerings, but it’s still at a developmental stage.
Others have speculated that the reason was that the Board wanted to see the university run like a business, a vision that Sullivan did not share. But if you read a strategic memo issued by Sullivan in May, you can see that she was actively engaged with the university’s budget situation. She was making efforts to control costs and optimize revenue streams. As you’d expect from any competent president, as it appears she was, Sullivan was keenly aware of the operational needs of the university.
Sullivan’s own public statement about the resignation suggests that the board was unhappy with her style of leadership. They wanted her to run the university in a more autocratic style, a style she did not believe was conducive to good university governance : “Corporate-style, top-down leadership does not work in a great university. Sustained change with buy-in does work.” Taking this statement as a signal of the disagreement between the two parties, the board probably wanted Sullivan to make some moves that would have been unpopular with some of the faculty and Sullivan was unwilling to make those decisions without some faculty support. I’d like to know more about what those unpopular actions were.
What am I missing here? I’d appreciate it if anyone else who is much better informed about the context could shed some light.