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Types of Organizations | ||||
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The Legal Forms of Organizations | ||||
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The Corporation | ||||
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Corp Attributes | ||||
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Types of Corporations | ||||
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Corporate Personnel | ||||
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Organizational Departments | ||||
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Leadership | ||||
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Interlocking Directorates | ||||
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Who Holds Org Power | ||||
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Dominate Coalition | ||||
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Middle Mgt | ||||
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Org Power | ||||
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Corporate Power | ||||
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An Analysis of Corp Power | ||||
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Market Concentration | ||||
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Mergers | ||||
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Current Mergers | ||||
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Shell Corps | ||||
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Econ Development | ||||
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Fordism | ||||
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Small Firms & Econ Development | ||||
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Corp Corruption | ||||
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| INDIVIDUALS ARE GIVEN A SET OF RIGHTS & RESPONSIBILITIES BY THE GOVT WHILE ORGS ARE GIVEN A DIFFERENT SET | |||||
| Hall notes an attitude shift: seeing orgs as more responsible for criminal/negligent actions | |||||
| Orgs are said to have standing in the legal system: | |||||
| Organizations form / aggregate to create social structures | |||||
| THE SOCIAL STRUCTURES ( PF REG M CEML ), & THE ORGS THAT COMPOSE, THEM HAVE A UNIQUE LEGAL STANDING | |||||
| 1. Peers orgs have no special legal standing, though some peer unions are gaining power | |||||
| 2. The family is an organization with very strong legal precedence behind it. The relationship of the parents, children, even grandparents in the family is legally defined | |||||
| 3. Religions have legal standing similar to charities & exist w/in the separation of church & state | |||||
| 4. Work / economic / business organizations have a legal standing, & are highly regulated | |||||
| - The enterprise /sole proprietorship: most common business org in terms of numbers | |||||
| - The partnership | |||||
| - The cooperative | |||||
| - The corporation is the most prevalent (biggest & most powerful) form of business org | |||||
| 5. The government has legal standing, & a unique set of laws compared to religion & business | |||||
| 6. The military has legal standing: legal to kill & destroy; civilian control | |||||
| 7. Charity has legal standing & may be tax exempt | |||||
| 8. Education in both public & private sectors has a legal standing which parallels that of govt & business | |||||
| 9. The media has a business like legal standing enhanced by the Freedom of the Press | |||||
| 10. Leisure / recreational orgs have a business type of legal standing, but many small leisure groups are informal orgs | |||||
| WORKPLACES HAVE INNUMERABLE LEGAL FORMS, RIGHTS & OBLIGATIONS, ESPECIALLY W/ REGARDS TO THE CORPORATION | |||||
| The majority of workers in the developed nations go to work each day in enormous corporations | |||||
| Many workers do not know from day to day which corporate entity is their employer because of reorganization, acquisitions, or mergers | |||||
| Workers do have a good idea of approximately how many people work at their particular work site | |||||
| The term establishment is used by social scientists to denote the place to which one reports for work | |||||
| Many small businesses have one establishment, while many corporations have numerous establishments | |||||
| The establishment is important to workers because it is where they perform their daily tasks, interact w/ other workers, & spend most of their lives | |||||
| The firm is the employing organization & may be organized as a corporation, enterprise, etc., as discussed above | |||||
| The parent company is the orgl entity, usually a corporation, which may own or control several firms | |||||
| A firm that is controlled by the parent company is called a subsidiary | |||||
| A parent company that controls subsidiaries that are in different industries is called a conglomerate | |||||
| A multi national corporation is a parent company that owns or controls subsidiaries in many different nations | |||||
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| Organizations today are rational, bureaucratic, corporations which are organized into departments | |||
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In general, the corporation today is organized into TWELVE departments, but there may be more or less. They are listed in approximate order of historical appearance | ||
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1. OPERATIONS | ||
| Originally the owner was the manager in charge of operations | |||
| Operations had the most influence in early organizations | |||
| 2. ENGINEERING | |||
| 3. MARKETING | |||
| 4. FINANCE | |||
| 5. ACCOUNTING | |||
| 6. SALES | |||
| Sales has the most influence in orgs today | |||
| In the 1970s, Perrow believed the sales department had the most power in organizations, but he believes that today management has the most power | |||
| 7. ADVERTISING | |||
| 8. PERSONNEL | |||
| 9. PURCHASING | |||
| 10. RESEARCH & DEVELOPMENT | |||
| 11. SHIPPING / DISTRIBUTION | |||
| 12. MANAGEMENT / ADMINISTRATION | |||
| INFORMAL STRUCTURES PERMEATE & LINK THE FORMAL STRUCTURES / DEPTS OF ORGS | |||
| The informal structure is made up of the things people actually do on a day to day basis in an organization | |||
| The informal structure operates in contrast to what the official rules say organizational members should do | |||
| The informal communications system in an org is also known as the grape vine | |||
| The grape vine is made up of the communications that occur outside of the formal channels of communication | |||
| The grape vine can either support or hinder the operation of the formal or informal org structures | |||
| PYRAMIDAL STRUCTURES ARE THE MOST COMMON & TYPICALLY DEPICT A HIERARCHY OF AUTHORITY | |||
| Org depts are typically organized into the traditional orgl pyramid | |||
| There are THREE basic types of pyramidal structures which organize the departments | |||
| In the functional design the departments are organized based on what they do | |||
| In the geographic design the departments are organized based on where they are located | |||
| In the matrix design the departments are organized on functional & managerial lines |
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| - Project: Leadership |
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| - Project: How Would You Lead? |
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| - Project: Video: Master & Commander |
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| LEADERSHIP IS AMONG THE TOP FACTORS AFFECTING ORGS & BECAUSE ORGS & PEOPLE ARE NOT COMPLETELY RATIONAL, CHARISMA IS AN IMPORTANT FACTOR | |||||
| Leadership is perhaps the most important, influential, & oft studied topic in orgl studies |
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| There is the assumption that leadership is the most powerful aspect of any org |
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| Even political events often hinge upon leadership as seen in the famous: "Great Man [ sic ] Theory of History" paradigm |
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| Much of history is the story of military, political, religious, & social leaders |
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| Leadership studies often examine why some great leaders were deposed despite apparent power & a record of successful accomplishments |
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| LEADERSHIP IS HEAVILY CONSTRAINED, INFLUENCED, & OTHERWISE SHAPED BY MANY FACTORS INSIDE & OUTSIDE THE ORG |
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| Meindl, et al, 1985, holds that leadership is romanticized as a solution for whatever is ailing an org |
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| Focusing on issues such as leadership often masks problems w/ structure, power distribution, etc. |
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| Etzioni, 1965, describes leadership as the ability, based on the personal qualities of the leader, to elicit the followers' voluntary compliance in a broad range of matters |
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| Leadership is distinguished from power in that it entails influence, i.e., the ability to influence preferences, while power implies only that subjects' preferences are held in abeyance |
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| Followers do alter their preferences to coincide w/ those of the leader |
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| Gouldner, 1950, describes the leader as any individual whose behavior stimulates the patterning of the behavior & ideology of some group |
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| For Gouldner, the leader is an influence on what the members |
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| Katz & Kahn, 1978, see leadership as the influential increase over & above the mechanical compliance w/ the routine directions of the org |
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| Thus leadership is closely related to power, but involves more than simply the power allocated to a position in the or or claimed by a member | |||||
| Leadership is something that is attributed to people by their followers | |||||
| There is little research on top leadership because these people have the power to control access to them & they have generally not allowed researchers in & when they do, they control by controlling access they control the findings of the research | |||||
| Much research on top leadership is the result of books written by the
leaders themselves:
Lee Iacocca & Chrysler Donald Trump Winston Churchill |
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| There are an extremely large number of dependent variables used in leadership analysis | |||||
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The contemporary conceptualization of leadership involves a combination
of FIVE factors, including the:
- position w/in the org itself - situation / context / environment - traits of the Leaders - traits of the Followers - nature of the relationships w/ subordinates |
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| Because each leadership role is the result of the unique combination of these factors, no one style of leadership is successful all the time | |||||
| Leadership affects both behavior & attitudes at all levels of the org, though the influence of top leadership is thought to be greater | |||||
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| - Project: Interlocking Directorates |
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| In advanced capitalism, most corporations are interlocked | |||||
| Interlocks, a.k.a., interlocking directorates, occur when corporate directors sit on the boards of several corporations, & thus interlock them together | |||||
| Interlocking directorates are an example of a powerful type of interorganizational relationship (IOR) where a member or members of the boards of directors or trustees of one org also serve on boards of other orgs | |||||
| Much of the upper class has been reduced to "investor status" while the corporate class wields even more power than their % of ownership indicates | |||||
| The concept of interlocking directorates holds that the linking of two or more corporations through at least one of their board members increases power, control & networking of both corps | |||||
| There are direct & indirect interlocks among corps | |||||
| Direct interlocks occur when a board member sits on the boards of two or more corporations, linking them | |||||
| Indirect interlocks are two corporations tied by their board members through a third corporation | |||||
| Direct interlocks between competing corporations such as Wendy's & McDonalds are illegal, but both may own frozen food processing corporations | |||||
| The structure of the corporate class is one of interlocking directorates
giving unity & class consciousness in the corporate class through SEVEN
processes:
1. Owning stock in several other corporations Banks & insurance companies own stock in many other corporations 2. Influencing major corporations & government 3. Establishing economic concentration 4. Dominating the mkt through establishing a large market share, oligopolies or oligopsonies 5. Creating networks of directors & managers at the corporate level 6. Magnifying the size of major corporations through interlocks 7. Ranks are more permeable than the old upper class, allowing more networking |
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| On average, corporate boards of directors have 12 people who control the corporation | |||||
| The board has the
- authority to hire & fire management - set broad policy - approve acquisitions/divestitures |
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| Board members come from inside corp mgt, outside the corp but inside the corporate network, & from outside the network | |||||
| Compared to board members, most individual stockholders are widely dispersed & have minor amounts of stock | |||||
| There are ELEVEN major effects of interlocking directorates
The effects of interlocking directorates are to: 1. reduce competition & generally increase cooperation 2. increases econ concentration 3. represent outside influences 4. share info: the business or envl scan: SWOT 5. provide unity ( like other networking devices ) 6. provide "coordination" in the economy 7. provide unity in corp dealings w/ govt 8. increases influence over govt 9. secure good relations w/ sources of capital 10. maintain or create mkt relations w/ other firms 11. provide another means ( in addition to stock control and credit ) for board influence ( used extensively by banks ) |
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Allen found that the top 250 corporations averaged 10 interlocks |
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| A study by US Senate Committee on Govt. Affairs ( SCGA ), 1978, found that each of the top 123 corps was linked w/ 62 others [This is the most recent, exhaustive, govt analysis] | |||||
| The SCGA found that the largest 13 corps had links w/ 70 % of other corporations | |||||
| In 1989 the top 1% of the population owned
- 47 % of all stock - 73 % of all bonds - 53 % of all trusts |
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Allen demonstrates that interlocks create the possibility for financial corporate dominance |
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| The inner group of the corp class is made up of elite board
members & top corporate officers
The ELEVEN qualities of the inner group are that they 1. tend to have more positions on corporate boards 2. are more likely to be board members on large corps 3. often represent large banks on corporate boards 4. belong to social clubs 5. have worked way up rather than starting at the top 6. represent corp interest in other institutions: foundations, universities, govt, etc. 7. like most interlocks, are accounted for by a relatively small number of people 8. tie large corps more closely together 9. represent one set of common interests in the political environment 10. are international players 11. are more able to speak for corp interests as a whole rather than just one corporation |
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| In 1913 Sup Ct Justice Louis Brandeis warned that interlocks contain many evils, such as the suppression of competition | |||||
| Interlocks are seen as the means by which elites maintain their position & exercise societal control | |||||
| Interlocks, like any IOR, help orgs control uncertainties & are a valuable source of info | |||||
| In the basic form of an interlock, a an officer or member of the board of directors of one org is a member of the board of another org | |||||
| Another form of an interlock is where members of two orgs sit on the board of a third org | |||||
| Since orgs cannot merge w/ all orgs because of limited resources & fed merger restrictions, an interlocking board of directors is an indirect way to link orgs | |||||
| Interlocking directorates provide opportunities for collusion, co-optation, monitoring, legitimacy, career advancement, & social cohesion | |||||
| Financial instits are the dominant actors in the network set of interlocking directorates | |||||
| Commercial banks, & ins corps are the most likely to have their members of the boards of other types of orgs | |||||
| Some theorists conclude that the corp sys is dominated by a handful of NY fin instit | |||||
| In the past, railroads were at the center of the network set of interlocking directorates | |||||
| Railroads, telegraphy & coal corps were at the core of the network set of interlocking directorates in the past, circa 1886 to 1905 | |||||
| RRs were very powerful as the US industrialized & moved west | |||||
| Interlocks allow orgs to manage uncertainty in their envs | |||||
| Interlocks provide access to resources & can influence decisions | |||||
| Some orgs mandate an interlock w/ another org, thus lowering the autonomy of the latter org | |||||
| Interlocks are purposive for all the parties involved | |||||
| Orgs that are experiencing fin probs may seek out director from a bank, & conversely, banks seek out directors from corps that are expanding & may need capital | |||||
| Public orgs such as colleges also seek out interlocks from local political & community orgs | |||||
| Orgs in the public sector engage in the same kinds of interlocks through their boards | |||||
| Interlocks are affected by local ties through the interactions at upper class clubs, or the presence of corp headquarters | |||||
| In 1980, of the 797 largest US firms, only 62 had no interlocks & there were a large number of fin instits interlocked | |||||
| Interlocks are the most common in concentrated industries where monopolies exist or almost exist | |||||
| Highly interlocked firms have greater econ effectiveness | |||||
| Interlocks are used to prevent hostile takeovers | |||||
| The poison pill defense against a hostile takeover gives a network of stockholders, usually dev in relation to the interlocks of all involved corps, the opportunity to buy the corps stock at a discount | |||||
| W/ the poison pill defense, the option to buy discounted stock spreads rapidly through the network set & prevents the hostile takeover | |||||
| Some studies have found that interlocks do not constrain one another across industries, only w/in industries | |||||
| Social status w/in a community is imp for interlocks in that the socially elite individuals who are assoc w/ large corps are disproportionately more represented on other boards | |||||
| Orgs tend to interlock w/ those of equal social standing | |||||
| Both econ "clout & grace" contribute to the densest interlocks because these attributes make board members attractive to one another | |||||
| Some believe that the power of boards is limited, relying on the managerial thesis to support their view that mgrs, not boards are in control of corps today | |||||
| Often, the CEO & other top tier mgrs have more knowledge of the op of the org than do board members | |||||
| On the other hand, the board can replace mgt | |||||
| The presence of external influences was found to have little influence on a board or the mgt of the org | |||||
| But the board of a corp is the apex of pwr in the org & there is a natural jousting for power | |||||
| Top mgrs want to maintain their pwr & prefer a passive board while active boards want a mgt who will faithfully execute their directives | |||||
| Since the corp scandals of the early 00s, i.e. Enron & World Com being the two largest corp scandals in hist, Congress has enacted legislation making directors more responsible, & more liable, for the ops of their corps | |||||
| The legislation enacted by Congress to limit corp corruption has served to increase the power & reach of boards | |||||
| Ornstein (1984) concluded that corp imperatives & class solidarity factors op in interlocks encouraging them to make decisions in the interest of the up class | |||||
| Kerbo & Fave (1983) found that an intercorp complex of major corps, w/ banks in a central coordinating position formed an inner group of the corp class that provides the human linkages | |||||
| Kerbo & Fave found that in the 1980 Congressional elections that corp contributions to PACs were based on ideological conservatism | |||||
| PAC contributions in 1980 were based on interlocks as structured by class wide rational actions | |||||
| Class interests are exercised through powerful orgs in mod society which are structured around interlocking directorates | |||||
| In 92 Mizruchi examined 1576 dyads among 57 large mfr firms & found that membership in the same industry was related to similarity of pol behavior | |||||
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| POWER IS ALLOCATED BY THE ORGL STRUCTURE & CULTURE & VARIOUS ORGL ENTITIES SHAPED BY THESE |
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| Power, authority, influence, etc. is all held by individuals in their positions in the organizational hierarchy |
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| Thus, people higher up in the org should have more power than those lower in hierarchy |
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| Power is often held in relationships outside of the formal organizational structure |
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| a. Organizational culture creates & allocates power |
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| b. Informal networks create & allocate power |
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| c. Individual attributes, such as charisma, tradition, knowledge, etc., create & allocate power |
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| Horizontal power relations should, but do not have to create power |
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| Members, at each level of the org, struggle w/ peers for resources |
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| Power may not enter into relationships if parties have no reason to influence others |
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| Power plays w/ peers often enters in the types of conflicts over
a. budgets b. output quotas c. priorities for personnel d. what new tech is adopted & who gets it |
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| 1. DEPARTMENTAL POWER IS SOMETIMES SO GREAT THAT IT DOMINATES THE ENTIRE ORG |
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| Perrow (1970) notes that sales depts are overwhelmingly the most powerful in orgs |
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| In the past it was engineering / production which were the most powerful in most orgs | |||||
| Fligstein (1987) notes that entrepreneurs or people who came up through mfr dominated corp presidencies in early 1900s, while today it may be finance |
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| The parts of the org w/ most power carry out the most critical functions & have the other parts of the org depend on them |
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| 2. MANAGEMENT HOLDS POWER IN MOST ORGS TODAY | |||||
| But there are other forms of orgs where power is more equally distributed | |||||
| 3. CLIQUES & COALITIONS ARE INFORMAL ORGS W/IN THE ORG WHICH CAN HOLD POWER | |||||
| May be groups of mgrs, or any of the power holders discussed below | |||||
| 4. POWER IS HELD BY EVALUATORS THROUGHOUT THE ORG | |||||
| Dornbusch & Scott (1975) demonstrate that regardless of who has day to day power over one power in orgs is often contained in evaluation | |||||
| The one who evaluates, has authority | |||||
| Dalton (1959) demonstrates that staff / line power struggles are constant occurrences in several areas | |||||
| 5. STAFF OFTEN COMES INTO CONFLICT W/ LINE PERSONNEL | |||||
| Staff often have SIX characteristics that bring them into conflict
w/ line personnel, including that they are:
1. younger 2. more formalized 3. concerned w/ dress & manners 4. more theoretically oriented than line mgrs 5. more expert power 6. must secure coop from line/managers to do anything |
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| An early innovation in bureaucracy was the development of specialized staff positions | |||||
| Modern bureaucracies often include staff positions that are outside the linear chain of command | |||||
| See Also: Mintzberg, who has developed a 5 part model of the modern bureaucracy that includes staff & line segments | |||||
| Staff positions are ancillary support positions | |||||
| Staff positions are filled by specialized workers trained in some specific area, such as safety & health, law, accounting , personnel relations or other important functions that support the main activity of the org | |||||
| Staff report directly to someone in a line position at a given level of the org; however, they have no direct relationship to those higher up in the hierarchy or to those in subordinate positions | |||||
| Staff are supplementary experts needed at specific levels of the org, but they are not included in the formal chain of authority | |||||
| Staff have less frequent promotion opportunities than for Line Workers because they have less defined job ladders | |||||
| 6. LINE / MANAGERS OFTEN COME INTO CONFLICT W/ STAFF | |||||
| Line / mgrs have characteristics that bring them into conflict w/ staff
because
they:
a. seek income, promotions, power b. hold the power through controlling the promotion process c. fear that staff may threaten their domain d. struggle over the same resources |
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| Line positions are those included in the linear chain of command w/in a bureaucracy | |||||
| 7. ACCOUNTING & INFO SYSTEMS ARE CENTRAL AGENTS OF POWER BECAUSE THEY DEAL W/ THE ORG'S MOST IMPORTANT RESOURCES | |||||
| Accounting & info systems are important agents of power for reasons
including that
a. incentive systems provides basis of reward distribution b. power holders shape & decide what are issues & non issues c. they have access to critical info that others do not d. they have a range of professional discretion that can allow for divergent outcomes |
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| Staff resents line & vice versa | |||||
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| THE DOMINANT COALITION IS THE GROUP THAT HOLDS THE POWER & MAKES THE STRATEGIC DECISIONS | |||||
| Thompson's, 1967, coined the term: the dominant coalition |
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| The dominant coalition is composed of those who make the strategic decisions | |||||
| Pennings & Goodman, 1977, note that the dominant coalition comprises a direct & indirect representation of horizontal constituencies, subunits, & vertical constituencies w/ different & competing expectations |
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| The concept of the dominant coalition emphasizes that orgs are not representative democracies |
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| The dominant coalition is the outcome of power held by the various parties in the coalition | |||||
| Some members are more powerful among the horizontal or vertical constituencies & some are more powerful than the various other constituencies |
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| The dominant coalition is the power center in the org which makes strategic choices w/ regard to org structure, processes, personnel, goals, etc. |
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| The dominant coalition: |
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| - in small orgs, is the owner or CEO | |||||
| - does not exist in some orgs; no one has significant power (very rare) | |||||
| - in most large orgs is composed of the major stock holders, the top management, & maybe, powerful Board of Directors members | |||||
| Decision makers in the dominant coalition select those areas of the env w/ which they will be concerned |
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| The selection of areas of concern is done w/in a political framework in which members shift allegiances & power allocations changes | |||||
| W/ selective perception of the env, strategies are selected for dealing w/ the env |
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| MID LEVEL MGRS OPERATE AT A RANGE OF LEVELS BELOW UP MGT & PERFORM VERY VARIED TASKS |
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Traditionally the job of middle mgrs has been to search out, compile, & digest production & mking info & then pass this info on to top mgt |
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If there are no supervisors in the org, then mid mgt's task is also to supervise lower level wkrs |
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| Mid mgt includes mgrs below the rank of vice president but above the supervisors | |||||
| Some orgs include 2 or 3 mid mgt levels | |||||
| Whether labeled by geographic region or grp function (such as mkting or production), mid mgrs implement top mgt's objectives & policies | |||||
| The subordinates of mid mgt are other mgrs | |||||
| Typically, planning & sales mgrs are mid mgrs | |||||
| MID MGT'S ROLE IS BEING SUPPLEMENTED & SUPPLANTED BY TECHNOLOGY | |||||
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Mid mgt is also being affect by tech in that both info processing & surveillance & other forms of supervision can be automated |
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Where computerized accting systems are used, mid mgrs may face displacement & more pressured wking conditions because they are in direct competition w/ the more cost effective systems |
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Mgt info systems (MISs) allow closer monitoring, not only of wkrs, but also of middle mgrs, thus eroding important aspects of their traditional power & autonomy |
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There is increasing resistance to automated production systems among some md mgrs, a grp normally identified w/ willing compliance to orgl goals |
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THE ROLES OF MID MGT ARE TO OVERSEE IMPLEMENTATION, SECURE PROFITABILITY, ORGANIZATION OF PRODUCTION, OVERSEE SUPERVISORS,MONITOR OUTCOMES, & ADMIN |
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Mid mgrs develop strats to implement top mgt's broad concepts |
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The mid mgrs decide how to attain a desired profit level; whether to pursue new products, customers, or territories; & whether to lower prices to increase mkt share |
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Organizing production at this level means fine tuning the structure & allocation the resources acquired by top mgt |
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Mid mgt typically directs other mid & supervisory mgrs by providing leadership & support for lower level mgt |
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Mid mgt typically directs other mid & supervisory mgrs through controls consisting of the monitoring of results of plans for specific products, regions, & sub units & refining ops to ensure attainment of objectives |
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| Mid mgt typically performs admin by overseeing staffing, which
focuses on:
- implementing equal opportunity policies - implementing wkr development programs - negotiating labor contracts - selecting health care systems |
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| - Project: Power & Orgl Power in Your Org |
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| ORGL POWER IS THAT POWER EXERTED BY MEMBERS W/IN AN ORG & BY THE ORG OVER OTHERS | |||||
| Orgl power is power that is circumscribed by the rules & culture of an org, which is the ability to affect the actions of people & grps w/in the org as well as to control the org to such an extent that it may be directed to affect the actions of people, grps, & orgs outside the org | |||||
| All power has both individual & orgl aspects which cannot be separated in practice |
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| Power in formal orgs is usually influence power |
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| Influence is the the authority that is accepted as a decision is made, usually in a formal orgl setting | |||||
| While influence is the primary form of power that is used in decision making in orgs, the other forms of power, e.g. authority, political pwr, coercions, control of info, econ pwr, are also used | |||||
| Influence is the primary form of power utilized in an org, & in a rational org it should be the primary form of power utilized because it is power used, contained w/in the proper orgl context of actors, rules, env, etc. | |||||
| Influence is not the only form of power utilized in orgs because even in the most rationalized orgs, the maximization or rationality is not possible because there are always unknown factors in decisions per bounded rationality | |||||
| See Also: Rationality | |||||
| See Also: Decision Making | |||||
| IDEALLY ORGL POWER IS BASED IN RATIONALITY, BUT IN PRACTICE ALL FORMS OF POWER COME INTO PLAY IN ORGS | |||||
| Because of the orgl factors that lie outside of rat dec mking, i.e. the context of bounded rat, some part of the decision, some part of the power utilized may be based on authority, politics, coercion, control of info, econ pwr, & not exclusively on the factors influencing the decision / use of pwr | |||||
| Individuals acquire power both from their own unique attributes ( charisma, tradition, knowledge, etc.), & also from their organizational attributes ( authority, organizational resources, etc.) | |||||
| Analysts look not only at individual power, but also at the power that comes in the positions & roles that people fill in orgs |
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| Interdepartmental power is primary which is to say that important power laden conflict often exist btwn depts |
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| Power is an act btwn people: most often from different departments |
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| Power is used to signify power: increase awareness of others of ones power |
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| The point of view of the one who is being affected by power is crucial in determining if a power play has occurred |
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| If the one affected believes a power play has occurred, then it has |
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| Organizational power varies according to internal & external factors |
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ORGL POWER IS AFFECTED BY MANY INTERNAL FACTORS OF THE ORG INCLUDING STRUCTURE, CULTURE, ECON POWER, ETC. |
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| Wamsley (1970) holds that organizational power is variable
because of SIX factors, including that power
a. varies by hierarchic level b. is situationally specific c. is surrounded by checks & balances d. makes one interdependent e. players may utilize negotiation & persuasion f. varies as coalitions change |
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| Depts capable of dealing w/ uncertainty have more power |
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| Depts w/ nonsubstitutible resources such as irreplaceable skills which are central to the work flow have more power |
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| Thus power shifts depending on how well depts & individuals cope w/ the demands of the env |
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| In uncertain situations, or situations where nonsubstitutible resources come into play, the established horizontal hierarchy & degree of centralization is often ignored |
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| But the vertical hierarchy is often still as important as it was where power is concerned |
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| In extreme situations, even the vertical hierarchy may come into play where power is concerned |
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An internal orgl power base consists of the EIGHT resources
held that permit the exercise of power, including
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EXTERNAL FACTORS WHICH AFFECT ORGL POWER MAY BE TOTALLY OUT OF THE CONTROL OF THE ORG, OR THEY MAY BE PARTIALLY CONTROLLABLE |
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| A network creates power for an org | |||||
| See Also: A Network is an association of similar orgs, including
but not limited to
Suppliers Users of output Regulatory agencies Similar orgs |
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| TWO General External Economic Conditions impact an org's power
- On the Demand Side, the products' markets & price are the most important - On the Supply Side, price & source of material & labor are the most important |
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| Secondary General External Economic Conditions also influence an org's
power
a. interest rates b. amount of debt holdings by the govt, corps, consumers, etc. c. vitality of the stock market, etc. |
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| Working together (cooperation) increases power for all | |||||
| Amount of power increases w/ a joint cooperative agreement | |||||
| Lammers, 1967, found that in a joint project, managers & workers influence each other more effectively & create joint power & are more effective | |||||
| Factors Causing Power to Vary in Orgs: | |||||
| Power does not generally vary dramatically from situation to situation & at any one point in time, the amount of power is fixed: zero sum game | |||||
| But power may change radically over time | |||||
| Power levels changes in orgs through external & internal changes | |||||
| The external expansion of power into org's env | |||||
| The internal expansion of power through changed structural conditions expediting interaction & influence among all & motivational conditions result in increased interest by all & greater willingness to be controlled | |||||
| External development affects social & psychological process w/in the org conducive to a high level of internal control | |||||
| External & internal power are mutually supporting: | |||||
| As external power increases, org members are more willing to submit to internal power | |||||
| THE ORIGINS OF POWER OFTEN AFFECT WHETHER IT WILL BE LONG LASTING OR NOT | |||||
| Some depts are delegated important task in first place & these types of moves are often a power play to begin w/ | |||||
| Once a dept gains power, it tries very hard to keep power | |||||
| Powerful depts receive more resources: the rich get richer & poor get poorer, maintaining the incumbency of power | |||||
| The power distribution impacts the distribution of resources e.g., rewards, budgets, etc. | |||||
| The reverse is also true, the distribution of resources impacts the power distribution | |||||
| Power's distribution, effect etc., in voluntary orgs is in some ways the same & in some ways different | |||||
| Volunteer orgs need volunteer members participation | |||||
| The importance of democratic process increases in voluntary orgs because members & voluntary & expect more participation | |||||
| The democratic form of power tends to increase continued participation | |||||
| Volunteer orgs need increased permeability to new ideas & interests if democracy is to be maintained | |||||
| OLIGARCHY IS THE POWER OF A SMALL, CLOSED, NETWORK OF PEOPLE, I.E. A DOMINANT COALITION, WHO COOPERATE TO CONTROL AN ORG | |||||
| Thus prevention of oligarchy is especially important in volunteer orgs | |||||
| Michels developed the Iron Law of Oligarchy which demonstrates that oligarchic power emerges & is maintained through FIVE processes, including |
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| a. the delegation of authority or tasks | |||||
| b. those in power having access to resources ( info, $$, etc.) that those in power do not have | |||||
| c. those in power having both legitimacy & a sense of obligation of the followers | |||||
| d. incumbency | |||||
| e. human "self interest:" once power emerges, people & organizations seek to preserve & then expand it | |||||
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| - Supplement: Takeovers & Leveraged Buyouts. The Concise Encyclopedia of Economics |
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| A MERGER IS WHEN TWO OR MORE FIRMS COMBINE, USUALLY BY ONE FIRM BUYING THE TARGET FIRM |
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| Corps have increased in size & concentration in a halting & irregular fashion patterned by periods of rapid growth & relative quiet |
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| Corp growth occurs not only through expansion of a firm's ops but also through the acquisition of other firms, & these mergers occur in cycles |
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| MERGERS OCCUR IN A PERMISSIVE LEGAL ENV |
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| Changes in anti trust laws have encouraged merger frenzies |
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| IN the 1980s the Fed Trade Commission ( FTC ) stopped targeting industries for anti trust investigations & instead only went after corps known to have engaged in illegal activities (Blau, 1993) |
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| Anti trust cases ere left to the Justice Dept where presidential appointees gave low priority to enforcement of the law |
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| Under Pres Reagan there was a lax attitude toward anti trust laws as seen in the near immediate dropping of the cases against IBM, the 8 largest oil corps in the US, & the major US auto corps |
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Because mergers were no longer legally contested / regulated greatly accelerated their occurrence |
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MERGER TARGETS ARE THE RESULT OF TROUBLE CORPS, DEINDUSTRIALIZATION, TECH COMPATIBILITY, CONSUMER PREFERENCES, RESOURCES, BARGAINS, ASSETS, & TAX LAWS |
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Factors that make firms into merger targets include: |
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| 1. that it became cheaper to buy financially troubled corps than to build | |||||
| 2. that because of deindustrialization, there re many troubled corps in No Am | |||||
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3. technological compatibility btwn corps |
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4. shifting consumer preferences that corps share in a mkt |
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5. a desire to control resources |
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6. corps being a bargain / good buy as picked by financial advisors, esp in the case of conglomerates (i.e. mergers among unrelated industries) |
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| 7. the mkt value of a corp being less than its salable assets | |||||
| 8. tax laws allowing the write off of merger costs | |||||
| MERGER & TAX LAWS CREATED THE POPULAR MERGER STRATEGY OF DISMANTLING TARGETS FOR THEIR CASH OR ASSETS | |||||
| It was possible to buy a firm for less than the value of its tax losses & then deduct it losses from one income (Davidson, 1985) | |||||
| A cash cow is a successful corp w/ a secure mkt niche, but a low growth potential had a low price | |||||
| A acquiring corps can use the regular profits of the cash cow to fund the expansion in other areas rather than setting them aside to maintain or upgrade the acquired corp (Bluestone & Harrison, 2000) | |||||
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Conglomerates will pay a premium for the purchase of corps the want to merge w/ typically buying large blocks of a corp's stock at btwn 40 - 50 % more than the current mkt price |
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This tendency to pay a premium makes mergers irresistible for shareholders in the corp being acquired who are interested in quick profits |
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Even if the corps wished to avoid being taken over, it may only be able to seek a "white knight," i.e. a more congenial firm w/ which to merge |
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THERE ARE SO MANY MERGERS, & THEY ARE SO LARGE TODAY THAT THEY IMPACT THE ENTIRE ECON |
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During the current merger era, the 50 to 100 hostile merger attempts indirectly affected nearly al corps because they had to spend time, money, & energy to avoid takeover |
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| The pressure to avoid takeovers moves their investment decisions toward conservative options (Taggart & McDermott, 1993) | |||||
| Merger activity drives up the price of credit, making productivity enhancing investments more difficult | |||||
| CORP EXECS & THE DEAL MAKERS OFTEN BENEFIT FROM MERGERS, BUT STOCKHOLDERS & OTHERS MAY OR MAY NOT BENEFIT | |||||
| The mega mergers impacted wkrs, shareholders, & communities because many mergers create profits for some of those involved in the merger, but destroy the security & prosperity inherent in the original corps | |||||
| Top execs are often in control of info they use to plan their careers & mergers & they often choose not to share this info w/ stockholders or wkrs | |||||
| Top execs may whitewash the facts, stone wall, or consider only their own interests | |||||
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| THE CURRENT MERGER WAVE BEGAN IN THE 80s & HAS CONTINUED STEADILY W/ EVER LARGER FIRMS |
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| The 5th merger wave ended after the recession of 1974 - 1975 |
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| The recession of 1974 - 1975 which was characterized by stagflation, a stagnated econ accompanied by an econ downturn | |||||
| The 74 - 75 recession was the result of Vietnam War costs on the econ & OPEC dramatically raising oil prices | |||||
| A 6th merger was started in the early 80s & began the mega merger trend |
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| THERE WERE RECORD SETTING OIL MERGERS IN THE 80s | |||||
| An early record setting corporate financial deal was when RJR Nabisco became a privately held corp by being taken over by top mgt | |||||
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The 1980s merger frenzy occurred in the oil industry |
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| The oil corps had huge stockpiles of profits as a result of growing energy prices | |||||
| US oil profits received windfall profits from the sale of US oil at prices leveraged upward by the Mid Eastern oil cartel | |||||
| With this money, the oil corps expanded into new areas as in where Mobil, Seagram, & du Pont competed to buy out Conoco the 14th largest industry in the US | |||||
| Du Pont won the competition to acquire Conoco, setting the record at the largest merger in history | |||||
| THERE WERE RECORD SETTING AIRLINE MERGERS IN THE 80s | |||||
| In the early 1980s, the airlines diversified as they bought hotels, restaurants, car rental corps, etc. | |||||
| In 1985 UA purchased the pacific routes of Pan Am | |||||
| 1986 Southwest Air purchased Muse Air | |||||
| People's Express purchased Frontier | |||||
| Tex Air purchased People's Express | |||||
| Piedmont purchased Air Empire Air | |||||
| Northwest Air purchased Republic Air | |||||
| Texas Air purchased Eastern | |||||
| TWA purchased Ozark Air | |||||
| IN THE 90s, COMMUNICATION & AUTO MERGERS SET RECORDS | |||||
| In 1993 the merger btwn McCaw Cellular & ATT set a new records as the largest merger | |||||
| In 1998 two of the world's largest auto corps combined when Chrysler & Daimler Benz merges | |||||
| By the 90s, nearly all these merged airlines had entered bankruptcy at least once | |||||
| Daimler & Chrysler split up in the 2000s & Chrysler declared bankruptcy, as does GM, & they are bailed out by Presidents Bush, Jr & Obama | |||||
| IN THE 00s, COMMUNICATIONS MERGERS CONTINUE SETTING UNPRECEDENTED RECORDS, ALONG W/ UNPRECEDENTED BANKRUPTCIES | |||||
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By the early 2000s, a hi level of mergers was routine in the US & Canada |
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By the early 2000s, top mgrs & wkrs alike became nervous about their corps as they came to be defined as salable bundles of assets |
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Takeovers assumed a hostile character |
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In 2000 the largest merger ever occurred when the 2 telecom giants, Time Warner & AOL merged creating a $350 corp, nearly 10 times the value of the Chrysler & Daimler Benz merger |
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Enron & World Com declare bankruptcy, being the largest firms ever to dissolve |
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GM & Chrysler declare bankruptcy, being the largest firms ever to go bankrupt & not dissolve |
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Links |
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Links |
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| A shell corporation is a type of holding company that is generally set up for the purpose of avoiding legal responsibility for any number of liabilities or to protect the name & reputation of another corp |
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| A holding company is a corp organized for the purpose of owning stock in & managing one or more corps |
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| A holding co is different from a parent corp in that the it generally does not conduct any operations of it's own |
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| A holding co is is a corp that owns stocks or securities of other firms, deriving income from dividends or interest yielded by these |
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| A shell corp is often called a hollow corp because it has no assets |
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| A corp can become a shell corp when it sells off its assets or transfers it's assets to another business entity |
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| Instead of investing in productivity enhancing activities such as tech innovation & job redesign, they subcontract production outside the US |
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| Thus, many of the goods we think of as being "American made" are not being made in foreign nations, w/ the Am co providing little more than the packaging & the labeling |
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| By subcontracting & hollowing out, many corps are attempting to maintain profit rates by lowering their wage base & outsourcing |
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| Jonas, 1986, notes that prosperity will require investment in human & physical resources |
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| In the financial shell game, made in America is determined by "content legislation" which determines the amount of Am input necessary to be called "Made in the USA" |
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| ECON DEVELOPMENT IS THE GROWTH OF THE ECON & USUALLY INCLUDES A GROWTH IN THE NUMBER OF JOBS, WAGES, GENERAL PROSPERITY, & THE PHYSICAL STRUCTURES THAT MAKE IT POSSIBLE | ||||
| Economic development is the transformation of the nature & composition of the economy & usually implies increases in prosperity |
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Ec dev is the process whereby simple, low income national economies are transformed into modern industrial economies | |||
| ECON GROWTH IMPLIES THAT QUAL ECON GROWTH ACCOMPANIES ECON DEV AS IN PEOPLE MOVING UP IN THE CLASS STRUCTURE | ||||
| Economic growth is not the same as economic development since the former implies quantitative growth only while the latter implies quantitative growth, but more importantly qualitative growth |
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| Ec growth implies qualitative growth, a movement up the hierarchy of economic types of agriculture econ, extractive econ, industrial econ, high tech econ, & service econ | ||||
| For many social activist the term econ dev is nearly synonymous w/ exploitation in that ec dev allows corps to move into an area & avoid many of the rules & reg of the indilzed nations including labor laws, envl laws, safety laws, etc. | ||||
| ECON DEV IMPACTS ARE BOTH POSITIVE & NEGATIVE; FROM ED & WEALTH TO URBAN SPRAWL & ENVL DEGRADATION | ||||
| For social critics, ec dev retains all or most of the negative impacts that the indlized nations experienced in their own indl rev | ||||
| All participants in the ec dev debate are concerned w/ making the ec dev process less exploitative & more friendly to corps, labor, the env, etc. | ||||
| At present there is no clear distinction in the language to differentiate btwn "good" & "bad" ec dev, i.e. there are no labels for different types of ec dev other than to state it is green ec dev, or labor friendly ec dev, etc. | ||||
| The issue of econ dev is important because through govt policies & the policies of econ dev agencies, many other issues & policies are impacted | ||||
| Econ dev pol impacts envl pol, military pol, trade pol, human rights pol, etc. | ||||
| Econ dev pol often impacts the very tone the debate around other issues & thus is often defining what is important on issues, the nature of scientific studies done, & the very ground rules for what is "knowledge" & what is not by setting the parameters of the discussion | ||||
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A SOCIO HIST ANALYSIS OF ECON DEV INCLUDES COLONIALISM, THEN NEO COLONIALISM, THEN NEO LIBERALISM, & NATION BUILDING | |||
| The history of economic development is that in the early 1900s, European colonialism ended |
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| Ec dev was not recognized as a social process until after WW II | ||||
| Former colonies & other countries had low living standards compared to the developed countries | ||||
| The colonies came to be known as developing countries | ||||
| As the concept of econ development emerges, the concepts of developing & undeveloped countries emerges |
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| MEASURING ECON DEV IS PRIMARILY DONE VIA GDP, WHICH INCLUDES THE VALUES OF A NATION'S EXPORTS | ||||
| Economists usually rank countries as developed, developing or undeveloped based on per capital income criterion |
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| Another intl econ ranking system, which parallels the developed, developing, undeveloped system, labels nations as core, semi peripheral, & peripheral | ||||
| There are several problems w/ using the developed, developing, undeveloped system to measure ec dev including currency comparisons & quality of life issues |
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| The current measure of ec dev may result in the classification of oil rich nations w/ hi per capita income as dev, when in fact other than the oil ind, they are undeveloped | ||||
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The current measure of ec dev does not effectively acct for currency exchange rates & variations in the cost of living: comparing dollars to denars & cost of living |
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| The current measure of ec dev does not take into acct quality of life factors such as food, shelter, health, retirement, etc. | ||||
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GDP, GNP, PPP HELP US UNDERSTAND DIFFERENT ASPECTS OF ECONOMIES | |||
| GDP, GNP, PPP are THREE methods of measuring income | ||||
| Gross domestic product ( GDP ) is the amount of income that a given nation creates both nationally & internationally | ||||
| GDP is the most frequently used measure of income | ||||
| Gross national product ( GNP ) is the amount of income that is produced in each nation, thus the international production in another nation is not counted | ||||
| GNP was the measure on income used until globalization became so widespread that GDP became a clearer measure | ||||
| Purchasing power parity ( PPP ) is a measure that equalizes the measure of income based on the purchasing power of income for necessities | ||||
| Using PPP as a measure of income means that, for example, that $55 K provides a mid class living in the US while $45 K provides a mid class living in Australia | ||||
| PPP is considered to be the clearest measure of income across nations | ||||
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Other means of measuring development include:
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| Examples of comparing economic development | ||||
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The gap between rich & poor is over $20,000 and growing
Core: PPP GDP: $ 15,000 to $ 20,000 per yr. Periphery: PPP GDP: $ 750 to $ 7,000 |
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| India per capita income est at $270 in
1985
Brazil est at $1,640, Italy est at $6,520 |
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| An analysis of the ec dev of Italy, i.e. Italy's living standard, is raises the question of whether 24 times greater than India's, or just how they relate to one another | ||||
| The living standard gap btwn Italy & India could be biased, i.e. it could be too hi or too lo | ||||
| An analysis of the comparative ec dev of Italy & India leaves no doubt that the Italian living standard is significantly higher than that of Brazil, which in turn was higher than India's by a wide margin | ||||
| ECON DEV CONCEPTS DEMONSTRATE THE GROWTH OF DIFFERENT SECTORS OF THE ECON & THE FACT THAT ECONS MUST HAVE PARTICULAR CAPACITY LIKE ED IN PLACE BEFORE OTHER ASPECTS CAN MANIFEST | ||||
| There are FOUR types of economic activities: Primary Activities, Secondary Activities, Tertiary Activities, Quaternary Activities | ||||
| Geographical path dependence analyzes the relationship btwn the present activities & the past activities of that place | ||||
| There are always different pathways to development according to the circumstances of the variations in factors involved | ||||
| What is the Geographic Path Dependence of the coalfields? | ||||
| FIVE CHANGES IN SOCIAL STRUCTURE IN EC DEV INCLUDE THE BASE, EC SYS, TECH, CONDITIONS, INFRASTRUCTURE | ||||
| Economic Development causes changes in FIVE a society's social structure including the | ||||
| a. structure of a region's economic type of base: ag, raw material extraction, industrial, info/ high tech, services | ||||
| b. form of economic organization (e.g., barter, pure capitalism, state capitalism, socialism) | ||||
| c. availability & use of tech | ||||
| d. basic living conditions | ||||
| e. physical framework or infrastructure | ||||
| UNEVEN DEVELOPMENT IS WHERE AN ECON STRAYS FROM ECON PATH DEVELOPMENT | ||||
| Uneven development is a problem that has plagued nations & their economies: e.g., a nation must have the infrastructure of roads, power, etc. to support an industrial base | ||||
| GENDER & DEVELOPMENT: IN PERIPHERAL NATIONS, WOMEN EXCEL AT STARTING SMALL BUSINESSES WHILE PATRIARCHAL MEN DO NOT | ||||
| An analysis of gender & development demonstrates that in no country are women better off than men | ||||
| In the core women have 85 to 95 % of the wealth of men | ||||
| In the periphery, women have less than 5 % of the wealth of men | ||||
| Developers have found that women invest in new sectors of the econ, whereas men are more likely to invest in tradl areas | ||||
| Women must go to new sectors to gain an econ foothold | ||||
| REGIONAL PATTERNS IN DEVELOPMENT DEMONSTRATE REGIONAL EC DEV SYNERGY | ||||
| Regional patterns in development are a form of uneven development | ||||
| Regional patterns in development are explained by the unique interaction of factors affecting development & scarce resources, history of neglect, aka the history of exploitation, lack of investment, concentration of low skilled people, etc. | ||||
| Explain how each of these has occurred in the Appalachians | ||||
| In reality, many pathways exist to development | ||||
| The same factors that effect econ development itself, also effect which pathway is followed | ||||
| Regions are interdependent & Econ Development is based on geographic, physical & social factors | ||||
| THE STANDARD PATHWAY TO DEVELOPMENT INCLUDES HG, AG, EXTRACTION, IND, INFO / HI TECH, SERVICE | ||||
The 'standard pathway to development' typically includes the SIX phases
of:
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| Most core countries followed the standard pathway to it's end | ||||
| Most semi peripheral countries are struggling in extraction or industry econ systems | ||||
| Most peripheral countries are struggling in H-G, agricultural, & extraction type of econ systems | ||||
| We cannot yet foresee what the next type of economy will be for the core countries | ||||
| We now understand that the pathway to development for semi peripheral & peripheral countries will not be the same path taken by the core countries | ||||
| Thus economists, social scientists, politician, business people, etc. are all attempting to discover the best pathway for each type of nation to take |
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| SMALL FIRMS ARE OF VITAL IMPORTANCE TO THE ECON BECAUSE THEY SUPPLY 1/3rd OF ALL JOBS & 2/3rds OF NEW JOBS |
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| Economist David Birch (1981) holds that firms w/ fewer than 20 wkrs create 2 / 3rds of new jobs |
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| Many new jobs from small firms disappear as rapidly as they are crated |
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||||
| Jobs in small firms represent a circulation of wkrs among small firms as new firms are born, struggle, & die rather than a lasting contribution to the supply of jobs (Bdnarzik, 2000) |
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||||
| Small firms do create many jobs, but many are of short duration; many others are relatively marginal & offer only low wages & meager or non existent benefits |
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| Seasonal hiring in small retail stores of part time or temporary wkrs provides a good example of this latter type of job |
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| SMALL BUSINESSES ARE INNOVATORS BECAUSE THEY ARE FLEXIBLE & CAN INNOVATE AS OPPOSED THE INFLEXIBLE, STAID BUREAUCRACY OF CORPS USING THE FORDIST MODEL OF PRODUCTION |
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| Many social scientists & policy makers hope the small business sector will provide solution to the lingering econ doldrums |
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| Sabel & Zeitlin (1997) argue that production strategies pursued in the past by large firms in the core nations are no longer able because standardized products through the use of highly product specific equipment is now being replaced by specialized batch production |
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| Fordism, i.e. standardized mass production, is being replaced by specialized batch production |
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See Also: Fordism | ||||
| The mass production strategy was successfully used by Henry Ford to revolutionized the auto industry, but this strat tends to deskill wkrs, rendering such industries attractive to low wage competitors such as So Koreas, Taiwan, Brazil, & Mexico |
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| International competition in mkts for mass produced goods eroded the econs of No Am & Euro in many industries |
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| Sabel & Zeitlin proposed that the core nation econs begin to concentrate on specialized products that imitators find impossible or unprofitable to copy |
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| Sabel & Zeitlin cite the example of specialized batch production in Italy where starting in the 1980s small shops of 50 people specialized in textiles, automatic machines, machine tools, auto, buses, & ag equip | |||||
| Specialized batch production in Italy has escaped the role of being subcontractors depending on larger firms through diversifying their mkting ops to include other small producers in the local area & in the Euro mkt | |||||
| They are independent innovators, developing new products for a wider mkt | |||||
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In the past the subcontractor's customers arrived w/ a blueprint to execute, but now they arrive w/ a problem for the subcontractor to solve |
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SMALL FIRMS HAVE DEMONSTRATED INNOVATION, FLEXIBILITY, SPEED, & COST EFFECTIVENESS |
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Part of the optimism around small firms results from their demonstrated ability to innovate more quickly & less expensively than large bureaucratic orgs |
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| The Nat Science Foundation (NSF) finds that small firms are about 6 times more effective in creating techl innovations than are large firms (US Senate, 1986) | |||||
| An example of innovation in a small firm occurred in the steel industry where a small firm introduced the industry changing innovation of the oxygen converter by McLough Steel, a small independent firm based in Detroit (Reid, 1976) | |||||
| An example of innovation in a small firm occurred in the steel industry where a small firm introduced the industry changing innovation of the continuous casting process by Allegheny Ludlum (Reid, 1976) | |||||
| SMALL, DECENTRALIZED FIRMS ARE THE FOUNDATION OF THE NEW ECON | |||||
| Public policy agendas supporting small firms as a source of innovation have gained increasing acceptance | |||||
| In the current econ sys, hope are on the small business sector & on the belief that "decentralization is the great facilitator of social change" (Naisbitt, 1999) | |||||
| The mini steel mills of today replacing the massive, centralized mills of yesteryear are an example of the new decentralized model of business | |||||
| Whether small can produce techl & org innovations that will increase its relative share of production seems less certain | |||||
| Small business will continue to play an important role in providing jobs, goods, & services | |||||
| That fact that 1 / 3rd of the labor force works for firms w/ fewer than a hundred wkrs should caution us not to assume that the experiences of wkrs in the largest corps are the only or most significant type of work experience in core nations | |||||
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| The wealth & power of multinational corporations ( MCs ) often makes them more powerful than the host countries themselves |
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| MCs are often involved in bribery & coercion in developing countries |
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| Pre industrial societies often have great inequality of wealth & power & may be ruled by monarchs or dictators who have their own interests at heart to a greater extent than those of the people |
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| Such govt leaders are often swayed by the great wealth of the MC, & may even demand bribes as SOP |
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| Congressional investigations, the most famous of which took place in 1976, found that hundreds of American corps made payments to foreign govts. to gain favors |
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| Payments of hundreds of millions of dollars were made by Am. corps to govts in So. Korea, Bolivia, Japan, the Netherlands, Turkey, Italy, Pakistan, Colombia, & others |
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| Since WW2, it is now known that corps have been involved, w/ the assistance of the Am. govt., in overthrowing the govts. of Chile, Guatemala, Iran, & Argentina, Nicaragua, Cuba, & probably more |
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| In Chile, in 1970 the Marxist Allende govt was somewhat anti American & the CIA, ITT, Ford & others played significant part in bloody downfall | |||||
| MCs are by their very nature exceedingly difficult to regulate |
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| Every country has different rules & the corp can simply move around until it finds either the rules it likes or officials willing to bend or ignore the rules |
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| The threat of an MC to move often discourages enforcement of the rules for fear of job loss |
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| Thus, MCs find it possible to operate at the fringes of the law, or find a place w/ no law on a particular issue such as pollution, child labor, hazardous materials, unsafe working conditions, detrimental methods of resource extraction, etc. |
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The End
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