Sociology of the firm

SOCIOLOGY OF THE FIRM – SUMMARY OF THE READINGS

Session 1: Introduction to the Sociology of Business

1. What is Sociology? in the Introduction to sociology

• Autism example:

• Scientific explanation: The epidemic is fueled by more toxic chemicals in the environment. The increase of autism is related to changing ways in which we recognize its signs and symptoms.
• Sociological explanation: The communities where autism cases appear to arise from diagnostic processes are very different from those communities where they do not. The communities differ in ways that make sociological sense. Diagnostic change appears to be associated with community wealth.

• Love example:

• Love has been shaped by social and historical influences that sociologists study.

• Coffee example:

• Coffee possesses symbolic value as part of our daily social activities.
• Coffee promotes social interaction and the enactment of rituals; rich subject matter for sociological study.
• Caffeine is a drug and is socially acceptable; sociologists are interested in why these contrasts exist.
• Coffee drinkers are participating in a complicated set of social and economic relationships stretching across the world.
• Virtually, all of the coffee we drink today comes from areas that were colonized by Europeans; it is in no sense a “natural” part of the Western diet.
• Coffee also reveals how and why we interact with a plethora of other commodities, legal or not.
• Coffee is consumed with great fervor in rich countries such as the United States yet is grown with few exceptions in the poorest parts of the globe.

Session 2: The Human and Social Corporate Dynamic

1. A Sociological Approach to the Internal Dynamics of a Company

• Nazi example (the power of every actor): Every actor is powerful. In fact, the Nazi example is an extreme case in which there seems to be no margin of freedom for individuals but cooperating with the camp directors without losing their human dignity, seeking to improve their fellow prisoners’ lot, etc. Those who did not perceive a margin of freedom and did not try to use it perished in camps.

• Shareholders’ conflict example: The owners of a large company may be squeezed between a single main shareholder and a number of small shareholders. It is clear that these two types of owners differ in terms of role and influence, and it is important to take this into account during the corporate analysis.

• Public opinion example: Public opinion, expressed via the media, may be an important resource for a collective actor such as a union, the leadership of a company, or a government.

• Control regulation example: It is composed of the rules and structure set up to direct and oversee the execution of work by employees. These rules generally include procedures for evaluating personnel, disciplinary measures in case of misbehaviour, corrective procedures to solve problems (technical or other), and so on.

• Autonomous regulation example: These are, among others, the rules of their trade that employees forge and that enable them to appropriate a bit more of their work while codifying their interpersonal relations (initiation, integration, mutual assistance, and so on). It is not uniform regulation that is shared throughout the company.

• Joint regulation example: This is the case in companies in which a union exists and many of the rules are negotiated by the union and employer parties. It is also the case in countries such as Germany, where there is a legal co-management obligation in large companies.

• Miners example: We can thus discern three rules of the trade that are central to miners’ work (at least, miners in Abitibi). They can be summarized as follows: one must be a hard worker; one must be sociable; one must not be fearful or boastful. One must be a hard worker because salary is tied to productivity; moreover, constant hard work is a defensive strategy to keep fear at bay. One must be sociable because the workdays are long, the working conditions challenging, and the only comfort that the miners find is in the good relations that they maintain with their colleagues. One must not be fearful because not only does this reaction make the work difficult, but it reminds the other miners of the fear lying deep within each of them.

1. FC Barcelona: "Més que un club" [Case]

• The Early Years:

• Financial situation was precarious for a long time
• Legal status of a not-for-profit sporting club; this status precludes it from being acquired by a foreign investor.
• Catalan identity of the club was reinforced to appeal to the burgeoning Catalan nationalism amongst Barcelona’s middle class.

• The Dark Years:

• Spanish Civil War (1936-1939): FC Barcelona’s players took up arms and joined the Republican faction that was loyal to the leaders of the Second Republic.
• Throughout the 1940s and 1950s, every match was preceded by a ceremony displaying loyalty to the military regime.

• The Climb to the Top:

• Rivalry between Real Madrid and FC Barcelona, based on identity-based and political tensions.

• The Nunez and Gaspart Years:

• In 1978, for the first time in the history of Barça, the president was elected in a vote by all the members of the club.
• Lax management and a lack of transparency had led the Spanish clubs to rack up astronomical debts, forcing the government to intervene in the form of a law in 1990.

• Four Internal Tensions:

• Unsurprisingly, the first had to do with the lack of trophies in the 1999-2003 period.
• The second cause was the lack of transparency of the Nùñez-Gaspart administration at several levels.
• The third cause of discontent was the lack of transparency in Nùñez’s financial management.
• Finally, some people accused him of wanting to gradually erode the club’s Catalan identity, purportedly in order to make the club more competitive.

• The Four Strategic Objectives:

• To give top priority to sporting success by starting to win again as soon as possible.
• To improve transparency in the governance of the club and increase its membership.
• To improve the team’s financial situation by controlling costs and boosting revenue.
• To implement a series of corporate social responsibility initiatives aimed at positioning the club as an institution that acknowledges its responsibility toward society beyond the sports arena.

• Actions to improve the club:

• Newsletter, revenues, expenses, board of directors, partnerships with brands, introducing new players.

Session 3: Capitalism and Globalization

1. Globalism’s Discontents

• Beneficial Globalization:

• East Asia’s growth has been based on exports--by taking advantage of
  the global market for exports and by closing the technology gap.
• It was not just gaps in capital and other resources that separated the developed from the less-developed countries, but differences in knowledge.
• East Asian countries took advantage of the "globalization of knowledge" to reduce these disparities. 

• The Darker Side of Globalization:

• The liberalization has left them prey to hot money pouring into the country, an influx that has fueled speculative real-estate booms; just as suddenly, as investor sentiment changes, the money is pulled out, leaving in its wake economic devastation.

• Lessons of Crisis:

• In Thailand, the free market led to investments in empty office buildings, starving other sectors such as education and transportation of badly needed resources.
• Until the IMF and the U.S. Treasury came along, Thailand had restricted bank lending for speculative real estate.

• An Unfair Trade Agenda:

• The trade-liberalization agenda has been set by the North, or more accurately, by special interests in the North.
• Consequently, a disproportionate part of the gains has accrued to the advanced industrial countries, and in some cases the less-developed countries have actually been worse off.
• Trade negotiations in the service industries also illustrate the unlevel nature of the playing field.
• Which service industries did the United States say were very important? Financial services industries in which Wall Street has a comparative advantage.

• Global Social Justice:

• In Latin America, after a short burst of growth in the early 1990s, stagnation and recession have set in.
• The growth was not sustained--some might say, was not sustainable. Indeed, at this juncture, the growth record of the so-called post-reform era looks no better, and in some countries much worse, than in the widely criticized import-substitution period of the 1950s and 1960s when Latin countries tried to industrialize by discouraging imports.

1. Globalization for Whom ?

• Positive Impacts of Globalization in China:

• In 1960, the average Chinese expected to live only 36 years. By 1999, life expectancy had risen to 70 years, not far below the level of the United States.
• Literacy has risen from less than 50 percent to more than 80 percent.
• Even though economic development has been uneven, with the coastal regions doing much better than the interior, there has been a striking reduction in poverty rates almost everywhere.

Session 4: Information Technology

1. Media and Technology

• Oligopoly in communication

• Mass media control and ownership is highly concentrated in Canada. Bell, Telus, and Rogers control over 80% of the wireless and internet service provider market; 70% of the daily and community newspapers are owned by seven corporations; and 10 companies control over 80% of the private sector radio and television market.

• Censoring in China

• China is in many ways the global poster child for the uncomfortable relationship between internet freedom and government control. A country with a tight rein on the dissemination of information, China has long worked to suppress what it calls “harmful information,” including dissent concerning government politics, dialogue about China’s role in Tibet, or criticism of the government’s handling of events. With sites like Twitter, Facebook, and YouTube blocked in China, the nation’s internet users — some 500 million strong in 2011 — turn to local media companies for their needs.

• Drones

• New media giants like Google and Facebook have recently acquired key manufacturers in the aerial drones’ market creating an exponential ability to reach further in data collecting and dissemination. While the corporate line is benign enough, the implications are much more profound in this largely unregulated arena of aerial monitoring.

• Cellphones of Africa

• In many of Africa’s poorest countries there is a marked lack of infrastructure. Bad roads, limited electricity, minimal schools — the list goes on. Access to telephones has long been on that list.
• With access to mobile phone technology, a host of benefits are available that have the potential to change the dynamics in these poorest nations.
• These programs are often funded by businesses like Germany’s Vodafone or Britain’s Masbabi, which hope to gain market share in the region.

Session 5: The Corporation

1. The American Corporation

• Manager vs Shareholders vs Employees : Will the managers of corporations manage them in the interests of the shareholder-owners? Or will the man- agers act in their self-interest? Will corporate managers take into account the interests of employees, customers, suppliers, lenders, and the polity that made the corporation possible?

• 1790s to 1860s

• The United States led the world in modern corporate development.
• Most of the early American corporations, operating within a state or in a city or town, were small by later standards.
• The largest were banks and insurance companies, joined later in the era by railroads and manufacturers.
• Legislative chartering meant that charters could be tailor-made for each corporation, with its powers, responsibilities – including those to the community – and basic governance provisions carefully specified.

• 1860s to 1930s

• Most corporations remained small (as is still true), but growing numbers of them became very large and operated nationwide and even multinationally. Large corporations required professional managers, who often had limited or no ownership shares. They separated ownership (share- holders) from control (management), marginalizing the influence of owner and shareholders in corporate affairs.

• 1930s to 1980s

• Great Depression, which put the financial and corporate sectors under a cloud, resulting in a host of New Deal reforms.
• Post World War II : The United States not only led the world in production of the key industrial products, steel and electricity, but also led in their per-capita production.
• Science was not viewed as practical. The prestige of science, and the appreciation of its practicality, rose sharply following the war.

• 1945 to 1965

• Large American corporations were subject to little international or domestic competition because of their oligopolistic market structures.
• Dividend payouts declined as corporations retained more and more of their profits to fund much of their investment.
• Stockholders did not mind lower dividends because prosperous times increased the value of their shares, and regulation by the Securities and Exchange Commission increased investor confidence that Wall Street provided a level playing field.
• Managers still controlled corporations, and they exercised their power.
• Corporations did so well in this period because of a strong American economy, a worldwide demand for American products and know how, and a lack of competition from abroad.
• After World War II : They aimed for good products, satisfied customers, a good effect on the community and nation, and a steady return to the shareholders. Foreign competition for the American market mattered more than ever because of the tremendous evolution of seaborne commerce in the form of container ships. (i.e. : Japan)

• 1980s to present

• Countervailing power weakened further as academics and others began to attack government antitrust and regulatory policies as misguided.
• In the rising stock market of the 1980s and 1990s, compensations for all CEOs rose together.
• Stock options : a benefit in the form of an option given by a company to an employee to buy stock in the company at a discount or at a stated fixed price. They were introduced to align the interests of management and shareholders.

• Expectations from the people in regards to corporations : Productivity and sharing.

Session 6: The State and Transnational Organizations

1. Rethinking Growth and the State

• Education : Argue that the closer a region is to the technological frontier, the more growth-enhancing research education funding is, and the higher the growth externalities generated by investments in higher education.

• Liberalization : Productivity growth in firms and sectors that are closer to the technological frontier tends to be fostered by increased trade and entry, whereas productivity growth in firms or sectors that are farther below the frontier tends to be inhibited.

• Macroeconomic stabilizer : Macroeconomic volatility tends to be detrimental to innovation and growth in more credit constrained firms or countries. The underlying intuition is that growth-enhancing investments (in skills, R&D, structural capital,..) need to maintained over the long run.

• Climate : A laissez-faire economy may tend to innovate in "the wrong direction". They distinguish between "dirty innovations" which affect combustion engines, and clean innovations such as those on electric cars.

• Trust : Trust and a good social climate in firms are related to growth and innovation. Trust is correlated with growth, but that is an essential and causal factor of growth. they estimate that GDP per capita in 2000 would have been increased by 546 percent in Africa if the level of inherited trust had been the same as inherited trust from Sweden.

• Decentralization : Indeed, decentralization is the best way to have more information and so to implement policies that better fit the local realities. In other words, it is the best way for the State to be more efficient.

• Social Contract and Corruption : Social contract has to rely on redistribution because a too unequal society cannot be a society in which people trust one in each other. Inequalities create rigidities and the willingness to protect social status, impeding social mobility. An efficient State that can guarantee the social contract, is a non-corrupt State — and a State that has to fight against corruption.

Session 7: Unions

1. How the Unions Deal with Globalization

• Union Organizing Challenges :

• Workers must be persuaded to take a chance on collective bargaining even when this means arousing the ire of their employer.
• Union membership gains are usually small and expensive.
• Most employers strongly oppose union organizing, not infrequently by illegally discharging or otherwise intimidating union supporters.
• The law of organizing stipulates that unions be certified as bargaining agents only after demonstrating majority employee support, usually through secret-ballot elections; critics claim this turns election campaigns into forums for intense employer opposition.
• Globalization gives employers a powerful way to intimidate workers during union organizing drives.
• An employer might claim that if a union wins the right to represent the workforce, the plant will relocate abroad; this threat is particularly credible if much of the industry have already fully or partly relocated, as many have in light manufacturing.

• Collective Bargaining :

• Unions organize groups of workers so that employers will be compelled to bargain with them, and they engage in politics primarily to strengthen their hand in bargaining.
• Before 1980s, employers pressured unions into concession bargaining; negotiations that cut or freeze wages and employee benefits, that relax restrictive work rules, and/or impose two- tier wage or benefits systems.
• Finally, in the rare case, collective bargaining might actually be used to reverse outsourcing by creating insourcing and bringing jobs back to the United States.

• Political Action :

• Unions have turned to politics to curb the impact of globalization by backing candidates who favor union-friendly and domestic worker-friendly laws.
• They sponsor political rallies and ‘‘get out the vote’’ by contacting and helping voters to the polls.
• Every year, unions promote labor law reforms that would make organizing cheaper and easier or that would create jobs for union members.
• Unions also campaign against legislation that might limit the scope of collective bargaining, prohibit compulsory union membership, or even require that unions regain their certification each year or lose their bargaining status.

1. Who Gets What?

• Determination of Wages : Wages differ because of characteristics like education, race, gender and age for no apparent reason. Oversupply of workers and potential workers drives down their remuneration. This also happens when there is only a limited demand for a particular kind of work.
• Widening Income Gap : Salaries also include benefits, which are not accounted for in the statistics, but the gap increases every single year.

• Income Equality Increase Causes :

• Education : Having a college education enhances the earning power. Educational opportunities impact directly the economic status of a family.
• Social and economical shift changed the distribution of wages.
• The rate of employment also impacts the wages. For example, if the employment rate is low, the employers increase wages for open positions.

• Unionization : Unions are successful at getting higher salaries and better benefits when their members work in large, oligopolistic industries with generous remuneration packages.

• The loss of jobs due to globalization or technology does not increase unemployment because the loss creates jobs in another sector.
• The number of relocated jobs is far smaller than the number of jobs created.

• Immigration Income : Diverse population (some are educated, some are not). Low wages have been diminished by competition with unskilled immigrants.

• Occupational Prestige : Ranking is based on  the educational preparation, the qualities, qualification, the clients and services they provide.

Session 8: Women, Work and Management

1. Gender Inequality: Economic and Political Aspects

• Social Roles Changed During Years :

• 1950s : women were wives and mothers (head of household) and men have paying jobs to meet their family’s need (provider).
• 1975s : Average age marriage increased, divorce also. Men more involved in household maintenance, and women in labour force.

• Gender Inequality : Inequalities between men and women in social roles, where gender is found in daily actions and in institutions.

• Power : Is the capacity to impose your will on others, regardless of any resistance they might offer ; influence, manipulation, control.

• Material well-being : It involves access to the economic resources necessary to pay for food, clothing, housing and other possessions and advantages » ; work-related earnings and accumulated wealth.

• Prestige : Is the average evaluation of occupational activities and positions that are arranged in a hierarchy ; degree or respect, honour.

• Feminism Models :

• Liberal Feminism : Human beings are rational and will correct inequalities when they know about them. Men and women should enjoy equal rights and opportunities.
• Karl Marx : . Women are a reserve army of labour in case of labour demands increase. Gender equality is possible when socialism will replace capitalism, because inequalities exist because of division of work and capitalism.

• Social Feminism : Build on Marxist feminism. They add that men, before capitalism, oppress women (patriarchy).

• Causes of the Labour-Force Participation Increase :

• More jobs available that women are considered suitable for.
• Fertility decline and labour supply.
• Family finances; women’s employment important source of income.

• Causes of Wage Inequality :

• Gender differences in the characteristics that influence pay rates

• Gender differences in the type of work performed

• Discrimination
• Societal devaluation of women’s work
• Birth place and colour matter

Session 9: Immigrants, Work and Management

1. Why Diversity Programs Fail

• Problem : To reduce bias and increase diversity, organizations are relying on the same programs they’ve been using since the 1960s. Some of these e orts make matters worse, not better.

• Reason : Most diversity programs focus on controlling managers’ behavior, and as studies show, that approach tends to activate bias rather than quash it. People rebel against rules that threaten their autonomy.
• Solution : Instead of trying to police managers’ decisions, the most effective programs engage people in working for diversity, increase their contact with women and minorities, and tap into their desire to look good to others.

1. Race, Ethnicity and Migration

• Race : Before the modern period, distinctions between human groupings was based on tribal or kinship affiliations (cultural similarity and group membership). Race can be important in the analysis of the reproduction of patterns of power and inequality within society.

• Racial profiling : The likelihood of individuals in specific racial or ethnic groups committing particular types of offence.

• Racialization : Understanding of race to classify individuals or groups of people, can take on a codified institutional form.
• After WWII : Differences in physical type between groups of human beings arise from population inbreeding which varies according to the degree of contact between social or cultural groups

• Ethnicity : It refers to the cultural practices and outlooks of a given community of people which sets them apart from others. Language, history or ancestry, religion, styles of dress or adornment.

• Minority Group : It refers to a group that is disadvantaged when compared with the dominant group (possessing more wealth, power and prestige) and have a sense of group solidarity.

• Why do we still have racism ?

• Invention and diffusion of the concept of race itself (race superiority)
• Exploitative relations that Europeans established with non-white people (ex: exclusion from citizenship)
• Large-scale migration of ethnic minorities to Britain, EU and NA. Immigrants became an easy scapegoat for dissatisfied natives, encouraged by the media, to the unemployment and welfare crisis.

• Primary Models of Immigration :

• Assimilation : Immigrants abandon their original customs and practices, molding their behavior to the values and norms of the majority. It demands a change of language, dress, lifestyles and cultural outlooks in order to integrate a new social order.
• Melting pot : The traditions of immigrants become blended to form new, evolving cultural patterns. It creates diversity through hybrid forms.
• Pluralism : Ethnic cultures are given full validity to exist separately, yet participate in the larger society’s economic and political life.
• Multiculturalism : it encourages cultural or ethnic groups to live in harmony with each other.

• Sophisticated multiculturalism: it emphasizes the importance of national identity and national laws, but also encourages the fostering of connections between different social and ethnic groups.

• Models of migration : These movements (immigration & emigration) add to the ethnic and cultural diversity in many societies and help to shape demographic, economic and social dynamics.

• Nation of immigration : immigration is encouraged and the promise of citizenship has been extended to newcomers (however, we do tend to implement quotas).
• Colonial model of immigration : it favors immigrants from former colonies over those from other countries.
• Guest workers model : immigrants are admitted into the country on a temporary basis, in order to fulfill demands within the labor market, but do not receive citizenship rights even after long periods of settlement.
• Illegal forms of immigrations: result of tightening immigration laws in industrialized countries.

• Five types of diasporas :

• Victim diasporas : people suffer forced exile and long to return back to their homeland.
• Labor diasporas : indentured labor.
• Trading diaspora : voluntary movement for the buying and selling of goods.
• Imperial diaspora : those where imperialist expansion into new lands takes with it people who subsequently make new lives.
• Cultural diaspora : cemented by literature, political ideas, religious convictions, music and lifestyles as by permanent migration.
• Common to all diasporas : movement from homeland to new region, shared memory of the homeland with commitment to preserve, strong ethnic identity, sense of solidarity, potential for valuable contributions to host societies.

1. Examining the Quebec Model of Integration

• Axiological pluralism: it consists in the diversity inherent in a free and democratic society, the result of the multitude of differences produced by the freedoms of association, thought, and expressing (i.e. identities that emerge out of life choices).

• Cultural pluralism: it refers to groups that seek recognition by the larger society, on the basis of their cultural, linguistic, ethnic, religious or national differences.

• Cultural pluralism involves finding a balance between the identity-based claims of groups, the terms of integration with the wider political community, and bases of social cohesion

• 1977: Charter of the French Language

• It links integration with the public use of French
• This charter makes it clear that protecting the French language is not only the responsibility of the francophone majority, but are fundamental to the rights and responsibilities of belonging in Quebec

• Three fundamentals principles of Quebec’s approach to integration

• A society in which French is the common language of public life.
• A democratic society and everyone needs to participate.
• A pluralist society open to multiple contribution within the limits imposed by the respect for fundamental democratic values.

Session 10: Young People, Work and Management

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Session 11: Is the Company “Necessary”?

1. Prosperity Without Growth

• What can prosperity possibly mean in a finite world with a rising population that is expected to exceed nine billion people within decades?

• These related arguments – ecological, social and psychological – are the answer to sustainability (and happiness).

• The cumulative impacts of economic growth – climate change, resource depletion, social recession, for example – are unlikely to go away, just because growth slows down in the advanced economies.

• The current state of the economy and the concerns of this report are not unrelated.

• In short, there is no better time to make progress towards a more sustainable society. To invest in renewable technologies that will reduce both carbon emissions and our dependence on finite resources. To renew our financial and social institutions and create a fairer world. To invest in the jobs and skills that these tasks demand. To initiate the transition to a sustainable economy.

• 2008 Crisis :

• The most prominent cause was taken to be subprime lending in the US housing market. Some highlighted the unmanageability of the ‘credit default swaps’ used to parcel up ‘toxic debts’ and hide them from the balance sheet.
• A dramatic rise in basic commodity prices during 2007 and early 2008 certainly contributed to economic slowdown by squeezing company margins and reducing discretionary spending.
• Politicians had no choice but to intervene in the protection of the banking sector.

• Types of debts :

• Personal Debt : Personal (or consumer) debt is the amount of money owed by private citizens. It includes home loans, credit card debt and other forms of consumer borrowing.
• National Debt : The national (or public sector) debt is the money that government owes to the private sector.
• The total debt held outside the country by government, business and households is called the external debt.

Session 12: Corporate Social Responsability

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