A New Theory of What? Humanizing the Firm in the Time of the Precariat

IESE 2nd Theory of the Firm Conference

A New Theory of What?Humanizing the Firm in the Time of the Precariat

JC SpenderESADE / LUSEM

27-June-11


complementary methods for examining ‘humanizing’ - ‘dignitizing’ - human work

universal ethics - homogeneity conformance

uniqueness - heterogeneityindividual flourishing

etic methods emic methods

independent & dependent variablescausality, equilibrium

Knightian uncertainty - agencytransitive

work (1) - knowledge-using work (2) - knowledge-making

academics ‘theorizing’ managers ‘framing’

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from method to substance‘theory of the firm’ as socio-political entity - but which society ?

society (markets)

‘firms’production functions

individuals -rational

society (environment)

‘firms’social systems

system elements -rational

society (democratic capitalism)

socio-economic institutions& private-sector ‘firms’

individuals -‘human’

economic model systems theory model humanizing model

rationality - simple or behavioral or …homogeneous

human being = a-rational, unique ?politics, sympathy, morality, emotion

heterogeneity/agency/practice

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‘rights’ - State, individual and owners’

• humanizing (top level) - ‘society’ using power, regulation and other institutionalized constraints over private sector firms

• humanizing (bottom level) - e.g. legislation to protect employees’, customers’ and others’ ‘rights’ against the rights and powers legally granted to private-sector owners

• firms straddle state’s constrained rights to shape the firm and the firm’s constrained rights to shape the individual’s practice

• framing the private-sector firm (middle level) - back to the etic/emic

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conference target

3/13

IESE 2nd Theory of the Firm Conference27-June-11

figure - ground

reversal

bottles or glasses ?

4/13

IESE 2nd Theory of the Firm Conference27-June-11 5/13


k-presences and k-absences that define ‘the BCG firm’ (Example1)

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• interplay of k-presence and k-absence

• portfolio, life cycle, time• firm (as cash machine) synthesized

by executive agency• judgments - allocation, dogs• managing as agentic repairing -

complementing rational designing

6/13


Porter’s firm (Example 2)

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• firm not industry

• ‘force’ = power to disturb the firm’s rent-stream

• many dimensions of ‘force’ - multi-layered, multi-timed

• firm arises from agentic ‘positioning’ in a multi-dimensional force/time context

7/13


principal-agent theory’s firm ? (Example 3)

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• Jensen & Meckling 1976– single period– perfect markets

• Fama 1980– multi-period– imperfect markets– mutual learning

• ‘firm’ arises from principal’s and agent’s time-full mutual learning and preparedness to adjust their utilities

8/13


‘ToF’ as defined k-absences to be filled by agency

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• diagnostics - framing entrepreneurial ‘opportunity space’

• executive’s ‘bounded agency’• T methodology - fact-driven analysis• U methodology - coup d’oeil, augenblick• preparation, history, theory (von Clausewitz)

• ‘added value’ - endogenous growth

T U

eticK-presencerationality

emicK-absence

imagination

9/13


emic firm analysis & construction

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technological advance

competitor’smarketing

labor market -

Precariat

government

standards

funding limits

TMT’s moral/ethical scruples

business

model

• might, can, should, want - LCAG’s 4 emic dimensions

• Balanced Scorecard - 4 etic? dimensions• Spender - Industry Recipes (1989) - 12 emic

dimensions

unoccupied strategicopportunity-space

executiveagency

10/13


after the entrepreneur’s vision comes harnessing others’ reason & agency

27-June-11

• decision to participate - a matter of reason or persuasion ?• incentives (extrinsic and intrinsic) - or rhetoric ?• others offer both reason & agency• firm (profit) arises from the subordination of others’ agency

- not from instructions guiding others’ reason • ‘docility’ - becoming ‘another’• beyond logos and into ethos & pathos• stasis theory, argument theory, inventio• work (1) ‘toil’ - work (2) ‘fulfillment’, ‘flow’

11/13


Precariat - new meaning of ‘work’

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• not ‘participating’ in 20th century-style work - e.g. long-term employment contracts, training, pensions, health-care

• not having one’s agency managed by others

• ‘living by one’s wits’ in today’s democratic capitalism

• undergrad business education - post-crisis, economic history, time

• graduate - staffer’s diagnostic tools (von Clausewitz)• leadership - should BSchools teach rhetoric once again ?

12/13


summary

27-June-11

• humanizing (top level) - public control of private-sector firms’ activities

• humanizing (bottom level) - counter-balance owners’ legal rights

• mid-level synthesizing of T and U (Barnard 1938)

• rhetorical engagement of others’ agency + reasoning

• private-sector firms’ legitimate seizures - quasi-monopolies & employees’ agency

• humanizing mid-level - owners & managers acknowledging and remunerating the value added by others - both toil & fulfillment

• U - agency - rhetoric - practice - value-adding

• extending the BSchool agenda - diagnostic tools + rhetoric & art

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IESE 2nd Theory of the Firm Conference27-June-11

‘theory of the firm’ - academic concept or

real value-add ?

A New Theory of What? Humanizing the Firm in the Time of the Precariat

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