The Shrinking Hand: Why Information Technology Leads to Smaller Firms

We explain the firm downsizing trend of the recent decades by the new abundance of information – the ICT revolution. Production processes differ in their information requirements: while decentralized production by means of market exchanges is information intensive, less information per unit of output is needed in the hierarchically integrated production of firms, and the information/output ratio is decreasing firm size.

We formulate a quantity of information theory of the firm embodying these differences and derive a Coase–Rybczinski effect for the aggregate economy, which predicts a decreasing employment share of large firms and an increasing share of small ones when the aggregate quantity of information increases Panel data regressions and other evidence provide support for this hypothesis.     

Madeleine Zelin, Jonathan K. Ocko, and Robert Gardella, eds. Contract and Property in Early Modern China. Stanford, Calif.: Stanford University Press, 2004. vii + 398 pp. ISBN 0-8047-4639-7, $65.00.

In 1887 the Journal of the Royal Asiatic Society—ChinaBranch sponsored a symposium on "Chinese partnerships," in whicha number of eminent China hands such as E. H. Parker and ChalonerAlabaster shared their long experience with the subject. Thediscussants agreed, among other things, that liability for debtsof the firm was enforceable in Chinese courts, that this liabilitywas shared among the partners according to their contractuallydetermined shares in the business, and that a contractuallydesignated "managing partner" normally     

Toward a Social Ontology of the Firm: Reconstitution,Organizing Entity,Institution, Social Emergence and Power

In the past half century, the theory of the firm has become a specific and prolific research field. However, the social ontology of this central institution of capitalism has never truly been the subject of investigation. I consider this negligence harmful for organizational economics and management and, more broadly, for the social sciences, notably because the first and central question raised by the theory of the firm relates to its nature: What is a firm? For this reason, I propose some novel considerations for a social ontology of the firm by focusing on social emergence, reconstitution, the two-level institutional logic of the firm, complex organizational dynamics and interacting mechanisms, and power.     

Stakeholder Learning Dialogues: How to Preserve Ethical Responsibility in Networks

The shift in corporate strategy, from vertical integration to strategic alliances, has developed hand in hand with the evolution of organizational structure, from the vertically integrated firm to the network organization. The result has been the elimination of boundaries, more flexible organizations, and a greater interaction among individuals and organizations. On the negative side, the specialization of firms on single areas of competence has resulted in the disaggregation of the value chain and in the disaggregation of ethical and legal responsibility. To illustrate this point, the paper considers some cases, such as the case of the "beer girls" of Southeast Asia, who are used unethically by distributors to sell beer and liquor. To deal with the problem of the disaggregation of ethical responsibility, managers can use organizational culture and ethical values to control the performance of employees and of other organizations. Contemporary developments in business ethics also offer tools for dealing with the problem. For example, "global corporate citizenship," integrated social contracting theory, and stakeholder learning dialogues provide ways of integrating the interests of all stakeholders. The task is now to use these new approaches to create a governance process that incorporates the voices of all stakeholders, especially the voices of those stakeholders that have legitimate and urgent moral claims, but lack the power to establish those claims.     

Henry S. Rowen, Marguerite Gong Hancock, and William F. Miller, editors. Making IT: The Rise of Asia in High Tech

General Electric is an international high-tech icon that beganwith Thomas Edison and the first electrical revolution, andthrived through every one since. Like many global giants, ithas firm American roots. Yet on June 1, 2007, the New York Timescould publish a headline in the business section entitled "ChiefSays G.E. Aims to Match the Growth Pace Set by India." In     

Tuija Mikkonen. Corporate Architecture in Finland in the 1940s and 1950s: Factory Building as Architecture, Investment and Image. Helsinki, Finland: Bookstore Tiedekirja, 2005. 269 pp. ISBN 951-41-0982-1, {euro}30.00.

As Alfred Chandler has shown in his writings, particularly thethree monographs Strategy and Structure (1962), The VisibleHand (1977), and Scale and Scope (1990), the development oflarge industrial corporations has been an important featureof society from the nineteenth century onwards. These organizationsbecame not only significant employers but also important providersof goods to consumers and to other industrial firms. Furthermore,their development has had considerable consequences for thelandscape in     

Vertical integration and efficiency: an application to the Italian machine tool industry

This paper analyzes the relationship between firm efficiency and vertical integration in the Italian machine tool (MT) industry. The link may really be the result of a two-way causality: the effect may run from productive efficiency to the type of vertical organization (i.e. vertical integration or outsourcing), as a self-selection mechanism, or an effect from the organizational mode to the firm’s performance may (also) be at work. This relationship is empirically investigated in a novel panel dataset comprising about 500 Italian MT builders, implementing two equations and instrumental variables for the two directions of causality. The evidence clearly indicates the self-selection mechanism of the most efficient firms in vertically integrated structures, while an effect from the organizational mode to the firm’s efficiency is not supported.     

Marina Moskowitz. Standard of Living: The Measure of the Middle Class in Modern America. Baltimore, Md.: Johns Hopkins University Press, 2004. xii + 300 pp. ISBN 0-8018-7947-7, $45.00.

In Standard of Living: The Measure of the Middle Class in ModernAmerica, Marina Moskowitz seeks to elucidate a term that cameinto broad usage at the turn of the twentieth century but seemedto have no clear definition. Sociologists, journalists, novelists,and government officials alike all referred to the "standardof living," yet they did not necessarily agree on just whatthat standard was. Moskowitz argues that the standard of livingwas a measure not of how     

John Landers. The Field and the Forge: Population, Production, and Power in the Pre-industrial West. Oxford, U.K.: Oxford University Press, 2003. xiii + 440 pp. ISBN 0-19-924916-4, {pound}60.00 (cloth); 0-19-927957-8, {pound}22.50 (paper).

This book recalls literature that emanated from the Annalesschool of historians, for, like the annalistes, Landers is fascinatedby the longues durées of history. His subject is preindustrialEurope from roughly the second century (with occasional forays back to the Iron and Bronze Ages) to the nineteenthcentury . He takes his thesis from E. A. Wrigley: preindustrial Europe relied overwhelmingly on organicsources for food, heat, energy, crafts, manufactures, commerce,and the means     

Scott A. Sandage. Born Losers: A History of Failure in America. Cambridge, Mass.: Harvard University Press, 2005. x + 362 pp. ISBN 0-674-01510-X, $35.00 (cloth).

Born Losers is a masterpiece that maps the misery of misfitbusiness failures in success-crazed, nineteenth-century America.The narrative sparkles with lively anecdotes, pithy quotes fromfamous people and failures, and Sandage’s own exquisiteprose, which rivals the catchy lines of the ubiquitous successmanuals. Skeptical scholars will find the research provocativebecause Sandage documents the wide range of sources availableto study the "forgotten men" of "the other nineteenth century"(p. 3): "private letters, diaries, business records, bankruptcycases, suicide notes, political     

H. Roger Grant. "Follow the Flag": A History of the Wabash Railroad Company. DeKalb: Northern Illinois University Press, 2004. xii + 291 pp. ISBN 0-87580-328-8, $49.95 (cloth).

"Follow the Flag" reaffirms Roger Grant’s status as oneof the preeminent historians of transportation in the UnitedStates. The book reflects the predilection of many railroadhistorians to focus on a specific firm, rather than addresslarger thematic issues. Far more than being "just another railroad,"however, the Wabash reflected changes in its political, economic,and social milieu, while also playing a leading role in shapingthe very environment that surrounded it. The Wabash rose from the ashes of an 1830s Illinois internal     

Claim and control: The functions of patents in the example of Berkel, 1898–1948

This article tries to provide a balanced view of firm patenting. Two different literatures provide two different functions of patents: patents enable a firm to claim a technology and they enable a firm to control that technology and to control markets. This article argues that claim and control are complementary functions, and that both need to be taken into account, but also that control gains in importance over time. It does so with a case study of the Dutch firm Berkel (Van Berkel's Patent) in the first half century of its existence. Berkel was a large and leading company in the development of meat slicing machines and compiled an extensive portfolio of patents.     

From Artisans to "Factories": The Interpenetration of Craft and Industry in English Cheese-Making, 1650-1950

This article traces the uneven development of English cheese-makingfrom its early commercialization to the eventual triumph ofthe "cheese factory." The narrative shows how contemporary actorsinitiated and adapted to changes in technology, distribution,consumption, and regulation. It indicates that artisanal practiceshave both borrowed from and become integrated with industriallogics and strategies, exemplifying a process that Charles F.Sabel and Jonathan Zeitlin termed the "recombinablility andinterpenetration" of different forms of economic organization[World of Possibilities: Flexibility and Mass Production inWestern Industrialization (Cambridge, U.K., 1997), 2–3].International comparisons are introduced to clarify the reasonsfor England’s halting and idiosyncratic transition toindustrial-scale cheese-making.     

Organizing Corporate Social Responsibility in Small and Large Firms: Size Matters

Based on the findings of a qualitative empirical study of corporate social responsibility (CSR) in Swiss MNCs and SMEs, we suggest that smaller firms are not necessarily less advanced in organizing CSR than large firms. Results according to theoretically derived assessment frameworks illustrate the actual implementation status of CSR in organizational practices. We propose that small firms possess several organizational characteristics that are favorable for promoting the internal implementation of CSR-related practices in core business functions, but constrain external communication and reporting about CSR. In contrast, large firms possess several characteristics that are favorable for promoting external communication and reporting about CSR, but at the same time constrain internal implementation. We sketch a theoretical explanation of these differences in organizing CSR in MNCs and SMEs based on the relationship between firm size and relative organizational costs.     

Exploring the Role of CSR in the Organizational Identity of Hospitality Companies: A Case from the Spanish Tourism Industry

Recently, organizational identity is being given more attention than ever before in the business world. This notion has grown substantially in importance in the hospitality industry. Facing increased competition, hospitality companies are driven to project a positive image to their stakeholders. Therefore, these organizations have begun to develop new organizational identity programs as part of their strategies to achieve their desired identities. This study analyzes the role of corporate social responsibility in the definition of the Organizational Identity of these organizations, employing a qualitative research methodology based on an illustrative case study. Particularly, the authors analyze the case of Meliá Hotels International, a leading hotel company in Spain with a presence in 27 countries. The findings indicate that the company has formally integrated CSR into its strategy to align its actual identity with its desired and conceived identity in view of the critics in its local community. Moreover, the interest of the firm toward its stakeholders suggests that the company understands its conceived identity as an important link in understanding its organizational identity. This paper demonstrates that firm’s organizational identity is a set of several elements. When analyzing Meliá Hotels International’s identity, we see that the firm defines this concept as that which is most central, enduring, and distinctive about the organization. In this sense, the company appears to follow the vision-driven approach by referring to the organizational mission and vision statements, organizational philosophy, and core values as the basis of organizational identity.     

Energy,Insurance, and Health: Viewpoints of a Microeconomist

Abstract

This contribution reviews developments in the microeconomic analysis applied to three fields that are rarely considered in combination – energy, insurance, and health – focusing on four themes. First, it finds that stocks are crucial not only in energy but also motivate (in the guise of assets) demand for insurance coverage, as well as healthcare services designed to maintain one’s stock of health. Second, however, the three fields strongly diverge in terms of their industry structure. While oil and, until recently, electricity are vertically integrated, healthcare has been the leading example of a cottage industry, with private insurance in between. Third, the structure of innovation also differs. In energy and private insurance, process and organizational innovation prevail; in healthcare, it is product innovation, meaning new characteristics at higher cost, facilitated by health insurance. Finally, government regulation impinges on all three industries.     

Uncertainty,organizational form,and x-efficiency

When the firm is uncertain about the efficiency units of labor that it employs, some organizational forms—franchise, owner-operated, and multiplant firms— may be more profitable than others. As a result, particular organizational forms may dominate an industry with uncertain inputs. Conversely, various organizational forms may be selected by a company selecting producing units that will maximize the decision maker's expected utility of profits. This paper offers an alternative view of firm attributes associated with x-efficiency.     

The Role of Buyer Trust in Outsourced CRM: Its Influence on Organizational Learning and Performance

Purpose: Company outsourcing of customer relationship management (CRM) functions is increasing (Kalaignanam and Varadarajan 2012). Although outsourcing CRM may provide financial benefits, the tasks of developing and utilizing the complex, cross-functional processes needed to gain enhanced customer knowledge from CRM may be more difficult when some or all CRM activities are outsourced. Trust in the information provided by the outsourced CRM supplier is vital. In this study, the authors examine the influence of buyer trust in its outsourced CRM supplier on cross-functional learning processes and firm performance within the buyer firm.

Methodology: Data were collected from a survey of marketing managers in 221 firms. LISREL 9.2 was used to assess convergent, discriminant, and nomologic validity using the two-step approach (Anderson and Gerbing 1988). Convergent and discriminant validity were evaluated in the measurement model phase, whereas the structural model provided an appraisal of nomologic validity.

Findings: The results provide evidence of buyer firm trust in the outsourced CRM supplier playing a critical role in the buyer firm’s success with information sharing, and both trust and information sharing strongly influencing information interpretation and information access in the buyer firm. All three organizational learning processes positively influence buyer firm customer satisfaction/retention and market performance.

Research implications: An important area for future research is the possibility of varying levels of trust needed for success with outsourced CRM depending on the buyer firm’s goals for its CRM system. It is possible that the simpler CRM functions could be outsourced effectively through efficiency strategies that do not require significant levels of trust, whereas the more complex CRM activities that affect organizational learning require more stringent coordination and inter-organizational development. Varadarajan’s (2009) cost versus quality classifications of outsourcing could be a useful starting point for this type of analysis. Considering the finding in this study that information sharing is critical for information interpretation and information access in the buyer firm, another area for future research is possible differences in the extent of information sharing required by firms that are outsourcing CRM versus those that conduct the CRM function in-house. One starting point could be possible differences in relevance among Maltz and Kohli’s (1996) factors affecting information dissemination.

Practical implications: For effective use of CRM data, it is important for buyer firms to develop trust in their outsourced CRM supplier. Managers can assist in this by communicating qualifications of the outsourced CRM supplier, such as any trade-specific certifications, awards, information about the supplier’s number of years in business, and examples of other companies the supplier has assisted. Managers can also help employees develop confidence in the supplier’s integrity by sharing the supplier’s code of ethics and serving as a champion for the supplier. In addition, firms engaged in outsourced CRM are encouraged to develop reward systems that motivate employees to build relationships with their counterparts in the supplier firm, and it would be useful for the buyer firm to help its employees understand the importance of the CRM outsourcing relationship to the buyer firm’s success. Finally, it is important for management to provide opportunities for interaction between the outsourcing partner and key buyer firm employees who will use the CRM data, to encourage effective processes in information sharing, information interpretation, and information access.

Contribution of the article: This article addresses the significance of outsourcing the CRM function and provides evidence that buyer trust in its CRM supplier is a critical factor in its utilization of CRM data for organizational learning and firm performance. It also demonstrates that effective sharing of information, cross-functional integration of customer data, and CRM information accessibility are critical for firm success.     

The Rise and Fall of a Free-Standing Company in Nova Scotia: The General Mining Association

The General Mining Association was a free-standing company which originated in 1826 as the result of a mercantilist granting of special privileges, but nonetheless it operated in a fashion little different from that of most mining firms during the early and mid-nineteenth century. Even its organisation as a free-standing company was common among mining companies. The firm continued as an independent corporation, although on a reduced scale, while other mining companies were created and many were subsequently absorbed in horizontal mergers during the 1880s and 1890s. In 1900 the GMA was bought by a vertically integrated steel company. The causes of the firm's lack of dynamism during most of its history cannot be determined with certainty, but attribution to its organisation as a free-standing company is hardly a tenable thesis, since rival firms which behaved far more aggressively were generally also free-standing companies.     

Pioneering Modern Corporate Governance: A View from London in 1900

Around 1900 Britain was exceptionally suited to pioneering largescale enterprises because of the precocious development of itsequity markets and London's experimentation with a more eclecticrange of corporate governance techniques than the world's smallerand less cosmopolitan financial centers. Information dissemination,incentives, and reputation—developed by a serendipitousmix of legal compulsions and flexible voluntarism—setthe scene for the growth of large, UK-based, national and internationalcorporations in the twentieth century. "The investment business is not with us as well developed oras well understood as it is in England." W. H. Lyon, Capitalization (Boston, 1913), 207.