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73rd Annual Meeting of the Academy of Management Program Theme: Capitalism in Question

Program Theme: Capitalism in Question

ALL-ACADEMY THEME SESSIONS: CALL FOR SUBMISSIONS

2013 All-Academy Theme (AAT) Symposia and Professional Development Workshops:

CAPITALISM IN QUESTION

Program Committee::
Chair: Paul Adler, Univ. of S. California
Gerald Davis, Univ. of Michigan
Thomas Kochan, MIT
Carrie Leana, Univ. of Pittsburgh
Stella Nkomo, Univ. of Pretoria
 

In anticipation of the Academy of Management's 2013 meeting in Orlando, we invite you to submit proposals for symposia and professional development workshops (PDWs) that address the meeting's theme, "Capitalism in Question."

Please note: All-Academy Symposia and PDWs should focus on aspects of the Theme that are of interest to a very broad audience. This year, unlike previous years, there are two routes rather than one for submissions: (a) about half the program will be organized directly by the All-Academy Theme committee based on submissions made directly to it; (b) the other half of the program will be selected from among submissions forward by the Divisional Program and PDW chairs from among submissions that they have already accepted for their own program and that they feel might best represent the Division's contribution to the Theme. If you have an idea for an All-Academy session, we recommend that you communicate it in writing to the committee Chair, Paul Adler (padler@usc.edu) as soon as possible, and no later than December 14, 2012. In your email, please describe the session, including the topic, key questions and ideas, format, and presenters you have in mind. The committee will advise you on which of the two routes to take. In either case, a full proposal will need to be submitted by following the AOM submission process by January 15, 2013, 5PM ET (New York time).

CALL FOR SUBMISSIONS

The Academy of Management's vision statement says that we aim "to inspire and enable a better world through our scholarship and teaching about management and organizations." The recent economic and financial crises, austerity, and unemployment, and the emergence of many economic, social, and environmental protest movements around the world have put back on the agenda some big questions about this vision: What kind of economic system would this better world be built on? Would it be a capitalist one? If so, what kind of capitalism? If not, what are the alternatives? Although most of our work does not usually ask such "big" questions, the assumptions we make about the corresponding answers deeply influence our research, teaching, and service.

Three features differentiate capitalism from previous economic systems in history: (a) market competition among profit-driven firms, (b) wage employment within these firms, and (c) limited government over them. Each of these features is associated with important benefits but also with important economic, social, and environmental costs. Partly in response to these costs, some countries have evolved variants of capitalism that differ from the canonical "free market" form, and some people argue that these differences should be enlarged - broadening the objectives of the firm to encompass social and environmental goals, deepening the participation of employees in management decision-making, and strengthening government's regulatory role. More radical critics argue that these reforms are insufficient: they urge replacing competition with collaboration, wage employment with cooperative ownership, and limited government with economic planning. Proponents of free-market capitalism respond that such reforms, whether more modest or more radical, endanger both economic growth and individual liberty.

While some aspects of these debates may be beyond our professional expertise, much of our work on organization, strategy, human resources, and behavior is directly relevant. Conversely, many aspects of these debates are directly relevant to the practice of management and therefore to our scholarship. Indeed, if, as researchers and teachers, we assume the inevitability of the prevailing economic system, we blind ourselves to the important issues posed by that system and turn our backs on debates prompted by calls to change it.

As sketched in more detail in the Notes appended to this call, these issues span a broad spectrum of our members' interests:
* Macro-oriented scholars might explore how the basic features of capitalism become taken for granted, how they shape organization structures, when and how their taken-for-grantedness breaks down, and how variants of and alternatives to capitalism emerge.
* Strategy scholars might explore the role of market competition in narrowing or broadening enterprise goals, the impact of market forces on traditionally not-for-profit domains such as education and healthcare, and differences in enterprise governance and goals across economic systems.
* Micro-oriented scholars might explore how the prevailing economic system affects modes of thought and feeling within individuals, management processes within organizations, and collaboration and competition within and between work units and firms.

The issues raised by our theme are of theoretical, empirical, and practical importance across the full range of Academy divisions and interest groups. Moreover, our international membership affords us a broad perspective, as economic systems vary across regions. And these issues are of practical importance to managers, employees, and the other stakeholders in our scholarly enterprise. I look forward to your contributions and to a lively debate in Orlando.

SOME POSSIBLE RESPONSES TO THE CALL

The following notes identify some key features of capitalism under the three headings identified in the Call, and, in italics, offer some suggestions as to the kinds of research questions these features might prompt. In some cases, these questions have already generated valuable research; in other cases, existing research could be mobilized to provide new insights; and in yet other cases, research has barely begun.

Market competition

Capitalism is based on private ownership of society's main productive resources. These resources are mobilized by firms for the production of goods for sale on markets rather than for direct consumption by the producers. Firms are in competition with each other in markets for both products and inputs (finance, material inputs, labor). This competition makes profitability and growth survival imperatives for each firm.

* How does strategy differ when firms are not constituted as vehicles of private wealth accumulation but are owned by communities or governments? How do the patterns of inter-firm interaction differ across economic systems?
* How does the institutional logic of market competition become taken-for-granted or challenged? In a capitalist system, wealth appears in the form of commodities and value is measured in monetary units: how does this context shape our understanding of ourselves as individuals and our relations with each other and with the natural environment? What factors influence how individuals respond to this context? How do group and cultural differences facilitate or hinder the spread of market relations?

The system of market competition has brought great benefits. It stimulates innovation, pushing firms to identify new, unsatisfied needs and to develop better ways of satisfying these needs. The cumulative result is that over the last century average individual material wellbeing has improved markedly, even if the variance is distressing. For the first time in history, there is the potential to achieve material comfort for all.

* How does this increasing but uneven material prosperity relate to human wellbeing and flourishing? How does market competition affect the fabric of trust and social capital within and between different social groups?
* Capitalist development has engendered information technologies with massive network effects. These impart a winner-take-all quality to competitive dynamics, and such dynamics may in turn undermine the effectiveness of market competition as a stimulus to further growth. Moreover, some of these same technologies have enabled a proliferation of open-source projects outside the market economy. But it is easy to exaggerate the empirical and theoretical significance of these potentialities: what have we learned about them?

Alongside its benefits, a system based on market competition comes with several important costs. Under competitive pressure, firms have little intrinsic interest in taking responsibility for destructive consequences of their activity for the natural or social environment. Because production is for profit, important social needs are left unmet due to the inability of potential beneficiaries to pay (e.g., medicines for poor people). Conversely, society wastes considerable resources on activities that are privately profitable but socially or ecologically destructive or undesirable (e.g., cigarettes). Moreover, the market process is not very stable: it has generated boom-and-bust cycles and periodic breakdowns.

* Research continues on the relative performance of firms that broaden their "objective function" to include social and environmental dimensions: under what conditions does this broadening improve financial performance, and when does it detract from it? What externalities remain unaddressed or merely greenwashed by a focus on "win-win" opportunities?
* What changes in enterprise governance could encourage firms to internalize social and environmental externalities? What kinds of institutional supports are needed to foster effective dialogue among all the affected stakeholders? How have different economic systems fared in their efforts to effect such changes in enterprise governance? Are government-owned or cooperative enterprises more effective in this regard? There are micro issues here too: what kinds of skills, values, and dispositions enable people to engage effectively in such deliberations?
* Corporations' disregard for social and environmental externalities sometimes provokes protest. What are the new strategies being used by social and environmental movements? What strategies do firms use to respond to these movements? When are such movements more likely to succeed by targeting firms rather than by targeting consumers, investors, or government regulation?

An economy based on market competition also engenders some distinctive dynamics. Four stand out. First, competition often leads to concentration, as large firms achieve economies of scale and scope and accumulate market power. Second, competition paradoxically stimulates efforts among firms to cooperate in the race to develop new products and processes, in alliances, partnerships, industrial districts, and standard-setting bodies. Third, competition drives firms to expand regionally and internationally. This globalizes both the benefits and the costs of capitalism, and in the process, it pits nations against each other in economic rivalry, which is sometimes productive and sometimes not. Finally, recent decades have seen a dramatic shift towards a financialized form of capitalism. Scholars are still divided over whether this is a long-term, structural mutation of capitalism or a symptom of the decline of one world power awaiting the ascent of another. Nevertheless, financialization, like globalization, poses important questions in our field.

* Our field has participated in a long-running debate concerning the relative importance of entrepreneurial small firms and oligopolistic large firms in the innovation and growth process. What new evidence do we have today? What new planning techniques are larger firms using today? What do these corporate planning techniques teach us about the feasibility of economic planning on a larger scale?
* How can socially beneficial inter-firm cooperative efforts be nurtured and protected from the centripetal effects of competition? What governance mechanisms can these collaborations develop to ensure the benefits of cooperation without simultaneously inviting oligopolistic collusion?
* How has globalization changed the everyday experience of people at work? Has it broadened social identities? Sharpened local ones? Do these individual-level changes differ across economic systems? At a more macro level, how is globalization affecting the fortunes of the firms and populations of the various countries involved? Are globalizing firms exporting the norms of their home countries, or are they escaping those norms? As firms globalize their supply chains, can they effectively take responsibility for their suppliers' practices? What about the countries that so far have been left out of this globalization process?
* How widespread is financialization and how do its forms differ across economic systems? What are the effects of financialization on corporate strategic planning processes? On the structure of inter-firm ties? How has the recent financial crisis affected these processes and structures? How has financialization and its crisis affected employees? How have they affected our non-work lives?

Wage employment

A second historically novel feature of the capitalist system is the predominance of wage labor. The proportion of the workforce that is self-employed declined dramatically as Western capitalism developed out of feudalism, eventually stabilizing at a low level that reflects modern industry's dependence on expensive equipment and larger firms' relative efficiency and market power. The vast bulk of the working population is now paid a wage or salary in exchange for accepting the authority of the employer to direct their work. Because productive resources are privately owned, enterprise profits accrue to these owners, as does the right to decide the proportion of these profits that is reinvested versus distributed as compensation and the right to decide on the targets of that reinvestment.

* How do management processes (strategizing, HRM, leadership, decision-making, etc.) differ when enterprises are not based on wage labor but instead organized as cooperatives? How do they differ across variants of capitalism where rights to hire and fire are strongly constrained by legal, institutional, or cultural factors? How does workers' behavior vary across these different types of enterprise?
* What is the significance of the recent proliferation of independent-contractor relations in some mature capitalist economies? Does the increasing importance of "human capital" portend a reversal of the trend toward wage employment? What new forms of professional work organization are emerging?

This wage employment system has brought important benefits. The employer's authority over labor and other resources makes the firm an island of conscious planning in a sea of anarchic market competition. Indeed, firms develop impressively complex divisions of labor and equally impressive systems for orchestrating the integration of these differentiated skills. The resulting efficiency and innovation have been astounding. Moreover, wage employment gives employees a freedom of movement that was not available prior to capitalism's emergence. The greater freedom to choose one's employer represents real progress, even if people are rarely able to work for themselves. In many countries where capitalism is less thoroughly diffused, large numbers of young people migrate to wage employment in the cities to escape what they feel to be the narrow horizons of the pre-capitalist social structures that dominate in their rural villages.

* Does work experience in different economic systems inculcate different values and self-concepts, some more individualistic and some more collectivistic? In capitalist societies that celebrate individual liberty, how does the institutional logic of the wage relation based on obedience to the employer's authority become taken-for-granted or challenged?
* How do employees and supervisors new to the norms of the wage relation adapt to its distinctive disciplines? How do specific traits, goals, and social identities influence people's experiences of, responses to, and attitudes toward wage employment? How do group and cultural differences encourage adaptation versus resistance? What role do religion and spirituality play in these processes?

Notwithstanding its benefits, the wage employment system has significant costs. Two command attention. First, within firms, employees often experience the fundamental asymmetry of power between employer and employee as an injustice. Second, capitalist development does not guarantee an equitable distribution of the fruits of growth: given an unequal initial distribution of resources, competition often aggravates that inequality over time. Indeed, employers are inclined to push wages lower, driven by both competitive pressure and self-interest. Labor market competition for some categories of skilled labor can counteract that pressure and drive some occupations' wages higher. However, at any given time only some people have skills or organizations that afford them this market power. At the other end of the spectrum, a non-negligible proportion of the working-age population is unable to find any employment at all. As a result, significant pockets of unemployment, underemployment, and low-wage work are persistent features of capitalism.

* How do wage-based enterprises encourage employees to engage in collaborative problem-solving notwithstanding the fundamental power asymmetry within the firm? How do other economic systems mobilize this involvement?
* How do employees assert their desires and act on their rights for voice within the employment relation? Unions are one form of voice: what factors account for the differences in union strength among different countries? What new forms of employee voice are emerging in non-union firms? In networked firms? What are the new forms of labor-management conflict, cooperation, and partnership? What forms of voice and conflict do we observe across and within different economic systems?
* Consider inequality. Inequality can stimulate or deter discretionary and cooperative effort: what have we learned about the conditions under which it has one effect versus the other? When does inequality come to be seen as unjust? Why has inequality of wealth and income grown so much in recent decades? Have women and minority groups gained or lost ground in this evolution? How have these evolving fortunes changed inter-group relations in the workplace and in society? How have they affected individual and collective wellbeing? Have they affected the likelihood of unethical behavior or workplace abuse? How do ethical conceptions and expectations of justice differ across economic systems?
* Much of our micro research focuses on employees; but what of the lives of the temps, part-timers, independent contractors, unpaid interns, and unemployed? Of people who work in the informal economy? What are the consequences for self-efficacy and other psychological attributes? How does poverty or income insecurity change decision-making, cognition, and attributions? How do these processes and outcomes differ across economic systems?

Trends in the modern economy are putting new stresses on the wage employment system. First, with the growing knowledge intensity of contemporary production, teamwork grows ever more important to business competitiveness; but in capitalist systems, employees also compete with each other, both for jobs in the external labor market and for advancement in the firm's internal labor market. In recent years, both the need for teamwork and the intensity of competition have increased. Second, some indicators suggest an increasingly blurred line between work and non-work life: work responsibilities seem to be overflowing the workday into family and leisure time. Third, the economic turbulence of recent decades has led firms to rely increasingly on temporary employees, independent contractors, and vertically disintegrated production chains: here too, both the need for teamwork and the intensity of competition have increased.

* How do employees experience and manage this tension between teamwork and competition? How are people today juggling work and non-work responsibilities when these are increasingly intermingled?
* How are firms managing skill formation and careers given the growing instability of employment? How are employees and young people entering the workforce asserting control over their own career trajectories? What about older workers, who are increasingly vulnerable to long-term unemployment? How do different economic systems deal with these challenges?
* How do these tensions play out in our own institutions - universities? In many universities, tenure has been progressively replaced by other contractual arrangements: what have been the effects on the quality of academics' work and non-work lives? How have faculty and staff adapted to and fought against these changes?

Limited government

In a free-market capitalist system, government does not direct the allocation of productive resources to assure that society's needs are met, but instead leaves that task to the "private sector." Government's role is in principle limited to enforcing private property rights and national defense, to ensuring the availability of the "public goods" that the private sector requires but cannot profitably produce itself, and to ameliorating negative externalities when they become dangerous to the system's survival.

* Over recent decades, many governments have privatized some of their functions, in some cases even core functions such as infrastructure, military operations and prisons. This was often justified by claims that the private sector is typically more efficient, and that the public welfare can be assured by the appropriate contract design. What have we learned about the accuracy of these claims?
* In capitalist systems, establishing and policing private property is a continuing challenge: this challenge has moved to center stage today in struggles over intellectual property. How are the frontiers evolving between knowledge as commons and as commodity? How is that evolution affecting competition between firms and between countries? How is it affecting the work of creative professionals and of academics such as us? How is it affecting indigenous communities' control over their traditional knowledge? How is knowledge development stimulated and retarded under different economic systems' intellectual property regimes?

The narrow scope of government has important benefits. It ensures a larger scope for individual and local autonomy. A vast sector of daily social intercourse proceeds on a voluntary basis rather than being mediated by government or community. While capitalism does not automatically engender electoral democracy - indeed, capitalism's periodic economic crises tend to revive authoritarian political solutions - nevertheless, individual autonomy in the economic sphere encourages an independence of thought and an expectation of voice.

* In capitalist systems, the institutional logic of competition and wage-employment expand beyond firms to penetrate government and not-for-profit organizations. What have we learned about how that penetration proceeds, and about its costs and benefits? How has the introduction of market forces into traditionally not-for-profit sectors such as healthcare and education changed practice for better and worse?

Limited government also has disadvantages. Capitalist economies give the owners of capital wealth and power, and these owners often use those levers to ensure that government protects their advantages. As a result, even though many argue that prosperous capitalism would require continuous government regulation and intermittent government intervention, capitalism's structure and spontaneous evolution tend to limit governments' ability to fulfill those roles. The net effect is that the costs of the capitalist system - its externalities, instabilities, and inequities - are only partially mitigated by government. The ability of governments to regulate and intervene is further limited by globalization, which creates firms and markets whose scale dwarfs that of many host governments.

* What are the pathways of influence used by business to influence government today? How do they differ across economic systems? What social-structural and psychological factors encourage some business leaders to act in a more statesman-like, far-sighted manner while others focus only on their own parochial interests?
* The legal form of the corporation and the legal standing of employees vary considerably over time and across economic systems. What accounts for these differences? What new trends are we seeing?
* In a growing number of industries, firms are creating mechanisms for private self-regulation. Where has this been effective? What are its limits? What is the relationship between public and private regulation?

One way that capitalism has overcome this internal limit is, paradoxically, through mass insurgency: social turmoil and the threat of revolution were key factors driving the creation of the New Deal in the US and social-democracy in Europe. With the demise of the socialist bloc and the decline of labor unions within many capitalist societies, are the new social movements capable of playing a similarly transformative role?

* What organizational and managerial challenges confront these various social movements? How do they attempt to overcome them? What experiences encourage people to join these movements? Which discourage them?
* What roles have our universities and business schools played in helping our societies confront their challenges and in helping our students contribute to positive change? The pressures on our institutions have been mounting on every side: what assessment do we make of our institutions' responses to these pressure? What alternatives paths of action could we pursue?

"A better world"

What, indeed, would a "better world" look like? What kinds of paths could lead us there? And what kinds of roles can we as management scholars play to encourage progress down those paths? Apart from our imagination and theoretical models, we can inform our discussion by careful analysis of historical and current alternative economic systems.

As concerns alternatives to market competition among firms, we can examine a broad range of cooperative inter-firm arrangements as well as forms of corporate governance that allow a broadening of the corporation's goals. As concerns alternatives to the wage relationship, we can examine the history and variety of cooperatives and partnerships. As concerns alternatives to the limited role of government, we can examine a wide spectrum of options from strengthened regulation to government-run enterprises and economic planning. As concerns paths of progress, we can learn from our own countries' pasts, from the record of the now defunct socialist bloc, from variation across advanced capitalist economies today, from the new forms of state capitalism, from the new forms of community-directed economic planning, and indeed from our own members' involvement in change projects of many kinds.

"Capitalism in question" is a big theme that points to many issues relevant across the broad spectrum of the Academy divisions and interest groups. We invite you to help us explore how management scholarship focused on these issues can enhance the value of our research, teaching and service - and inspire and enable a better world.

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