The Changing Organizational Paradigm

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VERSÃO EM 15 DE MARÇO DE 2001

Student ID: H.20777

The Business Corporation and the

Changing Organizational Paradigm

(La Empresa y el Cambio en el Paradigma Organizacional)

DOCTORAL DISSERTATION

by

Guilherme Da Fonseca-Statter

submitted

March 19, 2001

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PACIFIC WESTERN UNIVERSITY

BARCELONA DELEGATION

ABSTRACT

Over the last twenty years, with the development and global emergence of new information processing and communications technologies we have been witnessing a social transformation concerning both the way organizations in general and business firms in particular organize their work flows as well as the way people in the industrialized world organize their daily routines. This transformation impinges upon the basic tenets of the various theories of the firm, as part of both the fundamentals of economics (as a social science) and of sociology and anthropology.

We believe that the transformation taking place under the guise of new managerial tools corresponds to a major organizational shift from the established classical webberian bureaucracies to the type of structures better identified as professional bureaucracies. This transformation has been made possible because of radical inovations in one of the two basic parameters of any organization, that of the communications medium. Because of this transformation, the other parameter, that of “motivation”, is being transformed as well and we find that people at work have been changing their motives and loyalties.

When the project for this disseration was originally submitted is titled was “The Virtual Corporation and the Changing Organizational Paradigm”. We have changed the title to “The Business Corporation and the Changing Organizational Paradigm” because, during the course of our research, we have found little evidence that the concept of virtual corporation is gaining wider social acceptance in jure, although a case could be made that the constellations of temporary and moving partnerships and alliances between firms do correspond to the original idea of a “virtual corporation”.

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CONTENTS

ANALYTICAL EXPOSITION

General Introduction......................................................................................…

The Research Endeavour; Some Epistemological Reflections.........................

Science, Technology and Paradigms...............................................................…

The Object of our Study; Clarifyng some Concepts...........................................

A Framework for Analysis..............................................................................…

Business Firms and Technology Developments.................................................

The Sociology of Business Firms - A Short Critical Review..............................

Historical Antecedents and Structuring Principles.............................................

Theories of the Business Firm - A Short Critical Review...................................

Rationality as a Structuring Principle..............................................................…

Microeconomics, the Business Firm and the Profit Motive................................

CRITICAL CONTEXT

Introduction...................................................................................................….

The First Industrial Revolution.......................................................................….

The Second Industrial Revolution..................................................................….

The Sociology of Work and the Business Firm.........................................….....

Sociological Theory and the Practice of Business Firms....................................

Mintzberg’s Structuring of Organizations...................................................…....

Frameworks for Sociological Analysis.........................................................…...

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Reproduction and Creativity.............................................................................

The Diversity of Business Firms.......................................................................

The Problem of Size.........................................................................................

Diversity of Size...............................................................................................

Diversity of Status............................................................................................

Diversity of Capital Structure and Control........................................................

Diversity of Organizational Responses..............................................................

The General Problematic of the Business Firm..................................................

The Basic Theory of Business Management - A Short Review..........................

A Permanent Adjustment to Change.................................................................

The Art of Pragmatism.....................................................................................

The Study Group.............................................................................................

INTEGRATIVE CONCLUSIONS�Introduction.....................................................................................................

Resistance to Change.......................................................................................

The Implementation of CRM............................................................................

The Organizational Needs................................................................................

Resistance to Change Revisited........................................................................

Teams, Communications and Motivation..........................................................

Some Conclusions and Final Reflections...........................................................

From Aprenticeship to Professionalism.............................................................

Learning and Competence................................................................................

References..............................................................................……..................

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List of Illustrations

List of Tables

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Preface and Acknowledgments

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I - ANALYTICAL EXPOSITION

General IntroductionIt is always a matter of some measure of hesitation before one starts writing a

doctoral thesis, any thesis for that matter, on a subject matter as wide open as the one we seem to concern ourselves with in here. It is wide and open in the sense that literally thousands of books, papers and essays have been written and published over the course of the last 50 years on the subject matter of business firms as organizations and the sociology of such entities. One could easily, and quite understandably, assume that “all has already been said on the subject” and, as a probably acceptable result, resort to a detailed survey of the literature rather than attempt to convey any new facts and theories on these matters.

We look upon a doctoral thesis as a twofold exercise. On the one hand it is assumed that a student should provide proof of knowledge and experience in a particular branch of knowledge to justify the title of “doctor of philosophy”. This may be shown, for example, by means of an elaborate and extensive dissertation covering the most important, relevant and meaningful aspects of that particular branch of science. On the other hand, it is not uncommon to think or consider that a doctoral thesis should provide some evidence of a significant contribution to the advancement of science. In the case of the so-called physical sciences this last requirement could be fulfilled by means of an experimental discovery report, with less than a dozen pages. In the case of the so-called social sciences, however, the situation is somewhat different. In that case one has to show proof of study, assessment and evaluation of different (often lengthy and competing) theories, in order to demonstrate one’s own authority and capability to issue statements about the nature of things. It is not the amount of the knowledge (if this expression could be allowed), in both types of science (physical and social), that is at issue here. It is rather the communications medium that is at stake. In the case of physical sciences students have been groomed (through a lengthy socialization process of a specific educational nature) to express concepts and arguments using the concise language of mathematics and it is therefore quite possible to express novel ideas that correspond to a lengthy reasoning process. In the case of social sciences, where most concepts used are expressed through expressions, words and terms which are common also to every day current usage, one is required to state a perception or interpretation of objective reality using words that (themselves) often require some preliminary clarification, definition or contextualization. One can only beg for the patience and indulgence of one’s readers in an effort to get forth one’s own ideas. Most particularly when it is taken into consideration the fact that a doctoral thesis (in any branch of the social sciences) is not required to be an exercise in the art of literary writing.

Our primary subject of study is a particular occurrence of the organizational transformations taking place in one business firm, as an example of organizational transformations supposedly taking place everywhere else in the world of business firms. Over the last years a concern has been growing amongst social scientists in general and economists in particular about the contents and scientific nature of economics. Because

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of that debate1 that impinges directly upon our endeavor, we believe it is not only appropriate but rather mandatory that we discuss the social nature of science as this matter pertains to that debate and to our dissertation. So, in preparing for this dissertation this student was naturally taken to consider and review some fundamentals of epistemology and how the various considerations upon the nature of science impinge upon the study of social organizations such as business firms. We will therefore have to look into the nature of science and scientific research and how that is reflected in current social discourse, as well as the pretended nature of scientific thinking in the realm of social sciences. We will also have to consider how that is reflected in the analysis of the evolution of social organizations and its relationship with the historical evolution of society at large and technology in particular, as well as the theories of administration as applied to the study of that particular type of social structure we call a “business firm”. In doing so, we also propose to discuss the historical evolution of the business enterprise, as a particular or specific type of organization. By tracing this historical evolution we hope to show the close relationship between the prevalent organizational paradigm and the underlying and available technologies, as well as the stage of social and economic development in society at large. Even a brief review of most current literature on the business firm, as perceived by both sociologists and economists, will show that the most elementary meaning of words is quite commonly a natural cause for discussion, polemic and possibly confusion.

After a brief consideration and a critical review of the most important or most relevant literature of these matters we must prepare the stage, so to speak, for a more detailed discussion of our main object of study, the “radical” transformation of a large multinational corporation such as the IBM Corporation, considering the particular rôle that this company has played in recent technological and scientific developments as well as the resultant particular stance taken by economic development in the second half of the XXth Century. In doing this we take advantage of our own personal experience with that company (over a period of almost 30 years) working in several countries and having had the occasion to encounter literally hundreds of fellow workers from dozens of different countries and with different technical backgrounds. As a result of this, it will not be very surprising to indicate that we shall construct the last part of our dissertation in a manner that will remind even the most absent-minded reader of anthropological methodologies.

Having said that, and in very general terms, we may start by stating that in our perspective the problem faced by most large corporations in the last decade of the twentieth century has been one of changing from an organizational paradigm inherited from an electromechanical age, to an organizational paradigm more attuned to an age of electronics, information systems, explosive telecommunications and biotechnology. This change in the technological background of social evolution, has also been accompanied by an evolution in the class composition, scientific and technical knowledge distribution and cultural transformation of industrial societies, to which the theme of our dissertation applies, considering that they are all part of the social infrastructure. So, rather than just looking at transformation within business firms as if the outside world were standing 11For a very recent illustration of that debate see, for example, “Sciences économiques: un enseignment en crise” in “L’Économie Politique” Number 9, 1st Quarter 2001.

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still, we intend to look at transformations in business firms (as social entities) also as a result of transformations in the overall society, both from a social, demographic and economic perspective, as well as from a scientific and technological development perspective. We hope to show, throughout the dissertation, that this transformation is taking place along various levels of analysis and as a result of different social forces at work in a simultaneous fashion. We also hope to show that the one single example presented (of a particularly meaningful corporation) is indeed representative, by its nature and contours, of an overall societal tendency, probably prevailing across the whole gamut of social organizations.

The Research Endeavor; Epistemological ReflectionsMost scientific knowledge is commonly expressed in sets of laws or rules that are

supposed to be of general applicability to any particular realm of reality. There is in Portuguese (and indeed in other languages) an expression that classifies any anomaly that occurs and seems to contradict what is expressed in one of those general “rules” or “laws” as being “the exception that confirms the rule”. It is our belief that one does not need reading Lakatos (19xx) and his assessment of Popper’s and Khun’s differences, to reach the simple conclusion that that particular expression, common sense as it seems to be, sounds rather irrational and primitivist. Our own position has always been that when a scientist encounters an “exception to a rule” (such as the black swan of our philosophers’ discussions...), rather than “confirming the rule” (which would be silly, of course) or discarding the rule (as naïve or methodological falsificationists would have it), the most efficient attitude, from the point of view of scientific development, would be the initiation of a research effort into the reasons for, or reasons behind, that alleged “exception”.

When considering its purpose and scope, we must also recognize the existence of at least two fundamental types of “science”: on the one hand a “science” that merely describes what it perceives as reality, including in that description a statement of relationships between “causes” and “effects”, in a sense a description of “how” (whatever things come to pass), and on the other hand, a “science” that pretends or attempts to explain why such things, most specifically those “causes” and “effects” relationships come to happen. In a sense a statement of “why” (whatever things come to happen). This is not an academic or byzantine question as it may help explain the alleged failure of the so-called naïve inductionism as a philosophy of knowledge. For a detailed discussion of this difference see Tom (1998).

When reviewing the literature on the methodology of social sciences or the works of those authors discussing the scientific endeavor in general, one is confronted with a common divide between the so-called "physical sciences" (often referred to as "natural sciences", "'hard' sciences" or simply "sciences") and the so-called "social sciences". These are sometimes aggregated with, some times separated from, a third field or type of sciences: the so-called "human sciences". It is also common to find a certain degree of social status or hierarchy amongst these different types or categories of sciences, implied or explicitly expressed: the natural or physical sciences somehow being "more scientific" than the social and/or human sciences.

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As a youth (13-14 years old), this author experienced, for a period of some three or four months what would now be called an epistemological problem. If I remember correctly, then a junior student of elementary chemistry, I learned that the atomic weight of the atom of hydrogen was determined by the weight of its one neutron. Since all other chemical elements had a multiple number of neutrons (these all being of an equal nature and weight, I was puzzled to learn that the atomic weight of all other elements (as a matter of fact of hydrogen itself) was expressed by numbers having 5 decimals, rather than simple multiple whole numbers. Where did this decimals come from, was the question I dared pondering over for those 3 or 4 months. More pressing matters, (like getting on with one’s youthful life...) and the puzzled (and even more puzzling) answer of a teacher (“you are just too young to understand that” ) led me to give up on that issue only to find out many, many, years later that it had constituted quite an epistemological issue during a period of almost a century (from 1815 to 1911): the Prout theory and the Stas refutal (Lakatos, 1999). And, in what pertains to these considerations on science and scientificity, to the issue of how can one decide upon the acceptance and refutal of previously established theories based upon new “observable” facts. The question relevant to our dissertation is, of course, the determination of what systems of ideas and knowledge lie underneath one’s own perception of “observable” facts, particularly considering that these same systems of ideas and knowledge have been acquired through a naturally long and complex socialization process.

The impact of ideology2 upon the acceptance, or not, of explanations for oddities caused by “observable” facts could be illustrated by a simple example. The neoclassical, liberal (in the European sense) or mainstream perspective of economics states that the price of whatever goods and services ends up being determined by an equilibrium between supply and demand. If a falsificationist (naïve or sophisticated, it really does not matter that much...) were to draw the attention of conventional economists to the many examples of “exceptions”3 these conventional or mainstream economists would be (and have been) quick to respond with explanations that epistemologists would classify as anomalies or puzzles (Khun). But then, of course, this observable facts would be the anomalies, not the explanations, and that would be accepted and, as a result, the overall paradigm of mainstream economics would remain unscathed, if not even improved. However, when marxian economists state their fundamental “law of the falling tendency of the rate of profit”4 , mainstream economists are quick to point out the nonoccurrence of that “falling tendency” in countries X, Y and Z, and any explanations of why that is apparently not occurring are rejected (as being ideologically biased) rather than reviewed or considered in a similar light to that of our “stagflation” or “Giffen effect”. That is, as a simple anomaly or a paradox to be investigated further.

12As a set or a system of ideas that, in the final analysis, influence or condition our perception of reality. In this context it could be argued that all ideologies end up being expressions of alternative paradigms 13Such as the Giffen effect as an observable fact that “invalidates” the fundamental law of supply and demand or the phenomenon of “stagflation” that seems to “invalidate” Phillips Curve and endangers Say’s Law.14Which , in abstract, is based on a set of simple and otherwise undisputed postulates

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Looking back in reflection, it could actually be argued that the whole historical evolution of the mainstream economics paradigm has been one of a statement of an original theory (take, for example, the models defined by Walras or Marshall) which have systematically been changed and amended to include and comprehend new “observable” facts, to the point that some proponents of the economics profession end up pointing out the apologetic and apparently self-serving nature of the current conventional discourse (Galbraith, 1974). Going back to the relationship between methods and assumptions that characterize the “scientificity” of knowledge, what also comes out when discussing that "level of scientificity", is that the hierarchy already referred to seems to be based on two major parameters: experimentation and previsibility.

Naive inductivism is usually considered as an attempt at formalizing the common view that science is, by its very nature, based on observation and controlled experimentation. According to this approach, supposedly based upon the doctrines of early empiricists such as Bacon, objective reality is out there to be observed and studied and science ends up being a structured assembly of known and established facts regulated by general laws of behavior. The popperian vision as expressed by Milton Friedman (according to Blaug, if not explicitly at least implicitly), is that "empirical evidence can never prove an hypothesis. It can only fail in disproving it" (Friedman, 1953 as cited in Blaug.....). In that context our research (mostly based upon the literature) on the emerging behavior of state and business bureaucracies, and of the individual actors (as members of those bureaucracies) can not be used as proof of any particular thesis or theory. It can only be used as additional evidence confirming that our hypothesis is probably right. One expects a supposedly scientific theory to provide some sort of an explanation about the behavior of the social or physical world. It would therefore seem normal that it should be explicitly based upon a set of premises and that it should provide a number of possibilities for verification (or falsification, as the popperians would have it). But then, following the proponents of falsificationism, Truth (with a capital 'T') is a non-atainable goal, more of a religious nature than of a scientific concern. In a sense then, the search for better and more efficient explanations of Nature (both "physical" and "social") would therefore be at the mathematical infinite of a progression of successive and ever better attempts of explanations of the world.

In the view of Thomas Kuhn (or of Louis Althusser in the specific realm of Social Sciences), the relations between rival or successive paradigms is always liable to be one of disjuncture and incomensurability in which the central or core concepts and procedures of one paradigm are unstatable in the language of the other. That would be the case of functionalism and Marxism as opposed or alternative views of social phenomena. It is our view, however, that "paradigms" (or "research programs" as Lakatos would probably express it) are to our theories or visions of the world, as sets of different 'binoculars' possessed with different optical properties and therefore enabling us to gain different perspectives of a supposedly neutral and objective reality. This would normally bring us to the issue of our methodology of research and the polemic around the "methodological individualism" approach. We intend to look into this when we sketch a critical review of the most recent theories of the business firm.

One further problem that one has to contend with is the specific nature of social sciences in general and of Sociology in particular. As its was noticed already there has

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been a tendency to adopt in Sociology methods of reasoning that were firstly developed or encountered in physical sciences or in biology. The problem is that in these branches of knowledge, a biologist for example, can literally get on a microscope and look at some of the entities he or she is studying. Some years ago, in IBM laboratories, physicists have been able to look at, and manipulate, individual atoms. Now, when we consider the things that a sociologist or an anthropologist is deemed to study, what he or she can claim to really observe is people or groups of people. One may certainly claim to be able to observe the performance of certain rituals and/or traditions but it would be rather more difficult to show to any outside observer the structure or hierarchy assumedly prevailing in this or that society. When we look at a social entity such as a business firm, what we see are people and their symbols (postures, dressing habits, their offices, tables and desks). What we do not see and must only infer are hierarchies, statutes, routines, departments and functions. We are tempted to register the fact that, in a sense, these later concepts fall in the same category as the concepts of “forces” or “fields” in the realm of physical sciences.

In this context one has also to draw attention to the theoretical and historical consequences of adopting for the then emergent science of Sociology, the ideas, concepts or even the methods developed or originated in other branches of science. As one particular example, we are thinking most specifically about the problem of the different scales of time involved. If one considers the time scale of geology, before and after the Charles Lyell, as well as the Darwinian concept of the evolution of species through successful random variation, over a period of many (many...) generations, we could begin to understand some of the reasons why proponents of theories of social change (e.g. parsonian modernization theories) could possibly (eventually) be right on “principle” but wrong on time scale5.

Another problem we must contend with is the problem that the usage of the same words in various branches of sciences, as well as in science in general and in everyday common language, is a well known source of confusion and of lack of precision. If there is a relative lack of precision in certain usages of certain words (e.g. "force" in Newtonian mechanics versus, for example, "market 'forces'" in liberal economics or, further still, in "the 'force' of circumstances"), this is due to the relative level (or lack) of precision prevailing, as a normal and accepted state of affairs, in the various branches of knowledge. It could be argued here that it is not so much an alleged "lack of precision" but rather a matter of meaning in context that accounts for that normal and accepted state of affairs. We shall endeavor to define, within reason and bearing in mind both context and common sense, the particular meanings of certain words and concepts to be used.

When reviewing some of the literature on the philosophy of sciences, epistemology or the theory of knowledge, one is stricken with the feeling of incertitude and permanent or ongoing discussion about what science and scientific knowledge is, or is not. A brief and succinct review of the confronting positions is more than enough to let any Ph.D. candidate wonder about the usefulness of one’s effort towards scientific 15There are, of course, other reasons why one may claim that modernization tears are inadequate (e.g. the fact that the global world of human societies is a closed system where the development and evolution of one society is bound to interfere with the development and evolution of all other societies)

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improvement in any realm of knowledge. In the area of social sciences the situation gets even worse as the political, economic and social implications of certain theories make it all the more difficult to assess the intrinsic validity of any theorems and postulates that make up a theory, most specifically since from social science one usually tends to derive social technology and social engineering. For our purposes here, we shall confine ourselves to what might be termed an operational definition of science. In a sense we are simply confining ourselves to the bureaucratic or institutional definition of science. Having said that, science could be defined as the formulation of teories as tentative explanations for the structured knowledge we assume to have acquired about the world. The key words here are "formulation of theories" and "the assumption of structured knowledge". It could be argued here, of course, that this structuring of knowledge (as opposed to a non-structured amalgamation of sundry "facts of observation") in itself already presupposes some form of previous understanding and that we are defining science by using what could be called "circular reasoning". That argument might be accepted but, nevertheless, it could also be argued that historically and upon reflection of one's own personal experience, knowledge acquisition starts off by being an apparently unstructured registering of sundry facts of experience (as we grow up), which gradually gains structure as we are subject to the overall socialization process. In that sense we become bearers of those memories, traditions and customs (in short the "culture") of that particular social group into which we happened to be born. We believe that this stance is not tantamount to inductivism or "logical positivism" (quite the contrary!...), but simply an attempt at clarifying from the outset what is our own conception of science and the scientific endeavor. In any case we accept as valid that statement which says that theories can be, and usually are, conceived and formulated before experiments and observations are made to test them. But then, the issue of how new original theories come about and are formulated falls outside the realm of the philosophy of sciences (Chalmers....) but pertain rather to the field of Social Psychology.

When, again, reviewing the literature on the nature and character of science as a social endeavor, one is often confronted with the idea that in the realm of physical sciences “all is well” and that there is a general agreement amongst scientists about the nature and applicability of theories, whereas in the realm of social sciences, and only there, we are then confronted with a state of permanent ideological struggle amongst competing theories or sets of theories. According to this vision of things, a “normal science” (as Khun would have it) predominates in the realm of physical sciences and that it is only through a temporal succession of paradigms that progress in knowledge is achieved: stability, revolution and new stability, very much in a Hegelian fashion, we might comment. According to Lakatos, however, khunian “normal science” is only a research program that has achieved monopoly (in the universities and laboratories of the world, one might add), and a research program should in fact never be allowed to be transformed into a weltanschauung6 (Lakatos 1999), thereby confirming or recognizing the normal non-pacific coexistence of different paradigms also in the realm of physical sciences7. It is also worth mentioning that this student tends to sympathize or to agree 16A global or all encompassing vision of the world.17Although it seems to be common understanding that Lakatos, like Popper, pretends that there is such a thing as a “universal scientific method”.

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with the ideas of Feyerabend about the advantage for society and science inherent in the existence of pluralism of approaches and the proliferation of theories

As a matter of fact, in the history of Physical Sciences there seems to have been a time when the whole set of entities around us, and that constitutes what could generally be termed as "physical objective reality” was classified as being amalgamated into four large categories or elements: Air, Water, Earth and Fire. Apparently and accordingly, all particular and specific entities from animals of all kinds to plants and rocks, were supposed to be the result of different combinations of those different elements arranged according to particular structures and due to different formative causes. When reading and reviewing the literature on General Psychology, Behavioral Sciences or Social Psychology one gets the feeling that, judging from the expressions used, the terminology and categories referred to by the authors, we are in these fields still at an equivalent or similar level of scientific development. As an example of the above, the postulated difference between what is called "episodic memory" on the one hand, and "semantic memory" on the other, is in itself to be considered as one theoretical construct to be tentatively used for an understanding effort of what really constitutes "memory", the self-awareness of it, its various manifestations as apprehended results of possible inner workings of our biological minds. We seem to still be far from being able to identify with any degree of approximate precision what neuronal circuitries constitute what types of memory and if indeed we can talk of "semantic" versus "episodic" or "autobiographic" memory.

It has been said that “objectivity in the realm of social sciences is a myth” (XYZ, 1934). That notwithstanding, and as indicated before we will strive for that elusive goal of objectivity and, in order to minimize the usually expected researcher bias, it seems that the best medicine is to declare upfront one’s owns preferences and standings in these matters. Considering our approach to sociological studies, we believe that a systematic attempt should be consistently made at considering Sociology as particular branch of Zoology and to study human social organizations in the same or a similar way in which Entomologists study ants or bees societies. This approach would apparently place our posture squarely in opposition to the postulate of adequacy which, as we know, requires sociological accounts and explanations to be understandable to the social actors themselves. In this particular instance, we share the view (of behaviorism) that social actors understanding or interpretation of “reality” is often incoherent or may be better explained by causes other than the ones assumed by the actors themselves. In a sense it may be argued that what we are proposing is to ignore the “verstehen” factor and to try to look upon human societies in a manner that we could only imagine to be that of anyhypothetical extra terrestrial visitors.

The majority of sociological studies seems to be based on research methods based on surveys, questionnaires and structured interviews where the sociological researchers literally ask the subject members of their study object for their views and opinions on any specified set of issues. A number of survey refinements have permitted the uncovering of behavior and motivational variables that may have been unknown or unsuspected both to the researchers and the subjects or targets of the surveys. The work Le Suicide by Durkheim is generally acknowledged as the first and most classical of

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sociological research works. It does not require any formal demonstration to state that Durkheim did not conduct any survey amongst the suicides-to-be.

One additional way of expressing our intent is to draw attention to the difference in the practices of doctors of medicine (of human patients) and veterinarians. Their objects of study and concern are often very similar (in the case of mammals) but their research methods in identifying and diagnosing whatever disfunctions in the bodies of their patients is, as it is well known, strikingly different. Although one occasionally hears that some doctors, with the pressure and stress of daily practice, do behave with their human patients as if they were unable to speak. As a matter of fact, and as an indication that we intend no sarcasm here, the growing usage of laboratorial tools to assist in the diagnosis of body dysfunction brings the research methods of medical doctors and veterinarians somewhat closer than before.

This student believes to be fully aware that this goal of distancing oneself from the object of our study (in the realm of social sciences) cannot ever be fully achieved as we, human beings, cannot simply shed away our intrinsic human condition. However we seem to possess the capability of distancing ourselves from our perceptions and the circumstances of our environment. It is that posture or attitude, taken to the utmost or possible extremes, that is advocated here. One alternative (or rather complementary) way of expressing our position calls for a somewhat more detailed explanation... Ethnomethodology suggest that the search for a sense of our perception and account of “objective reality” is in itself a complex interpretative process which risks falling into a solipsist position. On the other hand, the typical attitude of sociologists when doing research in that of “surveys” and “structured interviews” based upon “snow balling” selection of interviews, as well as “content analysis” of publications and documentation (archives and aggregates of symbolic representation) available to the search process. Much along the lines of reasoning that are commonly found in medical practices - all kinds of blood and other body fluids quantitative and qualitative analysis before a diagnostic is formulated.

In discussing the social behavior of any human organizations, groupings and/or assemblages, and in particular in the course of our dissertation, and without falling in the political or ideological pitfalls of Sociobiology or the biologist determinism of.....8., we believe that Sociology should best be perceived as a particular branch of Zoology. This ought to be related to what is commonly accepted as scientific knowledge acquired through experiments with ants, chicken and various other animals species also in the related field of Social Psychology (see Zajonc, Cottrel and the theme of "social facilitation"). This purely intellectual attempt is to be tempered with the realization that although we do keep in mind the attributes of culture and the specificities of the human socialization process, we believe that the essential purposes of science are best served if we at least attempt to distance ourselves from the object of our study as much as an etologist distances him or herself from the object of his or her study, be them ants, bees or monkeys. In this endeavor we have to take into account not only the observation of human social behavior in general but also those experiments that have been and are 18Nor, even more so (!), those of the evolutionary perspectives of Herbert Spencer as seemingly adopted by Parsons

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routinely conducted in the realm of Social Psychology. In any case, and although we may try to distance ourselves from the object of our study (the social behavior of fellow human beings in various circumstances of technological and organizational evolution), we cannot ignore the particular circumstances of our research endeavor in the sense that we have to consider and take into account the fact that we are ourselves also human beings and therefore in a particular position to directly experiment the feelings and purposes we commonly attribute to others. The “verstehen" factor already referred to. One has also to consider the impossibility of conducting "unobserved 'experiments'" in the sense that the researcher cum observer cannot stop from acting as an audience when exactly the experiment attempts to consider the "subject" as being alone by comparison with his or her behavior when in the presence of an audience.

It is a truism in Social Anthropology that while accounts of actors’ culturally informed definitions of activities and institutions are invariably an essential ingredient of any explanation, they are often insufficient on their own, if only because what people say they do, commonly differs from what they really do (as seen from other, outside observers). Observers need also to draw on their own observations, which need in turn to be disciplined not only by sensitivity to cultural differences but also by a conscious reflexivity - an awareness that they themselves are part of the process being described. The mutual indispensability of the “emic” (description of cultural meanings) and the “etic” (observation of behavior) is fairly well trodden terrain in textbooks on anthropological method. (Booth, D. - “Social Development Research. An Agenda for the 1990’s” in European Journal of Development Research - Vol 4 (1) pp 1-39.

In the realm of social research this author believes that the prevailing paradigm (most notably in economics) is hostage to the Newtonian mechanical paradigm of the physical sciences and that as such it is less than useful for an adequate understanding of social reality. In the particular field of economics, this author believes that the most adequate model or paradigm in economic analysis is still the classical school started with Adam Smith and running up to Karl Marx and complemented by the German historical school. A case could argued that the neoclassical ramification initiated with Jevons, Walras and ... (even if some of its technical contributions are extremely important) has originated precisely because of the possible logical and political consequences of a full understanding of the latest development of the classical paradigm. One could even go as far as to argue that this developments could include in it the modifications introduced by authors such as Keynes.

Still in the realm of epistemology, we should also indicate our agreement with the position of Immanuel Wallerstein (formulated in Wallerstein 1982 and 1985, inter alia) that the different and established social sciences as indicated by that author (anthropology, economics, geography, political science and sociology) have become separate disciplines, that is, coherent bodies of subject matters organized around separate levels of generalization or separate meaningful units of analysis, due to specific historical reasons linked with the institutions where the development of such disciplines took place. Like biology or psychology, the subject matter of “social science” is very vast, and it might be convenient to subdivide it for heuristic or organizational purposes, though not for epistemological or theoretical purposes.

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Considering the prevailing and competing paradigms in Social Sciences, in the case of Sociology, this student believes that Functionalism, the prevailing school of thought, at least in the American universities, is a less than adequate model for the study of social reality. One could go as far as to contend that in the final analysis, Functionalism is redundant in the sense that it appears to be based on circular reasoning. At the risk of oversimplification, one could illustrate this contention by stating that functionalism’s basic tenet is that social things are as they are, because that is the way they are meant to be. If they function, it is because they are supposed to fulfill that specific role... If they fulfill that specific role, it is because they function... As one further example, this student believes that the concept of classes, as developed (or rather, elaborated upon) by authors such as Olin Wright following a marxian tradition, is a more adequate (a better set of binoculars, if you will) model of analysis of social reality than concepts derived from Functionalism. It should be added here that by “more adequate model of analysis” one means a model capable of providing better insights into social phenomena. In its apparent complexity, Wright’s schema to discuss “contradictory class locations” describes more than it really explains9. In defense of Wright’s analysis it can always be argued that his contribution of those concepts of “organizational assets” and “skills assets” do help explain how certain individuals, families or social groups came to occupy certain positions in the overall social structure of modern industrial societies, latu sensu. Be that as it may, in itself, the schema here referred to still is a useful analytical tool to help explain the behavior of most individuals and groups within the large business corporations that concern us here.

One word of caution, however, is required. We do not want to suggest the absolute (whatever that might mean) primacy of “marxism” over “functionalism” in their respective attempts at explaining social reality. What we also have to bear in mind is another and different perspective or problem encountered by both these two approaches. We are referring to the “agency” versus “structure” debate in sociological theory. It can be argued that both “functionalism”10 and “marxism”11 have common elements of a primacy of “structural” causes to explain social phenomena, as opposed to the relevancy of individual “agency”. In this debate one is tempted to “take sides” (in any case this would always be on a very, very provisional basis!...) regarding the primacy of either of these factors. Some comments are in order. In the first place, the idea of “structure” is naturally associated with the idea of “perennity” (something that stays on, like it is, and with a stable sense of identity, for a longer period of time). This in turn seems to have allowed social scientists to have attempted (and to continue to attempt) the 19In any case it can be argued that explanations are implied in most descriptions. On the other hand, we want to draw attention to a common confusion about exploitation that is also implied in Wright’s analysis. In his view, his analysis permits a clarification of “class locations within capitalism that are neither exploiters nor exploited”. On the contrary, we want to stress, within capitalism most players - at least most of those in the class locations indicated by Wright - are simultaneously exploited and exploiters. 110This is indeed often referred to as “structural-functionalism”111In the same line of our previous footnote, a reference must be made to the work, amongst others of Louis Althusser and the claim that his ideas were tantamount to structuralism

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elaboration of forecasts about the future development or evolution of human societies. Any reading of recent attempts at forecasts (elaborated, for example, about ten years ago) of then future probable developments, should be enough evidence of the precarious nature of our understanding of any true, deep and fundamental forces that may, in any perceptible way, be conditioning (if not determining) the course or our future evolution. On the other hand, the idea of “agency” is commonly associated with the individual actors capability to determine and change the social course of events. We could then say that while “structure” is associated with a deterministic approach “agency” is associated with the classical perception of “free will”. The future would therefore be impossible to predict and we would have no social science to speak of. This is a simplistic conclusion, it should go without saying, but the...

Science, Technology and Paradigms UNESCO's accepted definition of science indicates that it is a set of knowledge

organized upon the mechanisms of causality of observed facts, obtained through the objective study of empirical phenomena. On the other hand, its definition of technology puts it as the set of knowledge, scientific or empiric, that are directly applicable to the production, improvement or usage of goods and services. In this same context it is common convention to distinguish three categories of ER&D (experimental research and development): "fundamental research", "applied research" and "experimental development"). In the realm of social sciences, our work would pretend to be included in the second category, that of "applied research" and could be classified in the area of technological studies as organizational developments have now been recognized as important technological factors. As we shall see, or as we hope to show, this approach should not be viewed as if it were along the lines of the technical contingency theory approach. Common understanding of contingency theory approach puts it as the study of correlations between any one organizational structure and the contingent aspects of its outside environment, namely the technological ones, as well as the effects of this same outside environment upon organizational behavior and performance. Contingency theory therefore rejects the taylorian or classical idea that there are some best organizing principles (the “one best way”) and, instead, explains any variations in organizational forms as being determined by environmental (social, political or economic) and technical conditions. In our approach we do not reject the concept of one possible or eventual “best way” of organizing things or structuring entities and accept the basic idea that the organization (in particular business firms) do not merely respond to environmental circumstances (as the contingency theory seems to suggest or imply). What we suggest, instead, is the idea that over the very long run (decades12) organizational structures have been changing in accordance not only with social, political, economic, demographic and cultural factors, but also and mainly with the possibilities afforded by new technologies, mainly in the area of communications and information processing. In view of that, and looking more specifically at the changing conditions within business firms, it could naturally be argued that this will follow along the lines developed by Aoki when discussing the characteristics of the so-called “Japanese” and then J-firm as opposed to what that author calls the H-firm. The recent contributions of the “agency” as well as the 112It could in fact be considered as a secular trend

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“property rights” theories, as they relate to the changing modes of control and motivation being put in place, are also to be taken into account in our dissertation.

On the other hand, in this context, the idea of a “changing organizational paradigm” will probably sound somewhat presumptuous as paradigms, by common definition, are not expected to change every now and again. And yet, the idea of paradigm itself has changed, in a sense, from that of a “model” as in Plato’s philosophy, to that of its current or more usual incarnation: that of a set of ideas, assumptions and rules of reasoning that condition the research work of scientists in any particular field of knowledge. We may also refer the fact that the word “paradigm” has also come to mean, depending on context, the expression of ideas such as “a clear example” or “very characteristic of” whatever thing, event or idea any particular person wants to convey in a conversation. It is also often taken to mean what might termed as “ostensive definition” of a concept. In any case, in our dissertation, we do not pretend to be witness to anything resembling an epistemological break of the khunnian or althusserian kind. In the view of both Thomas Khun or Louis Althusser, the relations between rival or successive paradigms are always liable to be of the incomensurability type, in the sense that the central concepts and procedures of one paradigm are not statable in the concepts used for the other. It may be argued that this could be true or applicable in the realm of physical sciences but not so in the realm of social sciences. At the risk of oversimplification, and to attempt a clarification of this last statement, we have to consider how the evolution of paradigms in both physical and social sciences has affected the current situation.

In the realm of physics, for example, we have had the Newtonian paradigm, with its set of assumptions and theorems, the reversibility of time and the possibility of relating a specific cause to a specific effect, again as examples, being two of them. As it is well known this paradigm has long since been replaced by the ideas of Einstein in the realm of astrophysics and the quantum theory in the realm of nuclear physics. As noted by Georgescu-Roegen (1996) and Ormerod (1994), most social scientists, including the vast majority of conventional economists, have not yet managed (at least apparently) to escape from the type of reasoning that characterizes the paradigm of classical mechanics as formulated by Newton and later on chased after, or pursued, as an ideal type by early social scientists such as Comte (and his “Physique Sociale”) in the realm of Sociology and Marshall or Walras, with their conception of a general equilibrium, in the realm of economics. This same general comment may be advanced regarding modern Sociology. Sociological analysis investigates the various modes through which the actions of human beings are conditioned by pre-established relationships at the level of groups and organizations in which they are immersed and whose characteristics they themselves produce, reproduce and transform: families, neighborhood circles, local collectivities, professional environments and associations, institutional arrangements, States and nation-societies (Silva and Pinto, 1986). Tracing its sources back to the two major revolutions that shaped modern Europe (the French Revolution and the Industrial Revolution), Sociology was bound to take on a globalizing posture and to privilege the study of industrial societies. It was also bound to take on an explanatory posture akin to the, philosophies, sciences and technologies that had enabled those Revolutions. On the other hand, and still to use a distinction encountered in Georgescu-Roegen, conventional or mainstream economists like to think (or at least those who are aware of this...) that the

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theory of economics is a science where predominate rational phenomena of the first order (those that can be deduced by algebraic or logical computations and from which the phenomenon of novelty is excluded), whereas the nature of human society (a super organic entity) requires a rationality of second order, where novelty, variability and quality are essential ingredients of understanding and explaining.

Returning to our modest attempt of clarification of a difference in perspectives regarding paradigms in physical and social sciences, it is our position that whereas in Physical Sciences one can accept the argument of incomensurability, in the realm of Social Sciences what we have is a divide of a different nature. One that is based more on personal postures and perspectives, rather than premises and postulates. What we mean by this is that, in Social Sciences, it is possible to have or to accept the same premises and postulates and still arrive at different conclusions depending upon one’s own personal interests and social perspectives which in turn have been conditioned, if not determined, by different socializing processes prevailing in different societies upon which we happen to have been born. Hence, for example, the universality of Physics and opposed to the commonly asserted eurocentrism of Anthropological studies.

The Object of Our Study; Clarifying the ConceptsAs they are used by different people and in different contexts, words tend to gain

different meanings, also varying in accordance with their authors' expressed or implied intentions. Only too often one witnesses endless and bitter discussions and arguments about what was really meant by such and such an author on such and such a subject. In this respect, and without the foolish pretense of being able to exhaust the matter at hand, we still feel that it is important to clarify what is usually meant, and what we mean ourselves, by the words “open systems” and “closed systems”.

The behavior of social organizations in general and business organizations in particular, is conditioned, if not determined, by their economic, political, social and ecological environment. If we want, as it is proposed here, to a have a systemic view of organizations and of their behavior within themselves and in their relationships with the outside world, it is advisable to start our discussion by an attempt to clarify what is meant by expressions such as "open" and "closed" systems and how both sociologists and economists have tended to view this issue. We believe that the relevance of this preliminary discussion will become apparent as the text of our dissertation unfolds, most specially as we propose a new, different and original perspective. Which we believe is particularly relevant to any discussion of the behavior of social organizations in the contemporary global society.

In the context of General Systems Theory, as proposed by the biologist Ludwig Von Bertalanffy, economist Kenneth Boulding proposes and hierarchy of systems in which he seems to consider, by definition, all socioeconomic systems as being "open". It seems that this classification would postulate the "openness" of a system based on its organicity and all living systems (biological entities) would be defined as open and the "more open" the higher the degree of imprevisibility of its behavior. In other words, and to use an expression from the discipline of systems engineering, the higher the degree of freedom of a system, the more open that system would be. On the other hand, to use the terms of reference of Stafford Beer (Chiavennato, 1983), any socioeconomic system

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would be classified as a "hiper-complex and probabilistic" system and therefore by definition as an open system. By "socioeconomic" systems what is normally meant are entities such as economic organizations, business firms, state institutions, churches and national economies, to name but a few. "Owing to the fact that all organizations are open systems, all organizations will pursue activities that will expand their frontiers." (Daft and Steers, page 393). Yes, indeed. But one also has to realize that, although individually all organizations are open systems, the aggregated sum of all organizations on the planet comes to constitute a closed system.

As a result of these considerations it becomes quite understandable that most economists will stand by the proposition that “the economy is an open system”. In this context, a suggestion that part of the problem faced by most analysts, and by most multinational corporations, comes from the fact that they are now operating in a closed system, is probably a bold suggestion indeed. The introduction of the world-system concept into the realm of the social sciences is usually attributed to the North-American sociologist and President of the World Society of Sociology, Immanuel Wallerstein. Although his work on the so-called "world-system school" is based on the research and findings of French historian Fernand Braudel, he has also expanded upon the writings of the authors of the so-called “dependency school” that asserts the existence of a “center” (where large MNC’s predominate and control) and a “periphery” (where the surviving remnants of small businesses predominate and are subject to the control of the “center”). In a different perspective, we postulate here that we live in a world of bureaucracies and that the behavior of those bureaucracies, both collectively and at the individual level (of their leaders and followers), is conditioned if not determined by their outside environment. Since, in our own perspective, these bureaucracies have gone "round the world" and are currently "facing themselves in the mirror", it would seem important to consider some of the ideas behind the concept of the "world-system".

It is our belief that, in this context, an overview and a clarification of the contributions of the so-called "world-systems school" to the understanding of the global behavior of economic, social and political entities could be of interest. Considering the fact that that school of thought seems to go along with the proposition that the socioeconomic world of business firms and other organizations is an “open systems” because of its hiper-complexity, we want to suggest, on the contrary, that the World, (with a capital W), has always been a closed system, at least as far as socioeconomic entities are concerned. If in the past that system of social organizations (such as, to name but a few, business enterprises, nations and churches) has behaved as if the World was an open system, that is due to the fact that the borders or confines within which those organizations developed their activities were still expanding (from a geographical point of view). With the discovery of the Americas and the maritime route to the East Indies, a process was started that would inevitably lead to the current situation of us all living in a truly “closed” system, in the sense that human societies can conduct all kinds of transactions amongst themselves but not, at least not yet, with the members of any societies outside the confines of our planet. This is basically what is implied in the idea of, if not explicitly meant, by the currently fashionable expression of “globalization”.

One other way of looking at the suggestion that all business entities are truly operating in a “closed system”, comes from looking at the marketplace as the normal

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arena of activity of business firms as social organizations. As each business firm strives to increase its own share of the market where it operates, the end result of the collective expectations and activities of all business firms is the expectation that the market should grow indefinitely. This can be achieved basically in three ways: by geographical or horizontal expansion, by demographical or vertical expansion and by intensifying or diversifying the consumption pattern of otherwise unchanged markets. The business firms of the industrialized world have reached this last third stage approximately one century ago and that helps explain the schumpeterian perspective of the business entrepreneur and its propensity for “destructive innovation”. This could also help explain the bursts of economic activity that come in the aftermath of wars of destruction. Also, and finally, witness the “glorious thirty years” of reconstruction and expansion that followed the end of World War II.

A Framework for AnalysisAs part of this dissertation we also have to clarify a number of basic premises

that underlie our effort. In a sense, and before we enter into any substantive details, we need to clarify some of our premises and basic postulates. In doing so we also have, as we go along in our introduction, to expand and discuss some of the concepts and ideas to be used in the body of the dissertation. One could consider these basic premises as those thesis that support our dissertation and that may or may not require a formal or specific demonstration. As one first example of these premises, we believe that it should be operationally enough to use two basic parameters for the definition and characterization of any single organization (how it is setup and actually works or functions). These parameters then are:

- The communications medium or media available to the organization members- The motivation or belongingness motives. This second parameter could also be defined as the reasons for adherence to a common, collective and coordinated action.

As one second example of those same premises, we could also consider that in characterizing and discussing the how's and why's of any social organization, Sociologists tend also to adopt moral or ethical considerations, thereby combining a positive with a normative posture. In other words, combining detailed descriptions and explanations of the behavior of any study of object with considerations of how desirable or undesirable such behavior may or may not be and its possibly positive or negative effects upon other entities. In that sense Sociologists, although claiming to take advantage of the "verstehen" perspective (absent in the realm of physical and other natural sciences), are in fact also adopting an ethical posture that explicitly tends to influence their world perspective.

From the very beginning of recorded human history that there has been some evidence of the importance of organizational skills in the midst of any society. Chiavennato (1988) makes an interesting reference to the organizational structure of the Jewish exodus from Egypt under the leadership of Moses. The structure and organization of the Roman legions is also a well known historical case study of the added efficiency of an adequately trained and (most importantly!) organized social structure. Also to be noted are the writings of classical Greek philosophers upon the subject matter of social

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organization. Or, moving very fast ahead to more recent times, James Watt in the England of early XIX century already discussing the advantages of standardized procedures, operating specifications, planning and time standards.

The theory of administration is deemed to constitute a critically important technological endeavor in which cooperating human beings search for the best possible ways, with people and through people, of achieving results with efficiency and effectiveness. The concepts and contents of the theories of Administration have varied along the last decades together with their enabling technologies. We can think of “Scientific Management” as the first instance where the basic object of study were the work methods and chaining processes or sequences in the activities of manufacturing workers. For the so called Classical Theory, Administrative Science entails forecasting of events or developments, organizing resources to cope with different and chosen scenarios, directing these resources in their activities, coordinating their efforts to maximize results and minimize waste and, finally, controlling the work being performed against preset standards. If, in contrast, we then consider the Theory of Human Relations, we then notice that emphasis has been shifted to the search of the best possible work environment conditions (both physical and human, but most importantly human) for the achievement of the best possible organizational results.

Changing only so slightly the tone of our discourse, and referring to one of the premises underlying our dissertation (that of the critical importance of the available communications medium) one could make a case of the impact of communication technologies upon the type and relative complexity of social organizations. Starting with the early history bands of hunters and fruits gatherers, (and by comparison with contemporary aborigines of some more remote areas such as the Kalahari Desert), it has been established that their usual size does not exceed about 30 members. Now, if one considers the distance that can be reached by the loudest possible yelling of a human leader (sending commands to his partners or followers...), as well as the area to be covered in the hunting proceedings, one comes easily to the conclusion that there is probably some direct relationship between the level of sophistication of communication techniques and the size and complexity of an organization. We are referring here to a more profound or deeper level than that implied by the well known principle of “span of control”, although both themes are substantively interconnected. Apart from communication, the other very basic factor to be considered is, of course, motivation.

An organization with well defined functions, well accepted both inside and outside of its own structure may, "at the limit", function without institutional leadership. Like a well rehearsed orchestra without a conductor. In the business world, this would be the case of a well structured, well oiled administrative machinery superposed upon a divisional form (as in the case of so many American multinationals). But, due to the normal and inevitable evolution of the outside world, it would be a phenomenon, even for such a well oiled administrative machine, not to have at some point in time the need for that "institutional leadership". The critical issue here is, of course, that of why should the members, any members, of that “well oiled administrative machine” be there in the first place, and then why to contribute their individual and collective efforts to fulfill and materialize the ideas (or dreams, one might add) of that person or persons that represent that “institutional leadership”.

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In an expanding world of business activities, superimposed upon a world of social, economic and material scarcity (such as the western world during the last decades of the XIXth Century and the beginnings of the XXth Century) the answer was one, at the turn of the Millennium, the answer is naturally another. We are thinking here about the current situation of the “Welfare State” and its impact upon the causes and nature of the (un)employment situation prevailing in the most advanced societies, as well as the ongoing discussion of the motives for the behavior and attitudes of employees, workers, managers, executives and politicians.

Business Firms and Technology DevelopmentWhen discussing scientific and technological development, it is not uncommon

to consider various social actors, namely universities and state laboratories as well as industrial firms and their different and complementary roles in that development. For our purposes we consider that business firms are, and over the last two centuries have always been, at the core of the process of technological development, whereas fundamental research has been conducted mainly in public interest institutions13. Also, modern economies are ever more based on professionalised knowledge and economic success depends considerably upon investments in the immaterial factor of scientific and technical knowledge. Further on, Human Resources constitute the catalytic factor indispensable to convert technological progress into economic growth and social welfare. As a result of these points, scientific and technological activities can not be considered as an exogenous variable in relation with et socioeconomic milieu in which they are exercised.

The business firm as an object of study has a history of pluridisciplinay scientific research about which one can identify various sources of inspiration which have come to merge into the current set of perspectives. This history goes back at least to the Thirties and to the recognition of the field of social change and to the interest of British social anthropology for labor migrations, urban life and the industrial environment. In the Fifties this anthropology has given place to a labor sociology and in the Sixties to a political science of the labor movement.

As we have indicated, our dissertation concerns itself with a specific set of phenomena (changes in organizational practices within business firms) which are naturally included in the realm of social sciences, as these are normally understood. One has to bear in mind that, in the eyes of mainstream economists, for many years the situation has been as if the matters of business firms were the private concern of conventional economics. In the words of author Paul Ormerod (1994) “there are few greater insults in an orthodox economist’s vocabulary than to describe someone as a sociologist.” Also because of this type of polemics, it could be argued that business firms are precisely one particular arena where the research interests of both economists and sociologists (to name just two strands of the many scientists that concern themselves 113It is worth noting, here and now, that the leaders of the IBM Corporation used to pride themselves in the number of Nobel Prizes for Physics and the institution of the IBM Fellowship in recognition of outstanding achievements in computer science related fields, such as innovative developments in database and data communications technologies

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with the inner workings of these particular types of institutions) do come together. Also because of that, and the related but different perspectives or points of view expressed, in this case there seems to be room for discussion of the validity proper of paradigms, as one tends to think of paradigms as pertaining more to the realm of physical sciences.

It is not uncommon to define organizations as the social and physical "places" or entities where human beings interact and live out activities in the pursuit of specific goals. From the setting up of daily activities to the preparation and execution of longer term goals. These entities are further characterized by structures of hierarchy and social distribution of differentiated roles. In this sense we would exclude from the concept of organizations the most simple and elementary forms of social structures such as the family (both the nuclear and the extended versions) and the clan or lineages as studied by mainstream or classical anthropologists. As a result of this, we could consider such a definition as being close to the idea of bureaucracy as discussed by Max Weber. In this context it is almost a common platitude to state that we live in a world of organizations, of which business firms are one particular instance. Organizational Sociology could then be defined as that branch of Sociology that concerns itself with the structure and dynamics of social relationships within organizations. It is a multidisciplinary analysis of formal and informal structures of control, the distribution of decision making power, the allocation of tasks and the definition of goals and means to attain them. Apart from Sociology proper, one usually considers the contributions of other disciplines such as Psychology, Economics, Management Science, Administrative Theory and Social Anthropology. Our concern then is about “organizational sociology applied to the field of business firms” and this dissertation, or at least part of it, could also be seen as a meta-study (as an analytical survey of current literature on the subject matter of the "virtual corporation and the changing organizational paradigm"). See Bond and Titus (1983).

With reference to economics theories or schools of thought, it could be argued that, although we concentrate more on the organizational (internal) perspective, in our dissertation we take an institutionalist (external) perspective of global firms behavior.But then one might also consider that, in terms of what is meant by the “institutional” perspective in the realm of economic theories, the study of the inner workings of any business firm constitutes an institutionalist approach whereas, from a sociologist’s point of view, the study of the institutionalist perspective of a business firm is the study of its relationships with other relevant social actors and in particular with the State and Trade Unions. In any case and in general terms, institutional analysis is deemed to concentrate upon critical decisions and these are defined as those that impinge upon the key values of an organization and most of all upon the distribution of power both within the organization itself and its impact upon the external environment, both social and physical. In that context, our thesis is that, due to both its size and its role in technological leadership (in an industry sector that is also by itself leading and influencing developments in other industrial and business sectors), the case of IBM is a good illustration of the dialectical nature of this particular dichotomic perspective (the organization and the institutional perspectives). In practice, as well as in theory, both concepts are intermingled and both organizational and institutional vectors or

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perspectives get to be affected by many technological developments that originate both inside and outside that corporation.

The Sociology of Business Firms - A Short Critical ReviewFor simple historical reasons (of an epistemological nature), the enterprise as

seen through the eyes of sociologists presupposes wages labor, collective work operations, social relations of an hierarchical nature and social conflicts. As a result it is only too natural that individual and micro-enterprises (such as those akin to the liberal professions) have usually been out of the range of interest of organizational sociologists. And yet, when one considers the experience of Josse Vanrobais in 1728 (!) in the setting up of a “royal manufacture of fine drapes” in Abbeville, France, one has to consider that both the writings of Adam Smith and F.W.Taylor, each one in his own time and regarding the social division of labor and the technical organization thereof, are not much more than a continuance of previously historically recorded experiences (Thuderoz, 1997).

Borrowing from Thuderoz (1997), the enterprise is simultaneously a place of production, an organization and an institution. These are three different but complementary perspectives of that social reality that concerns us here: the economic, the social and the symbolic. While it can be said that these different perspectives need to be separated and singled out for analytical purposes, they are interrelated but not in any hierarchical manner. The enterprise is, in fact, that particular place where men and women get together, outside the domestic realm, in order to produce goods and services that ought to be sold in a marketplace. To do that, they need to coordinate their actions and therefore stipulate certain operating rules and procedures. This production of rules, in its turn, implies a production of values and a formulation of a system of ideas (an ideology) and a permanent interaction with its social environment. As a result of this production of values and symbols, the enterprise becomes anointed, so to speak, with the social trappings of an institution.

The modern version of the business firm and enterprise came upon the world scene sometime between the last decades of the XVIII Century and the first ones of the XIX. We could, in any case refer to some historical precedents such as the banking houses of Northern Italy and the Low Countries which characterize the first signs of a new macro social system arising out of the decadence of feudalism. Today we conceive the business firm as a formal and structured organization dedicated to the pursuit of specific business objectives, where innovation and change take place as a matter of course. As a result of its existence and purpose, the business firm was originally conceived by classical Political Economy (the actual current name and concept of “Economics” was coined only after the so-called “marginalist revolution”) as the site of accumulation of capital and the business owner (or entrepreneur) as the owner of capital and the agent of change, innovation and accumulation, this later set of functions being firstly conceived as a separate one by J.B.Say. Therefore, and considering the importance of historical determinants for the current state of affairs in the analysis of the business firm, we believe it appropriate, in the context of our dissertation, to spend some time

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reviewing the evolution of the social environment around the business enterprise over the course of the last couple of centuries.

Historical antecedents and Structuring PrinciplesSuch as we know it today, the business firm has had an historical evolution

closely associated with the global evolution of the capitalist system itself, including the evolution of accounting techniques. The business firm has evolved both as an economic concept (also in its concrete historical manifestations), as well as a particular set of organizations of productive factors. Although it is true that much of the origins of the business firm, are due to private (in the modern sense of the term) and not to State initiative (or arising outside the realm of concerns of the “Prince”), it is also true that a number of concrete business firms has had its origins in State decisions in which the sovereign and/or his immediate entourage, in the name of an alleged national interest, have decided to launch specific business adventures. In the case of Portugal one only has to think of the Marquis de Pombal (Prime Minister of King Joseph I) and the “Real Companhia dos Vinhos do Norte de Portugal”. Many other instances of “business firms” initiated by State decision may, of course, be found in standard text books on Economic History. The main and major historical event that concerns us here is that one which truly marks the emergence and triumph of the private business firm as a separate and specific locus of economic activity. We are referring, naturally, to that epochal period commonly known as the Industrial Revolution. Before that economic production took place mainly in the households and/or through State determined projects and initiatives. The first structuring principle we wish to retain here is therefore that of “private initiative”.

Industrial society has been commonly defined as being one where there is a radical differentiation between the “enterprise” as the locus of work and “family” as the locus of primary social relations, this being our second structuring principle. This is, of course, an ideal type definition in the sense that in real life we end up having a continuum of organizations from the “family”, pure and simple, where primary personal relations of care and reciprocity are supposed to predominate, to the allegedly impersonal business enterprise where social behavior is assumed to derive from the postulates of an ideal homo economicus. This continuum arises from the fact that we do have family businesses, where a certain type of relations are determined by norms of efficiency, albeit intermeshed with relations of care and loyalty, and the fact that in any business or institutional organization, personal or primary type relations do arise amongst its members, this being due to their close day to day social interactions.

Division of work and specialization of tasks is usually remarked as another structuring principle of business organizations peculiar to industrial societies. There again, in any case, we could make a case that also in the family we do have a degree of social division of work. The basic difference is one of degree rather than one of principle. The point to notice is that it is the available technology that makes a stronger point in the type and character of this social division of work. Both in the realm of business firms activities, as well as in the realm of family related work activities. Domestic electrical appliances are a case in point. The availability and continuous and consistent use of technology has enabled the process of capital accumulation, and this

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would arguably constitute the most important characteristic of an industrial society. Together with this we will have to consider as an additional structuring principle the practice of accounting and that of economic rationality that goes along with it.

The alleged transition from an industrial to a postindustrial society basically entails the changes in what has been considered as another principle definition of an industrial society: that of the physical presence or concentration of workers in a set of specific and specified places of work (be it manufacturing, transportation, services, etc...). After an initial, extended and prolonged process of concentration of hundreds or thousands of workers in hundreds of dedicated working places, the arrival upon the social scene of new communication tools and information processing technologies has enabled the dispersion of work places (witness the currently ongoing process of “working from home” or “telework”...) and has therefore caused a drastic change in the “rules of the game” in what used to be the realm of “industrial relations”, and by implication has caused a revision of the above mentioned structuring principles.

Theories of the Business Firm - A Short Critical ReviewWhen discussing concepts and theories in the realm of social sciences, we must

be permanently aware of the dangers of using analogies from the realm of physical sciences. On the other hand, and this applies in particular to the social sciences, in terms of the debates of science the difficulty (according to Wallerstein) is whether one can truly bridge the false debate of the particular and the universal, on the one hand, or of the ideographic and the nomothetic, on the other, with a methodology that can effectively describe diachronic systems which, by definition, have an “arrow of time” (Wallerstein, 1994). In the realm of social sciences (and economics is a social and historical science), it has been noted that the “particles” under observation and scrutiny have memories, emotions and ambitions (Waldrop, 1992). As far as it seems to be the case in the current situation of advancement of knowledge (...), whereas neutrons, electrons, atoms and molecules do not have ambitions (nor do they learn from past experience or transmit values and symbols to other “particles”), the “particles” in social sciences in general and in economics in particular, have memories and traditions, which have been created and invented and keep on changing. It is precisely the presence of these memories, traditions, values, symbols and ambitions that make a radical difference between the two types of scientific knowledge and methods and which create an epistemological environment prone to errors and confusion if, as we have indicated and has so often been the case, logical schema taken from Physics are used in Social Sciences.

Rationality as a structuring principleSciences of organized social human behavior have developed a set of premises,

all based on what might be termed postulated rationality. From a methodological point of view, the sciences of economics and management, at least in their mainstream versions, start by assuming the total disagregation of all constituent elements in society and the observable behavior of the whole is perceived as the summation of the individual behaviors of the constituent parts. This results in the hipothetical-deductive method being the received one, amongst mainstream social scientists. In this methodological approach individual behavior is perceived as dictated by “rationality”, whereas the

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resolution of inherent conflicts, that inevitably result from the freedom of individual discretionary action, (in the context of a resultant collective behavior), is supposedly achieved through the mediation of a set of mechanisms that, in the realm of socioeconomic sciences, we may then call the “market”. It should be obvious that we are in the realm of what has also been called the civil society, that is, a stage of social development where the “rule of the sword” has been replaced by the “rule of the contract”. It is this postulated rationality that underlies our perception of those changes taking place in IBM (our chosen case study as an example of the organizational changes taking place in that type of business organizations) while considering the five parsoninan structuring pattern variables of- affective involvement versus affective neutrality- ascription versus achievement - particularism versus universalism, and- diffuseness versus specificity.The pattern variable that Parsons himself has later on dropped out of the original five, (that of collectivity orientation versus self-orientation) should also be considered. These pattern variables were, of course, developed for a different purpose and context: that of the modernization theories, whereby researchers in social development attempt to identify the particular stage which has been reached by any individual national society in its postulated progress towards the modern status, which is defined as being that one composed of stages on the “right” side of the continuum of each one of those five pattern variables. The transformation in the organizational paradigm that we are assuming is taking place, is to be considered as within the modern state of affairs and, therefore, a mere change of kind within a more global and secular trend of change of nature. IBM’ers, both before and after the transformation, were supposed, expected or assumed to behave in an affective neutrality manner regarding their business environment, to be recognized and rewarded according to achievement rather than according to birth “rights” or social networks, to act in most circumstances in a universalist manner and to be specific and professional and, finally, to look up to their own best interests in an individualistic manner. As opposed to this “postulated rationality”, whose main purpose was the enabling of building organizational structures that worked according to rational principles, the practice of life reveals a somewhat different story. Again, in the case of IBM, consider the transfer of corporate power from Thomas Watson Sr., to Thomas Watson Jr. and his younger brother Dick Watson. The same pattern of family connections (and others) in appointments for jobs of particular responsibility, as well as the observed behavior in the successions struggles of lines of higher executives resembles more the pattern of social behavior best studied in Anthropology. In short, and to conclude, one is naturally led to conclude that it seems that Anthropology and Sociology are more adequate tools of research and understanding than Economics when it comes to study the individual and collective behavior in the business enterprise setting. Another comment that seems to be justified at this point is related to the assumption of “rationality” on the part of the neoclassical paradigm and its critique as formulated by Herbert Simon. Apparently, Simon seems to imagine that the neoclassical paradigm postulates something resembling perfect information and absolute aristotelian logic on

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the part of all participants. It is the belief of this student that, if that were the case, we should only underline the fact, or remind the proponents of the neoclassical paradigm, that Economics is a “make belief”14 science, closer to Euclidian Geometry than to experimental Physics. One enumerates a number of premises and, based on these, a number of equally valid theorems are then deduced and formulated. Nothing wrong with that, provided we do not forget the nature of our premises.

One further problem to be considered is the issue of what is “right” (or “correct” or “adequate”) as an explanation of any phenomena and what is “wrong” (or “incorrect” or “inadequate”). In the literature that was reviewed in preparation for this dissertation, social scientists in general and economists in particular, seem to be adept of the pure dichotomy in the pursuit of truth. Something is either right or simply utterly wrong and should therefore be discarded. It is as if Kant and Hegel never wrote about dialectical logic in which presumed or observed real-world contradictions are surmounted in a continuing process of knowledge accumulation. The other alternative explanation for this adoption of pure dichotomic structures might be the allegedly subversive nature that thinkers such as Marx and Engels attributed to dialectical materialism. And yet, when a biologist studies the interactions of a virus or a bacteria with its environment, he or she is not directly concerned with the inner working mechanisms taking place within any of those entities or in their immediate environment at the intra-nuclear level as studied in Nuclear Physics. The biologist does not need to know the detailed mechanisms of the interactions between particles and/or sub particles or the wave lengths of information flows between the various cells that make up any particular virus or bacteria. In other words, the fact that the biologist studies a certain layer of physical reality does not invalidate, makes null or falsifies the study of that same reality at some “lower” level or composite layer below or underneath the layer that constitutes his or her object of study. That would indeed be an absurd suggestion and the reason why we bring this matter up in here is because of the apparent practice of a number of social scientists, namely some economists, that seem to consider that the study of certain areas of social inquiry are not simply “incomplete”, but outrightly “wrong”. The field of study that concerns itself with the theories of the firm is a case in point. Because of its interest to the substance of our dissertation let us review, very briefly some of the strands of the theories of the business firm, as expounded by economists, considering that most of these are critical of the neoclassical paradigm. We must stress that we do not propose to defend that neoclassical paradigm but rather to draw attention to some of the methodological assumptions (and quite often fallacies) that are involved in such critiques. In our view, the critique that must be made, and has been made, of that neoclassical paradigm is of a different and much more fundamental nature. A good example of this may be found in Georgescu-Roetgen (1996).

When discussing the most recent perspectives on the business firm both as an economic and a social phenomenon, we have encountered, in both an implicit and explicit manner, the following main strands of thought:

- The Theories of Transactions Costs as formulated first by Coase (1991) and then elaborated upon and developed by Williamson (1985) and (1989),

114“Let us pretend or assume that consumers act this or that way...”

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- The Neoclassical Theory of Agency and Property Rights as represented by Alchian (1987), Barzel (1989) Demsetz (199x) and Ricketts (1987),- The Evolutionist Approach to Learning Skills and Routines as discussed by Nelson and Winter (1982),- Theory of the “J” and “H” firms as formulated by Aoki, and- The approach of the Regulation Theory

As pointed out by Hugon15, the theory of the firm and innovation in business enterprises is at the heart of a fundamental debate amongst economists (and some sociologists, as well), and between the orthodox economics school (the neoliberal or neoclassical paradigm) and the school of institutional economics. According to the first school, a business firm is like a black box or an atomic entity (just an elementary unit that adapts itself to whatever changes occur in the marketplace). In that perspective, innovation is a process generated outside the firm environment, whereby new techniques and technologies which are external to the firm are adopted by the business units present in the market. The production function (and the degree of substitutability of production factors) is a central tool of analysis and that tool about sums up the furtive glimpse into the business firm’s own internal operations: a “mere” consideration of an optimum balance between production factors. On the contrary, for the institutional school16, one must open up the “black box” of organizations and business firms. In this perspective, innovation is a process that takes place right at the heart of firms and other organizations through a process of learning largely unconnected to the market.

For the orthodox school the central analytical concept is that of an abstract self-regulating market and the ambition of orthodox or mainstream economists is to analyze “emergent” economic behavior that results from postulated individualistic premises. But, according to conventional criticism, when one digs deeper into this question, we realize that, as indicated above, orthodox neo-liberal (the so called “mainstream”) economics tends to consider the business firm as a “black box” whose internal behavior is irrelevant to the analysis. The business firm is assumed to be an entity that receives information from the marketplace (on one side, probable sales prices of eventual products and services and, on the other side, the cost prices of input factors that the firm requires or proposes to use in its own production processes) and that will adjust its own activity to the information received from that marketplace. But, outside the realm of mainstream economics (strictly speaking, of its hard core of theoretical assumptions), still according to conventional criticism, we know now that this abstraction is too bold to reflect a reality in permanent motion. Thus we know that the business firm is not indifferent to other environmental factors such as the State, namely considering fiscal policies, trade regulations and industrial policies (such as protectionism against foreign competition), or 115In Ellis and Fauré (1995)116Depending on the authors encountered, the taxonomy used to classify the various schools and strands of thought in this area varies somewhat. We will take the position that the “institutionalist school” referred to by Hugon covers all the various strands that attempt to uncover the inner workings of the business enterprises as social actors.The institutionalist school (at least in a wider sense) would also include the study of the role and inner workings of other social actors whose activities are relevant to the economy at large, such as the State, trade unions and business syndicates.

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the national culture of a country and society at large. We also know that the business firm is the main locus of production of goods and services, as well as the main locus of the distribution of the social wealth being produced and therefore the main locus of social conflict that come to result from the process of that distribution.

Regarding the above referred to “conventional criticism” (of mainstream, liberal or neoclassical microeconomics) let us consider, for example, the research concerns of meteorologists. When we do so, we notice that this group of scientists is basically concerned with the mechanisms that influence, condition or determine the weather: ocean currents, prevailing winds, temperatures, clouds, high and low pressures, and so on and so forth. Meteorologists are most certainly aware of the planetary basic motions, notably that the Earth rotates around a North-South axis, from West to the East. They are also quite normally aware that this planetary rotation causes a certain pattern of oceanic currents and high atmospheric winds, which in turn condition the overall behavior of the weather, e.g. the famous “El Niño” in the South Pacific or the Azores anticyclone. But, the fact that meteorologists are also certainly aware of the force of gravity (if we were to accept the validity, or rather the applicability, of newtonian mechanics at the level of a single planet), does not mean that when considering the behavior of the earth’s atmosphere and when trying to formulate weather forecasts they dispel the theory or theories that attempt to explain the inner workings of particles of water, subject to winds and currents, all further subject to the overall effect of the force of gravity. They simply take those theories “for granted” and go on about their business of studying the weather. Not so with social scientists in general and with economists in particular.

Microeconomics, the Business Firm and the Profit MotiveThe science of economics is usually or conventionally presented as the study of

how men in society end up deciding upon the employment (with or without money) of productive resources, that could have alternative usages, in the production of different products and services and distribute them for consumption, now or in the future, amongst the various persons and/or groups in society (following Samuelson and Nordhaus, quoted in Plattner, 1989). And yet in most recent discourse it is as if the science of Economics is basically the science that studies markets behavior, leaving a vast portion of human activities (that would fall under the above definition taken from Samuelson and Nordhaus) to the study fields of Anthropology and Sociology.

Contrary to conventional or received wisdom amongst mainstream economists, that like to think of “Economics” as equivalent to, or in the same epistemological category as, “Physics”, Economics is an Historical science. This means that its object of study (the systems and/or structures of production and distribution of wealth), has a History and keeps unfolding before our very eyes. This means that the object itself has a Past, a Present and, presumably, a Future. While in the realm of physical sciences, at least from a conventional perspective, the future has already been determined by the so-called “laws of Nature”, in the case of social historical sciences, the future is only to be determined by the will of human beings, in particular by those in positions of power, with the reservation that this “being determined” is strongly conditioned by the weight of social inertia inherited from the past. In the fashionable jargon of chaos and non-linearity, by the dependency upon initial conditions.

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To use a distinction encountered in Georgescu-Roegen, economists like to think (or at least those who seem to be aware of this...) that the theory of economics is a science where predominate rational phenomena of the first order (those that can be deduced by algebraic or logical computations and from which the phenomenon of novelty is excluded), whereas the nature of human society (a super organic entity) requires a rationality of second order, where novelty, variability and quality are essential ingredients of understanding and explaining.

When considering the discipline of microeconomics, supposedly concerned with the workings of a marketplace and how certain prices are arrived at and how scarce resources are allocated, one should normally expect that the theory of the business firm would be discussed at length and that the various alternative schools of thought would be presented. That is not the case in most curricula. The criticism that is usually leveled at this fact by most authors seems to this student to be a typical case of misplaced analysis. If one could use an analogy from the physical sciences, one could say that the mistake arises from a confusion between two different levels of analysis: that of organic chemistry (for example), and that of nuclear physics (again, for example). It would seem that the basic tenets of microeconomics - such as that of perfect competition (arising from equality of access and opportunity to all participants) and the postulate of an objective function, such as that of maximization of utility and results (and hence of profits) or the reciprocal of minimization of costs (and hence of maximal efficiency) -are still valid and that (when one discusses all the detailed implications of such principles and postulates), the analysis and discussion of the internal workings of an entity such as a business firm, is really out of place in that particular context. This statement is justified in that those principles and postulates are still relevant to the analysis even if by then they have been integrated (assumed to be there) or displaced into the background where they are still operating. In other words, the criticism that is leveled at the fact that microeconomics would seem to ignore (or does not consider) a “realistic theory of the firm” could be said to be as valid as an hypothetical criticism that would be leveled at nuclear physics for not considering a theory of organic chemistry (all proportions considered). One other way of expressing our own position is as follows: whereas microeconomics is the study of “plays”, “scripts” and/or “rules of the game”, (the market and its effect upon participants behavior), its critics seem to pretend that it should rather be a study of individual actors motives and cultural backgrounds (the producers and consumers qua individual participants). Our position is very simply that one thing does not invalidate the other.

When considering the analytical tools of neoclassical microeconomics, one of the basic tenets is, as we have seen before, that the basic objective of economic agents (notably the business firm) is the maximization of utility which, in the case of the businessman or entrepreneur, is equivalent to maximization of profit. Since there are many and multifold manners and mechanisms (legal and illegal, legitimate and not so legitimate...) in which individuals and groups may strive to achieve that goal, it would be quite normal to expect that a field of research evolves to study those mechanisms through which people try to maximize their own welfare according to their own perception of what that welfare means to them. The interesting thing with those economists that study these matters is that, in order to explain the behavior of business

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firms, it seems to be necessary to dispel the fundamental postulates of neoclassical microeconomics as invalid or as irrelevant, including the profit motive. As if those fundamental postulates could not be the result of empiric observation through various generations of individuals and families in general, and businessmen and entrepreneurs in particular, or the valid result of reasoning and of what German sociologists have called “verstehen” (in the sense of the inner understanding of humans behavior that comes from being human ourselves...). We are aware of the fact that we are here touching upon the issue of methodological individualism versus holist explanations in social sciences. Be that as it may, we are still led to the suspicion that the disparaging of the profit motive (that comes with the new theories of the firm) is highly beneficial if one wants to promote the idea that in the final analysis there is no such thing as a Homo economicus.

As previously indicated, some of the best known or most discussed theories of the business firm set out to discuss that the firm’s main objective might not be that of profit maximization, as indicated in the neoclassical postulates, but rather that of sales maximization (as in Baumol) or maximization of growth rate (as in Marris), or still a hierarchy of graded objectives whose main purpose is the satisfaction of all groups members within the firm (as in Alchian, Kessel or Radner). In these views, the firm as a whole would then have a collective behavior that, for all practical purposes could be translated into operating objectives such as profit and cash flow but also career growth opportunities (for the widest number of members), power and social status. As indicated in Pappas et alia (1983), the thesis of Berle and Means, or of those of follow this same line of argument (e.g. Baumol), could be reduced to, and be best formulated in, the equation “the value of the firm equals the present value of expected future profits”. Basically these authors all seem to indicate that at some point in time the emphasis on profits has shifted, or broadened, to the goal of wealth or value maximization and that goal is recognized today as the primary objective of a business. An elementary exercise in basic algebra (as expressed by the above “equation”) shows the mere semantic nature of such a discussion. Still according to Pappas et alia, “in its earliest version the goal of the firm was assumed to be profit maximization - the owner-manager of the firm was assumed to strive single-mindedly to maximize the firm’s short-run profits”. In that context, cash flows may be equated to profits and therefore, the value of the firm today, its present value, is the value of its expected future profits, discounted back to the present at an appropriate interest rate.

While the neoclassical theory of microeconomics seems to consider the firm as an atomistic point and as if devoid of internal substance, as well as an automaton that responds in a somewhat preprogrammed manner to the information flows received from the outside environment, right or wrong, it seems that this position at least takes the assumption that the essence of the firm behavior is that one which is relevant to its scope of analysis: the behavior of markets, and agents in the market, unfettered by an overall centralized center of control - a very visible hand, as it were.

Even if one may readily accept the insufficiency of such an analysis, one must at least recognize that such an analytical scope takes a stance similar to that of a physiologist that studies the flow of fluids in mammals in general and in humans in particular, for example. Compared to that, the analysis that are offered as alternatives (not even as complements, advancements, extensions or enhancements to be

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superimposed upon the previous analysis...), appear as conjectures which become more or less trendy, in a manner not very dissimilar from fashion designs.

In other words, rather than criticizing microeconomics from considering the business firm as an atomic point in the network of interactions operating in the market and an automate that responds “unconsciously” to the outside forces of that market, critics should simply assume or consider that microeconomics is only and exactly that specific approach, the study and discussion of a series of postulates and principles and the consequences thereof (nuclear physics, one might be tempted to say...) and proceed to the discussion of the various possible interpretation of the inner workings and responses to the outside environment of that particular “point” in the network of business relations referred to above. Without forgetting (or losing sight of ) the fact that when considering the individualistic behavior of social actors within the business firm we are also considering the “emergent behavior” of one collective entity (as opposed to the individualistic postulates of microeconomics). One could therefore conclude that it is not that microeconomics is “wrong” in its perception of the business firm. It is rather that microeconomics does not perceive the business firm as its own specific object of study. At most one could accept the indictment that microeconomics (the theory of prices, markets and the mechanisms of resources allocation) should perhaps be expected to also study the inner workings and the forces that condition (note that we do not say “determine”...) the emergent behavior of one of its main “actors”: the business firm.

This confusion or superposition of different (albeit complementary) levels of analysis is at the source of several analytical errors that are incurred by most conventional authors. Take, for example, the postulated (and historically verified) “conflict of interests” discovered by Berle and Means back in 1933. As is well known, according to these authors, whereas the owners of capital were mostly or exclusively concerned with the dimension, growth or stability of profit (the maximization of the profit rate as the objective function of the business firm), the managers and directors of the larger business firms were mostly concerned with the maximization of their own utility function, the interests of the executive team, the growth of the firm (as a source of further income for the executive managers and directors) both in terms of growth of total head count or sales volume (also as a source of social prestige and possible career enhancement). The point that this student wishes to stress is that in the final analysis, there is no contradiction between the interests of the so-called “owners of capital” and the interests of the so-called “directors and managers” (or the “technostructure” as discussed in Galbraith’s “The New Industrial State” (1974).

If we were to be concerned with an exercise in the sociology of scientific research, we could perhaps consider and discuss the causes that originate the general overall critical tone (vis-a-vis classical and neoclassical microeconomics) with which one is confronted when reading any (or at least most) books and essays on the theories of the firm. But that, of course, is not our purpose here. We have indicated this issue here only to justify (explain) our own discussion of this subject.

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II - CRITICAL CONTEXT

IntroductionFor simple historical reasons (of an epistemological nature), the enterprise as

seen through the eyes of sociologists presupposes wages labor, collective work operations, social relations of an hierarchical nature and social conflicts. As a result it is only too natural that individual isolated workers (such as village peasants and artisans) and micro-enterprises (such as those akin to the liberal professions) have usually been left out of the range of interest of organizational sociologists. And yet, when oneconsiders the experience of Josse Vanrobais in 1728 (!) in the setting up of a “royal manufacture of fine drapes” in Abbeville, France, one has to consider that both the writings of Adam Smith and F.W.Taylor (each one in his own time and regarding the social division of labor and the technical organization thereof), are not much more than a continuance of previously historically recorded experiences (Thuderoz, 1997).

The main substantive contents of our thesis is directly and specifically linked with the transformation taking place over the last few years in most large business firms, mainly (but not only) in MNC’s, regarding the reorganization of work flows and the structuring of value-adding activities as a result of the availability of, on the one hand,radically new technologies and, on the other, of changed circumstances in the structure of the labor markets and in the characteristics of the labor force (both blue and white collar) in the most advanced industrialized countries.

In this second part of our dissertation we look at the sociological aspects of labor or work and of the business firm as one particular social entity where work activities take place. On the other hand we also have to consider the fact that this transformation is related to the relationships historically established between capital , as the sum o fixed and movable material and financial assets and, on the other side of the coin, the sum of know-how and skills accumulated as human living capital whose ownership resides in blue, white and otherwise workers and supervisors, managers, professionals and executives. As a result we then propose to look, very briefly, into the sociological nature of the human labor process, the main characteristics of the industrial revolutions, the emergence and evolution of the scientific disciplines of “labor sociology”, “industrial sociology” and the “sociology of the business firm” and its relationship with the practice of management and the diversity of business firms.

According to now conventional wisdom, the labor process is the process by which products or services are created by human activity for the satisfaction of human needs. Marx, from whom the term originally derived, outlined (1857) the basic components of labor process as being:(a) - purposeful activity or work(b) - the object on which work is performed(c) - the instruments of that work.Together these elements of the labor process comprise what Marx called the “means of production”, including both the means of appropriating nature and the corresponding

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social relations of domination, subordination and property ownership in successive epochs of human history.Contemporary interest in the labor process was stimulated by the publication of Braverman’s Labor and Monopoly Capital (1974). Braverman’s main argument was that Marx’s “real subordination of labor” was only fully realized in the 20th century. Since Marx describes at length the actual steps and activities that constitute the so-called labor process in his own time, but still envisions the underlying alienation and implied in the attendant social relations and extracts from his observations the abstract relationship between, on the one hand, “current living labor” and on the other “capital as stored-up labor” (abstracting from the actual social system of ownership rules and practices), one also could argue that Marx was a “labor sociologist” long before the term was even invented.The emergence of work as a subject matter of sociological study has been historically associated with the emergence and development of industrial society. Before the Industrial Revolution(s) work was a matter of day-to-day activities of every member of the “working classes” (avant la lettre) then known generally as the “commoners” or in France as the “troisième état””, or in the southern countries of Europe quite simply as “el pueblo”, “o povo”, “il poppolo”.

As indicated by G. Friedman and P. Naville (1962) work in the environment of the business firm is the most profound social mode of being, for without it there is no production and, even more important, no social reproduction. As a result, the study of work and working conditions (technical, organizational and social) have enabled what is presumed to be a more effective understanding of society at large and to explore possibilities of its future evolution. “Labor” (or “Work” or “Industrial”) Sociology would therefore become the central component discipline of the overall science of Sociology. The transformation of labor from being a family or village matter of concern to becoming a matter of overall social (or societal) concern, started (that transformation) with the well known and well studied historical process of the “Industrial Revolution”. A few words about that process are in order.

The First Industrial RevolutionThe well known and often discussed historical process best known as “Industrial

Revolution” can be divided into various periods taking into account the technological breakthroughs that characterize them. In order to keep that evolution into perspective we have to remind ourselves that the basic needs of human society can be brought down to food, shelter clothing and transportation. Related needs such health and education follow from these. As a result, the evolution of inventions in any of these basic areas are bound to be linked and to be intertwined with the evolution of society at large. Hence the fundamental historical impact of inventions in the area of clothing at the source of the first Industrial Revolution, happening in the footsteps of changes in the food producing activities. - The mechanization of agriculture and industry with the invention by Hargreaves (in 1767) of the spinning jenny, the invention of spinning frame by Arkwright (1769), the power loom by Cartwright in 1785 and the cotton gin by Whitney in 1792 (also the creator of the “uniformity system” the basis of the modern mass production system).

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Meanwhile, the discovery by Denis Papin of the elastic force of vapor in the mid 17th Century had remained, for all practical purposes, without industrial use until James Watt invented the steam engine in 1776. This permitted the application of non-human energy to manufacturing processes on a scale never seen before (windmills and other technical contraptions had been known and used for centuries...). This fact also enabled the concentration into a single “place of work” of first dozens, then hundreds and eventually thousands of workers who, by their resultant increased productivity simply displaced the artifact producers of this world. This was going to be an historical process of a magnitude never seen before, during which process the concept itself of work (and production...) were to be totally revised acquiring a different social meaning and status. We are considering here the fact that one of the consequences of the Industrial Revolution, that is still with us today (apparently ever more so...) in its most dramatic forms, is that one of unemployment as a new social phenomenon. This new phenomenon could only become possible and come about as a social reality, as a result of the historical separation (both physical and social) between the workers themselves and their production or work tools. With the advent of the Industrial Revolution something that had been unseen before became socially possible: people out of work for lack of employment. In other words, like two sides of the same coin, the idea and even the concept of work became historically associated with that of employment. Historians usually consider four phases within this First Industrial Revolution: Phase one or the mechanization of agriculture and industry; this was followed by phase two where steam engine energy is applied to industry, enabling the emergence of phase three, with its development of the manufacturing system. As a result of exponentially increased production capabilities, a logical need arose for highly expanded transport and communications facilities. This was to be achieved in what can be described as phase four.

The Second Industrial RevolutionThe main characteristics of the Second Industrial Revolution are the replacement

of iron by steel as the basic industrial material, and the replacement of steam by electricity and the derivatives of petroleum as main sources of energy. Other factors can be added such as the later development of automated machinery and the concomitant high specialization of work activities. The growing importance of science as a determinant factor of technology applied to the development of new products and new processes can not be overemphasized. Other facts that are usually considered are the radical innovations in transports and communications (railways, rubber tires, automobiles...), the innovations and expansion in capitalist organizations (the development of what was to be called “financial capital”) and the expansion of this new social industrial organization to Central and Eastern Europe and to Asia (Japan).

In the case of “financial capital”, this entailed an initial separation between “ownership” and “management” with its attendant problems or issues of mobility of capital amongst the various branches of industrial activity and the building up of huge business conglomerates. This same process of concentration was characterized and enabled by movements of mergers, fusions and acquisitions leading to situations of monopolies and near monopolies. As Schumpeter was to notice at the time, this

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movement of societal proportions was also to be associated with the development of immense bureaucracies. This theme is to be taken up later on in our dissertation.

From a strictly technological point of view, three main events are usually associated with the unfolding of the so-called Second Industrial Revolution:

- The development of a new process of steel manufacturing (1856)- The perfectioning of the electrical dynamo, and- The invention by Daimler of the internal combustion engine (1873)

Notice as well the dates of invention and initial spread of communications media:- The telegraph- Launching of the first transoceanic cable- The first transcontinental telegraph networks

What this all (the technical developments of both the “first” and the “second” industrial revolutions) entailed, of course, was a gradual but speedy transfer of the medieval artisan's ability and know-how to machines or machines’ assemblages and the replacement of human energy or animal power by the usage of mechanical energy under the form, initially of steam, and later on of internal combustion and electricity. The particular developments of electricity usage and the internal combustion were to be of particular importance in allowing for a wide diversification and geographical dispersion of production units and the concomitant possible changes and innovations in their particular and specific working arrangements (as social constructs).

The Sociology of Work and the Business FirmDuring the last few decades, starting with the 50’s, it is possible to identify a

difference in emphasis between American and European sociologists in what concerns the sociological study of the business firm. Whereas in the USA within the sociology of organizations (often under the guise of administrative science) the various areas of study of the business firm as a social entity (its modes of operations and management, industrial and work relations and institutional arrangements), were well established during the period, in Europe attention concentrated on the specific study of work conditions in the workshop and its technical environment and dependencies. What was the object of study of European social scientists that attempted to study the work place and the business firm, was the performance of work as an individual, but collectively determined, activity of creation and production. In this context, the business firm per se becomes a secondary or even marginally relevant subject. In this chapter we review, albeit very briefly, the evolution from a sociology of the workshop to the sociology of the firm in order to see how we have arrived at the study object of the Sociology of Business Firms.

Initially, when considering the social environment of production activities, sociologists seemed to concern themselves primarily with the sociology of work in itself, in the sense of studying the social factors and conditions that determine or influence the production activities taking place in a specific social setting such as the workshop This being irrespective of the characteristics underlying the social or institutional setting in which these work activities take place. This means that the study object of sociology of work was the set of social relations engendered by work activities outside the realm of the family. One particular set of subdisciplines that concern us here is then the set of

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“industrial sociology”, “sociology of work” and “organizational sociology“. Because of the scope and possibly wider interest of our dissertation, we will give some emphasis to a short review of “sociology of work”. In the first place, the subdiscipline itself arose through the realization that the older and previously established “industrial sociology” seemed to have a more narrow concern: that of the principles and procedures regulating the working operations of manufacturing firms. This initial perspective has been linked to the work of F.W.Taylor and his followers (namely the Gilbreths and their “therglibs”) and their specific concern with the engineering of work activities and the design of detailed work flows in manufacturing plants. Notwithstanding the further and critical developments coming from various corners, namely the “Human Relations”, the “Contingency” and “Evolutonist” schools, the study of those social relations that developed in the context of production activities took on a normative approach in the sense that it was meant or developed with the intent of improving working conditions and thereby the overall productivity of production organizations.

As a result of recent developments in the information and communications technologies, both in the fields of hardware and software systems, we have all been witnessing significant changes in the organization of production, both in services and in products. As a result of these changes, also the overall labor processes have been the object of important modifications within the conventional limits of most multinational corporations. These modifications have also been reflected in the way most MNC’s relate to both their customers and their suppliers and we may then talk of permanently and dynamically changing configurations of business relationships. The concept of “virtual corporation” originates precisely based on these changes.

These changes taking place on an immediately observable level have somewhat more profound counterparts in terms of their effects upon both the national and the international division of labor within the overall production processes. On the one hand we witness a constant movement towards miniaturization of components, which implies a reduction of material inputs and an overall decrease in the aggregate demand for certain raw materials. A a result of most recent developments in software systems and applications design, on the other hand, we are also witnessing a gradual displacement of certain professional categories, with a number of tasks which were previously the domain of white-collar employees (or even lower managerial cadres) now becoming displaced to be executed (in a changed format, to be sure) by less paid employees elsewhere in the world. One of the most talked about examples of these displacements, has been the transfer by Swissair of some of its accounting functions from Switzerland to India. “Customer Support Centers” that now cover the whole of European Union, rather than just any particular or individual countries where they would have been before (if they existed...), have now been set up in only specified countries in accordance with particular strategies peculiar to each MNC. In the first part of our dissertation, we have indicated that our own perspective intended to be seen as a different point of view from that of the sociotechnical systems approach, even if it, our own approach, pretends to be based upon the relationships and interdependencies between the available technologies, in particular those that pertain to communications and information processing, and the organizational structures in society at large.

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Given its normative nature and its prescriptive approach to organizational design, the sociotechnical systems approach emphasizes the need to consider the interrelationships between social and technical systems in order to obtain better results. Developed by the Tavistock Institute of Human Relation, it came about as one humanist response to standard taylorist principles. As opposed to this normative nature, what we propose to be doing is an attempt at an explanation (certainly a very sketchy and rudimentary one) of a positive nature, of the relationships between the technologies available in society at large and the organizational structures that may become adopted as a result.

For many decades, most social scientists (economists and sociologists alike) have considered that larger enterprises were more amenable to innovation than smaller ones. In fact Schumpeter went as far as suggesting that the technical innovation that characterizes capitalist entrepreneurship was facilitated and formally institutionalized in the bureaucratic framework that developed in big business firms with their growing size. In that context it would appear that small and medium sized enterprises are (potentially, each and every one) simply the forerunners of bigger enterprises, as if the world of business firms was meant to be made up (eventually) of only large business corporations. Again, in this context, a very large number of SME’s (relative to a smaller number ofreal large ones), in any one country, would be a sure sign of backwardness in industrial development. As recent history has unfolded, most sociologists and economists now agree that the landscape of business firms (just like that of natural forests) is quite normally made up of very large MNC's, immersed in a web of intertwined small and medium sized firms of all kinds, each and every one active in particular “ecological” niches. And that, in the evolution of business and industry, there is no necessary ordeterministic evolution from “small” to “medium” to “large”. And yet, for many years, there was almost no sociological research outside the realm of the very large business enterprises and, in fact, in most technocratic discourse, SME’s were considered just as an initial step towards a permanent and normally promising growth process.

One other aspect to be considered in an analysis of the changing organizational paradigm, is its relationship with the overall structure of the manufacturing industry. In the days of Adam Smith (the age of the “manufacturing” - strictu sensu) most orders were executed by dispersed workshops under the business control of one particular merchant. The famous “putting out” system. From the point of view of responsiveness to conjunctural crisis, this was the perfect arrangement for the “capitalist merchant” - no employees to be sacked with any severance pay, no idle labor, no idle incoming stocks... With the “mechanization process” (that culminates in taylorism) came economies of scale, better coordination mechanisms, better usage of the time availability of the labor force . But a part of that previous flexibility of the system is gone. The business firm becomes “square”, with “rough edges”, so to speak, and its capability to adjust to changing conditions in the environment is therefore diminished. The system had evolved from the original organicity to a stage of raw mechanicity. It may, quite naturally, be argued that the current mood of economic liberalism in the context of flexibility in the labor market on the one hand and of flexibility in the organization of production activities, on the other, the system (or the people who decide for it, of course...) is once again trying to recapture that same long lost organicity.

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Sociological Theory and the Practice of Business Organizations French sociologist Alain Touraine distinguishes three types of organizations: - administrative entities, (endowed with the power of totality, akin of politically

enforced rules of behavior) examples of which are: hospitals and prisons. Apparently, the identifying members of these organizations do not negotiate their membership with the organization, they are just part of it;

- enterprises, which are autonomous entities resulting from the initiative of particular individuals and have to negotiate, on a permanent basis, their relationship with its own members (as well as with the outside environment); and finally,

- agencies, which are entities, characterized by their almost sacred character and which strive to dominate and to determine their cultural environment, examples of which are churches and universities.

This classification is very useful in terms of clarifying the nature of the political power exerted within the enterprise or business firm. Every business firm participates or shares each one of these analytical features: each enterprise is an administrative entity in the sense that it is permanently self-regulating through the issuance of internal by-laws and regulations; each enterprise is a “business firm” in the sense of self-replicating its own production processes; and each enterprise is an agency of culture and history in the sense that it permanently produces and reproduces social links within itself and with its social environment. Bur, of course, not all business firms have the same institutional capacity or the same capability to intervene and influence the social and business environment. The IBM Corporation, due to its sheer size and to the technological leadership position of its industry (as well as its own leadership position within that industry), is certainly one of those business entities who rightly deserve to be qualified as a social actor of prime importance.

When considering organizations in general (as does Mintzberg) and business enterprises in particular (as does Sainsaulieu), sociologists approach this task in a manner very much akin to that of Linné when studying and classifying plants and animals. It is a positive, non-normative, approach that tries to classify and to characterize social entities. In an effort of taxonomy, or rather of typology, Renauld Sainsaulieu ((in Francfort et alia (1987)1995)) talks of business enterprises as “social worlds” of different kinds or types. In the research here referred to, Sainsalieu has identified five different “social worlds” ( these being defined as original or specific combinations of the production factors, internal regulations, relationships with the environment and the management of labor):

(1) the dual enterprise, where the requirements for taylorian methods and discipline coexist with requirements for flexibility in social relationships. On the one hand we would have a large proportion of the work force being constituted by heterogeneous non-qualified labor, whereas “at the top” a smaller proportion of the work force would be constituted by qualified personnel. As a result, social relationships will tend to evolve into two major separate groups and work relationships tend to become antagonistic in nature; (2) the bureaucratic enterprise, where the rationalization model tends to persist, based on formalized structures and hierarchies. In this model (or “social world”) there are

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normal avenues for “modernization” (in the parsonian sense) and the relationships tend to be impersonal and social behavior expected to be based on individualism; (3) the modernized enterprise, where new management practices are superimposed upon an evolving set of traditional trades and professions; (4) the enterprise in crisis, where new practices are forced to coexist, in a fragmentation mode, with traditional methods and social roles17; and finally (5) the community enterprise, where personnel and management practices seem to blend into the surrounding social and economic environments, ensuring better chances for a supposedly sound economic performance on a more sustained basis.

It has been said that primitive societies are those where everyone works but nobody is a worker. Work is there considered a normal and prosaic part and parcel of everyone’s daily life. Ever since the end of slavery and medieval servitude system, and the historical spread of salaried work as a current social norm, a basic problem of mobilization has had to be solved by the emergent and later on dominant capitalist system. If we now consider the manner in which industrial capitalism, in the face of workers and trade unions resistance, has progressively solved this problem of motivation and mobilization of its required labor force, four different types of business enterprises can be differentiated:

- Tutelle.- Paternelle- Rationelle- Conventionelle

Mintzberg‘s Structuring of OrganizationsWe would now like to consider Henry Mintzberg’s contribution to the taxonomy

of organizations in general and the part of business entities in particular in that scheme of things. The basic framework of analysis developed by Mintzberg (198x) considers the existence of five different types of organizations, on one hand, as well as a set of five different and complementary components or social roles that, according to Mintzberg, can always be identified within each and everyone of those structure types and which we recall here in order to expand our own reasoning later on. Those well known components are the strategic apex, the support staff, the technostructure, the intermediate lines of management and finally the operating core.As for the five different types of organizations, Mintzberg has been able to identify:

- The Simple Structure (Mom and Pop corner stores...)- The Machine Bureaucracy (the Army or the Catholic Church, a State Department...)- The Divisional Form (a multinational such as Ford or IBM)- The Professional Bureaucracy (a consultancy firm, a University, an Hospital)- The Ad-Hocracy (a show-business temporary setup, a movie crew, a theater...)

117This is precisely to the point as far as the implementation of new systems (eg. CRM ) in IBM as we shall see in the last part of out dissertation

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In relation with each and every one of the above structuring types, Mintzberg has identified a number of parameters that help define and characterize each one of those types. For our purposes here we select the following parameters:

- The coordination mechanism of social or collective action- The main or most important component in each one of those five types- The delegation of power within each one of the five structuring types

One of our contentions, in terms of an alleged changing organizational paradigm is that the problem faced today by the largest organizations, business entities in particular, is that one of transformation or change from a “divisional form” or even a “machine bureaucracy” into a professional bureaucracy.

Production, Organization and InstitutionFor his part, while looking at the business firm as a matter of sociological

concern, Alan Touraine has identified, or defined, three different but complementary system within the analysis of the business firm: (1) the Production System, (2) the Organization System and (3) the Institutional System. Because this framework is particularly relevant to our study of the transformations within IBM and its particular role in the development of the capitalist system throughout the 20th century, we shall have to consider it in some minimal detail. The business firm is then simultaneously a place of production (of marketable goods or services), an organization and an institution. Although these three different views of a social reality - the economic, the sociological and the symbolic - should, for analytical purposes, be distinguished, they are neither dissociated nor is there an hierarchy of importance or relevance amongst these different views.As a result of this, there are three different ways to apprehend the business firm in a sociological framework:

- In its historical movement, evolving from the single adventurer’s business enterprise to the multifaceted multinational conglomerates, going through

“incorporated” and “private” companies and cooperatives, to name just a few of its multitudinous and various stages of development. - As a place of social relations, rules and practices, that is, as an organization.- As an institution, that means in its relationship with society at large.

Still according to Touraine, the business firm is the agency of various different layers of working functions, each one of these layers requiring specific analytical tools. In an attempt to capture the essential traits of a business firm, the sociologist will have to inquire about the relationships between the strategy (formulation and implementation), the operating equilibrium and the political issues confronting the firm. The first level or perspective of approach concerns the study of ideas, rules, norms and activities devised and executed in the promotion or the defense of those interests of each social group that participates in the firm’s existence. The second level or perspective of analysis concerns the study of rules and norms that constitute what is normally called “the organization”, (or the methods and procedures that regulate the internal flow of data and materials) and the structure of working hierarchies and formal power relationships. Finally, the third level is that one that concerns the study of those relationships between the firm and the social environment and the changes in the various markets where the firm operates

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(those “upstream” or the production factors and those “downstream” or the intermediate and/or final customers).

Each one of these three levels constitutes a subsystem, with a high degree of autonomy, with its limits and specific norms of behavior. In summary, the business firm constitutes an articulated whole of these three autonomous subsystems.

The base foundation is the production system where the firm looks for the maximum efficiency in the various possible combinations of the different factors. This being the only perspective of the business firm that seems to be relevant to the analytical framework of standard Neoclassical Economics: the firm as a production function. This subsystem is industry specific and that particular set of possible combination (of factors) will vary from one activity sector to another. Sociological analysis is in this case concentrated on the flow of human social activities that are performed towards the production of whatever goods and/or services that distinguish the firm in question. In modern or fashionable parlance, this is where “process reengineering” takes place, if need be. The key moments are the product or service conception and design, procurement, fabrication, sale and distribution or fulfillment.

The organization system comes next. As noted by Herbert Simon (also duly quoted by Thuderoz (1992)), the firm organizes itself in order to solve its own internal working problems and to decide on its own collective behavior. In this case sociological analysis concentrates on organizational theories, as well as, rôles and status and action systems studies, rationality and authority, the formal and informal networks of influences an power plays. And finally we have the institutional system, where longer term strategies concerning products and markets are conceived and developed, as well as the type of relationships to be established and negotiated with the outside environment, namely the State and other regulatory entities. In fact, the firm simply cannot ignore the outside established order that constrains and conditions its own activities: the laws and regulations concerning products and services (such as norms and standards), the other players in the various markets, the laws and established practices regulating the labor markets, the national environment and culture in the countries where the firm wants to operate.

When we indicated the thesis underlying our dissertation, we stated that it is our belief that the organizational problem faced by most large business firms was one of transforming themselves from “bureaucracies of the divisional form” (to borrow ideas from Mintzberg) into structures that would be better classified as “professional bureaucracies”18. As we have acknowledged before in our text, the world of social organizations is not one of dichotomic classifications, of “black” and “white” entities, but rather one of many shades of “gray”. In that sense we could also accept the statement that the problem faced by those business firms, and by the industrialized world at large (over the last few decades, and going into the next few ones) is one of changing from a social environment dominated by “fordism” and/or “post-fordism”, into one of flexibility in organization methods and solutions, on the one hand, and into democracy and participation by all social actors in decision making steps, on the other. Over the last seven or eight decades the western industrialized world has been marked by the ideas 118We should note in passing that this transformation is required to take place without endangering the centrally managed overall control of the production process itself.

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first expounded by Henry Ford. According to now conventional wisdom, his great initiative in manufacturing was the mass production of one standardized product at a price that would generate (or enable, if not guarantee) mass consumption. Although the fundamental reference point of both “fordism” and “post-fordism” is the production process in itself, these terms are often used to convey the associated social and political consequences19. For the purpose of discussing these ideas in the context of our dissertation, let us now briefly consider the general features that characterized “fordism”. These were basically:

(1) the predominance of capital-intensive, large-scale plants(2) a rigid, inflexible production process, as devised by production engineers(3) strict hierarchical and bureaucratic managerial structures(4) usage of semiskilled workers performing repetitive and routine tasks, as prescribed by “scientific management”(5) an assumption of clear/open class conflict in the form of strong unionization and the vulnerability to industrial action(6) at the macro-economic level, protectionist measures on the part of the State.

Although Ford’s innovations began to spread during the inter-wars period and with the production of cars, his methods were rapidly being adopted and employed in other sectors of manufacturing and were increasingly seen as the organizational basis on which the advanced economies could continue to develop and , especially after World War II, prosper. It should also be noted that the Fordist ideas of scale, centrality of control, standardization and mass consumption not only influenced the agenda of capitalist production, but also underpinned the character of Soviet industrialization20 and the creation and delivery of social welfare services in the free market democracies.

Post-fordism, in its stead, refers usually to the new social and economic possibilities opened up by the development and expansion of new technologies in microchips, computers and information processing, robotics and telecommunications in the production and exchange of services, commodities and information. In contrast to the large scale perspectives of production processes and overall and all-encompassing central control in “fordism”, the distinguishing feature of “post-fordism” is usually considered to be the emergence of smaller entrepreneurial units, catering for segmented or “niche” markets, using flexible production processes in the development and delivery of specialized goods and services. Naturally there are some social and economic changes involved in the transition to “post-fordism”.

(1) the decline of old manufacturing and “smoke stack” industries together with the emergence of the so-called “sun rise” computer-based enterprises(2) the emergence of more flexible, decentralized forms of the labor process and of work organization

119Although some of the ideas associated with “fordism” have been used as a defense or justification of “capitalism versus socialism”, the fact is that these ideas pervaded the social experience of the then “socialist countries”. 120The case could actually be made that this was one contributing factor for the reported lack of democracy in the workplace also prevailing in old Soviet Union.

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(3) the emergence of a reorganized lab our-market, into a skill-flexible core of employees and cadres and a time-flexible periphery of low paid insecure workers performing contract work(4) a consequent decline of the traditional, unionized blue-collar working class and the preeminence within the occupational structure of white-collar, professional, technical, managerial and other service sector employees(5) the feminization of many labor processes affected by the new technologies(6) the promotion of types of consumption around the concept of individually chosen styles of lifestyles, and therefore with an emphasis on taste, distinctiveness, packaging and appearance (7) the dominance and autonomy of multinational corporations in a global process of capitalist production(8) the emergence of a new international division of labor, based on the new flexibility, within which global production can be organized.

It is impossible to indicate a date for such an event as “the precise transition” from fordism to post-fordism. As a matter of fact, there is a continuing debate about the content and interest of both concepts. The least that can be said is that different sectors of national economies are differently affected21, and that, internationally, the implications of post-fordism are rather obviously different for different national economies such as the UK and/or the Bangladesh. Witness the transfer by SWISSAIR of its accounting operations from Switzerland to India. As an analytical device, the term fordism was used by Antonio Gramsci to emphasize Fordism’s pivotal role as an “hegemonic” form of industrial organization, which entails a form of control that combines persuasion with compulsion (e.g. high wages with welfare provision), but this is only relevant (in terms or our dissertation) on a macro or societal level. In any case it does matter to us in the sense that the organizational transformation taking place in individual business firms will most probably have results at an aggregated level that may come to justify talking of something other than just “post-fordism”.

Frameworks for Sociological AnalysisThe business firm may also be studied and understood through the articulation of

three different spheres or layers of analysis: (1) the nature and structures of markets and products that the firm deals in, (2) the technologies that are generally available and used and the organizational structures that are relevant to the firm,

and (3) the type of human resources, skills, professional relationships and codes of conduct that prevail in those activities that pertain to the firm.

Through this model of analysis one can identify the various features that constitute and distinguish businesses from one another. What products and services are being produced and sold in what markets, which technology is being used and what is the organization model applied to the firm’s operations, and finally, what skills and types

121A case in point is the continued expansion of the fast-food industry, in spite of being based on classical fordist principles

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of managerial staff and workers are necessary for the whole operation to be successful and sustained.

There are other analytical frames that can be used, namely the one developed by the sociology of professional relationships. There one can study the different social players in the business firm (owners, directors, managers, staff, workers, trade-unions); its system of internal rules (hiring and promotion, transfers, assignments and recognition events...); the operating context (production technologies, marketing channels...) and the culture that underlies the everyday operations of the firm. One should in any case study the business firm through a flexible combination of two complementary perspectives: that of its relationship with its environmental social order (or its institutional capability) and that of its own internal order (or that of its organizational capability or the capability for self-reproduction).

Reproduction or Creativity?Business firms are a specific instance of a wider conceptual framework: that of a

production organization. The word “production” is here taken to its widest possible meaning, to include what Alan Touraine considers to be “administrations”, “agencies” and “enterprises”. In the framework of Alain Touraine’s ideas, basically, an “administration” is defined as being a social mechanism to enforce political decisions, but will include entities that, although usually included in the so-called “private” or “business production sector”, are capable of imposing their own rules upon entire social groups, such as EDF or the SCNF in France or the old ATT in the USA. On the contrary, an “enterprise” (here considered as an analytical category rather than any example of empirical real entities) is an entity not decided upon by the political realm. Finally, an “agency” is an entity directly linked to, or responsible for, the symbolic representations that societies develop of themselves. Examples of this would be churches, universities and museums, or even entities such as the “central bank”.This taxonomy is useful to the extent that it enables research to look into the different capabilities that different organizations have to either “just reproduce” themselves through consecutive biological generations of human social actors, or are capable of innovation and adjustment to ever changing social and environmental circumstances. In our dissertation we are naturally concentrating on the issue of “reproduction with creativity” and innovation of IBM as an “enterprise”, even though we have to remember that the technological lead and business (and political) clout of this particular company has given it some of the characteristics of an “administration (like ATT and/or SNCF). For several decades, it has had an overall and encompassing control over the development of computer technology and was thereby in a position to influence (in a very determinant manner) the direction taken by this particular field of industrial and technological development22. With the emergence of both Microsoft and Intel (curiously enough, and for the record, in both cases IBM’s decisions were very much influential, if not decisive, in their future development), the social functions associated with the 122We may consider such fundamental but now elementary things as the telecommunications protocols used in data transfers now routinely used in the well established Internet phenomenon, as well as the standard interfaces in the PC industry. One is reminded that “PC-compatible” literally means “IBM PC-compatible”.

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concept of “institution”, namely the production of industry norms and standards have been somewhat displaced from IBM into these two other companies.

The Diversity of Business EnterprisesTo state that business firms are many in type and variety is a simple platitude,

conveying no particular amount of meaningful information. What is important and meaningful, however, is the fact that that diversity also comes from the diversity of products and services in whose production or delivery they are engaged and the processes and technologies used in that production activity. Indeed, the only thing that most business enterprises used to have in common is the search for profitable opportunities for their productive capabilities, this search and the related operating activities usually being recorded and reported according to reasonably standardized procedures23. Among some of the criteria that analysts usually take into account when differentiating between business enterprises, are criteria such as size (number of employees being one main indicator), the nationality of origin, the volume of sales, market share or dominant position (if any or meaningful), their life cycle (including the usage of demographic analytical tools), legal status, capital structure and control. One further way of studying the diversity of business enterprises is to consider the various manners in which they seek to solve the problems of mobilizing and motivating their human resources, or, in other words, their organizational responses. We therefore propose to consider here the diversity of business firms under various complementary headings: the diversity of size, the diversity of status, the diversity of capital structure and control and the diversity of organizational responses. We intend to briefly consider some of these criteria, as they relate to a discussion of recent developments in IBM’s changes.

The problem of sizeWhen studying any social entity, the problem of size is also inextricably linked to

that of identity, that of such and such an event being (or not) part of the “same process” (or the “same phenomenon”). Considering the fundamental difference between cardinal and ordinal measurements, we are reminded of Hegel’s assertion that in the end quantitative changes will give place to qualitative changes which seems fully justified, most specially the realm of social sciences (Georgescu-Roegen, 1996). As a side remark, we notice that if all the variables that are immediately related to a phenomenon are cardinally measurable, all of them can be augmented in the same proportion and the phenomenon being represented is still the same. In this case, the formula that represents the phenomenon in question must be homogeneous and lineal or, more generally, homogeneous of the first degree. Since this situation characterizes a phenomenon or a process with indifference to its size, it becomes obvious that the problem of size only 123It is worth noting that the diversity of these standards is in itself a reflection of the diversity of national cultures. The Anglo-Saxon (or Anglo-American) “standard” has been developed by the associations of chartered accountants and implemented worldwide by the large American based consultancy firms, whereas the “continental” standard has been developed and implemented by state administrations such as the ministries of finance.

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arises in processes that entail quantifiable qualities. One logical or theoretical consequence of these observations is that the problem of a theoretical optimum size of a unit of production continues unsolved. In the realm of the relationships between the practice of Management and the theoretical considerations that arise from Applied Microeconomics or Business Economics, we must refer here to the thesis of perfect divisibility of factors. It is one of the basic or elementary postulates of neoclassical orthodox economics. It supposes or implies constant returns to scale. Yet, in the very same manuals where students of economics study the behavior of perfectly competitive markets, one studies also the behavior of business firms or units of production searching for their optimum size and their optimal break-even points. These exercises, by their very nature, imply the not perfect divisibility of factors and hence the non constant nature of returns to scale. It can be argued that this is a tautological thesis in the sense that it postulates a perfect divisibility of factors which by definition presupposes constant returns to scale and the creation of processes as ways of ensuring that all labor inputs (all of them qualitatively different!...) are optimized in a uniform manner in their use of time availability. The problem of quantity and quality of labor and its evaluation in any work or production process has, of course, been extensively and exhaustively studied by Marx and many of his followers as well as other social scientists. It also touches upon the fundamental discussion of the nature and source of economic value. What produces and what causes value to come about.

Diversity of SizeFor illustrative purposes we confine ourselves here to the exemplary situation of

“enterprises” within the European Union. A total of approximately 16,000,000 enterprises has been censed. Amongst these, approximately 92% employed less than 10 employees or workers amounting to approximately 29% of total employment in Europe, almost as much as the total employment (30%) of those enterprises with more than 100 employees each. In the case of France, only 3100 firms (that is about 0.1% of the total number of business firms in France) employed more than 500 employees.

In 1994, just within the so-called “Europe of 12” (the Union just before its latest enlargement to 15 member states), there existed a total of about 16.000.000 business firms. Among these 16 million firms, about 92% had less than 10 employees but still accounted for about 29% of the overall European employment. Or about the same as the employment provided by those firms with more than 100 employees.However, what interests us here is not so much the statistics of business enterprises and their distribution by employment sizes in any particular country or regional grouping of countries. What interests us in this matter is the fact that the main object of study of sociologists who look into the workings of social relationships within business enterprises, (as places of production and distribution of wealth), are the larger business enterprises, not just any business enterprise. Although the sociological study of entrepreneurship is of major interest to the sociology of business enterprises, these two disciplines use different analytical tools in their research and approach, in different manner, what are basically two different problems. On one hand (in the case of entrepreneurship), what needs to be explained are the circumstances that enable or facilitate the appearance of certain individuals with a peculiar drive to excel in a certain

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type of activity and what social circumstances facilitate the appearance of these individuals in any particular society. The research and the N-Achievement thesis of McClelland is a well known example of this type of approach. On the other hand, (in the case of the sociology of business firms), what needs to be discussed, studied and explained are the various ways in which specific groups of individuals (those that constitute a business firm), in a particular and historically specific type of social relationship24 (which in its turn, has been determined by social forces outside the realm of that “social group” itself), organize themselves and relate to each other in the process of producing and sharing wealth in an environment of supposedly free competition.

Another fact worth noting is the possible relationship between the relative number of SME’s (Small and Medium Enterprises) in any one country and the degree of industrial development in that particular country. If one considers the so-called “production function” (as studied in microeconomics) and the effect of economies of scale, it could be argued that an excessively large number of small industrial firms in any particular country could be construed as an indicator of a somewhat backward development status vis-a-vis those countries where larger industrial firms predominate. The sociology of business firms should also be concerned with the study of any societal movement towards a greater level of concentration (a diminishing number of SME’s relative to a growing number of larger industrial firms), as was the case in France during the De Gaule years of indicative planning.

On a worldwide scale, according to United Nations studies, there were in 1992 approximately 37.000 multinational corporations (MNC’s) that, with a total of approximately 210.000 subsidiaries, employed over 73.000.000 employees around the world and were responsible for approximately 25% of world GDP. This would give a gross average of about 350 employees per operating company.

So, in summary and in very pragmatic terms, the sociology of business firms is mainly concerned with the study of a relative minority number of the business enterprises of the real world. In any case, it is worth noting that, also in very practical terms, that this very minority of business firms still constitutes the main core of development and technological progress that there is. Also, that they are responsible for the bulk of production of the main inputs (materials and machinery) that enable the other millions of smaller business enterprises to simply have a reason to exist. This is not the same as saying that the sociology of business enterprises does not concern itself at all with the social relationships within SME’s (or, indeed, within micro firms and family businesses), but rather that the bulk of sociological studies encountered in any review of the literature is concerned mostly with the social issues of larger firms.

Diversity of StatusBusiness firms can also be classified according to the nature of their capital

ownership, control and social purpose. There are large firms that by the very nature of their products and/or services have historically assumed a function and character of near public-service. Examples of this that are common in most countries are railways, urban

124Mainly that of wages relationship, as the modern business firm is not supposed to employ slave or other type of dependent type of work.

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collective transportation systems (buses, underground), the public utilities and PTT’s. So, and in summary, firms can be privately owned, state-owned, cooperative orthe property of nonprofit making organizations. It is also worth noting that there is a growing body of literature dedicated to the growing phenomenon of a “third sector” or the so-called “economia solidaria”, as well as a growing social movement of concern about the quality and social responsibility of investments.To sum up, within those firms that are exclusively “privately” owned, one can still consider that there are many possible variations in the nature and type of ownership dispersion and concentration..

Diversity of Capital Structure and ControlFrom Berle and Means (1932) to Galbraith (1967) through Burnham (1947), the

problem of capital structure and ownership in the modern business firm versus its operating control, has been the source of much debate as well as a good deal of confusion of concepts. If one considers the issue of “methodological individualism”, whereby it is the individual motives that ultimately determine the behavior of every group of which every individual is a part, and we then also consider the concept of “emergent behavior” of an aggregate as that behavior that then results from the even unintended behavior of constituent parts of the whole, we may easily (albeit after some reasoning) come to agree that there is really no valid reason for much of that debate. According to Thuderoz (1997), for example, in the preface to the book by Burnham (“The Managerial Revolution”), Leon Bloom is supposed to have written (and we can imagine, with regret) that apparently it had become possible “to destroy private capitalist property without destroying capitalism”. We want to suggest that, precisely because of the thesis underlying our dissertation that, on the contrary, it is quite possible to finish with capitalism without finishing with private property of capital. State intervention, regulation and legislative control (enabling or imposing, among other things, the direct participation of workers and employees in general in the management of business firms), coupled with “civil society” pressure groups (such as consumer associations and lobbyists for quality and price performance controls), that seek to restrain the economic power off larger corporations, are precisely what Galbraith seems to have in mind when he talks of countervailing powers to provide some measure of check and balance to ensure some kind of a transition to a form of democratic socialism. In this case it could also be argued (and that is our own position) that this would be just another name for a system some authors came to call “regulated capitalism” (a contradiction in terms, just like in “tamed wild animal”, the animal is either “tamed” or it is “wild”...). In passing it is worth noting that our thesis, basically, suggests that this long term, secular, transition is taking place also and predominantly because of the changes in the nature, substance and structure of the working classes (ever more educated) together with the evolution in the technological capabilities of both production and communication techniques.

We have referred above to the problem of dispersion or concentration of capital ownership in any business firms. Berle and Means distinguished five modes of capital control that result from that dispersion or concentration of capital: (1) absolute or total control, in the case of an individual or a family that owns more than 80% of a firm; (2) majority control, in the case where the main share holder (again an individual or a

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family) owns more than 50% of the capital of a firm; (3) minority control, where an individual or a family group owns only between 20% and 50% of the firm’s capital but by legal procedure, which can be implemented through indirect and cascading participation in subsidiaries’ capital and, finally, (5) managerial control, where the extreme dispersion of capital ownership enables the capture of a true equivalent of legal ownership by executive management. This last scenario is possible, of course, due to the almost impossible or practical impossibility of assembly of enough voting shares to “dethrone” the established managerial cadres. If one considers the growing predominance of institutional investors, which in turn are mainly the depositors of millions of savings throughout the industrialized world, among the investors of large MNC’s and the fact that these are not truly “private” owners of capital, one could start questioning the wisdom of such debates.

Ownership has been defined as “the right to possess an item of property” and so one has to ask where does that right come from and how is it exercised. In the context of large MNC’s and the way their capital worth is expressed (the value of their shares in stock exchanges), it is obvious that individual dispersed owners of capital can freely sell their pieces of ownership. But, if one considers the point of view of how other rights of property or ownership are exercised, then it becomes apparent that the owner of a one per thousand (or one per million) part of a whole is not in a position to exert much influence, let alone control, over the bulk of that whole property of which he, or she, is a partial owner. As discussed at length in all manuals of corporate finance, the analysis of capital structure always includes a discussion of how an issue of extra or additional shares (to get “more capital”) may and should be compared with long term bank loans. Because, in a sense and from a societal perspective, for the business enterprise, both forms of financing (share issues or bank loans) are only two different manners of obtaining and directing economic surplus, under the guise of money, from alternative sources (strictly speaking just two stages of the same societal savings) to possible alternative uses. In summary, executive management and members of the boards of directors are simply the most active of the owners of corporate capital and hence the issue of a possible conflict of interest between “capital” and “management” is not really an issue.

Diversity of Organizational ResponsesCorporate governance seems to be a newly developed concept to express certain

differences in the way business firms are directed and managed in different cultural contexts. In the case of Europe, Marginson and Sison (1995) have identified two main types of ownership and control: (1) an “external” or “Anglo-Saxon” model, and (2) a “continental” or “internal” model. This last one could still be split between two variants: (a) a “Latin” model and (b) a “Nordic-Germanic” model. As of late, still according to these authors, it is possible to identify a third type of corporate governance upcoming in Europe: the so-called “Japanese” model.

In accordance with the “Anglo-Saxon” model (which also prevails in Australia, Canada and New-Zealand), the governance of business firms in these countries is characterized by a dispersion of loose networks of shareholders grouped, or informally assembled, under the umbrella of a number of institutional investors such as pension funds, whereas in the case of the so-called “continental” model of governance of

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business firms, this is characterized by a closely-knit network of relationships whose study calls for the methodologies normally used in anthropological research , namely the search for the networks of clientelism and reciprocity. In this “internal” or continental model, the rights of stakeholders (but specifically and mainly those of management and investment bankers) are deemed to be of more importance and consequence than those of shareholders. This preeminence results in, or can be assessed through, a more regular participation in boards of direction and a more stable top management structure. The accession to those positions of corporate power is usually conditioned by one’s own social background and, here again, there are several different roads and alternatives: (1) the State political apparatus, (2) family connections, (3) school or “old boys” networks and (4) professional careers within the business firms themselves.

In this context it is interesting to consider the differences in two countries such as France and Germany. In the case of France, family affiliations, as well as school connections (the case of the “énarches”25 being a commonly cited example) are deemed to be of primary importance in one’s career development and access to positions of power in the business firms management structure. In the case of Germany, professional careers and progression within the business firms themselves, are deemed to be much more important than school connections, for example.

Once we have very briefly referred to the diversity of organizational responses from a national cultural perspective let us now have a closer look at the different possibilities from another angle: that of different internal structures that result from (a) the size and the technology, and (b) the insertion of each business firm in its technical and market environments.

The general problematic of the business firmAs a starting point for our discussion, we may begin by remembering, the fact of

common sense that the business firm is that social space, or institution, whose basic function is the production of goods and/or services with the purpose of sale in a market place. If one asks students of management for a definition of a business firm, one comes across definitions that include items such as people or human resources, material means, capital or financial resources, technology and usually the entrepreneur himself (or herself) as the guiding force that brings together all the other elements. For the purposes of our analysis, it is best if we think of the business firm in terms of the place or instance where production and distribution of wealth, plus accumulation, takes place. The business firm, in its essence, is that entity which materializes the historical end of the family as a production entity and its beginning as an exclusive consumption unit (from a strict economics perspective, of course). To this we should add the idea of production for sale in the market, as there are entities who produce and provide certain goods and services but nor necessarily to be sold in any market, e.g. the Church or various State institutions. That being said, we want to concentrate on the terms “production” and “sale”. In generic terms it can safely be stated that no enterprise can exist or survive without producing something that can be sold, and be effectively sold, for a price that is at least minimally higher that its own cost of production.. Even in the cases of so-called 125The graduated students of the prestigious “École Nationale de Administration” or ENA

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“public enterprises” (which are supposed to provide certain services deemed to be of a public social interest and for which services they are usually entitled to certain financial subsidies) one can consider that in the long run they will have to be able to show “results” if not profits (of a pure financial nature) which can be clearly and openly explained and justified to all its stake holders, most specially the tax payers., either as legitimate social transfers of wealth or a social sharing of certain costs of a common public nature (e.g. health, education, energy and pollution policies).Thuderoz lists five basic characteristics that define a business firm:

- The production and sale of products and services in the marketplace- To be a center of accounting and profit- Its activities are at the same time fixed and continuous- It is the place of collective salaried labor- It is a center of autonomous decision-making

The fundamental problem of any business firm can therefore be expressed in the expression “results maximization”, this being considered the basic behavior function to be considered. Such a maximization of results may, however, be subject to different interpretations. These different interpretations may vary according to the perspective to be considered: that of society as a whole or of each specific interested group of individuals, namely in the guise of institutional investors and private owners, board of directors, executive management, trade unions, employees, banks, suppliers and customers. From a global or collective outside perspective, this maximization can obviously be reduced to two different but complementary statements of objective functions: maximization of sales or production results and minimization of respective costs. One crucial question that then becomes relevant to the study of social behavior and effects upon any country or society affected by the decisions of any large business firm is to consider how these two parameters or objective functions (which of course are of a finalizing nature) are perceived by the societies at large in which these firms operate.

The Basic Theory of Business ManagementBusiness management, both as a theoretical discipline and as matter of pragmatic

professional practice is an exclusive product of the 20th century . Ever since its first theoretical and “official” introduction in 1909, with the work of Frederic Winslow Taylor (“Scientific Management”), that it has progressively become part of the daily life of business firms, of our vocabulary, our habits in our everyday life. The great wave of expansion of the ideas of business management has had its peak, in a triumphalist version, around the end of the Sixties, an epoch when “big business” executives and those in charge of marketing thought with enthusiasm and a sense of historical accomplishment that they had the world at their feet. It was the time of large entrepreneurial expansions, mergers and takeovers on the part of the largest and mostaggressive industrial groups and conglomerates. A time also for the spread and popularization of business management and leadership techniques. It was also the golden era for the creation and expansion of many management consultancy firms. It could be argued that after a relative down fall during the Seventies and the Eighties, we have been witnessing a revival of this period with some “good old” ideas being expounded under new clothing.

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The economic crisis of the Seventies (of which we retain a couple of the most expressive slogans such as the so-called “oil chocks” and “stagflation”), as well as the social convulsions that were then originated (long term unemployment that went from being conjunctural to being definitely structural, if not systemic... as well as the apparent end of lifelong, one firm, employment) have caused a change in the problematic and themes of business management both as a theoretical discipline and a professional practice. As a result, or it is so alleged (Hubel.....) business management entered a more humane phase of development including in a much more clearly marked fashion than before, previously developed ideas under the influence of studies and research in the field of social psychology, and social and cultural environment where the business firms develop or exert their activities. It can be argued that this evolution is comparable to, and goes side by side with, the evolution of global contemporary thought and is one reflect of the revolution of in Information and Communications Technologies.

A permanent adjustment to changeSince business management, both as a field of theoretical discussion and of

professional practice has had its origin the Anglo-Saxon world it is quite natural many of its concepts should be expressed in words originating in the English language. To start with we have the word “management” (which in fact is a verbal corruption “second hand” of Latin, via French, with the original meaning of “having a hand upon”, “to control” and “to direct”...). In the southern provinces of Portugal (the Alentejo) the function of “manageiro” (that one that leads and controls the work of a team of laborers) is very well known. We also have marketing, merger, takeover, options and futures (to name just a few of the most common ones) leading one to the feeling that experts in management, marketing, communications or finance talk one very peculiar dialect of their own, only reserved to the initiated.

In some cases countries of Latin languages have gradually been trying to adopt, and in a few cases actually succeeding in adopting words of their respective national languages. This is probably and quite naturally a symptom of the national feelings of a social need for a statement of national identity on the part of citizens and institutions of these countries. One simple and very prosaic example of the need for careful evaluation of cultural factors on the part of the larger MNC’s referred to elsewhere in this dissertation. In passing, the usage of terms and concepts such as “management” has been expanded to other fields of human concern and one talks today of managing personal relationships and the management of one’s own time and feelings. A case in point is the theory of -............. in the field of social psychology.

The word “management” - which not withstanding the previous remarks has come to gain universal usage - although originating in the United States has purely Latin roots: manus, hand and also manegiare which also means to maneuver or to conduct, and that gave origin in France in the 16th century to ménagement (from menager, to dispose or ordain things and/or events with care and ability). One also has to note the typically Latin (French, Spanish...) concern in underlining the cultural or civilizational source, not so remote, of a particular key word which stands as a symbol of the power and influence of the Anglo-American culture upon the industrialized world. By contrast, Anglo-Americans limit themselves in a very prosaic and “matter-of-fact” style to simply use in

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their day-to-day activities of all nature, words of direct French or Hispanic source without bothering to ask themselves about its immediate or more remote linguistic roots.

On the other hand, coming back to the more immediate concern of our dissertation, it is important to notice that all these notions have been converging into the basic principle of business administration, that is, in the systematic adjustment of business management techniques to the conditions of outside environment. Or, in otherwords, management techniques always end up by evolving and modifying themselves in a process of adjustment to better adapt themselves to outside social environment conditions, which are themselves permanently changing. It still is a field of current discussion if this change and evolution takes the form of a darwinian struggle for the survival of the fittest or a lamarckian survival of the best adapted to cooperation. It also necessary o draw attention to the fact that this definition of business management, per se, as well as its substantive contents, was not the first to be developed starting from industrial economic reality of late 19th century. As a matter of fact, the first ideas about this problematic had a less empirical character. Later on, around the Thirties of the 20th century, it came to be understood that in the realm of entrepreneurial life, “laws” and “principles” (mostly of a normative nature) had a tendency to be overtaken and quite simply contradicted by facts of life.

To run a business enterprise means a global and comprehensive activity that requires as much human experience and simple common sense, as it does of labor engineering and organizational skills. The objective finality (what we could call the “objective function”) of business management concerns, and is related to, the rational perspective of human activity. Rober MacNamara who was one of the first business leaders in the second half of the 20th century to successfully run the rehauling of production methods in a large manufacturing company (the Ford Motor Company) before embarking upon the management of an equally complex task of management (even though of a strikingly different nature - that of running the north American war effort in Vietnam), will have captured rationality as that complex quality of the art of management, telling us at the end of the Sixties: “Business management is a matter of permanent adjustment to change. Everything is permanently evolving, products, men, the firm. It does not make any sense to submit ourselves to a static notion of perfection”. Adding further that it is dangerous to freedom not to manage reality in its entirety as that would mean that some force distinct from reason controls that same reality. And that other force could be well an uncontrolled emotion such as envy, agressivity, hate, ignorance or simply inertia. Any thing but reason, whatever that force, if it is not reason that dominates man, then man will not fulfill entirely what he is capable of.

The art of pragmatismIn business management rationality must integrate the totality of ingredients that

will facilitate the methodic preparation of action: the research of facts and data, its analysis and measurement as well as the intervention of scientific disciplines such as mathematics, sociology or psychology. Without forgetting that “new” and now fashionable subject matter known as “Human Resources” and its interaction with economic life. Paradoxically enough, in the history of management, the human element starts by appearing only as second thought and initially as a neutral factor. More as

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another “input” to be considered, in relation to which some specific kind of supposedly rational behavior is postulated. As if everything could change but man, the main factor in the equation. Pragmatic reality, meanwhile took care of forcing a reassessment and reformulation of theory. And so business management could follow its own path of dialectical and existentialist evolution, in the pursuit of its practical objective purposes: growth and profit.

Every director, executive or manager today agrees that to manage is a pragmatic art that one can certainly learn, much as one learns how to swim or ride a bicycle, but that above all is lived on a daily basis and ends up by being consolidated on the basis of common personal experience and that therefore gains both a personal and a universal character. One has to remember, however, that it was not always like this and that what came to be known as the “classical school of management”, at the dawn of the 20th century, had some clearly academic limits and looked upon management as another discipline of scientific engineering, with rules and laws of a universal character, applicable at any historical time and geographical place.

First of all it has to be stressed that the specificity of business management comes, or results, from the very specificity of each business enterprise. In its origin the business firm could be considered as a social human group orientated towards production and as such it could and can assume multiple and diverse aspects. Going from the free capitalist enterprise to the state controlled socialist enterprise, passing through public services enterprises and state monopolies, as well as business concerns of mixed characteristics in what concerns capital ownership, statutes, governance and other institutional relationships with the State. Without forgetting cooperative enterprises, one also has to mention the multiple forms of small and medium enterprises, family businesses or micro and individual firms. That being the case, we have to consider that it is practically impossible to define or elaborate upon a single rational and “perfect” model of the business firm or enterprise, be it in the realm of economic theory or in the realm of managerial sciences. It could perhaps still be argued that there is movement towards such “perfection” (as could be illustrated with the current “Quality movement”) without however considering the possibility of ever attaining that hypothetical “point of perfection”.

Towards an equilibrium point? In what regards the number one objective of the business firm, neither there can it

be said that there exists an ideal recipe for its maximization. As for a strategy definition (the dorsal spine of business management) it can only help defining what are the short, medium and long term objectives to be attained, enabling some form of assessment and possibly measurement of the risks and possibilities involved. Up until the end of the Sixties, the relationships between the business firms and the public opinion were somewhat ambiguous, as if the social and the economic and business arena did not function very well together. This was perhaps an influence of the May’68 spirit and the alleged end of the consumerism culture which had been feeding the previous spiral of growth. The notion of profit did get along very well with the civic consciousness and there was a certain and paradoxical notion that “to make money” was a somewhat shameful thing.

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The study groupWe have stated that the basic thesis underlying our dissertation was that large

business firms (basically MNC’s) were facing a transformation from being “bureaucracies of a divisional form” to becoming aggregates of “professional bureaucracies” and “ad-hoc-cracies”. This means that our concern (in terms of sociological interest) leaves out a very large number of business firms: those “Small and Medium Sized” (SMS) firms which are currently responsible for about two thirds of employment and production everywhere in the world. This means that our study group is mainly that group of companies that fall under the category of “Multinational Corporations”. According to the United Nations, in 1992, there were about 37.000 MNC’s (with approximately 206.000 subsidiaries) which employed approximately 73.000.000 employees around the world and were responsible for about 25% of the World GDP.

As it was suggested before, we are naturally fully aware of the extreme variety of detailed organizational forms with respect to ownership and leadership models prevailing in certain countries, as opposed to other countries with similar economic performances, as well as the varieties in the various social reproduction schema (regarding the ownership and leadership models) observed in various different countries. These differences are related to national histories and cultures and we shall make only brief references to them in here. On the other hand, we also have to consider that this thesis does not propose that in the near future there will be no more “bureaucracies of the divisional form” (or BDF’s for short), as if meanwhile all of them were supposedly transformed into professional bureaucracies (...). We rather want to suggest that the currently existing BDF’s will have reached their maximal size in terms of managerial capabilities as well as in terms of “operating costs” versus “operating benefits” and that the currently fashionable “outsourcing” and “flexibility” trends are nothing more than the economic perspective of that more profound sociological phenomenon. It also has to be noted that while this organizational transformation is taking place, the control tools that ensure the “de facto” or effective exercise of that legal or “de jure” ownership of the very large business firms and of their operations and profits is being transformed and, in a sense, moving up in the scale of knowledge and information control as capital assets. We could also look at this upwards movement of these control tools and mechanisms as being technological enhancements in organization that are moving upwards in the chain of value adding activities.

In a way it can be said that the “societal system” of business firms has been evolving in a fashion not too dissimilar to that of the human species. As it is well known from the biological sciences, when a change has occurred in the outside environment and a new need for adaptation and adjustment has arisen, the human species did not discard altogether previous biological functions but built new ones on top of those previous ones... This is to be compared with the current fashion of justifying new theories of business enterprises by radically discarding previous ones (Coriat and Weinstein, 1999). The coexistence of the so called “factory system” and the “domestic system”, coexistence which can still be observed to this very day (namely in the fashion and garment industries, but also in such new and technologically advanced sectors such as

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computers) are also a good indication of this type of evolution and building up on top of previous and successful developments.

So, and to conclude this point, we have basically looked upon the transformation taking place amongst and within that particular group of social entities better known as MNC’s, bearing in mind the highly complex and varied setup that each particular sector of activity is following.

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III - INTEGRATIVE CONCLUSIONS

IntroductionHaving chosen one particular MNC in a particular industry segment, one should

explain why this was done: the fact that there was a choice to be made (in the first place) and the choice of a particular subject in itself. As indicated before we have opted for a case study-type of exercise rather than doing an extensive survey of various companies experiences or concentrating in an emphasis on the literature pertaining to that and this we did for a simple but objective reason: on the one hand, the relevance of this particular case-study and owing to the already mentioned facts of the particular roles of this industry sector and of this particular MNC in the economic and technological evolution of the industrialized world during the 20th Century and, on the other hand, to take reasonable advantage of the fact that this student worked for that particular company for a period of about 30 years with a total of 35 years in the same industry. The fact that this particular industry has had, during the last five decades or so, a particular impact in the inner working conditions and organizational setup of all the other industries was also a decisive consideration. We believe it is only fair to assume as a consensual fact that the industry of Information Processing Technologies has been instrumental in providing the tools and enabling the methodologies for the organizational transformations that have been taking place amongst most (if not all) of the largest MNC’s. It is common practice amongst social scientists to consider as a social system any “patterning of social relations across ‘time-space’, understood as reproduced practices” (Giddens, 1995). In this general sense a society or any organization or group constitutes a social system. More specifically and from a functionalist perspective a social system is any persistent system of interactions between two or more social actors especially where this interaction is associated with a tendency for this grouping of social actors and their interactions to maintain a boundary or preserve a specifically different position vis-a-vis an external environment. A business firm is also therefore perceived as a set of stable and persistent interactions between owners, managers, workers, suppliers and customers. As a result of managerial problems and business results lower than expected, the executive team led by John Akers experimented with the idea of re-structuring the IBM Corporation by transforming it into a group of independent operating companies, or subsidiaries, dedicated to different but complementary lines of business. A number of executives, managers and professionals were skeptical about this, for fear of loss of corporate identity26 and inconsistency of borders or divisions between the IBM core companies, the other subsidiaries and the outside environment. The transformation that eventually took place resulted in one single IBM Corporation (with a few subsidiaries that were purchased and retained their own identity), much reduced in headcount size but at the center of a much larger constellation of IBM “partners” (software developers, 126Most of these companies would actually operate under different names and would only be known as “an IBM Company”.

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dealers and distributors). In a speech before the heads os state and government of G-7, the then vice-president for Europe, Middle East and Africa, in 1994, had the occasion to stress that, in terms of overall employment, although the IBM Corporation had gone down from about 410.000 employees in 1990 to just over 240.000 at the time, the “extended IBM family of IBM partner companies had gone up to almost 800.000 employees. At the risk of seeming redundant, we can quite naturally understand the fact that the IBM Corporation (our principal object of study as a particular type of a social system) because of its technological leadership in a particularly important industry segment, has been worthy of a series of studies in the area of social sciences. It is also worth trying to understand the fact that the transformation that was initiated and is still taking place is also a profound change in the type of the above referred to “patterning of social relations”.

In July 11, 1983 the well known and general public minded American magazine TIME featured an article (“cover story”) about IBM titled “The Colossus that works -Big is bountiful at IBM”, with a cartoon-type picture of the then Chairman of the Board John Opel. In a natural apologetic manner, the TIME magazine portrayed the IBM Corporation as the shining example of a successful corporation which, to resort to sociological jargon, closely corresponded to a bureaucracy of the divisional form, or, to use another terminology, a tutelle company as referred to before. One that takes care of its own and presumes to be not just a place of work where employees come to earn a living but reaches out to try and embrace the overall social environment of its employees.

As one good example of IBM’s relevance as a particular subject matter in anthropological and sociological studies applied to the understanding of industrialized societies at large, the IBM Corporation has been the subject of several studies of a more or less scientific nature, both in the realm of economics and management as well as in the realm of sociological and anthropological and behavioral sciences. One of the studies that is particularly interesting for our purposes is the one by Hofstede (1991). In it the author takes advantage of the multinational character of that corporation and of its particular line of business. In the words of that author, once you have taken out the common traits of social behavior that would characterize its (then) over 200.000 employees (which social behavior was developed in a uniformly set work environment) what remains as differentiates are the respective national cultural traits. In order to conduct his research, Hofstede took advantage of IBM’s practice of conducting worldwide yearly “employee morale surveys”. In these surveys the company would ask its employees how they felt about a number of issues (such as the rating of IBM as a company to work for, the management style and the competence of its leaders, the work environment and the socially perceived status associated with working for IBM, and so on and so forth...) and what were their ideas for any possible improvements.

Sifting through those hundreds of thousands of questionnaires, Hofstedte and his team were able to progressively identify a number of variables (e.g. a masculinity-femininity continuum or risk aversion and authority dependency scales) which were then used to characterize and differentiate the various national cultures of the countries and regions where IBM conducts its business. In the context of our research for this dissertation we were not particularly interested in how the French are distinguished from the Swedes, (or the Portuguese from the Japanese, or any other nations, for that matter)

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in the masculinity-femininity continuum, for example. However, we consider that Hofstedte research effort is still very interesting and of use to our own purposes: that of assessing the organizational transformation taking place amongst the larger business firms around the world. Through this particular research about national cultural traits, the IBM Corporation was then in fact being extensively portrayed and, to use Mintzberg terms of reference, could in itself be characterized as being a “bureaucracy of the divisional form”. But then, also because of its particularly predominant position and role in a very prominent and emerging technological market (that of computers and information systems and technologies), a number of more specific traits could be identified and, although not explicitly described by Hofstede, could be detected as being implied if the published research results are read with the insight of having worked for many years with that company. We are therefore now turning to a summary of our own personal observations:

- The first one, and perhaps one of the most important or most relevant for our purposes was the incentives plans then in use and which were characteristic of the so-called “divisional-form” structure. As described by Mintzberg, these organizations are characterized, amongst other facts or traits, by the fact that line-executives and middle-line managers are rewarded in accordance with business results achieved, these results being measured-up against a set of objectives agreed upon in advance. The basic idea was, quite naturally, to create or to develop in the managerial ranks of the corporation the entrepreneurial spirit of which talk authors such as David McClelland (Human Motivation, Cambridge University Press, Cambridge 1990). In many respects each Country General Manager could be, or feel, encouraged to look upon the Financial Controller of the next higher up level in the managerial scale within the Corporation as a whole, as a very intimate and personalized investment banker. - The company was perceived, both internally and externally, as insular and internally focused, bending on the arrogant, this being a common charge leveled at the company by its competitors and often also by its customers. This was perceived to be caused by its predominant (near monopoly) position in the then emerging computers and information technologies markets. - As a result, the common view was that it was difficult to do business with this company, only on its own terms and that it felt capable of dictating the “rules of the game”;- It was certainly very much “product and technology driven” with the capability of imposing upon the market place (“its environment”) the pace, rhythm and direction of technological evolution, as a result of its sheer size and marketing clout.- It was very much a self-centered entity, one could say “parochial” in its perspective of its environment and the world at large. Internally this tended to breed group or factional behavior of reciprocity in exchanges of support coupled with what might be termed the building of personal power bases. - It prided itself on a set of “corporate principles” and among them one in particular: that of “respect for the individual”. One result of this principle was that of permanent consultation of peers and reportees before decisions were taken. Or at least such behavior was permanently, openly and explicitly encouraged. One further result of

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this “principle” was an environment of endless debate behind the scenes together with a façade of consistency in the market or in the visible behavior of any IBM representatives. - As noted above, this was very much a technology driven organization. So much so that it developed an image of being a “hardware” company and a company that sells “boxes”. Possibly the “very best boxes around”, but still “boxes”. Some of the most prized skills amongst its sales and sales support personnel were the “configuration” skills. That meant, the capability to design the most adequate set of features and characteristics of a “machine” (or set of machines), also commonly known as a “configuration”, to optimize an alleged ratio of “price/performance”, as well as the adequacy of “function” to “purpose”. - Again, being a technology driven organization and allegedly a “box” or “machine” oriented company, its most common interface or line of communication with the outside world (its customers), and on the part of that same outside world, was the so called CIO or “chief information officer”, in those days more commonly known as the Data Processing Manager. This, in time, led to a lack of contact (and desired “control) with the CEO’s, and CFO’s of larger corporations throughout the world. This was in sharp contrast to other companies that, in the process of technological transition transformed themselves from usually cooperating companies in the I.S. technology field, (business and organizational consultants) to fierce competitors, as the IBM company attempted to position itself, more and more, as a provider of services rather than as a provider of products. However, from detailed discussions with colleagues and ex-competitors staff, we must stress, that this same characteristic could also be easily traced among other companies in similar environments. It is quite easy to detect here the upwards movement of value adding activities. On a purely theoretical level, and as a side remark, this movement in itself could be established as a possible serious indictment upon the nature, causes and sources of value creation as assumed by the neoclassical, marginalist, school of economics, as opposed to the paradigmatic assumptions of the classical and marxian Political Economy. - In spite of its practices of “respect for the individual” and the concomitant results of permanent consultations and group deliberations before decisions were taken and implemented, IBM could quite naturally be considered as a “bureaucratic” and “hierarchical” organization. The “bureaucratic” term is here used in its vulgar or common sense.- It is also worth noting that because of its prior preeminence in the business of punched cards systems and the attendant control of the most important customer set (the CEO’s and CFO’s of the largest organizations then in existence), IBM was able to rapidly control and set the pace of development of the then emergent market for computer systems.- We have noted before that IBM’s top executive management felt it could impose upon the market the pace of technological change. For outside observers this could be construed as being “slow to market”. What this in fact meant was the capability to maximize the use of fixed capital and maximize the revenue streams resulting or

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coming from any new technological developments. In other words, it could afford (due to its dominant position) to dictate the pace of change and the rate of amortization of its investments. In sociological terms it might be argued that this position reflected a group aversion to risk or (the inverse perspective...) a preference for certitude and stability. - This perception of its own power position was also reflected in its capability ofchoosing the members of its own Board of Directors, this situation being quite typical of Galbraith’s technostructure. This same phenomenon is also a reflection of a social behavior commonly associated with an established set of practices better studied in the realm of Anthropology. In layman’s jargon what is usually referred to as “old boys networks”. - The IBM Corporation was also very well known for its participation in leading edge federal (both scientific and military) programs in the United States. The inter woven relationships between IBM’s executive management and the political actors or establishment is well illustrated by President Carter’s appointment of late IBM Chairman and CEO Thomas Watson Junior as Ambassador to the Soviet Union.

With a corporate culture that encouraged the status quo27, the celebration of past achievements and the sheer size of its global operations rather than innovation and flexibility decision making processes, and considering the historical dependency of its operations and business success upon the development of accounting, administrative or, in general terms, business data processing services to the larger business corporations and to government departments (all very much centralized structures and presumably well functioning bureaucracies...), it is only too natural that any technical developments which might entail organizational innovations running counter the established centralized structures, would be sneered upon if not outrightly discarded. But, meanwhile, the emergence of new data processing technologies, most specifically the so-called micro-processor and its attendant micro-computer, started to draw the attention of the overall business community. From an IBM’s point of view that phenomenon was looked upon with an undisguised measure of condescendence. In the words of late chairman of board Frank Cary, “there is no particular challenge to building a personal computer other than to build one that someone wants”. (Time Magazine/July 11, 1983). In a nutshell, the development of micro-computers did not fit in the overall IBM scheme of things. A world of business and government entities modeled after weberian centralized bureaucracies, supported by ever larger centralized computer systems, where individual blue and white-collar workers were supposed to utilize video terminals under the overall control of centralized applications. The development of software blueprints and guidelines28 such as SNA (Systems Network Architectures) and SAA (Systems Applications Architecture)29 is a well documented example of this institutional posture. 127The motto of Hundred Percent Club and Golden Circle conventions was the systematic reemphasizing of the idea that “you (the convention participants) are the best, the cream of the cream”.128For detailed developments of products both by IBM divisions and outside OEM’s or “other equipment manufacturers”.129The idea being that, through the implementation of these blueprints’ guidelines, all kinds of business applications, using all kinds of terminals and intermediate data storage

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It also so happens that this general set of characteristics can be translated into the usual definition of a “closed system”. We mean by this term, in our current context, that the IBM Corporation tended to behave as if there were no other relevant actors of the same species in the outside world. Be that as it may, the world does keep changing, not necessarily for the better (as one might argue), and the outside world did experience an important technological revolution in the field of computers and information systems. Ironically enough this revolution was caused, or at least much enhanced, by specific IBM actions. We are referring here to the so-called PC revolution. Due to its importance toour dissertation, some general comments are in order regarding the now “historical events” concerning this “revolution”.

Against the background of well established and centralized social structures supported by well functioning centralized data processing systems, and in the eyes of planners and business executives within galbraithian technostructures, the emergence of the micro-processor and its attendant micro-computer might have seem like a technical curiosity30 and not much more. Soon enough, however, the business executives found out that the new technical innovation was finding ways of penetrating the desktops of offices and homes everywhere. Within IBM proper, the established power structure was based upon the preeminence of the so-called mainframe computer, around which all the other technical components and attendant organizational divisions were looked upon as mere satellites. As a result, any developments that were not in line with the established corporate planning criteria (not to mention well established and rewarding career streams...), were not just frowned upon but, as we have indicated before, simply discarded.

When, apparently too many, personal computers started to appear in corporate offices, still under the leadership of Frank Cary, the top executive management of IBM decided that there was a new emergent and growing market segment. Not a structural change in the making. A new and emergent market segment. There was the time for extensive management seminars based on the “findings” of the Boston Consulting Group graphical analysis of “rising stars”, “sleeping dogs” and “milking cows”. The development of an IBM product to enter that market was bound to come up against all kinds of obstacles both cultural and structural. As a result a decision was taken to assemble an independent group of executives from within the company (an “Independent Business Unit”, so to speak) to come up with a finished product in a matter of twelve months. As indicated several years later, “the fact that its PC development had to be done totally outside the IBM system tells you something about the system” (Business Week/June 17, 1991).

and interchange subsystems, should be able to fit together in an all encompassing set of inter linked systems and subsystems, through a well structured set of standardized procedures and protocols.130This comment refers to the development of the personal computer as an independent viable commercial product. The emergence of the micro-processor (“computer con a chip”) per se or in itself - taking out its specific use a motherboard (to use current jargon) of a personal computer - was the increasing complexity of the mainframes and the attendant development of peripheral specialized computers within those mainframes.

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Resorting again to personal notes and observations, this student can testify to the type of perspective that pervaded the ranks of IBM management when this development was finally publicly announced (and internally discussed at length). With the development of the PC a serious technical “tradition” was broken. Before that all computer systems were “proprietary” in the sense that each computer company hold the patents and the exclusive rights to manufacture all the various sub components making sure that every single one was in accord with the technical specifications of all the other inter linked components. With the development of the PC a so-called “open architecture” was announced, meaning by that that the IBM Corporation would make all the technical specifications (in particular those pertaining to interfaces between machines and components) publicly available. As a result any other manufacturer could freely develop similar machines or components thereof. Operating and application software could also freely be developed by outside independent companies. Most IBM managers were simply dismayed, if not apalled, at this turn of events.

We could add on to the complexity of the situation if we also consider the UNIX phenomenon. UNIX was (and still is) a set or family of operating systems (the core programming that defines the most intrinsic behavior of any computer system) that, having originated in the Bell Laboratories of ATT, was being developed across universities all over the industrialized world. In time this came to pose an additional threat to the preeminence of IBM mainframe computer systems. As a matter of fact, and as a result of this, within IBM there developed serious factional struggles amongst different professional groups, each one trying to put forward and demand priority of attention and investment into the alleged advantages of the systems of their choice or expertise. As if the outside world didn’t really matter.

However, the world outside IBM was moving and changing. The Johnson Administration on its final day in office (January 17, 1969) opened a massive antitrust case against IBM charging the company with anti-competitive and monopolistic practices. The federal suit dragged on for almost exactly 13 years to be dropped “without merit” in January 1982. During that period, IBM kept growing but at 13% a year, a pace slower than that of the industry as a whole. As a result, the company entered the 1970’s with a 60% share of the computer market and ended it with a market share of only 40%. From personal observation in a number of management meetings and briefings from “high above”, this student can testify to the simple fact that much was discussed internally within IBM, trying to understand this tendency and searching for ways to counter act it. What seemed to be strangely absent from such discussions was the now obvious realization that the overall industrial sector of information processing technologies was simply in the throes of major structural changes very much akin to the transformations that had taken place, a few decades before, in the transportation industry (with cars and trucks and motorways “replacing” - so to speak - the previously well established trains network).

Resistance to ChangeWhenever the leaders of an institution or organization (latu sensu) decide that

that entity has to change in order to survive or simply to better take advantage of new circumstances in a changed environment, this decision is bound to face up to a number of

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resistance movements or simply to inertia on the part of the members of the organization. The reasons for resistance to change are multifold and have been discussed at length in the literature. A number of implementation barriers, some blatant, some subtle, have been identified that can inhibit the successful execution of a change and which can quickly thwart even the most sincere efforts. A few examples of some of the more common ones are:

- Lack of vision, when the corporate vision or specific business strategies are unclear, there may be confusion over how the change should be interpreted. One is reminded of the dialogue between Alice and the Cat, when at the crossroads, Alice asks the Cat guidance on which way to go...- Poor implementation history; when an organization has a history of poorly implemented strategic plans, the members of that organization will tend to expect little substance when more new changes are announced.- Lack of middle management support; middle managers often lack any feeling of ownership and involvement necessary for the enthusiastic support of change.- Lack of understanding or belief; Managers and supervisors will not be effective change agents or supportive sponsors if they do not understand or believe in the change themselves.- Low risk-taking; a tendency to overly punish errors and reward the mere absence of mistakes will promote an environment of low risk-taking in which nothing is ventured, nothing is gained is more vice than virtue.- No consequence management; When there is an absence of positive or negative consequences for complying with a change objective, the targets of that change will likely ignore any new directives. In cybernetic terms we would talk here of no feedback loop.- Lack of clear communications; If information about a change is allowed to filter down the organization in an unmanaged fashion, it becomes diffused, vague, and can be interpreted in arbitrary ways.- Failure to anticipate resistance; All major changes, even those with positive implications, provoke resistance. People are not necessarily resisting the change itself, but the disruptions the change causes in their lives, this being due to each own individual and specific perception of change and the way each individual perceives the effects of a change upon one’s own interests.- Poor management of resistance; When resistance surfaces, it is often denied or suppressed. When overt resistance is not acknowledged and properly managed, it goes “underground”, resulting in such covert activities as slow down, malicious compliance or even outright sabotage.- Lack of time; If too little time for implementation is allotted, huge post-change maintenance costs will result. Time must be allowed for target groups to internalize or to subconsciously assimilate the principles of the change.- Poor follow-through; Many organizations launch major projects with great fanfare and reward those responsible for initiating the change, but then fail to follow through to see that the project achieves its stated goals.- Lack of synergy: The various operations of an organization, even widely dispersed components, are by definition and to a variable degree, interdependent. If this

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fundamental point is overlooked, a change that is initiated in one area may encounter enormous resistance in others because they are still all part of the same organization.- Rhetoric versus results; Problems are sure to arise when executives or senior managers say one thing about change, but then behave in ways that send out opposite signals.

The Implementation of CRM The worldwide implementation of a new system to manage and control the

overall set of customer relationships, in a standardized and consistent manner is to be considered as one good example of the fairly well studied phenomenon of “best practices” transfer within MNC’s. In this respect, the following points are worth noting: MNC’s have different practices which they implement across the world (often indifferent ways) in an attempt to capitalize on replication of their most successful practices; these practices are socially imbued as they reflect the socio-cultural environments in which they have been developed and have evolved; practices vary in their transferability due to socio-cultural determinants and local constraints; the transfer of best practices is usually facilitated through normative integration and verbal information networks and international meetings, as well as through coordinated informal structures. The actual practices that are specifically used by a particular sub unit of a multinational are the final result of the interplay of pressures for local isomorphism with the host country and pressures for global integration with the parent company (Kostova, 1998). The problem that arises (certainly amongst many other problems) is the one of who judges what is a “best practice” just before it is set to the test of the “real world”.

At the time that IBM’s corporate leadership decided to start implementing a new organizational scheme (a set of “best practices”) structured around the CRM (for Customer Relationship Management), this was initially perceive as being linked to and caused by the change in the top executive post31 and part of the relative skepticism that this system was faced with could be related to the perception that this was “just a new fashion brought in by the new senior executive team”32. On a total of 30 unstructured interviews with IBM employees from 5 different countries, not less than 28 indicated this view. And yet, from the original internal documentation pertaining to the world wide implementation project of the CRM system, to which this student has had direct professional access, it becomes apparent that the whole project had been initiated a few years before the transition from Mr. Akers to Mr. Gerstner.

In the case of IBM, and the development and implementation of a CRM system, this task was initially attributed to a group of senior and fairly experienced sales 131From John Akers (a lifelong IBM veteran) to Louis Gerstner (a relative outsider) who brought along a series of other outsiders to fill in a number of top executive jobs.132At the time of his appointment as CEO, Louis Gerstner was known for his avowed (but mostly alleged...) “ignorance” of the Information Technologies industry and, contrary to tradition within IBM, he started (apart from being himself a relative outsider to the IBM Corporation) by bringing in a number of other outside executives to run the Corporation that previously prided itself on promoting exclusively from within its own ranks.

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executives from various countries around the world. An original team of sales and marketing experts was assembled in 1993 in order to try and capture the whole set of activities and processes running from the time a sales opportunity has been identified to fulfillment and, finally, the time when a sales cycle is closed with a customer satisfaction survey. This team of senior sales executives and marketing experts were given the task of defining with as much detail as possible all the tasks, steps and procedures of a “successful sales relationship”. This process of definition and detailed description of processes and tasks was done by adopting procedures that were very much in line with the “knowledge engineering” methodologies that had been under development within the IBM Corporation and elsewhere in Universities and business concerns. In fact, this could be described as a striking example of how a social group consciously attempts to capture socially acquired procedural knowledge and attempts to transfer it to an artificial device, a series of computer programs.

Based on the work in “new” institutionalism and “old” institutionalism, organizational practices (in particular successful and “best” practices) have been defined as institutions that have evolved over time under the influence of organization history, people, interests and actions. Practices reflect the established ways of conducting organizational functions and, as a result, they also reflect the shared knowledge and competence of the organization; they are, so to speak, infused with value (having meaning for participating organizational members that goes beyond technical efficiency); they tend to be externally and internally legitimate (accepted and approved by those legitimating institutions in the external environment and by employees as the “right way of doing certain tasks”). This conceptualization of the term “organizational practices” has its implications for the understanding of the process of transfer of a practice between organizational units. It also affects the definition of “success of transfer” (of an organizational practice), which is a dependent variable when developing and studying a model of critical success factors of that transfer process.

The critical success factors for such an attempt could be described as follows:- Full adherence and commitment on the part of all the participants- An intelligent comprehension of all the steps, activities and procedures involved in the overall system of processes.

These are both part and parcel of a set of requirements that could be translated in “internal selling” and “education and training” on the new procedures. We have referred before to a set of two parameters to enable a comprehension of the processes involved: that of communication and that of motivation. Communication, of course, also involves or includes understanding which, in this case, implies learning and training on new methods and technologies. Given the span, diversity and depth of activities and functions involved or affected we should rather talk of a new corporate culture. As indicated above, the core team that developed the new system (encompassing the whole gamut of marketing, sales and fulfillment operations, processes and detailed tasks) was lead by senior sales executives with wide marketing experience, with the assistance of experts, both in sales administration and the programming of “expert systems”. As might be expected, the problem that arose later on was that of actual implementation and deployment in the countries and other operating units. In the case of both Portugal and

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Spain33 a number of problems arose right at the beginning. The tasks of “internal selling” and “education and training” were given to different individuals and different departments or managers were responsible for each one. Also, neither of these different managers seemed to be aware of the relationship between the two sets of activities. As far as the “internal selling” was concerned this “new way of doing things” was being presented in the manner of a new fashion “just like last years’ ‘market driven quality’”, whereas the “education and selling” was being presented by local management as a new “computer application that controls the sales cycle”.

In the case of “internal selling”, at the time of implementation of CRM in Portugal and Spain, just before the actual company wide dispersion of experience and know-how (initially restricted to a single operating unit), a group of outside consultants was hired to implement a system of self-responsibility in personnel and human resources management to enhance the “feeling of ownership” vis-a-vis decisions and consequences on the part of the totality of employees. This group of consultants was headed by a Spanish-speaking South American and included a couple of Brazilians (one of them of Japanese descent) and one afro-american lady, Portuguese speaking, and a long-time resident of Brazil. The “transfer” sessions were conducted in Lisbon with the presence of one Spanish observer. The explicit purpose of these sessions was “the empowerment of IBM employees regarding their management of their working conditions, incentives systems, within specific financial constraints”. As the sessions progressed it became reasonably apparent that one of the implicit aims was also the “shaking-up” of established routines and practices in order to pave the way for new and more radical changes in the day-to-day operations of the Company as a whole.

For the Portuguese IBM employees the constitution of this team of outside consultants reflected several important features: (1) it was largely Americanized in its approach to management problems and solutions, so it reflected “the gospel” from corporate headquarters; (2) the language used was a mixture of Spanish and Portuguese and, since the predominant culture amongst the outside Consultants was a very familiar one (Latin), as a result it was familiar and the ideas to be conveyed more easily accepted; (3) the mixture of nationalities and “ethnic” backgrounds also helped convey the message that those “new ideas” were sound and universal in their applicability.

In the case of “education and training” there were courses and seminars (very much like in previous years, with the same attendance and level of priority) on themes such a BPR (for “Business Processes Re-Engineering”) and CRM (in particular the administrative component OMSYS - for “Order Management System). Interesting reactions could be observed during most of the classes as some of the line/field managers started to realize that under the new scheme of things they would no longer be in position to actually control the day-to-day activities of “their” professionals as the performance of these ones would now be under the direct guidance of “project managers” and each

133This student had a first-hand experience of this process in both countries and had the occasion to discuss the process at length in other countries such as France, Italy and the United Kingdom.

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“sales cycle” became a “project”34. In other words, “professionals” were about to become self-managed and to be expected to be more directly responsible for their participation in each and every sales project. Through discussions with colleagues from other countries it was possible to assert that a similar situation was developing elsewhere in the company.

The organizational needsWe have to remind ourselves of the special relationship established through

practice over a number of decades between IBM and its customers, this on a consistent worldwide basis: the privileged point of contact was, from IBM’s side, the “sales representative” or “account executive”35 and, from the Customers’ side usually (or predominantly) the “Data Processing Manager” or “Chief Information Officer”. A sign of a very good job being done by the IBM account representative would be an additional and good, or operating, “line of contact” with the CEO of a customer. Corporate protocol would usually require that contacts with the President, Managing Director or CEO of an IBM customer to be handled, on an occasional but more or less structured or formalized manner, by the national or country general manager of IBM. But these were the “good, old days” of the steady mainframe and centralized control of information processing within the customers. With the spread of mini and micro computers came also the dispersion of information processing and of decision-making power in the acquisition of all kinds of information processing devices and new and related services. As a result, new skills (on the part of the “human interfaces”), new tools and new methods, were being required to properly handle the “special kind of relationship” that IBM executives (including those that had taken charge of closely guiding the development of CRM) liked to imagine they used to have with “their very own” customers. As a result, the “old” sales professionals were now expected to change their own perception of their “profession” (that of “computer sales persons”) into one of being responsible for overall “customer relationships”. In actual practice, what this seemed to entail was the strict adherence to a set of routines such as the assembling of detailed qualitative and quantitative data, concerning a set of customers (by calling on various customer officials) and the recording of those customers business plans and the potential sales opportunities in the realm of information processing services and technologies, resulting from those permanent customers surveys. From an IBM executive perspective, the previous sales persons were being promoted to “account managers or executives”, from their own perspective they were being demoted to marketing assistants and data collectors. According to their perspective, the actual sales exercises were being passed on to the actors performing the newly invented role of ”opportunity managers”. Furthermore, these “opportunity managers” would be like migratory birds, only calling on customers to negotiate and close “fat deals” whereas the older “sales professionals”

134 “In the new IBM, there are no more sales persons, but rather participants in the sales process”, was one particular sentence by this student (then acting as class manager) that seemed to strike a chord with a class of senior managers. 135Quite naturally there was a full career stream going from junior “Sales Assistant” to senior “International Account Executive” or “Vice-president” in charge of a particular industry segment or other.

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were stuck with the day-to-day contacts trying to ensure a smooth relationship, including those ever more frequent periods of hardship.

When talking of organizational demands it is understood that in order to function, any system (in this instance, a productive system, that is with a finality of production and productivity objectives) must abide by a number of principles or decision procedures, division of labor and resources allocation (amongst actors or agents and activities), of coordination, motivation, the production of rules and the solution of conflicts and, most of all, the accumulation of knowledge. This is the only specifically addressed component or vector in CRM: the accumulation of corporate knowledge. On the other hand, by default, every system is threatened with disorder, incoherence and inefficiency... in summary with more or less serious dysfunctions and, if the case may be, of degradation to the point of disappearance or extinction. Entropy at work. When implementing and deploying the managerial tools and computer applications of CRM through the operating units, it soon became apparent that the company wanted to assert its ownership of the customer relationship and the detailed knowledge of individual customers situations and business plans and requirements in terms of information systems and technologies. For professional sales persons, with established and often stable relationships with customers in their territories, this was an invasion of their “trade secrets”. Their motivation to provide the detailed information required by the new “expert system” implied in CRM was close to boycott and sabotage... A simple survey of the required data bases revealed, one year after the process had begun, that less then 10% of the accounts had meaningful information recorded.

Resistance to Change Revisited“It must be considered that there is nothing more difficult to carry out, nor more

doubtful of success, nor more dangerous to handle, than to initiate a new order of things” - in “The Prince” by Machiavelli as quoted by author Keith Hammonds (Business Week/June 17, 1991).

The main problem facing the top leadership of any organization is dual fold and of a different nature: (1) What to do, in the sense of where to go, and (2) how to get there. This second issue is subordinate and dependent upon the first one. This remark determines a shift in analytical emphasis and the organization has to be perceived and studied as an institution. As a result one conceives the institution as having a character and that this character is an historical, integrated, functional and dynamic product. An historical product in the sense that, as any other human artifact, it carries with it the weight of experience and remembrance, established routines and ways of dealing with particular situations. In our case, these are mostly important in what concerns “stake holders”, in general, and employees in particular. In other words, we look upon an institution as being an organization with an historical background.

When a wide ranging strategic decision has been taken to implement profound changes in an organization, one of the key factors to be taken into account is the issue of behavior and the corresponding “corporate culture”. In the case of the IBM Corporation and its world wide subsidiaries, one was expected to have a strong sense of loyalty and pride in belonging to “the Company”. It is well known from sociological socio-psychological studies that individuals do normally have to manage eventually conflicting

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loyalties and allegiances to various groups and institutions. From an historical perspective, the IBM company expected all employees to be primarily loyal to itself and, in a sense, to have this loyalty to override other personal and professional loyalties, including nationhood and professional codes. This student can testify to a public statement, in Johannesburg, from the then Area South General Manager (including part of Southern Europe , the Middle East and Africa that explicitly said “as far as we are concerned, you are IBM’ers first and South Africans, second”. This expectation of such an attitude and behavior on the part of IBM employees coming from very different countries, cultures and social backgrounds was assumed by top executive management as a normal and natural outcome of a lengthy process of well planned set of enculturation practices. As might be expected the ones that appeared to be spontaneous and informal were the most effective ones. We are referring here to the stories that went round about the lonely CE (Customer Engineer) who would ensure continuous service to computers installed in remote sites (mining areas, for example) or the stories about IBM “widows” and their support to the professionalism and dedication of their husbands in the performance of their professional duties. How heroic sales representatives went about their business explaining and clarifying strange new concepts to customers, or the jokes about the professional relationships between sales representatives, systems engineers and customer engineers and their common and shared contempt for administrative and financial bureaucrats within the company. The lengthy residential “sales schools”, “systems engineers institute”, meticulous “customer engineers classes” and “management development seminars” were particularly useful in that respect. The internal IBM schools such as the International Education Center at La Hulpe (near Brussels) were very much considered as university campuses reserved for post-graduated IBM students, were highly regarded (but often dreaded because of its monastical ambiance) and were permanently full of students and instructors (quite often highly reputed consultants, professors and scientists from all over the world). Quite significantly this International Education Center has now been practically disbanded.

With the changing circumstances that emerged during the early nineties, the expected behavior of IBM employees was assumed to be slightly but steadly changing from loyalty to the company to commitment to business. In a sense, and going back to the future so to speak, from homo sociologicus to homo economicus (as postulated by taylorism and fordism). One further behavioral aspect of this expected transformation was changing from pride in belonging to pride in success and contribution to the company results. On the other hand, whereas before one was expected to share in a more comprehensive sense of community (the IBM company as a whole) matched by individual competitiveness (sales events competitions), the expected behavior was now more group oriented and to develop a sense of team work (much smaller and readily visible groups of professionals) and of winning together rather than in competition with peers and colleagues. As a result of these intended changes and as tools to implement them, the selection criteria for attendance of rewarding trips to celebrating and recognition events36 were radically changed from “individual achievement of results versus individual quota” to “group achievement versus group objectives”. Field or line managers were now given the role of collective referees in assessing individual 136Significantly these were also renamed from “Hundred Percent Clubs” to....................

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contributions to group achievement. Project managers, on the other hand, were supposedly being measured by professionals whose activities they happened to coordinate, in their capability to build “team spirit”. As a result of this changes, the company was now quite prepared, if not eager, to have higher natural attrition as opposed to the previously encouraged lifetime employment and career development practices. Also as an expected result were a permanent environment of challenge (of practices and values) and, hopefully continuous improvement as opposed to the previously high conformance and low contention atmosphere. Previously standard practices such as the “Open Door” and “Speak-Up” policies were all but abandoned. These were critical and instrumental tools in the management of internal conflicts. Also, whereas before change was expected to be of an evolutionary type and new developments to be built upon past experience, the company now wanted to re-invent itself on a more or less permanent basis through the use of then emergent organizational re-engineering disciplines. Finally, and to dispel the image of a self-centered and closed system type of a company, IBM started to implement in a systematic manner external bench marking, as opposed to previously predominant internal comparisons.

Also we may notice in passing that in an individualist culture employed persons are expected to act according to their own individual interests and work activities and motivational schemes or incentives are expected to be organized in such a way that this self-interest and the interests of the employers tend to coincide. This seems to be a clear case of the Homo economicus postulate of conventional liberal economic theories, at work. At this point it is worth noting that both IBM and a vast number of other representative multinationals have originated in the USA, a country particularly associated with an individualistic culture. This would naturally explain those various incentive and motivational schemes (derived from taylorism and fordism) that could be found in such business organizations, predominantly based on the postulates of the above mentioned homo economicus, both in terms of the adherence or belongingness and the communication vectors we have referred to before. In the realm of social psychology, and once the contributions of the human relations movement are also taken into account, this homo economicus becomes somewhat colored and improved upon with the so-called “needs theories” (Hunt, 1986) and approaches a concept of a new homo sociologicus.But then, of course, there is no definitive definition of what constitutes the “individual interests” of each and every member of any society. By definition, and common sense observation, these depend upon each individuals perception of his or her own world. In this case, then, one has to be prepared to accept the emergence of also unpredictable individual behaviors, even if one takes into account the normalizing effect of well established socializing processes.

Teams, Communication and MotivationWhen researching the literature on the issues of teams, team spirit and

development of team oriented performance, one is stricken by the apologetic or normative tone or character of most discussions. A review of the current and most applicable literature appears to indicate that most authors seem to take an approach

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orientated towards "top" or "executive" management usage of "team work" principles and disciplines. Comparisons are established between "work groups" and "teams" and detailed discussions are elaborated as to why teams work as teams and why what is loosely defined as "work groups" are not or should not be regarded as teams for lack of certain characteristics, such as "shared leadership", "specific purpose" or "open ended communications".

If one changes from a normative discussion about the pragmatic instrumentality of concepts and theories that have been shown to work, to a positive discussion of the factors that enable the emergence of teams within organization and a discussion of what factors, of a psychological and sociological nature, that allow the collective performance of a team to be more than the sum of the individual performances (synergy, what it is and how does it come about, experiments in social facilitation...) of each and every member of the same team, then we stumble upon the basic or fundamental vectors in the emergence and development of that so much sought after “team spirit” which are then, of course, motivation and communication.

Author John Hunt (1983) defines motivation as the degree to which an individual chooses to engage in certain behaviors. There are, allegedly, six important factors that are supposed to influence that choice, these being abilities, skills, experience, goals, energy and expected rewards. If one takes a specific look of these factors in an organization setting, then they have to be considered within the context of other influences on motivation such as: (1) the formal structure (and the symbolic nature of the social perception of that structure), (2) the enabling and underlying technology, (3) the pressures coming in from the market (both from competitors, suppliers and customers) and the social environment (in particular the regulating agencies), (4) the management attitude (in terms of industrial relations), (5) the existence, strength and pervasiveness of networks of informal relationships and (6) the all encompassing corporate culture.

Referring to the issue of conventional postulates of business economics and business administration (those that define and assume the preeminence of a mythical but useful homo economicus) the most popular theories of work orientation, derived from taylorism (also as modified and improved upon by the human relations movement), have been the so-called “Need Theories”. Basically humans act according to needs and in order to satisfy them. These theories seem to have dominated the North American literature from the 1950’s to the 1970’s and its basic findings or theses were standard material in all management development courses and seminars. Maslow’ theory of an hierarchy of needs was enthusiastically adopted by employers as it was the first simple theory that could be readily applied as it supported the conventional wisdom and common sense theories of managers (Hunt, 1986).Maslow postulated five different groups of needs which he listed in a hierarchy:

- Physiological, the first and basic needs such as hunger and thirst- Security, the second but also basic needs such as clothing and shelter - Love, the third in the hierarchy of needs indicating the need for links with others- Esteem, translated in self-respect and recognition of one’s own worth- Self Actualization, the highest order of personal needs expressed through the need to stretch and fulfill one’s own capabilities.

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As it is well known, many of the features of motivational and incentives schemes that were adopted in the corporate world were derived from these ideas and their variations as expressed by authors such as McGregor, Argyris, McLelland and Likert.Author John Hunt (1986) proposes an alternative explanation for social behavior in an organizational setting. He calls them “Goal Theories” and suggests the identification of six main categories of personal goals, namely: comfort, structure, relationships, recognition, power and autonomy. Although there is a clear link to the so-called “Need Theories”, in contrast with those neo-maslowian theories, there is no hierarchy as goals are deemed to relate to circumstances rather than to an inner ranking. Whereas needs of an higher order could only be addressed and eventually satisfied if and when needs of a lower order had been satisfied, in the case of goals, these are addressed according to current age, situation and the culture in which each particular individual has been socialized. This means that goals may change with time and space Also, goals are orientations to behave and not stimuli for learnt responses. Being orientations, current goals will reflect the child rearing practices of the late 20th Century (in our case) rather than those of the early 20th Century. Still according to Porf. Hunt the orientations may be deduced as themes or patterns of beliefs and values about choices an individual might make. Deducing those values and beliefs37 then requires the detailed knowledge of an individual’s background to date.Unlike the maslowian and neo-maslowian theories Prof. Hunt’s research seems to indicate that over a period of a decade there can be major shifts in what individuals think is important to them both individually and collectively. At the macro level, one only has to consider the effect of compound growth rates upon the wealth and life styles of entire national societies. Portugal and Spain are good and easily visible examples of this. Whereas up until the late Seventies managerial mastery and power were perceived as important career goals for high achievers, this type of goal appears to be much less important now. As pointed out by Prof. Hunt, “this alone points to the problems of fixed hierarchies of ‘needs’”. What we have here is again one particular representation of expected or postulated human behavior and, at best, in each culture there are values and beliefs which cumulatively lead to orientations towards certain ends. As those values and beliefs change (and the globalization process is indeed a process of cultural change on a global scale...) so, too, do the ends change and, in the process, invalidate a concept of stable needs in individuals.

Still following Prof. Hunt’s remarks, what is important in assessing theories of motivation is to recognize that the subject is extremely complex. Maslow and others noticed, from observing thousands of men and women, some recurrent patterns. Common sense logic would suggest that these recurring patterns of behavior may be the outcome of more or less stable sets of motives and/or needs. What more recent theories propose is that the recurring patterns of behavior relate more closely to values and beliefs each individual holds and hence the common sense view is that the goals are less definite, more fluid and more variable rather than fixed.

137Both for research or positive purposes in a university or research institution setting, as well as for normative or empirical purposes in a personnel department setting.

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But then, managing organizations depends on generalizations about behavior. It is therefore inevitable that most personnel systems have been based on some general model of a human being. With the beginning of Taylorism and the resultant scientific management movement we had, basically, what has been called homo economicus, or man as a social actor as perceived by practicing economists. Because of its apparent inadequacy or incompleteness, stressing individual differences from that particular model became extremely popular in the human relations movement of the 1950’s and 1960’s. Indeed, the stress on differences almost overwhelmed one important fact, that there is more in common in human behavior that there is that is different. With the emergence of needs theories what we have is the emergence or definition of a new theoretical entity with some predefined characteristics, that of a homo sociologicus, or man as a social actor as perceived by practicing sociologists. Finally, with the emergence of goals and orientations theories seems to come the recognition of the role of culture in conditioning social behavior of individuals in any organizational setting. In other words, the emergence of what we may then call homo anthropologicus, or man as a social actor as perceived by practicing anthropologists.

As indicated above, whereas up until the late Seventies managerial mastery and power were perceived as important career goals for high achievers, this type of goal appears to be much less important now. This is a clear indication of the changing pattern in organizational needs. As suggested by our thesis, from a bureaucracy of a divisional form, where career development is equated with upwards movements in hierarchical power and socially perceived as a strong incentive for action, to a professional bureaucracy where career development is equated with personal pursuit, achievement and peer recognition. One simple example to clarify our idea: if one asks a graduate MBA who has recently joined a large multinational corporation what his or her dreams truly are, the answer will probably be something around “becoming chief executive” of some type of a socially visible company. This could be translated by “recognition by social status” by the society at large38. If, on the contrary, one asks a recently graduated medical doctor who starts practicing in a hospital, the same kind of a question, the answer points clearly in the direction of peer recognition (the ultimate dream being that of Nobel Prize, the culmination of recognition by peers, the scientific community and society at large).

Some Conclusions and Final Reflections With the recent and ongoing explosion of the Internet phenomenon it is near to

impossible to make predictions and forecasts as to its impact upon the existing and still changing organizational structures. IBM subsidiaries such as Lotus Corporation (and a large number of competitors and partner companies) have announced new techniques, tools and methodologies that impinge directly upon our subject matter. We are now referring to the emergence of virtual “work rooms” and “virtual team rooms” that are expected to get together dozens of cooperating workers physically spread throughout the world. These software tools are embedded with teamwork process techniques that are 138Informal but structured surveys conducted by this student over the period between 1995 and 1998, discussing career aspirations with younger colleagues in several different countries of Europe amply justifies such an assertion.

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designed to boost communications, collaboration and team learning. Even though the individual skills are the property of individual workers, the ownership of the process as such, of course, remains with the company. Because of the distances involved and the scarcity of closer social interactions between participants in teams/projects, individual allegiance to the team, group or the company becomes that more problematic.

On the other hand, the "Customer Relationship Management" system seems to be, or appears on the surface and so far has been perceived by its users, as an attempt by higher management to (re)introduce OST methodologies into a type of activity not exactly adequate for that purpose. In terms of what is conventionally considered OST (for "Organization Scientifique du Travail") or simply "Scientific Management", the daily activities of workers can be subdivided in a definite and specific number of steps or atomic activities which are expected to be performed at regular intervals, forming repetitive and controllable cycles. As a matter of fact and as a result of this, a "Process" is usually defined as set of structured activities, sequenced in time and that are regular an repetitive in nature, following a specific cycle and whose results are measurable at regular and predefined intervals. Just like with manual or blue-collar workers in manufacturing, the transfer of control for the execution of any specific tasks from skilled professionals to a computerized system (such as OMSYS).

The implementation of various software tools that claim to be CRM systems is now a well documented process and is still expanding. According to a study by the consultancies IDC and Cap Gemini, covering 300 MNC’s from various industry sectors (banking, insurance, distribution, telecommunications, etc.) has concluded that 65% of these companies are in the process of implementing CRM methodologies and tools. Most of these developments seem to start from a customer service orientation and try to impose upon the marketing and sales administrative personnel the same (allegedly) rigorous discipline that one traditionally associates with the manufacturing industries where the definition of business processes has its roots (Scherr, 1993). As indicated by Scherr, classical process management is oriented toward improving product quality and process cycle time. It involves a step-by-step approach to defining and then methodically improving processes. This was standard practice following both the manufacturing and the programming paradigms of well or clearly predefined sets of activities. The question that now arises is, of course, how to handle spontaneous or ad hoc activities in the context of a disciplined, predefined business process? The analogy of the expected procedures on the part of medical and para-medical staff in case of emergencies in hospitals39 comes naturally to mind.

In the context of theories of development and in his classification of sectors of activity and the evolution of societies in relation with the predominance of “primary”, “secondary” or “tertiary” sectors, Colin Clark has drawn attention to a slow down that seems to occur in the gains of productivity when moving from the phase where the “secondary” (manufacturing industries) predominates to the phase where the “tertiary” (the provision of services) predominates. This seems to be an accurate estimation and, if one is to judge from frequent articles in the business press, this has probably been noticed by other authors. One could also deduce that the reason for the slow down in productivity gains in moving from “machine-oriented” production to “human-oriented” 139A typical example of a Mintzberg “professional bureaucracy”.

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activities lies basically in the nature of the subjects themselves. Whereas machines can be “easily” commanded, instructed or programmed to do whatever is required of them, in the case of human beings it seems that these do require not just “commands”, instructions” or “procedural check lists” but something else that, for want of a better word, we call simply “motivation”. This in turn is historically and culturally determined and, as a result, we have to face up to the fact that the “homo economicus” (a social actor whose taken-for-granted type of behavior underlies so many of well known incentive plans studied in Industrial Sociology and Human Resources) postulated by both the neoclassical theory in economics and the classical theory in administration science, is only a theoretical construct partially useful in certain and very contingent circumstances. The concept of “stake holders” which is currently gaining wide acceptance amongst authors of management themes and which is equally becoming common currency within the IBM Corporation (and no doubt within other business firms, as well...) derives directly from the managerial apologetics of authors such as Mayo (1945), Burnham, Drucker e Humble. In what concerns the distribution of decision making power, currently known as "empowerment", this student has found no record of any formal or specific survey having been conducted to inquire from the "empowered-to-be" professionals if they indeed wanted to be empowered in the first place. Resorting to a methodology resembling the anthropological “participatory observation” and first-hand experience encountered, this student is led to conclude that the majority of employees (both “professional” and “administrative”) shy away from being empowered as that “empowerment” also means putting some of their monthly income at risk in exchange of rewards that, according to them, is not commensurate with the responsibilities that “higher management wants them to assume”.

From Apprenticeship to ProfessionalismAccording to conventional wisdom, professional knowledge and know-how may

be analyzed according into two complementary categories:- General scientific or technical knowledge, which can be used everywhere in an industrial society and usually acquired through schooling and college attendance- Specific or particular knowledge or know-how which, usually, can only be obtained through hands-on training and on the work place.

Because of that, business firms are usually willing to support the costs of specific hands-on training but society will usually consider that the costs of general technical or scientific education should be borne by each individual or his or her family. These costs include not only the out-of-pocket expenses incurred with school, college or institute fees, books and materials but also the loss of income arising from delayed entry into the labor market. Human Capital considerations “a la Becker” would lead one to think that students/workers will normally enter into considerations about the value of time and investment on one’s own development (most probably of a marginalist type and taking

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into account “rational expectations”) regarding the pros and cons of studying for a longer education, and go without a salary for a number of years, or starting to work as soon as a job is available and forego a better salary later on in life. Up until some twenty years ago, this kind of reasoning seemed to apply also to the then emergent “information technologies”.

The current or ongoing changing perspective from a mechanistic bureaucracy (of the divisional form variety) to that of a professional bureaucracy carries with it also a matter of professional identity and knowledge acquisition process. Identity of one’s own system of references regarding professional conduct and career expectations and how one’s own skills, recognized or certified knowledge and activities, fit in with those of others within an overall process of chained activities. What characterizes a certain profession (the legal profession, the medical profession, an engineering profession...) is indeed the specificity of the way in which whatever things or activities that constitute profession, are done. In the case of Information Technologies, due to its recent appearance in the industrial landscape, there has been no time yet to fully consolidate a set of practices that truly set it apart from other “engineering” professions. As one simple example of this, the “Portuguese Association of Engineers” still does not recognize this as a “profession”. In any case we have to recognize the changing pattern of power, within IBM and other large MNC’s, from the I.S. specialists (scientists, engineers, salesmen) to that of financial results specialists. This is due both the generalization of Information Technologies courses, diplomas and degrees in all universities and other institutions of higher learning. Also to be noted are the newly established certification processes on the part of suppliers of software products such as Microsoft and SAP, to name just two of the most prominent ones. Both these two factors contribute to a devaluation process of this new profession of “I.T. Specialists”. This changing pattern of power is also linked with the tentative recording in computerized routines of work processes (such as in CRM) as an attempt to fix and maintain “for ever” the control (power) over the sequence of technical activities and the attendant devaluation of living technical know-how.

The transfer of know-how from “humans” to “systems” which is implied in the implementation of CRM-type of systems could also be perceived and studied as a phenomenon that is part of a wider social transformation that affects class structures as studied by authors such as Olin Wright. We are thinking here in terms of this author’s grid of analysis where the possession of technical skills is combined (and/or confronted) with the possession or control of organizational skills and one’s own positioning in the various organizations’ structures. If we look at the referred grid of analysis we could also consider and further discuss the thesis that the transformation we have been discussing (at the macro level and in the context of most advanced industrialized societies, from predominant bureaucracies of the divisional form to professional bureaucracies, intermingled with increasing numbers of adhocracies), is equivalent to a wider social movement from bottom right towards the center and to the left, along the axis of scientific and technical knowledge as well as along the axis of organizational control.

In the context of studies of development, and in studying the characteristics of African societies in general and of business enterprises in particular, most anthropologists will identify and extensively discuss the networks of solidarity and

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reciprocity that most often tend to create problems and impede the development of the individualistic type of behavior postulated by the neoliberal school in economics. And yet, the building of networks of social relations (the “old-boys” networks or the “ivy-league” syndrome in North America), is an easily recognizable feature of social life anywhere in the world. This student, while a manager and junior executive in IBM Africa Operations did participate in the building up of such a network of social relations of personal trust and business confidence that would (and did) facilitate the conduct of normal business relations. When transferred to IBM Portugal, this same student quite naturally encountered an already established social network of business relations amongst his owns peers in Portugal, while at the same time loosing out the previously established network in Africa and the European headquarters supervising the African operations. These previous social networks were now of no importance or simply not relevant to IBM operations in Portugal. One of the possible implications of the organizational transformation taking place is that of a gradual erosion of previously existing “old boys networks” or the tendency to prevent new ones from being built. In a sense this would tend to reinforce or consolidate the (re)emergence (?) of that mythical homo economicus postulated by main stream Economics, as opposed to the apparently more realistic homo sociologicus who considers family and friends when making plain business decisions.

One of the implications inherent in the so-called Okun’s Law is that in the modern economy there is an inherent tendency for unemployment to grow with technological development and evolution. Although this “law” is better qualified as an empirical phenomenon that has been observed in the North-American economy for an extended period of time, (Mochon Morcillo 1990), it does seem to express at a very macro level, a negative relationship between, on one hand, the rate of growth of any economy (as a result of technological evolution and the concomitant increases in social productivity), and on the other, the number of productive employment opportunities that become available. This negative relationship is affected, quite naturally, by a number of factors such as the evolution of the demographic composition, the flexibility of industrial and contractual or labor relations and the degree of government regulations but, on the whole and at the global level of a planetary economy, it does seem that such a tendential law has been operating within the economy. Now, if such a law is indeed operating within the economy, as we assume it does, then it goes a long way to help explain the current situation (in fact some 30 years old...) of persistent, if not growing, unemployment on a global or planetary level. It also helps explain the explosion of the so-called informal sector of the economy in Latin America, Southeast Asia, the Middle East and Africa. It further also helps explain the growth (and the growing official encouragement thereof) of the SME’s (Small and Medium Enterprises) in most industrialized or developed economies.

One of the factors that is commonly used as an explanation for the lack of growth in employment opportunities are the so-called rigidities in the labor markets, these rigidities being somehow imposed upon the business community by the regulations of the welfare state. With less rigidity, it is argued, business firms would have no major problems in hiring new employees (at the market determined wages), as long as they could also freely fire them when business circumstances so required. In a nutshell this is

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the core of the argument in favor of flexibility in the market place. One other and different thing, often confused with this however, is the growing movement for internal flexibility in the organization of the operations and activities of business entities. In this area also there has been room for government, as well as trade-unions, interference and regulation. Some authors will refer to the first one as “external” flexibility, and to the second one as “internal” flexibility. Whereas trade-unions have been vocal in the rejection of “flexibility” altogether, they probably would be better advised to concentrate on struggling against “external” flexibility in order to ensure employment stability to their members while accepting “internal” flexibility in order to ensure skills evolution and a minimum stability in adjustments to market requirements. But this is obviously already outside the scope of our dissertation. Suffice it to say that the changing organizational paradigm we have been discussing is a critical success factor for the larger business firms to obtain the required “internal flexibility” above referred to.

Learning and competenceWe could also envisage a discussion of IBM’s change from a perspective along

the lines expounded by such authors as Nelson and Winter (1982). The evolutionist approach to the business firm seems to be rather recent in its spread although relatively old in its inception. The basic traits of this approach being (1) the consideration of procedural routines as the equivalent of hereditary genes, (2) market changes and opportunities as the equivalents of variation and mutation and (3) the firms own R&D activities and corresponding responses to market pressures and opportunities as being the equivalent to biological selection mechanisms. With Richard Nelson and Sydney Winterwe witness the convergence of three types of concerns: to explain the evolution of firms by means of the darwinist principle of natural selection, to update the schumpeterian approach to technological evolution on a trial and error basis and, finally, to include the limited rationality principle proposed by Herbert Simon. The darwinian “natural selection” mechanisms would act upon the “genes” of the firms, their operating procedures or routines and this would enable their adaptation to a changing environment. The main concept here is that one of “routines” or “operating procedures” which are specific to each particular branch of activity as well as to each particular business firm. As indicated in anthropological approaches to business firms self identification, their “culture” is also their own very particular “way of doing things around here” (Deal and Kennedy, 1988). The evolutionist theory refers here to the specific competencies which are the particular property of each firm and the firm is envisaged as a cluster of interrelated and coherent competencies which are reflected in particular ways of “doing things around here” or “routines”. These routines ensure the previsibility of behavior of participating individuals, previsibility which is essential for any collective coordinated action. In the context of Schumpeter’s different types of innovation, our thesis could be considered as studying the introduction of a new mode of organization with the explicit aim, on the part of IBM’s top executive management, of obtaining a decisive competitive advantage.

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The Changing Organizational Paradigm