Industries, Firms, and Jobs

George Farkas

• Publisher: Routledge
• Year: 2017
• eBook ISBN:
  9781351512671
• Print ISBN:
  9781138526044
• Subtopic: Business General

What are the links among industrial structure, segmentation, the internal structure of firms, job characteristics, technology, productivity, labor markets, and product markets? The answers, posited by a distinguished group of sociologists and economists, have gained resonance as the field of economic sociology has grown. In this expanded edition, the editors and their economist colleague, Kevin Lang, explore the theoretical interstices and update the references.Sociologists and economists have responded differently to work within the other discipline. For some sociologists, the typical economic assumption of basic actors engaged in rational action is both unrealistic and objectionable. Other sociologists have not always agreed with everything economists do, they have seen ""rational choice"" as a partially true description of human behavior and as a starting point for sociological theorizing. Among economists, the situation is quite different: most have maintained their basic rational choice model while pushing aggressively into substantive areas previously addressed only by sociologists and political scientists.Industries, Firms, and Jobs is a welcome reassertion of an old tradition of interdisciplinary research. That tradition has recently weakened, largely because of an enormous expansion of the domain of neoclassical economics. The expansion has fed on two scientific developments: human capital theory and contract theory. This book is an invaluable resource for all economists, sociologists, labor specialists, and business professionals.

I
INTRODUCTION

1
Work Structures and Markets

An Analytic Framework

Arne L. Kalleberg and Ivar Berg

I. Introduction

Work structures and markets are central foci for sociologists and economists seeking to explain a variety of phenomena related to work and industry. By "work structures" we refer to the arrangements, institutions, and patterns used by social actors to deal with the tasks of production and distribution. They represent the hierarchical orderings of persons and clusters of interests, configurations of norms, and the rights and obligations that characterize the relations among economic actors. Work structures describe the ways in which labor is divided, tasks allocated, and authority distributed; they point to reasons why doctors' work is different from teachers' and why executives are able, with wide degrees of freedom, to hire and fire their employees.

The importance of work structures derives ultimately from their significant consequences for a wide range of social phenomena. For example, "new structuralist" sociologists and "new institutional" economists have shown that many work-related inequalities among individuals are generated by correlates of such work structures as firms, industries, occupations, classes, and unions. Work structures help to define the contexts, and many of the parameters of these contexts, within which people are employed and rewarded. Furthermore, some structural locations are "better" places to work than others because they pay higher salaries and provide greater opportunities for advancement to higher-paying positions. Moreover, it is generally assumed that the overwhelming majority of these work structures exist independently of, and are temporally and logically prior to, the involvements of people who work in or otherwise have traffic with them.

Since the economies of industrial societies are complex, empirically well-informed insights are needed from many disciplines—industrial and organizational sociology, labor economics, social history, and political science—in order to account for the origins and correlates of work structures. Unfortunately, disciplinary boundaries have often been major impediments to fuller understanding of work structures, as potentially complementary studies at different levels of analysis have been conducted in isolation from one another. For example, sociologists usually study organizational, occupational, and other work structures. In contrast, economists typically focus primarily on markets and other macroeconomic forces, and make simplifying assumptions about the nature of the work structures that result from them. Advancing our understanding of the institutional order of the economy requires preliminary syntheses, at least, of sociological and economic approaches that take into account the diverse units and levels of analysis involved in the organization and experience of work.

In this chapter, we outline a conceptual framework that provides a "way of looking at" work structures and markets.¹ We argue that (1) work structures are complementary and interrelated in theoretically meaningful and important ways, and (2) societal and historical influences, operating through each of four critically important markets, largely determine the correlates of work structures. We then discuss some key issues raised by a multidimensional view of work structures and markets by the expedient and illustrative use of the other contributions to this volume.

II. Sociological and Economic Approaches to Work Structures and Markets

In the 1960s and early 1970s, neoclassical economists and status attainment sociologists² showed how people's labor force experiences were shaped by their economically rational choices and interests, marginal productivity, and ability to compete in competitive labor markets. These writers tended to take work structures as "given" in their analyses. Seeking to compensate for the individualism of these approaches, "new institutional" economists and "new structuralist" sociologists³ in the 1970s and 1980s turned their attention to the structure of the economy itself. In contrast to the first group, these writers did not take work structures as given but rather as objects of inquiry, as "social technologies" invented by human architects more or less planfully.

The "new institutional" economists assume that the social relations between employers and employees (whether governed by markets or administrative procedures) are central to an understanding of the workings of the economy. They tend, though, to describe these relations in fairly abstract terms. In Chapter 8 in this volume, for example, Williamson accounts for a wide and diverse set of phenomena by applying a relatively simple and basic principle—that actors seek to economize on costs of their transactions. Thus, firms—"governance structures," not "production functions"—try to economize the costs of their transactions as best they can in view of their bounded rationality. This abstract idea takes us some distance toward an explanation of firms' transactions (such as subcontracting and vertical integration), labor market organization, regulation, and corporate governance. Williamson's model even sheds light on some aspects of family organization.

Research by the "new structuralists" in sociology complements the work of the "new institutional" economists by specifying more precisely the contexts within which economic actors make their decisions. At the heart of this parallel effort is the postulate that a variety of economic activities may be considered "rational," depending on the particular context. However, these sociologists vary in the way that they conceptualize the relevant "contexts." In this volume, Granovetter, for example, stresses the role of "weak ties" and other aspects of social networks and contacts in forming the social contexts within which work structures are embedded. Other writers focus on work structures such as industries, firms, occupations, and cities.

In general, economists—both neoclassical (with its twin emphases on marginalism and marginal productivity) and "new institutional" (stressing the minimization of transaction costs)—seek to reduce complex realities to more basic processes, thus capturing the "core" or "essence" of human behavior in its various forms and deducing specific structures from these more basic ones. In contrast, the "new structuralists" in sociology are less often guided by assumptions that there are "basic" features of human behavior underlying a wide range of work structures and markets. Rather, they more often seek to include, in an inductive fashion, a wide range of concepts in their explanations, in order to provide what they hope is a more accurate and comprehensive description of complex realities and to order their independent, "explanatory" variables without reducing them one to the other. While these distinctions highlight some important differences between economists and sociologists, there are considerable differences among members within each discipline in their assumptions as to whether or not explanations of the institutional order of the economy can be reduced to one or a few work structures.

We label as univariate structuralists those sociologists (and economists) who focus on the determinants and consequences of one or another work structure (or market) to the virtual exclusion of others. A diverse group, its members have in common the assumption that the logics associated with their favored structure—which they may or may not conceive to be multidimensional—afford the "one best way" to conceptualize and understand problems related to work and industry.

Other sociologists (and economists) may be classified as multivariate structuralists. These writers explicitly posit the existence of multiple structures and levels of analysis and seek to integrate them in accounting for the nature and consequences of work. This approach offers, we believe, the most fruitful opportunities to integrate sociological and economic approaches, and it is accordingly our main focus in this chapter.

III. A Multivariate Structuralist Approach

Multivariate structuralists are a diverse group. They differ, for example, in the number of work structures they analyze: Some take into account a large number of work structures and seek to assess their relative impacts on a dependent variable(s)⁴; others hold one or more work structures constant in order to examine the nature and consequences of other work structures.⁵ In all cases, the researchers attempt to understand explicitly how the structures they investigate are related to others and Iiow these interrelations affect their conclusions and interpretations of findings.

Six basic and conceptually distinct forms or levels of work organization have drawn the lion's share of the attentions of structural sociologists and institutional economists concerned with stratification:

1. Business organizations (firms and establishments), which differ in their size, market power, and extent of internal labor market development.
2. Industries, or groups of firms producing similar products and/or services, which vary in their degree of concentration, capital intensity, and other features related to the nature of product/service production and distribution.
3. Occupations, or technical activities that are transferable among different firms, which differ in their skill content, resource base, and other attributes reflecting the demand for, and supply of, people who perform particular activities in a societal division of labor (we label as "jobs" the specific tasks within specific firms that are not transferable across organizations).
4. Classes, or control relations between occupants of positions in the firm's structure of power and ownership; these relations reflect differences in the circumstances of employers, managers, and workers.
5. Unions, or organizations that represent workers in their relations with employers; unions may be organized along occupation (craft), class or industry (industrial), and/or firm (enterprise) lines.
6. Nation-states; these structures are important for two reasons: The bureaucracies of modern nation-states employ increasingly larger numbers of people; and the policies of political parties, along with cultural differences among societies, affect the ways in which these work structures are related to markets and to inequalities and other outcomes.

A central assumption underlying this multivariate structuralist approach is that these work structures are complementary and related to each other in systematic, which is to say, in theoretically important ways. Business organizations are "basic" units of analysis for studying the institutional order of the economy, since the vast majority of people in industrial societies work in them and they are the main sites of labor (and other) market transactions. Business organizations, in turn, can be aggregated into industries, which are groups of firms that produce similar products. Class groups ("classes in themselves")—owners, managers, and workers—are defined within each organization, and there are several kinds of linkages among class positions ("classes for themselves") in different firms: For example, craft and industrial unions link workers in different companies, and trade associations and directorial "interlocks" link the agents of owners of different firms. Finally, occupations represent technical activities that are transferable across firms, while jobs are specific tasks within particular organizations.

Multivariate structuralists also argue, as we have noted, that the impacts of these work structures cannot be reduced to one another; each work structure independently shapes the nature and consequences of work. Hence, a particular level of analysis—whether organizations, industries, occupations, classes, or similar bodies—is not necessarily the most "appropriate" one for all questions. By contrast, "univariate structuralists" confine their attention to a single level of analysis as follows: Those studying single organizations often do so without considering the industries that form the environments of these organizations and the work structures (such as unions, occupations, or classes) that may span firms; those studying differences among industries often neglect differences in the organization of production within these industries; and those studying occupations often fail to consider differences in the economic organizations within which the occupational activities are performed.

Moreover, multivariate structuralists frequently seek to integrate insights from economics and sociology in order to account for the origins and consequences of work structures. The extension of renewed dialogues between some of the leading members of these disciplines can in part be traced to the growing recognition that neither group can afford to ignore the insights of the other in accounting for differences in inequality and growth rates among the economies of both the less and the more developed nations. In particular, a multivariate structuralist approach is useful for linking the economists' study of markets to the sociologists' focus on work structures and concrete institutions. This approach is useful because multivariate structuralists argue that the origins (or ultimate "causes") of work structures are to be found in economists' markets within which exchanges take place and in the political and other processes that determine the mix of market and nonmarket initiatives in a society, in an industry, in an occupation, and in firms. As an example, police officers are concerned both with their income returns in narrow economic terms and with preserving differences between themselves and other uniformed municipal workers in social or social-psychological terms.

A. Markets

We assume that a central feature of all societies is the need for individuals and groups to exchange goods and services with each other in order to satisfy their wants. This leads them to develop means for conducting transactions that economic agents hope will become conveniently routinized. In industrial societies, these exchanges take place in markets, which can be arrayed along a continuum from more to less competitive or planned; hence, markets are useful constructs for studying work structures even when they do not fit the economic textbook's "perfectly competitive" model. While markets are most visible as mechanisms for the distribution of human resources and opportunities in capitalist systems of production, even the economies of socialist countries depend on markets, since they must compete with other countries in a capitalist world system. In addition, in socialist economies many goods and services may more often be exchanged in "black" markets that, while not legally sanctioned by the state, have been legitimated by long-time practices of their participants as efficient ways to carry out exchanges.

Exchange relations in industrial societies are complex, and so there are many types of markets. Four major types of markets are especially important to work structures. These markets vary in the commodities and capacities being exchanged (labor power, goods and services, money and credit, raw materials and other resources) and in the types of actors (the buyers, sellers, and traders) involved in the...

Table of contents

• Cover Page
• Half title
• Title Page
• Copyright Page
• Contributors
• Foreword
• Economic Sociology and Social Economics
• PART I. INTRODUCTION
• PART II. ECONOMIC SEGMENTATION RECONSIDERED
• PART III. INDUSTRIAL STRUCTURE AND MARKETS
• PART IV. FIRMS AND INTERNAL LABOR MARKETS
• PART V. THE FUTURE OF WORK
• PART VI. SOCIOLOGICAL AND ECONOMIC APPROACHES TO THE STUDY OF INDUSTRIES, FIRMS, AND JOBS
• Index