Enterprise

Commons-based businesses such as cooperatives and other forms of community ownership.

Shareholder accountability

Education

  • Khurana, Rakesh. From Higher Aims to Hired Hands. Princeton University Press, 2007.
    • Describes a transition, begun in the economic crisis of the 1970s, and carried through in the 80s and 90s (2): “the image of the ideal executive was transformed from one of a steady, reliable caretaker of the corporation and its many constituencies to that of the swashbuckling, iconoclastic champion of 'shareholder value'” (3). This was reflected in business schools, and led to a greater alignment between executive compensation and share price.
    • Corporate managers came to be perceived as the problem. “The business media provided an image of corporate managers as unaccountable plutocrats who were mismanaging corporate assets” (302). In response, “The new logic of shareholder primacy absolved managers and corporate executives of responsibility for anything other than obtaining the desired financial results” (303). “Under the sway of the new economy orthodoxy, any suggestion that the corporation was subordinate to any societal institution other than shareholders was increasingly regarded as soft-minded and suspect” (304).
    • Quotes two official policy statements from the Business Roundtable. In 1990, it began: “Corporations are chartered to serve both their shareholders and society as a whole” (320). But by 1997 it had been changed to say: “the paramount duty of management and boards of directors is to the corporation's stockholders; the interests of other stakeholders are relevant as a derivative of the duty to the stockholders. The notion that the board must somehow balance the interests of other stakeholders fundamentally misconstrues the role of directors” (321)
  • Spender, J. C. “A Brief and Non-Academic History of Management Education.” BizEd. February 23, 2016.
    • “The first purpose-built school of commerce was probably the Escola do Comércio, founded after the 1755 Lisbon earthquake.”
    • “In 1853, Illinois businessmen formed an Industrial League to establish “industrial education for farmers and mechanics.” In New York, a People’s University for farming was set up in 1853.”
    • “The founding of the Wharton School of Finance and Economics in 1881 was another major event in America’s management education history. It was named for Joseph Wharton, who had become the driving force of the Industrial League after the Civil War. Wharton, a powerful monopolist and passionate protectionist, had studied the education methods of the German Cameralist schools.”
    • “In 1908, Harvard University opened its two-year Graduate School of Business Administration. Harvard’s president, William Eliot, was under pressure from East Coast bankers and railroad magnates to provide young men educated in business.”
    • Around that time, tensions began emerging in business education between research and skills
    • After WWI, “Frederick Taylor, a mechanical engineer and accounting consultant who devoted his career to making industry more efficient, started the Scientific Management movement, which he considered a move toward better labor relations. However, he was demonized as the source of the labor problem by both unions and politicians.”
    • By “1942, HBS had militarized and become a school for operations analysts and statisticians—such as Robert McNamara, the school’s highest-paid young professor. Business leaders everywhere became eager to apply these quantitative methods to peacetime management problems.”
    • “AACSB had been established in 1916, but its initial objectives were to help its elite members create a shared curriculum, to encourage faculty training, and to protect its members’ reputations.” Not necessarily the standards-upholding role of many professional organizations. In the late 50s, “AACSB had yet to reach abroad and its standardization efforts worked only on its own members, a minority of U.S. schools, let alone the world’s. The global population of business schools was expanding without any control”
    • “the ablest students began to choose schools less for their curriculum or teaching and more for the consequences their certification would have on their careers. The trend was exacerbated when U.S. News & World Report debuted its business school rankings in 1987.” Reputation was perhaps more significant than rigor. “The relentless demand pushed fees upward and transformed many business schools into their universities’ cash cows. Management education became a business rather than a discipline.”
    • “In the most recent period, many management educators have largely given up on theorizing economic value creation and have retreated to entrepreneurship and leadership, topics seemingly beyond the reach of neoliberal economists. Student demand for these courses skyrocketed after economists proved unable to predict or explain the 2008 financial upheavals. Yet neither entrepreneurship nor leadership is a discipline that stands on viable theory or an empirically verified core.”
  • Spender, J. C. “How Management Education's Past Shapes its Present.” BizEd. February 23, 2016.
    • “Business schools are not free-standing educational enterprises or academic accidents; they are educators’ thoughtful responses to particular questions posed by the wider socio-economy.”
    • “One illustration can be found in the 2007 book From Higher Aims to Hired Hands, written by Harvard’s Rakesh Khurana. In this important book, Khurana divides management education into three periods. In the first, the late 19th century, management education arose as business sought practices that would balance public benefit against personal gain. In the second period, after WWII, management education was reframed as a science and became the property of management academics rather than of practicing managers. In the third period, beginning in the 1970s, neoliberal economic thinking “colonized” academic thinking and prioritized shareholder return. As a result, management education became the property of a small subgroup of rationalist economists rather than of theorists of broader disposition.”
    • “Khurana concludes that our industry’s focus shifted from business’ social duty to organizational efficiency to shareholder return. The lesson we need to learn [in Khurana's view] is that business schools should rebalance the curriculum away from theory and quantitative analysis toward greater attention to social duty; as they operate now, business schools are no longer responding appropriately to today’s socioeconomic challenges.”
    • “Khurana’s analysis is powerful, but I see our industry’s history differently, and this leads me to different conclusions. Business schools have not merely shifted rhetoric from 19th-century moralizing to modernity to a narcissistic post-modernity; each change was a response to the events and political philosophies of the day.”
    • With the rise of labor movements between the wars, “many politicians, business academics, and managers hoped for a “science of the workplace” that would supplement what was known about incentives and wage systems and alleviate the growing conflict between workers and owners.”
    • In the 1950s and 60s, “a cadre of economists was anxious to advance the political impact of their theories that focused on the firm as a purely economic entity. They promoted the view that management education should focus on maximizing shareholder return. Other difficult-to-measure performance criteria were sloughed off, leaving the firm defined by its tangible capital and ROI. But with this step, business educators legitimized the notion that good management might mean dissolving the firm to improve shareholder return, without concern for the social costs to employees who lost their jobs or to communities that lost employers.”
    • “Today management education is marked by heterogeneity, with a long heritage of conflicting philosophies piling up to shape its anxious state.”

Fair Trade

Freelance economy

  • Freelancers Union
  • SMartBE - Belgian freelancer network spreading to countries across Europe

Co-working

Bibliography

    • “The Online Platform Economy attracted individuals across the income spectrum, but low- and moderate-income participants relied more heavily on labor platform earnings.”

Guilds

  • Davidson, Adam. “What Hollywood Can Teach Us About the Future of Work. The New York Times Magazine. May 5, 2015.
  • Epstein, Steven A. Wage Labor and Guilds in Medieval Europe. UNC Press, 1995.
  • Epstein, S. A. and Maarten Prak (editors). Guilds, Innovation, and the European Economy, 1400–1800. Cambridge, 2008.
    • A chapter in the volume: Epstein, S. R. ”Craft Guilds, Apprenticeship, and Technological Change in Preindustrial Europe.“ Journal of Economic History 58, no. 3 (September 1998).
      • Argues that guilds were abolished not because they were uncompetitive but because they were abolished by decree, against the common claim that they were rent-seekers that inhibited innovation (684)
      • Focuses on craft/manufacturing, not service guilds (685)
      • Craft guilds bought and sold bulk products for members, stabilized volatile incomes, cheap credit, bargaining unit, political power. Were often at odds with the wealthy merchant class.
      • Minimizes the role of rent-seeking in guilds, emphasizes the avoidance of free-riding on collective benefits. (687) - “Guilds were cost-sharing rather than price-fixing cartels.” (688)
      • Criticizes Adam Smith's critique of the apprenticeship system (688-89), necessary to protect the investment costs from masters in the training process
      • Questions the evidence that guilds stifled innovation (693)
      • The innovations that the guilds promoted were of a skill-enhancing, quality-adding, capital-saving kind, as opposed to later capital-driven innovations (696)
      • Success as a system for investment in human capital (701)
      • The benefits and mutual monitoring of clustering enterprises in craft districts (701)
      • The role of journeyman travel in diffusing innovations (703)
      • guilds helped protect the incentives for inventors (703-704)
  • Greif, Avner. Institutions and the Path to the Modern Economy: Lessons from Medieval Trade. Cambridge University Press, 2006.
  • Guild.“ Wikipedia.
    • A largely urban phenomenon, the controlling forces in many cities; those not governed by guilds were termed “free” cities
    • The word “guild” derives from “the gold deposited in their common funds”
    • “predecessors of the modern patent and trademark system”
    • “The guilds also maintained funds in order to support infirm or elderly members, as well as widows and orphans of guild members, funeral benefits, and a 'tramping' allowance for those needing to travel to find work.”
    • “Journeymen were able to work for other masters, unlike apprentices, and generally paid by the day and were thus day labourers” - their traveling was a means of spreading innovations across Europe
    • “Two of the most outspoken critics of the guild system were Jean-Jacques Rousseau and Adam Smith, and all over Europe a tendency to oppose government control over trades in favour of laissez-faire free market systems was growing rapidly and making its way into the political and legal system. The French Revolution saw guilds as a last remnant of feudalism.” - “Karl Marx in his Communist Manifesto also criticized the guild system for its rigid gradation of social rank and the relation of oppressor/oppressed entailed by this system.”
    • “Guilds were more like cartels than they were like trade unions”
    • “Thomas W. Malone of the Massachusetts Institute of Technology champions a modern variant of the guild structure for modern “e-lancers”, professionals who do mostly telework for multiple employers.”
    • “Groups called guilds exist in online communities such as massively multiplayer online games.”
  • Lucassen, Jan, Tine De Moor, and Jan Luiten van Zanden. ”The Return of the Guilds: Towards a Global History of the Guilds in Pre-industrial Times.“ IRSH 53 (2008).
    • An introduction to a journal issue that looks at guilds in cross-cultural context, including Ottoman, Japanese, Chinese, and Indian examples (6)
    • “The one universal purpose uniting members of any European craft guild was to obtain charters and ordinances from the political authorities endowing its members with exclusive rights”
    • “some political scientists have begun to adduce guilds as historical exemplars of ‘social networks’ which generated beneficial ‘social capital’ for the economy as a whole.”
    • Criticizes the positive scholarship on guilds, especially that of Epstein. “Detailed case studies of what particular guilds actually did, combined with cross-European comparisons on an industry-by-industry basis, indicate strongly that guild rent-seeking and monopolies were a major source of market failure in pre-modern economies.”
  • Ogilvie, Sheilagh. ”The Economics of Guilds.“ Journal of Economic Perspectives 28, no. 4 (Fall 2014).
    • “Guilds in medieval and early modern Europe offered an effective institutional mechanism whereby two powerful groups, guild members and political elites, could collaborate in capturing a larger slice of the economic pie and redistributing it to themselves at the expense of the rest of the economy.” - “In short, guilds enabled their members and political elites to negotiate a way of extracting rents in the manufacturing and commercial sectors, rents that neither party could have extracted on its own.”
    • “Archival records are replete with cases of guild members penalized by the public authorities for producing above their guild quota, using prohibited techniques, or employing women.” (175) Followed by examples.
    • “Across Europe, as we have seen, the same industry could be strongly guilded in some societies, weakly guilded in others, and wholly unguilded in still others. There is no evidence that technological innovation was greater in the strongly guilded ones. On the contrary: in many cases unguilded or weakly guilded industries were at the forefront of inventing, adopting, and diffusing new techniques”
    • “The historical findings on guilds thus provide strong support for the view that institutions arise and survive for centuries not because they are efficient but because they serve the distributional interests of powerful groups.”
  • Ogilvie, Sheilagh. ”The Use and Abuse of Trust: Social Capital and its Deployment by Early Modern Guilds.“ CESifo Working Paper Series No. 1302 (2005).
    • “The very features that enable social networks such as guilds to generate trust also enable them to act collusively against the common weal.” (51)
  • Schneider, Nathan. ”Breaking up the banks might make things worse. Instead, let's take ownership.“ The Guardian. April 14, 2016.

Open value networks

According to this wiki on the subject, the “Open Value Network (OVN) is an approach to commons-based peer production.”

  • Assembly - “Where we band together to build.”
  • Bioecon - “a peer to peer, growth sensitive, decentralized and self regulated economic agreement in which the means of exchange is produced by participants as a result of our activity”
  • Colony - “A platform for open organisations” based on Ethereum
  • CoMakery - “Track and trade sweat equity for products”
    • Enspiral Tales,“ a series of essays on praxis and method
    • Formally a cooperative, legally an LLC in New Zealand - “we hacked the constitution to make it cooperative-like”
    • Also a number of Ventures within the structure
    • Uses Loomio (which is an Enspiral Venture) for decision-making
  • Gratipay, formerly Gittip
  • Greener Acres Value Network - “a resource for entrepreneurs in for-profit and non-profit startups and operational expansions who want to take advantage of agricultural localization”
  • hitRECord - “we call hitRECord an open collaborative production company”
  • Metamaps - “a free and open source web platform for changemakers, innovators, educators and students. It enables individuals and communities to build and visualize their shared knowledge and unlock their collective intelligence.”
  • Sensorica - “committed to the design and deployment of intelligent, open sensors, and sensemaking systems, which allow our communities to optimize interactions with our physical environment and realize our full human potential”

Wiki companies

Various approaches to organizing companies as either closed or open participatory systems.

    • “Agora puts you in the shoes of the CEO”
    • “the first principle of Agora, is to be fully transparent allowing our customers to access all information on the business. If you feel we forgot to share something, just ask.”
  • Swarm operates in this way in some respects

Cooperativism

Finance

Crowdfunding

Bibliography

Open-sourced code

  • Catarse
  • ShareTribe - “Let your users sell or rent goods, spaces or services online”
  • ShareNSave
  • steve [spez]. ”reddit goes open source.“ blog.reddit. June 17, 2008.

Social media

On a growing sensation of exploitation by social media companies:

Particular efforts to build alternatives:

Theories of the firm

  • Freeman, R. Edward and William M. Evan. “Corporate governance: A stakeholder interpretation.” _ Journal of Behavioral Economics_ 19, no. 4 (Winter 1990).
    • This is a constructive critique of Williamson (see below). On Williamson's contribution: “the firm is to be seen as a governance mechanism for a set of contracts between interested parties who make economic gains through their participation in these contractual relationships. Questions as to the proper form of corporate governance are thus translatable into questions of how best to ensure contract compliance.” These parties are stakeholders. “the accordance of voting rights to these stakeholders must be strictly limited to those who share the residual risk of the firm. Williamson believes that this group consists of owners, and under special circumstances, managers, and suppliers.”
    • This paper focuses on the role of “safeguards” in contract theory: “those safeguards that are exogenous to contracts and those endogenous to contracts.” It “sketches an interpretation of the corporation as voluntary multilateral contracts with endogenous safeguards.”
  • Hansmann, Henry. The Ownership of Enterprise. Harvard University Press, 2000.
    • Jensen, Michael C. A Theory of the Firm: Governance, Residual Claims, and Organizational Forms. Harvard University Press, 2000.
      • Mentions cooperatives on the first page, and deals with them (in order to dismiss them) elsewhere for the sake of the public corporation. “Corporations are unique organizations because they make no restrictions on who can own their residual claims, thus making it possible for customers, managers, labor, and suppliers to avoid bearing any of the corporate residual risk. … As a result, the corporation realizes great efficiencies in risk bearing that reduce cost substantially and allow it to meet market demand more efficiently than other organizations” (1-2).
      • “Unfortunately, proponents of stakeholder theory offer no explanation of how conflicts between different stakeholders are to be resolved. This leaves managers with no principle on which to base decisions, making them accountable to no one but their own preferences—ironically, the very opposite result from that stakeholder theorists hope to achieve. Rather, maximizing the total market value of the organization's claims makes the largest contribution to society as a whole (as long as there are no externalities or single-price monopolies)” (2)
      • “Stockholders, as the bearers of residual risk, hold the right to control the corporation and have incentives to maximize corporate value, although they delegate much of this control to a board of directors” (2).
    • Parmar, Bidhan L., R. Edward Freeman, Jeffrey S. Harrison, Andrew C. Wicks, Lauren Purnell & Simone de Colle. “Stakeholder Theory: The State of the Art.” The Academy of Management Annals 4, no. 1 (2010).
      • “In this article, we review the major uses and adaptations of stakeholder theory across a broad array of disciplines such as business ethics, corporate strategy, finance, accounting, management, and marketing. We also evaluate and suggest future directions in which research on stakeholder theory can continue to provide useful insights into the practice of sustainable and ethical value creation.”
      • “The word “stakeholder,” the way we now use it, first appeared in an internal memorandum at the Stanford Research Institute (now SRI International, Inc.), in 1963. The term was meant to challenge the notion that stockholders are the only group to whom management need be responsive. By the late 1970s and early 1980s, scholars and practitioners were working to develop management theories to help explain management problems that involved high levels of uncertainty and change.”
      • “Stakeholder theory suggests that if we adopt as a unit of analysis the relationships 3 between a business and the groups and individuals who can affect or are affected by it, then we have a better chance to deal effectively with these three problems. … Where stakeholder interests conflict, the executive must find a way to rethink problems so that the needs of a broad group of stakeholders are addressed, and to the extent this is done even more value may be created for each.”
      • A framework, not really a “theory”: “We see 'stakeholder theory' as a 'framework,' a set of ideas from which a number of theories can be derived. And we often use 'stakeholder theory' to refer to the rather substantial body of scholarship that depends on the centrality of the stakeholder idea or framework.”
    • Pitelis, Christos N. “(Corporate) Governance, (Shareholder) Value and (Sustainable) Economic Performance.” Corporate Governance: An International Review 12, no 2 (April 2004).
      • “We conclude that (the need for) stakeholder value is derivative from (not opposed to) the concept of sustainable value, that national governance and the nationwide “governance-mix” impact on corporate governance and that national and global economic governance are essential for sustainable global value-wealth creation, and economic performance.”
      • “reassesses some of the

    limitations and critiques of shareholder value-driven corporate governance. This is followed by a discussion of the determinants and agents of value-wealth creation, the role of corporate, national and global governance and the input of the last two in shaping corporate governance and sustainable value-wealth creation.”

  • Williamson, Oliver E.
    • Oliver Williamson.” The Concise Encyclopedia of Economics.
      • “Williamson found that common ownership, in the form of firms, helps to solve some market failures by mitigating transaction costs and uncertainty.”
      • Was part of the Antitrust Division at DOJ in 1960s. His work ends up arguing for the potential for efficiency in mergers, overcoming the potential for reduced cost from competition.
      • “Economics is typically thought of as the science of choice. Williamson avers that it should be equally treated as the science of contracts. This would better describe forms of organization, such as firms. When the transaction, rather than the commodity, is the base unit analyzed, the structure of firms becomes clearer.”
    • The Economics of Organization: The Transaction Cost Approach.” The American Journal of Sociology 87, no. 3 (1981).
    • The Logic of Economic Organization.” Journal of Law, Economics, & Organization 4, no. (Spring 1988).
    • Comparative Economic Organization: The Analysis of Discrete Structural Alternatives.” _ Administrative Science Quarterly_ 36, no. 2 (June 1991).
    • The Theory of the Firm as Governance Structure: From Choice to Contract.” The Journal of Economic Perspectives 16, no. 3 (August 2002).
      • “This paper examines economic organization from a science of contract perspective, with special emphasis on the theory of the firm.”

People and organizations

Related

Bibliography

  • Micklethwait, John and Adrian Wooldridge. The Company: A Short History of a Revolutionary Idea. Modern Library, 2003.
    • A history of the joint-stock firm. No mention of cooperatives or many other contemporary alternatives, though a useful background on how the dominant corporate form came to be, with lots of examples and clever anecdotes.