Wary cousins eye the firm

Organisations and Institutions
October 24, 1997

Economics," said James Duesenberry in a famous remark quoted by Michael Rowlinson, "is all about how people make choices; sociology is all about how they don't have any choices to make". The two disciplines have moved a long way since this aphorism was coined, and now is a good time to consider what they have learned from each other. This book examines one of the areas of greatest overlap, the nature of the modern business corporation. It is, its author explains, a sociologist's response to the tradition of Ronald Coase, Alfred Chandler and Oliver Williamson and an attempt to advance debate between organisational economics and organisation theory.

It begins with two chapters on the economics of the firm, followed by one on organisational theory and a fourth which surveys the heated debate between "power" and "efficiency" theories of the origin and growth of the firm. These theories surface again in the remainder of the book, which introduces debates on the division of labour and hierarchy before discussing the historical transformation of work, the ownership and control debate and accounts of the development of the multidivisional firm.

The book is a solid introduction to these various debates. It covers all the ground that could reasonably be expected, and it is comprehensive in its account of the literature, as demonstrated by the 500 or more references. It is clearly organised, and each chapter is carefully constructed. A typical page contains a closely developed account of a particular debate.

Unlike some writers, who discuss Williamson's work with only general reference to it, Rowlinson is scrupulous in giving specific page references. The book will thus prove an invaluable guide to those seeking a concordance of this field. I can see many of Rowlinson's citations being directly recycled by doctoral students.

The book has some fine moments. I had, for example, forgotten quite how much there was in Sidney Pollard's The Genesis of Modern Management (1968). Yet here it is being quoted to make two important points that have caused much subsequent confusion.

First, Pollard argued that subcontracting is not a historically transient form of organisation but that it has survived successfully and that it can be efficient. Second, the working class was created not through the monetary or other attractions of industrial labour but through compulsion and force. The latter point underlines the error of defining capitalism in terms of free wage labour, as well as illustrating the central relevance of a "power" model of the organisation.

Rowlinson also has a wonderful swipe at economists for taking it for granted that people are free-riders and developing policy recommendations on this assumption, thereby contributing to a self-fulfilling prophesy.

Yet the book has limitations. First, consider it is as textbook. It is densely written and at times hard going. Rowlinson wants to comment on every relevant debate, and at points I felt I was being given a detailed account of a particular tree without a picture of its place in the wood. A doctoral student using the book will find much valuable material, but may find some of it hard to grasp while also lacking a sense of where economics and sociology can really learn from each other.

Second, in terms of developing a new perspective, I wanted Rowlinson to indicate forcefully just what are the strengths of economics and sociology and where a research programme drawing on the two may emerge. One point where this might have been developed is the account of the historical evolution of work organisation, where we have a brief account of the industrial revolution in Britain and an even briefer one of the development of the new factory system in the United States between 1880 and 1920. A more elaborated account of such examples might have served to demonstrate how the economic and sociological perspectives can be combined.

In short, this is a reliable introductory guide, from which researchers and advanced students will profit. It is rather too dense for other students to use directly. The book points to the development of a synthesis but does not quite say what it is. At times, I felt that Rowlinson was torn between stressing the distrust between economics and sociology and arguing that a constructive synthesis can be developed.

He is right about both points, and it is to be hoped that the book encourages others to build on the positive basis which is laid here.

Paul Edwards is professor of industrial relations, the Business School, University of Warwick.

Organisations and Institutions: Perspectives in Economics and Sociology

Author - Michael Rowlinson
ISBN - 0 333 57858 9 and 57859 7
Publisher - Macmillan
Price - £45.00 and £14.99
Pages - 265

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