Neil Fligstein Quotes

The notion that advertising was a sort of corporate luxury, to be indulged in where there are no demands left over, now seems archaic and quaint. Businessmen are increasingly inclined to view the appropriation as a true capital investment – as much so as a new plant.

In this book Neil Fligstein takes issue with prevailing theories of the corporation and proposes a radically new view that has important implications for American competitiveness.

They are the basic mechanism of control of the external environment available to managers and entrepreneurs. Organizational fields are not generally benign and cooperative arrangements held in place by a sense of duty or honor the rhetoric and ideology of their proponents might lead one to think so. Instead, they are set up to benefit their most powerful members.

The purpose of the large horizontal (same-product) mergers was to reduce the number of plants and, hence, control production enough to insure a reasonable rate of profit. Mergers would allow a newly created large firm to produce full-time in its most efficient plants, and thereby maintain prices, production, and profits.

The organizational fields of the largest firms continued to be unstable. There were no accepted rules to define how firms could avoid destructive competition, so they attempted to control their markets through various aggressive trade tactics, continued mergers, cartels, getting the federal government to guarantee profitability.

Younger and smaller firms would be more likely to adopt the MDF (Multidivisional Form) than older and larger ones.

I claim that the central goal of managers in the past hundred years has been to make sure their firms survived. To promote survival they proposed various forms of control, both inside and outside the firm. Internally, control was oriented to ensuring that organizational resources were deployed so that top management could be confident that their directives were being executed. Externally, this control was oriented toward establishing stable relations between competitors to promote the survival of their organizations.

Conceptions of control refer to understandings that structure perceptions of how a market works and that allow actors to interpret their world and act to control situations. A conception of control is simultaneously a worldview that allows actors to interpret the actions of others and a reflection of how the market is structured. Conceptions of control reflect market-specific agreements between actors in firms on principles of internal organization (i.e., forms of hierarchy), tactics for competition or cooperation, and the hierarchy or status ordering of firms in a given market. The state must ratify, help to create, or at the very least, not oppose a conception of control.

All large organizations have an internal power struggle over the goals and resources of the organization.... In the largest firms, there are two bases of control : formal ownership and authority. Those who own the firm control by virtue of ownership. Authority relations embedded in the organizational structure legitimate how managers can control organizations.

Initial formation of policy domains and the rules they create affecting property rights, governance structures, and rules of exchange shape the development of new markets because they produce cultural templates that determine how to organize in a given society.

The farther afield mergers were, the less likely antitrust authorities were to intervene. Growth through mergers required that finance-oriented managers choose their targets carefully. They sought profitable and growing industries where their capital would earn higher rates of return and avoided mergers where the threat of antitrust prosecution might exist.

The leaders of the large firms dominated by the manufacturing conception saw the key problem as low prices. This meant that they were intent on controlling prices by cutting production. But once prices were stabilized, they were cautious about increasing production for fear that prices would again collapse. Since their competitors had roughly equal production capacities and costs, all would lose by too rapid an increase in production.

The forms of social organization produced the market, not the reverse... Instead of markets calling forth efficient forms of social organization, political and social interactions produced the structuring of sociologically effective markets.

We know that most of the wealth and income of the country is owned by a few large corporations, that these corporations in turn are owned by an infinitesimally small number of people and that the profits from the operation of these corporations go to a very small group with the result that the new opportunities for new enterprise, whether corporate or individual, are constantly being restricted. The committee therefore recommends the vigorous and vigilant enforcement of the antitrust laws, confident that an awakening business conscience will realize the necessity of complete cooperation in the elimination of monopolistic practice.

The basic insight of the finance conception was that such a firm could be more tightly controlled by strict accounting. This progression does not imply, however, that one conception of control caused the emergence of its successor. New conceptions of control evolved out of key interactions among firms and between firms and the state.