Business Organizations: Program Specifics

Gail M. Pesyna, Program Director

Program Description

The Foundation's interest in understanding how business organizations function is partly motivated by a desire for scholars ultimately to use that knowledge to develop more complete and realistic theories of the firm than exist today. Consequently, we are looking for research that examines in detail such things as the structure, practices, decision-making processes, governance and outcomes of business organizations, but then also draws out the implications of these findings for the broader questions of why business organizations exist in the forms they do, whose interests they serve, and how they affect the lives of people who invest their financial and human resources in them. We particularly favor empirical studies of real organizations and people, especially studies that employ field work and direct observation.

In economics and corporate law, a sizable and valuable academic literature exists related to the theory of the firm. Much of this work focusses on the well known "principal/agent" problem, which presumes that the main problem that companies have to solve in order to be efficient and productive is how to align the interests of shareholders and managers. While this approach addresses one model of human behavior, characterized by rationality and financial self-interest, there are many other non-financial, human characteristics such as trust, loyalty, the desire for security, for power and for fulfilling work that also motivate people's behavior within these organizations and affect business outcomes. Other social scientists have developed a rich literature on non-economic behavior that can contribute to this work, but very little of it either has been focussed on business organizations or has penetrated into legal and economic scholarship. Likewise management researchers have also developed much knowledge about organizational behavior and theory, human resource management practices, etc., but this work often focusses on very specific or narrow issues inside business organizations. Rarely does the same work delve into the implications of these practices for the broader inquiry into the nature and purpose of these business organizations or their role in society beyond their purely economic function.

An example may be useful in explaining how the work the Foundation seeks to support might differ from what's described above. An alternative starting point for developing a theory of the firm and one that we believe holds much promise is the problem of team production. Unlike the principal/agent problem, the assumption underlying team production is that the purpose of the corporation is to bring people together to make products (or deliver services) that individuals could not do by themselves. We are interested, for example, in funding empirical work that develops and tests these ideas, and helps us better understand whether and how business organizations do this: that is, how do firms keep coalitions of people together in the face of changing human, social and economic conditions, so that the company survives and thrives over the long term? Such research might take many different forms: it could include work by labor or industrial economists on how the distribution of economic surplus (wages, profits, etc.) among a firm's participants affects such things as employee retention and the firm's subsequent financial performance. It could also include studies of a company's culture by anthropologists, or its human resource management practices by researchers in industrial and labor relations. But in each case, we would expect to see the narrower issues of business practice meaningfully tied to the larger issues of business performance, employee well-being, etc. so that the results provide new insights into the team production problem.

Although the primary audience for this research is expected to be other academics, the Foundation is also interested in ways of disseminating or translating these academic research findings into articles or media that business leaders and non-academics can understand. In addition to outputs such as papers published in academic journals and books, we will occasionally consider other activities like academic conferences and workshops for specific purposes.

Business Organizations: References
publications and additional resources