Does your charitable donation go to an actual charity?

by Sri Raghurama Somala, UIC senior

Yellow jacket, informational clipboard, and a heart wrenching speech: the bane of any pedestrian. Outside shopping districts or on busy streets, selfless fundraisers are  practically ubiquitous. Sometimes it restores my faith in humanity that people would sacrifice their own time to fight and raise money for charities. Altruism isn’t dead after all. However, I was always baffled by the breadth of issues that these noble members of society fought for. While it ranges from breast cancer awareness to animal cruelty, but the yellow jacket, clip board and speech never change. Who are these social justice warriors?

The yellow jackets roaming the streets are employees of professional fundraisers.
Non-profit organizations outsource their fundraising to these for-profit fundraisers. There are various ways that professional fundraisers collect fees for their services, such as percentage based fees or fixed rate fees. It is not just the principle of charity at stake. Many professional fundraisers take 70-80% of the donations, leaving the charity with only 20%. One campaign for Planned Parenthood Federation of America raised 2 million dollars but they ended up losing 1.8 million dollars. In some instances, charities not only get just a sliver of the donations accrued, but they end up paying the fundraisers at a loss, like Save the Children, who netted a loss in three of their four campaigns.

So what does this mean? In the end, the money raised doesn’t fully go to the cause advertised. Lawyers like Errol Copilevitz have defended charities against government
regulations, using the first amendment. As a result, charities have no limit on how much they spend on third party fundraiser. Also the professional fundraisers the charities use have no responsibility to reveal how much of the money they pocket, unless the donors ask. The charities Copilevitz represents raised 1.2 billion dollars, and 880 million dollars was used on outside solicitors.

Copilevitz’s 1988 case Riley vs National Federation of the Blind established the precedent for the percentage based fees that exist today. After learning that professional fundraisers kept almost 50 percent of the donations collected, North Carolina amended its Charitable Solicitation Act to create a three stage test for reasonable fees. The Act prohibits charitable organizations from spending “unreasonable” amount of money for solicitations, and requires solicitors to reveal the percent of revenues that they retain.
Up to 20% of revenues were deemed as reasonable fees. Fees of 20-35% percent were
deemed unreasonable, unless the fundraisers had an effect on the interest and awareness of the charity, due to their campaign. Any fees above 35% were considered unreasonable.

Caopilevitz and his clients argued that the Act was unconstitutional. The Supreme Court ruled in their favor, arguing that the definition of “reasonable” was vague. The Court also ruled that there was no reason that the fee should not exceed the limitations set forward by the State. It saw no reason indicating that the charities could not negotiate on their own behalf, without government intervention. It is at the discretion of the charity to evaluate the value of the solicitor’s services. As for revealing the solicitor’s cut to the donors, the Court ruled that revealing these facts would be against the solicitor’s freedom of speech, since they would not say it if they didn’t have to.

This court case has a significant effect on future legislation, regarding professional
fundraising. North Carolina’s goal was to insure that the revenues from fundraising were going to the charities, not lining the pockets of the solicitors. Unfortunately they failed, but the case shined light ones who are responsible. The Court ruled that ultimately, charities were the ones responsible for the high fees. The lack of  transparency of charities makes them as accountable to the issues at hand as the solicitors. Does this mean that transparency is a solution? Forcing charities and solicitors
to reveal how much of the donations are pocketed can dissuade donators from giving money to the organisation.

To solve this issue, one must first elucidate the core of the problem with corporate
fundraising. Why is it wrong to use for-profit solicitors? To me and the Association of
Fundraising Practices, this type of solicitation is unethical. The Association of Fundraising Practices or AFP is vehemently against the idea of percentage based fees, because it deviates from and defiles the nature of fundraising. They believe it to be unethical because it can change the motives behind the goal of raising money. Rather than fighting for a charitable cause, it can  become about personal gain, as is evident from the examples shown above. The AFP has attempted to have Congress ban the percentage based fees employed by many professional fundraisers. On July 22, 2004, the AFP along with the IRS, FTC and other charity governing agencies convened a roundtable to discuss the regulations on charities, including percentage based fees.

Why do charities still use percentage based compensation? Simple answer is that there
is no downside for them. 20% of something is still better than 100% of nothing. For small
charities that don’t have the workforce or the resources, percentage based compensation is the holy grail. They have no down side and can only profit. On the other hand, it is ethically ambiguous for charities to ignore the donor’s intent. A donor does not intend the majority of their money to be pocketed by the fundraiser. The spirit of fundraising and the principle behind donation is violated in these instances. So what can be done?

As established by the Supreme Court case, it is the charities that must make a change.
While percentage based compensation is safe for small charities, there are alternatives. A cap can be established along with percentage based compensation. The cap would be equivalent to the market value of the services. This would require charities to evaluate the costs related to the industry as a whole. The responsibility does not end at the charities but also extends to the donor. The donor has to be aware of what they are donating to. It is always best to directly donate to the charity itself.

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Etsy: The Future of Conscious Corporations

by Warka Jabbar, UIC senior

The first time that I encountered the website Etsy was during the time that I was transitioning from High school to College. I attended Knox College, a liberal arts private college where I felt underrepresented. I yearned for a connection to not only back home in Chicago, but also to back home in Iraq. I missed my language, the way that the letters looked, I missed my culture. Thus, I was on a mission from that point on: I was on the search for artwork or decor that was adorned in arabic calligraphy. The longer I browsed the internet for a piece that had authentic calligraphy on it, the more I realized most of those pieces were not made in the middle east or be a middle eastern person and that was a major deficit for me. I was yearning for not only the material piece of art, but also for a direct connection to the creator of it. Much like any other online shopper searching for decor, I ran into the typical online marketplaces: Amazon, Ebay, Walmart, Bed, Bath & Beyond, Ikea, and Anthropologie. Though a few of those retailers offered the item I was searching for, they all provided it through mass-production. There was no connection to be felt for me, and there was no culture for to be reminded of.

After my failed attempts, I tried adding another word in my search: “handmade”. Etsy was the first search result that came up. I’d never heard of the word “Etsy”. I had never even seen any advertisements about the website, nor had I heard people in my circle of friends talk about it. Thus, I was a bit weary of placing an order when I found the perfect item I was looking for. It was handmade, created in Lebanon, and it was made by an artist who identified as middle eastern: The perfect product. Fast forward to many years later and many orders on Etsy later, I have majored in Sociology where I learned about the current economic system of the United States: Capitalism. In a capitalist economy, capital, profit, and hierarchy are put at the forefront. Capitalism is operating at its best when a small number of individuals are at the top and don’t do much work but get the majority of the profit.

At the same time, the larger population is performing the majority of the work while getting the least amount of profit. Due to this stratification, the individuals at the top, employers, begin to control the labor of the other group, the employees. In doing so, the ways in which the tasks are completed by the employees are controlled by their employers. Soon after, the worker begins to become alienated and distanced from his or her labor and creation. Similarly, the people who are fueling this process, consumers, begin to also be far removed from the worker him or herself and their labor. For example, Jorn Bramann clarifies the dangers of workers becoming distant from their work by referring to Karl Marx. Sociologist and philosopher Karl Marx speaks on this phenomenon, he named it The Theory of Alienation. In this theory, the worker is antagonized by his/her work. The work begins to feel strange to the worker, Marx mentions, including the production process (Bramann 2). The traditional employer-employee relationship flourishes when The Alienation Theory is put into place to nurture capitalism while at the same oppressing the workers. Marketplaces such as Amazon, Walmart, or Ikea, for example, rely on alienation to maintain their spot in the capitalist economy. Specifically, such retailers are using mass production to satisfy the demanding needs of their consumer base.

Etsy, on the other hand, offers a unique market place that operates as a form of resistance against capitalist mass production. As explained by Hollender, Breen, and Senge in their book titled “The Responsibility Revolution: How the Next Generation of Businesses Will Win”, Etsy is “declaring itself as ‘‘your place to buy and sell all things handmade, […] a nonstop craft fair featuring bags, candles, ‘‘geekery,’’ housewares, quilts, toys, woodwork, and a dizzying universe of other one-off objects” (Hollender, Breen, and Senge 137). The authors of the book located a uniqueness in the ways in which Etsy allowed for creators to make profit. In addition, Etsy administers a space where creators are able to have a virtual platform to directly interact with their customers. Similarly, Etsy also offers the customers a unique experience where they are able to undo the impact of The Theory of Alienation.

In addition, Etsy deviates from mainstream business in a plethora of ways. For instance, for-profit, brick and mortar, and mainstream business prioritize business and profit above anything else. On the other hand, Etsy is a certified B-Corporation. According to an article titled “Can a company upend capitalism without really earning a profit?”, Amy Larocca discusses what institutes a B-Corp: B Corp declares itself equally responsible to its community and to the environment as to its shareholders, which means, functionally, that the company’s founders (and its executives) get to establish priorities that the profit motive doesn’t automatically trump” (Larocca 2). Here, Larocca notes that a B-Corp is conscious of its impact on the “community and environment”. In doing so, Etsy prioritizes not only its investors but also its consumers, creators, customers, and community.

Consumers, while shopping on Etsy, are able to connect with the very individuals who created their wedding ring, their household artwork, the clothing on their backs, or even their families’ furniture. Consequently, the alienation felt by the consumers when they are distanced from the creator vanishes. In doing so, Etsy acts as a means of counteraction to capitalist mass production that mainstream marketplaces use. As a means of progressive resistance against capitalism, Etsy brands itself as a utopian conscious corporation.

Works cited

  1. Bramann, Jorn. “Marx on Alienation.” Marx on Alienation. N.p., n.d. Web. 26 Nov. 2016.
  2. Larocca, Amy. “Etsy’s Dream of a Shiny, Post-Capitalist (and Post-Profit) Workplace.” The Cut, 5 Apr. 2016, www.thecut.com/2016/04/etsy-capitalism-c-v-r.html.
  3. Hollender, Jeffrey, and Bill Breen. The Responsibility Revolution : How the Next Generation of Businesses Will Win, John Wiley & Sons, Incorporated, 2010. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/uic/detail.action?docID=485626.

 

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The Aiding of Corporation Personhood by the U.S. Supreme Court

by Jacqueline Medina, UIC senior

How have corporations managed to become people? Part of the reason corporations have acquired legal rights as people is due to various Supreme Court case decisions. Between 2000 through 2017, there have been two important cases involving corporations and their rights as persons. The two cases rely on prior decisions of Supreme Court cases that have been used to open the gate further for corporations to be, legally, people and citizens of the United States.

The first Supreme Court case was Citizens United v. Federal Election Commission of 2010 in which Citizens United pursued a sanction against the Federal Election Commission’s application of the Bipartisan Campaign Reform Act (BCRA) to their production film of Hillary: The Movie. Citizens United believed the Federal Election Commission because Section 203 of the BCRA “…prevents corporations or labor unions from funding such communication from their general treasuries” (Citizens United, 2018). Since Hillary: The Movie was an opinionated film towards the beneficiary characteristics of (at the time) Senator Hillary Rodham Clinton and a possible presidency, the Federal Election Commission was argued to be violating Section 203 and Section 201.

However, all arguments were denied by the United States District Court because “…political speech of corporations or other associations should be treated differently under the First Amendment simply because such associations are not natural persons” (Henning, 2017). However, in a separate case regarding the Religious Freedom Restoration Act, corporations were settled to be “persons.” In the same manner in which corporations were not considered persons in the Citizens United v. Federal Election Commission but were considered persons with the Religious Freedom Act, corporations are also protected by the Fifth Amendment against self-incrimination. Corporations are found to be “persons” by the court system of the United States when there could be the least negative impacts to its institution financially and legally.

In a separate case, Burwell v. Hobby Lobby Stores of 2014, corporations (for-profit institutions) were given First Amendment rights as well as privilege with the Religious Freedom Restoration Act of 1993 (RFRA). The Hobby Lobby Stores Inc. is owned by the Green family and is organized around the Christian faith and accordingly to Biblical beliefs. The Green family then sued Kathleen Sebelius, the Secretary of the Department of Health and Human Services, against the Patient Protection and Affordable Care Act (ACA) because of their opposition that employers must provide FDA approved contraceptive methods to its employees. After denials and reversals, the Court of Appeals held the decision of corporations as “persons” in which Hobby Lobby Stores Inc. had the rights of the RFRA under the Free Exercise Clause of the First Amendment (Burwell, 2018).

If corporations are fighting the United States Supreme Court to be considered “persons” in some occasions, corporations should be either considered persons in all occasions or not considered persons legally and not only when convenient to its monetary profit. Furthermore, because of the past established rights of corporations with the established rights of the First Amendment, Fifth Amendment, etc., recent court cases have become easier for corporations to gain personhood rights because of the supportive rights and already positioned constitutional amendments of certain citizen rights towards an institution that’s primary purpose is to gain in profit.

Anon. n.d. “Citizens United v. Federal Election Commission.” Oyez. Retrieved May 11, 2018 (https://www.oyez.org/cases/2008/08-205).

Anon. n.d. “Burwell v. Hobby Lobby Stores.” Oyez. Retrieved May 11, 2018 (https://www.oyez.org/cases/2013/13-354)

Henning, Peter J. 2017. “Treating Corporations as People.” The New York Times. Retrieved May 11, 2018 (https://www.nytimes.com/2015/05/27/business/dealbook/treating-corporations-as-people.html).

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Corporate Power and Social Movements: An Introduction to a Series of Student Blog Posts

by Paul Brian McInerney, Associate Professor and Director of the Center on Organizational Dynamics

For-profit corporations are a defining feature of our time. They are responsible for many good things in contemporary society—they employ people and provide goods and services that make our lives better and more convenient. They are also responsible for environmental degradation and create rampant inequality. However, because corporations are ubiquitous, they escape the scrutiny we give to other social institutions.

This semester, I had the good fortune to teach a course on corporations and social movements (feel free to email me if you would like to see the syllabus). I taught the course mostly as a social problems course. Few students entered the course with intimate knowledge of corporations, despite much experience in and with them. We spent the semester learning how the history and structure of the corporation contributed to the pro- and anti-social aspects of the institution we know today. By the end of the semester, we were discussing the various social movements that have sprung up over time to challenge corporate misdeeds, growing power in society, and increased influence over the polity. We also began to tackle the problem of corporate social responsibility and what happens when corporations try to be more pro-social.

Discussions in the course were intense and sometimes meandering, though I admit that the students were responsible for the former and I for the latter. As we began to talk about a particular topic on the syllabus, for example, the financialization of the contemporary corporation, I found the discussion moving from how corporations are financed through stocks and bonds to the difference between a public and private corporation to how financial markets work in theory and in practice. These were advanced students—all seniors and juniors—and somehow most made it that far into their education without anyone explaining how the economy worked in real terms. Despite the many turns and forays into esoteric topics (we spent the better part of one class discussing the history of corporate taxation), we all learned much and the students were genuinely and sincerely enthusiastic about the material.

As part of their grade, students wrote blog posts about a topic that interested them as it related to the course. Over the next few weeks, the Center on Organizational Dynamics will be posting their work. The topics vary widely, from the nonprofit status of the NFL to the opioid crisis to the environmental impact of fast fashion to how a growing movement of Black Vegans is challenging corporate food production. The topics reflect many of the problems created by corporations today. Some offer solutions. Others engage in critical analyses. All reflect the concerns of college students who are about to graduate and embark on their careers. As their teacher, I am incredibly proud of the breadth and thoughtfulness of the work they did this semester, inside the classroom and out. I learned a lot from our conversations and had a lot of fun at the same time.

Enjoy the series of posts. Feel free to comment.

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Finding “meso-level” community at SASE 2017

by Carla Ilten

As someone studying the role of federation strategies in shaping the conditions for alternative organizations, it doesn’t happen all the time that you find yourself in one room with your “scientific community.” The Society for the Advancement of Socio-Economics’ 2017 meeting in Lyon provided this invaluable experience. Joyce Rothschild and Katherine Chen organized a miniconference that was so coherent that everybody indeed stayed together for the entire two days. I came to make the case for studying the meso-level of alternative form strategy, and found the meso-level in most of the young scholars’ work in some way or other!

The case for attention to the meso-level: cooperation among cooperatives

Much of the literature on cooperatives as alternative organizations falls into one of the following two camps: one perspective focuses on the internal processes of cooperative organizations and how these processes and structures help alternative organizations thrive or bring about their demise. A second perspective zooms out to study populations of cooperatives and how they fare against the backdrop of varying legal, economic, and social environments. Most case studies of individual alternative organizations and their fate are of little help when it comes to understanding field-level trends and responses to environmental pressures. Case studies of cooperatives have been crucial to showing how different organizational requirements are negotiated within organizations (Rothschild-Whitt 1979), but they do not shed light on the strategies that alternative organizations such as cooperatives have pursued in different sectors and across time to leverage field power or shield organizations from competition. By way of “cooperation among cooperatives,” cooperative principle 6, these organizations have counter-balanced internal limitations such as low access to capital, limited economies of scale, or scarcity of expertise.

A few studies in the population ecology tradition have traced field-level dynamics among alternative organizations against the backdrop of changing environments, for example changes in movement support (Schneiberg 2013). These data provide us with an overview over large-scale shifts, but cannot deliver interpretive analysis of the pathways of perception and action that run between environments and organizations – the qualitative interplay between levels.

The history of the cooperative organizational form is full of field-level attempts at navigating environments and internal limitations by building alliances. Umbrella organizations such as federations have emerged (and expired) regularly in response to a perceived need for scale as a means of growth or as a buffer against a hostile environment. Yet, federation has also proven to be an incredibly difficult organizational process in its own right – tensions between autonomy and cooperation, decentralism and centralization, have repeatedly stunted efforts to build field-level institutions (Knapp 1969; Parker 1956). These challenges have been remarkably contingent, all the while exhibiting certain similarities along political lines.

Kramper shows how federations have been a key defense in response to European retail market modernization in the second half of the 20th century, yet, when concentration or integration overwhelmed the member organizations’ autonomy, devolution of the form or failure ensued. Timing and degree of centralization of power were factors in the success or demise of the adaptive strategy. At the end of the day, however, it was often the loss of the cooperative spirit and/or niche that led to field-wide failures – importantly, this threat is not independent from field strategy (Kramper 2012). Ekberg shows how the federated model can strike that sweet spot between centralization and un-organization that has helped Western European consumer cooperatives survive the retail revolution (Ekberg 2012).

In order to examine the conditions for alternative organizations, we need to move beyond the focus on isolated (failing) organizations and population surveys. We need to complement these perspectives with studies that aim at the meso-level, or field level, of sets of alternative organizations and meta actors such as associations, consultants, and networks, to understand how cooperatives navigate political economic and social structural environments and how form shifts may occur. Some U.S. sectors that have featured a visible cooperative population, such as the natural foods market, are undergoing massive change (Haedicke 2016). In other sectors, the cooperative repertoire is currently being rediscovered, for example in the notion of “platform cooperativism.” It is the emerging field-level response that will determine many organizations’ long term fate, as well as the potential of the cooperative form to pose an alternative to the dominant political economy.

In the works

Of course, I’m trying to answer my call for studying the role of federation strategies in shaping the conditions for alternative organizations with my dissertation project. I compare two cases of meso-level cooperation among alternative organizations to understand the dynamics unfolding between macro-conditions, meso-level strategy, and organization-level development.

Fortunately, the fascinating problem of scale kept surfacing in the SASE miniconference discussion. Right on target, Jason Spicer from MIT presented “Why Cooperatives Struggle to Achieve Scale in the US, but Flourish Elsewhere: A Comparative View of How Public Policy Shapes Cooperative Enterprise.” His finding that U.S. policies are comparatively restrictive should be of utmost importance to cooperative strategy in the U.S. Other contributors focused on the multi/meso-level quality of constructs such as cooperative identity (Dylan Nelson, UMich and colleagues), the role of hierarchy and structure in facilitating democratic decision-making (Stephane Jaumier, Katie Sobering), and innovation in the decision-making processes of collectivist organizations (Joyce Rothschild). My own research suggests that besides governance and identity patterns – which scholars care about a lot – sometimes mundane operational concerns about scale can drive meso-level strategy. How this bodes for the miniconference’s motto, “Seeking a More Just and Egalitarian Economy: Realizing the Future via Co-operatives, Communes, and Other Collectives,” is one crucial question going forward for this scientific community, and for alternative organizations.

References

Ekberg, Espen. 2012. “Confronting Three Revolutions: Western European Consumer Co-Operatives and Their Divergent Development, 1950–2008.” Business History 54(6):1004–21.

Haedicke, Michael A. 2016. Organizing Organic: Conflict and Compromise in an Emerging Market. Stanford University Press.

Knapp, Joseph G. 1969. The Rise of American Cooperative Enterprise: 1620-1920. Danville, Ill.: Interstate Printers & Publishers.

Kramper, Peter. 2012. “Why Cooperatives Fail: Case Studies from Europe, Japan, and the United States, 1950-2010.” in The cooperative business movement, 1950 to the present, edited by P. Battilani and H. G. Schröter. Cambridge; New York: Cambridge University Press.

Rothschild-Whitt, Joyce. 1979. “The Collectivist Organization: An Alternative to Rational-Bureaucratic Models.” Amersocirevi American Sociological Review 44(4):509–27.

Schneiberg, Marc. 2013. “Movements as Political Conditions for Diffusion: Anti-Corporate Movements and the Spread of Cooperative Forms in American Capitalism.” Organization Studies 34(5–6):653–82.

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Collaboration and Competition among Craft Brewers

by Paul-Brian McInerney

Half Acre Brewing is a craft brewer in Chicago. Among the many beers they produce are several dozen that have been “Brewed with Friends.” Describing this selection of beers, Half Acre explains on their website, “Many of these will probably never be brewed again, some of them might be.” In one such instance, Half Acre Brewing collaborated with Tired Hands Brewing, from Ardmore, Pennsylvania to produce “American Youth,” an American Pale Ale style beer that combined the breweries’ signature beers. Consumers rated the beer 88 out of 100 on the popular beer rating site RateBeer. Even with such consumer approval, once “American Youth” sold out, it was never brewed again. Half Acre Brewing is not unique in their collaborative brewing practices. Many craft brewers collaborate doing single production runs to market co-branded beers. Once these co-branded products sell out, they are rarely brewed again. On its face, this makes little sense. The costs of collaborating are relatively high, once recipe creation, ingredient procurement, and equipment usage are taken into account. Even when craft brewers collaborate more than once with the same partner, they produce an entirely new, single-run product. Why do craft brewers collaborate for a single production run to make co-branded beer? How do they choose craft brewers with whom to collaborate? How do craft brewers differ in their collaboration strategies? What role does consumer rating play in how craft brewers choose collaborators? How do the net effects of collaboration structure the brewing industry over time?

I currently have a project underway that seeks to understand these dynamics. In early fieldwork, brewers tell me they collaborate as a way of solidifying friendships, experimenting with ingredients and styles, and just having fun. A handful of field observations suggest that working in the craft brewing industry is indeed fun. However, it is also hard work. And while the craft brewing sector is growing, it is also becoming crowded. The fun of collaboration may soon yield to the realities of competition. So what does this mean for collaborations among craft brewing? Will brewers collaborate more frequently as a way of gaining reputation or accessing new markets? Will they be more selective in their brewing strategies? I don’t yet have enough data to answer these questions, or those I posed above. As I collect and analyze data, I’ll post preliminary analysis and interpretations. Check back for those.

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Notions of Authenticity: Technology Systems as Representations of Authentic Organizational Form

by Jerome M. Hendricks

My current research explores the actions of intermediary firms in periods of rapid technological change. By asking how new developments in listening to and owning music have changed the music retail industry, I offer the independent record store as a case of such an intermediary. Through a longitudinal multimethod content analysis of media and industry documents, I’ve looked at the evolution of music retail from a variety of angles. Early consideration of the curious position of independent record stores led me to store representatives and their understandings of change and how they see their role in an industry trending toward digital technologies. Recently, I’ve been thinking more about the extent to which structural adaptation has occurred due to the same market changes. In the absence of detailed procedural histories of music retailers across the country, I identified all types of music retailers in my data set and coded the various technologies they utilize. My conceptualization of technologies draws on the social construction of technology (SCOT), actor-network theory, and performativity literatures where technologies are practical strategies, objects, practices, and knowledge that legitimate markets and maintain structures over time (Latour 1988, Callon and Muniesa 2005, Callon 2006, Mackenzie 2008, Bikjer 2010). As an initial step, I look to the extent to which technology systems might represent organizational forms.

However, articles from my data set like this one made me think more about the nature of contemporary organizational form. As one store closes and another opens, their assessment of what constitutes a good record store is noticeably different. And while adaptation seems inevitable due to the evolving composition of the market, these small, specialist firms must resonate with target audiences in order to maintain value and legitimacy. Indeed, recent work on organizational form emphasizes the role of these target audiences in a firm’s successful affiliation with a given form (Hsu and Hannan 2005). Projecting an authentic identity serves as a central component in the positive exchange between firms and audiences. Carroll and Wheaton (2009) identify three components of an organization’s identity that facilitate the projection of an authentic form: “(1) an identity claim must be visibly projected; (2) the purported identity must be credible; and (3) the identity must be perceived as reflecting the meaning of authenticity in question” (273). This suggests that (1) identifying dominant technologies (2) utilized by similar store types (3) in specific contexts can offer insight not only into organizational forms but also corresponding notions of authenticity legitimized in the field.

To take on this issue of authentic form, I used my coded data consisting of firms, products, and practices to build edgelists for the purpose of network analysis. I felt the visual representation that network data offers can provide a clear identification of similar firms and their associated technologies; a representation of form. Additionally, the industry and media sources that constitute the network data correspond strongly to salient identities in the minds of members and external audiences. While not every music retailer is represented throughout the sample, through the discourse of technologies over time, I argue the output uncovers legitimate membership standards and expectations by which all stores are evaluated. Finally, network analysis allows for the identification of statistically relevant communities, or systems of densely connected nodes, through modularity measures. The algorithm utilized in Gephi, the open source software I used, is called the Louvian method where partitions of connected nodes are created based on the maximum modularity measure achievable. The resulting example below (color coded for your convenience) shows six technology systems that consist of at least 5% of the total ties in the network. I use my knowledge of the music retail market to interpret these systems of retailers and associated technologies to identify dominant forms as well as expression of authenticity.

Figure 1. Time Period 1: 1994-1996

Figure 1. Time Period 1: 1994-1996

Major System Technologies

System A

System B

System C

System D

System E

System F

T18. Deep-catalog/
genre Specialization

T26. Customer Service

T35. Location

T08. Electronics/
Accessories

T01. CD sales

T04. Used Product

T02. Vinyl sales

T11. Exclusive Product

T10. Memorabilia

T36. Fanzines/
publications

T29. Large catalog/inventory

T16. Listening stations

T31. Ambiance

T17. Expansion/
Merger/Acquisition

T14. Live music

T21. Sales/
Pricing

T22. Popular titles

T05. Other media

T06. Lifestyle Items

I generally categorize the top-right quadrant, consisting of systems D and E, as the mass retail sector due to the focus on size, growth, and price. The major technologies of system E are sale pricing (T21) with a focus on popular artist releases (T22). These mass retailers, like Best Buy, Circuit City, Target, or WalMart used CDs as a loss leader product where low prices would lure customers in with the hope that they might also buy a television, a blender, and so on. The music superstores, like Tower Records, Virgin Megastore, or HMV, found primarily in system D, could not consistently compete with the low prices mass retailers could offer on popular releases. In response these large, music-only retailers structured their operations around quantity. The major technologies of system D include maintaining a large inventory (T29), providing customers with listening stations (T16) in order to sample a variety of titles, and expanding operations across the country (T17). The emphasis on ambiance (T31) found in this system was also connected to the sheer mass of many of these superstores; highly organized, technologically advanced, warehouses of music product.

System A is the largest system identified in Figure 1, containing almost 24% of the total connections, and overlaps with almost every other system. For these reasons, I define system A as the mainstream independents or small chains that increased as a result of the market growth during this period. As indicated in the major technologies of system A, many of these stores specialized in specific genres (T18) and prided themselves on customer service through expert knowledge (T26). Like the mass retail quadrant, the geographical location (T35) that might ensure regular foot traffic was of great importance to these firms. And, like many types of music retailer, these mainstream stores were diversifying into electronics and accessories (T08). Systems B and F also highlight the mainstream store strategy of diversification at this time. Some stores began to carry a wider variety of media (T05) as well as lifestyle items (T06) like music-centered clothing as we see in system F. Many small chains began selling used product (T04) on a large scale as is evident in system B. While the modularity measure separates these technologies into three distinct systems, they are best understood as three mainstream responses to the price wars initiated by mass retailers.

The remaining system C also overlaps heavily with the mainstream stores but offers a distinct form that separates it from the others. I categorize system C as the tastemakers because of its focus on rare and collectible product as well as the presence of Do-It-Yourself technologies. The major technologies in system C are vinyl records (T02), exclusive product (T11), and memorabilia (T36) which suggest a strong connection to collector markets outside of the CD dominance of the 1990s. Moreover, many of these stores carried local publications or fanzines (T36) and some ran their own independent record labels (T28) showing a distinct connection to their regional music scene. The juxtaposition of technologies in systems C with those in the mainstream systems are very similar to the discussion of differences between coalitions found at this time. Drawing on the typology of organizational authenticity explicated by Carroll and Wheaton (2009), the mainstream systems in this period largely exemplify a brand of “type” authenticity by conforming to audience expectations of a specialized music store. The expertise and selection they provide in highly visible retail spaces legitimates these retailers as an original type of music retailer and an alternative to mass retail forms. The rare and collectible product and Do-It-Yourself practices of the tastemakers tend more toward a brand of “moral” authenticity. Here, the consumer is asked to not only evaluate the product sold by the firm but also the personal objectives of the store owner, managers, or employees. The connection these retailers have with collector markets and the vinyl record medium exemplify an emphasis on cultural values contrary to the price wars at the time. Appealing to an audience’s love of a music scene or a collectible history draws lines between those that sell music as a retail item and those that have given their lives to music.

As I’m writing this, I have drafted an extended version of this analysis that tracks both form and notions of authenticity over four distinct time periods in the music retail history. I argue that tracking changes in these technology systems (mindful of the context in which the change happens) can tell us a great deal about how these retailers have adapted and survived despite changes in the field that disadvantage them. Moreover, I argue that structural changes in what has commonly been identified as an independent record store suggests that our understanding of authenticity is not fixed and, instead, adapts to the context in which it is interpreted. I am curious what others might think of my use of network analysis and the application of “technology systems” to the concept of organizational form. I’m hoping to use this post to improve upon my explanation of the networks and the connections I aim to make to organizations literatures. Questions, comments, or concerns are welcomed!!!!

Works Cited

Bijker, Wiebe E. 2010. “How is Technology Made? – That is the question!” Cambridge Journal of Economics. 34:63-76.

Callon, Michael and F. Muniesa. 2005. “Peripheral Vision: Economic Markets as Calculative Collective Devices.” Organization Studies 26(8):1229-1250.

Callon, Michel. 2006. “What does it mean to say that economics is performative?” Working paper, Ecole des Mines, Paris.

Carroll, Glenn R., and Dennis Ray Wheaton. 2009. “The organizational construction of authenticity: An examination of contemporary food and dining in the U.S.” Research in Organizational Behavior. 29(0):255–282.

Hsu, Greta and Michael T. Hannan. 2005. “Identities, genres, and organizational forms.”  Organization Science. 16, 5: 474.

Latour, Bruno. 1988. Science in Action: How to Follow Scientists and Engineers Through Society. Harvard University Press.

Mackenzie, Donald. 2008. An Engine, Not a Camera: How Financial Models Shape Markets. The MIT Press.

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