Theory and Society

, Volume 38, Issue 3, pp 217–243 | Cite as

Modeling firms in the global economy

Article

Abstract

I examine the apparent deverticalization of firms in the world economy and their adoption of relational contracting and modularization, necessitated by rapid product change, cheap and rapid transport, and new technologies. I argue that relational contracting is superseded by modularization when possible in the interest of more control over suppliers, and modularization in turn leads to consolidation, when possible, through buying up suppliers or making them captives. The result is increased concentration of economic power in the world economy, and examples of this are presented.

References

  1. Appelbaum, R. P. (2008). Giant Transnational Contractors in East Asia: Emergent Trends in Global Supply Chains. In J. Bair (Ed.), Frontiers of Commodity Chain Research. Stanford: Stanford University Press.Google Scholar
  2. Bair, J. (2008). Frontiers of commodity chain research. Stanford: Stanford University Press.Google Scholar
  3. Baldwin, C. Y. (2007). Modularity, transactions, and the boundary of firms: a synthesis. Harvard Business School, Oct. 23, 2007.Google Scholar
  4. Baldwin, C. Y., & Clark, K. B. (1997). Managing in an age of modularity. Harvard Business Review, 75, September/October.Google Scholar
  5. Baldwin, C. Y., & Clark, K. B. (2000). Design rules: the power of modularity. Cambridge: MIT.Google Scholar
  6. Baldwin, C., & Clark, K. B. (2003). Managing in an age of modularity. In R. Garud, A. Kumaraswany, & R. Langlois (Eds.), Managing in the Modular Age (pp. 149–170). New York: Blackwell.Google Scholar
  7. Davis, G. F., Diekmann, K. A., & Tinsley, C. H. (1994). The decline and fall of the conglomerate firm in the 1980’s: the deinstitutionalization of an organizational form. American Sociological Review, 59, 547–570.CrossRefGoogle Scholar
  8. de Fontenay, C. C., & Gans, J. G. (2004). Can vertical integration by a monopsonist harm conumer welfare? International Journal of Industrial Organizatiion, 22, 82–834 June.Google Scholar
  9. Dobbin, F., & Zorn, D. Z. (2005). The myth of shareholder value. Political Power and Social Theory, 17, 179–198.CrossRefGoogle Scholar
  10. Fixson, S. K. (2007). Modularity and commonality research: past developments and future opportunities. Concurrent Engineering, 15(2), 85–111.CrossRefGoogle Scholar
  11. Gereffi, G. (1996). Global commodity chains: new forms of coordination and control among nations and firms in international industries. Competition and Change, 1, 427–439.Google Scholar
  12. Greenhouse, S. (2008a). The big squeeze: tough times for the american worker. New York: Knopf.Google Scholar
  13. Greenhouse, S. (2008b). Working life (high and low). New York: New York Times April 20.Google Scholar
  14. Heckscher, C., & Adler, P. S. (Eds.). (2007). The Firm as a Collaborative Community. New York: Oxford University Press.Google Scholar
  15. Helper, S., Macduffie, J. P., & Sabel, C. (2000). Pragmatic collaborations: advancing knowledge while controlling opportunism. Industrial and Corporate Change, 9, 443–483.CrossRefGoogle Scholar
  16. Herrigel, G. (2004). Emerging strategies and forms of governance in high-wage component manufacturing regions. Industry and Innovation, 11, 45–79 March/June.CrossRefGoogle Scholar
  17. Herrigel, G., & Wittke, V. (2008). Varieties of vertical disintegration: the global trend towards heterogenous supply relations and the reproduction of differences in US and German manufacturing. In G. Morgan, E. Moen, & R. Whitley (Eds.), Changing Capitalisms: Internationalization, Institutional Change and Systems of Economic Organization. Oxford: Oxford University Press.Google Scholar
  18. Langlois, R., & Robertson, P. (1992). Networks and innovation in a modular system: lessons from the microcomputer and stereo component industries. Research Policy, 21, 297–313.CrossRefGoogle Scholar
  19. Lazonick, W., & O’Sullivan, M. (2000). Maximizing shareholder value: a new ideology of corporate governance. Economy and Society, 29, 13–35.CrossRefGoogle Scholar
  20. Levi, F., & Temin, P. (2007). June 27 Inequality and institutions in 20th Century America. In Industrial Performance Center, MIT Working Papers Series, June 27. Boston: MIT.MIT-IPC-07-002.Google Scholar
  21. Luthje, B. (2004). Global production networks and industrial upgrading in China: the case of electronic contract manufacturing. East-West Center Working Papers, Economic Series, 74, October.Google Scholar
  22. Lynn, B. (2005). End of the line: the rise and coming fall of the global corporation. New York: Doubleday.Google Scholar
  23. MacDuffie, J. P., & Helper, S. (2006). Collaboration in supply chains with and without trust. In C. Heckscher, & P. S. Adler (Eds.), The Firm as a Collaborative Community: Reconstructing Trust in the Knowledge Economy (pp. 417–466). New York: Oxford.Google Scholar
  24. Mizruchi, M. S. (2003). Who Controls Whom Revisited: Managers, Boards of Directors, and Corporate Governance in Large U.S. Firms. American Sociological Association Annual Meeting.Google Scholar
  25. Mizruchi, M. S., & Kimeldorf, H. (2005). The historical context of shareholder value capitalism. Political Power and Social Theory, 17, 213–221.CrossRefGoogle Scholar
  26. Nasaw, D. (2006). Andrew Carnegie. New York: Penguin.Google Scholar
  27. Perrow, C. (1992). Small firm networks. In N. Nohria, & R. G. Eccles (Eds.), Networks and Organizations (pp. 445–470). Boston: Harvard Business School.Google Scholar
  28. Perrow, C. (1999). Normal accidents: living with high risk technologies. Princeton: Princeton University Press.Google Scholar
  29. Perrow, C. (2008). Software failures, security, and cyberattacks. May Manuscript draft.Google Scholar
  30. Prechel, H. (2000). Big business and the state: historical transitions and corporate transformation, 1880s-1990s. Albany: State University of New York Press.Google Scholar
  31. Ramalho, J. R., & Santana, M. A. (2002). VW’s modular system and workers’ organization in Resende, Brazil. International Journal of Urban and Regional Research, 26, 756–766.CrossRefGoogle Scholar
  32. Rubenstein, S. (2006). Collaborative commmunity and employee representation. In C. Heckscher, & P. S. Adler (Eds.), The firm as a collaborative community; reconstructing trust in the knowldege economy (pp. 334–352). New York: Oxford University Press.Google Scholar
  33. Sabel, C. (2007). A real-time revolution in regimes. In C. Heckscher, & P. S. Adler (Eds.), The Firm as a Collaborative Community; Reconstructing Trust in the Knowldege Economy (pp. 106–156). New York: Cambridge.Google Scholar
  34. Schneiberg, M. (2007). What’s on the path? Path dependence, organizational diveersity and the problme of institutional change in the US eonomy, 1900–1950. Socio-Economic Review, 5, 47–80.CrossRefGoogle Scholar
  35. Shapiro, R. J. (2008). Futurecast: how superpowers, populations, and globalizaqtion will change the way you live and work. New York: St Martin’s.Google Scholar
  36. Simon, H. A. (1962). The architecture of complexity. Proceedings of the American Philosophical Society, 106, 467–482 (Dec. 12), http://links.jstor.org/sici?sici=0003-049X%2819621212%29106%3A6%3C467%3ATAOC%3E2.0.CO%3B2-1.Google Scholar
  37. Sturgeon, T. J. (2002). Modular production networks: a new American model of industrial organization. Industrial and Corporate Change, 11, 451–496.CrossRefGoogle Scholar
  38. Sturgeon, T. J. (2003). Exploring the risks of value chain modularity: electronics outsourcing during the industry cycle of 1992-2002. In MIT Working Paper IPC-o3-oo2, May 2003. Cambridge, MA: MIT.Google Scholar
  39. Sturgeon, T. J. (2008). From commodity chains to value chains: interdisciplinary theory building in an age of globalization. In J. Bair (Ed.), Frontiers of commodity chain research. Stanford: Stanford University Press.Google Scholar
  40. Tabb, W. K. (2004). Economic governance in the age of globalization. New York: Columbia University Press.Google Scholar
  41. Takeishi, A., & Fujimoto, T. (2001). Modularization in the auto industry: interlinked multiple hierarchies of product, production, and supplier systems. In Institute of Innovation Research. Tokyo: Hitotsubashi University.WP#01-02, February.Google Scholar
  42. Vind, I., & Fold, N. (2007). Multi-level modularity vs. hierarchy: global production networks in Singapore’s electronics industry. Danish Journal of Geography, 107, 69–83.Google Scholar
  43. Whitford, J., & Zeitlin, J. (2004). Governing decentralized production: Institutions, public policy, and the prospects for inter-firm collaboration in US manufacturing. Industry and Innovation, 11, 11–44 (March/June).CrossRefGoogle Scholar
  44. Williams, K. (2000). From shareholder value to present-day capitalism. Economy and Society, 29, 1–12 (February).Google Scholar

Copyright information

© Springer Science+Business Media B.V. 2009

Authors and Affiliations

  1. 1.New HavenUSA

Personalised recommendations