Organizational Political Economy and Environmental Pollution

Environmental scholars have made important progress explaining the social forces associated with pollution. Although important exceptions exist, insufficient attention has been given to organizations, which is where most environmental pollution is produced. Even less attentions has been given to parent companies, which have ultimate decision‐making authority over their polluting facilities. To file this gap in the literature, this paper develops an organizational political economy perspective to advance our understanding of how organizational and political‐legal arrangements affect parent companies' capacity to externalize their pollution costs to society. Organizational political economy maintains that corporations' organizational complexity, financial characteristics, management operating systems, political embeddedness in subnational states, and the degree of compliance with national and subnational environmental policies affect their capacity to externalize pollution costs. This perspective also shows how the exercise of organizational power to externalize pollution costs subsidizes the managerial and investor classes by the middle and working classes, whose taxes pay for a large share of environmental clean‐up costs, thereby contributing to economic inequality that goes beyond standard inequality measurements.     

Corporate Transformation to the Multilayered Subsidiary Form: Changing Economic Conditions and State Business Policy

Despite the prevalence of corporate change in the last decade, researchers have not examined whether a change occurred in the corporate form. The analysis here presents a historical case study of a large U.S. corporation and quantitative data on the largest 100 U.S. industrial corporations. The case study examines the effects of changing economic conditions and state business policy on the corporate form. This study demonstrates that the corporation changed to a multilayered subsidiary form (MLSF): a corporation with a hierarchy of two or more levels of subsidiary corporations with a parent company at the top of the hierarchy operating as a management company. Whereas rising debt and increasing competition in the 1970s and 1980s undermined corporations' capacity to accumulate capital, changes in state business policy in the mid-1980s provided the political-legal structure for corporations to restructure their assets as subsidiary corporations tax free. Changes in state business policy also provided a means for corporations to merge, acquire, and spin-off subsidiary corporations tax free. Quantitative data on the 100 largest U.S. industrial corporations show that while the multidivisional form decreased, the MLSF increased between 1981 and 1993. Findings support a capital dependence framework. The MLSF constructs liability firewalls among corporate entities and creates internal capital markets, reducing dependence on external capital markets.     

CORPORATE DIVERSIFICATION REVISITED: The Political–Legal Environment,the Multilayer‐Subsidiary Form,and Mergers and Acquisitions

This article examines causes of product‐line diversification in the largest 200 U.S. corporations between 1986 and 1996. The analysis shows that some corporations decreased their level of diversification. However, in contrast with previous studies, other corporations became more diversified. Change in the number of first‐level subsidiaries and the value of mergers and acquisitions influenced corporate diversification. In contrast with the multidivisional form, the organizational characteristics of the multilayer‐subsidiary form give management greater capacity to socialize capital, pursue mergers and acquisitions, and manage a large and diversified corporation. This multilayer‐subsidiary form limits the managerial problem of bounded rationality by organizing product lines and product groups in legally independent subsidiary corporations that are embedded in their respective markets.     

THE EFFECTS OF EXPORTS, PUBLIC DEBT, AND DEVELOPMENT ON INCOME INEQUALITY

Classical economics and most modernization theorists hold that a curvilinear relationship exist between income inequality and development level. In this article that relationship is tested. In addition, it is hypothesized that exports and debt as percentages of gross domestic product increases individual income inequality. Regression analyses with controls for development and time were used to test these relationships (N=28 at two time periods). To test these hypotheses with additional data a panel cross-section design was used with data for countries where it is not available a two separate times (N=37 and N=46). The results do not provide evidence to support a curvilinear relationship between development and income distribution when controls for dependency are included in the regression equation. The results from all six regressions presented support the hypothesis that exports enhance income inequality. Moreover, a covariant analysis indicates that exports effect inequality significantly more in undeveloped countries than in developed countries. It is concluded that for less developed countries pursuing export-oriented production, income does not become more evenly distributed at later stages of development.     

Capital Dependence,Financial Risk,and Change from the Multidivisional to the Multilayered Subsidiary Form

Students of the modem corporation continue to assume that corporations have the same form as they did before the turbulent 1980s when the economy became increasingly globalized and competitive. Our analysis shows that corporations are changing from the multidivisional form to a multilayered subsidiary form. Previous research showed that most corporations were multidivisional in the late 1970s. However, by 1993, 42% of the largest 100 industrial corporations had one or no divisions. The mean number of divisions per corporation declined from 8.8 in 1981 to 4 in 1993, while the mean number of domestic subsidiary corporations increased from 23 in 1981 to 51 in 1993. Parent corporations are creating a hierarchy of subsidiary corporations. Most of these changes occurred after the mid-1980s change in state business policy. The theoretical framework historicizes the corporation by identifying how capital accumulation constraints and changes in the institutional arrangements (e.g., the state) within which corporations are embedded created motives and behaviors that resulted in a change in the corporate form. Findings from logistic regression suggest that corporations that have low profits, have low working capital, have a decline in dividend payments, and manufacture high-risk, liability prone product lines have an increased probability of change to the multilayered subsidiary form. Our results provide support for the capital dependence perspective.     

IRRATIONALITY AND CONTRADICTION IN ORGANIZATIONAL CHANGE: Transformation in the Corporate Form of a U.S. Steel Corporation, 1930–1987

This article analyzes historical and interview data on one of the largest steel corporations in the U.S. to determine (1) the effects of financial controls on long-term incremental organizational changes, (2) the effects of the environment on the organization, (3) the degree to which organizations structure their environment, and (4) the conditions that transform the corporate form. Findings demonstrate that transformations emerge from crisis due to contradictions within the corporate form and between the corporate form and its environment. The sources of these contradictions include the long-term irrationality of formally rational financial controls, oligopolistic structures, and the state's tax policies. These findings question efficiency arguments in general, but more specifically do not support Alfred Chandler's conception of the "logic of managerial enterprise," which suggests that oligopolistic corporations are efficient because their size provides capital to realize economies of scale, and market share competition sharpens management's skills.     

Beyond the undertheorized role of organizational power as political power in theories of the state

Critics express concerns over the theoretical pluralism in theories of the state and state power. This paper explores how organizational theories can provide more focus to theories of the state and state power thereby increasing their explanatory power. After summarizing concerns raised by political sociologists over pluralism in theories of the state and state power, the analysis focuses on existing theories of the state that employ concepts from organizational theory to understand the organizational state and its relationship to society. Particular attention is given to the state as a resource extraction and distribution mechanism, the resource dependent relationships among organizational entities inside and outside the state, and the power relations between states and organizations in their environment. This focus brings greater attention to the how groups, corporations, industries, and class fractions exercise power through organizations to influence the policy formation process.     

Do organizational and political–legal arrangements explain financial wrongdoing?

The 2008 financial crisis was a systemic problem with deep‐rooted structural causes that created opportunities to engage in financial malfeasance, a form of corporate wrongdoing. However, few quantitative studies exist on the effects of organizational and political–legal arrangements on financial malfeasance. In this paper, we examine the effects of organizational and political–legal arrangements that emerged in the 1990s in the FIRE sector (i.e., financial, insurance, and real estate) on financial malfeasance. Our historical contextualization demonstrates how changes in the political–legal arrangements facilitate the emergence of new corporate structures and opportunities for financial malfeasance. Our longitudinal quantitative analysis demonstrates that US FIRE sector corporations with a more complex organizational structure, larger size, lower dividend payment, and higher executive compensation are more prone to commit financial malfeasance.     

Changing economic conditions and their effects on professional autonomy: An analysis of family practitioners and oncologists

This study examines the effects of dimensions of the social structure on professional autonomy. Little support exists for arguments suggesting professional dominance or professional-bureaucratic confrontation. The study supports a theory of social change that places physicians in their historical, political, and economic context. There are four important findings. First, the degree of autonomy varies across physician specializations, and the social structure affects the autonomy of family practitioners and oncologists in different ways. Second, the Federal Drug Administration constrains the responsibility autonomy of both oncologists and family practitioners, and the innovative autonomy of family practitioners. Third, bureaucracy either has no effect or enhances physicians' autonomy. The fourth, and most consistent, finding demonstrates that profit-seeking corporations external to the work setting constrain physicians' autonomy. Findings suggest that researchers should give more attention to shifts in the loci of power and the effects of organizations external to the work setting, especially corporations, on professions.An earlier draft of this paper was presented at the American Sociological Association annual meeting, Miami, Florida, August 1993.