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Note: The article below is a guest commentary. If you are an OMT scholar interested in making a contribution, please email
By Kamal Munir, University of Cambridge
Financial Crisis? None of Our Business!
Given the theoretical significance of the 2008-09 financial crisis, I am surprised that there has been so little engagement with it in organization theory in general, and on the part of institutional theorists in particular (who are generally very enthusiastic about pointing out the flaws in mainstream economics thinking). With the exception of a notable conference organized by Paul Hirsch and Michael Lounsbury, where the usual suspects spoke (e.g., Paul Hirsch, Mitch Abolafia, Gerry Davis, Ezra Zuckerman, Chuck Perrow and a few others), almost all theoretical discussion surrounding the crisis has been dominated by economists. Newspapers, magazines, and TV were inundated for two years with discussions of the crisis, what led to it, how to understand it better, and so on. Yet, there was hardly an organization theorist out there explaining to the world why economists got it so wrong and how to think about things differently.
There is a lot about the crisis that merits scrutiny. To begin with, we need another discussion about markets. The crisis poses serious questions for the rigid notion of markets that economists and many business school colleagues painted in the 1980s and 1990s. The questions of how far the market should be regulated, to what extent it is the state’s responsibility to impose caps on executive remuneration, whether the state should ever bail out private enterprises, the rights that firms should have in society, or who should pay for healthcare, are all out there now. Armed with their knowledge of shifting logics, institutional theorists are in pole position to contribute to these important debates. Other areas of organization theory have equally important points to add but little was forthcoming.
At a more ‘micro’ level, the crisis throws up incredible instances of the diffusion of dubious concepts, as in the case of the Gaussian Cupola function that was used universally by rating agencies. Or the adoption of highly problematic ones, as in the case of commodity indices where, for example, in 1991 with the launch of the Goldman Sachs Commodity Index, food was essentially turned into a concept. This shift affected the lives of billions around the world, but still could not attract the attention of business schools. As business school professors we sit at the intersection of business, economics and sociology. And yet, we were conspicuous by our absence in debates over the crisis.
To me, all this raises at least three possible questions. First, have we gotten so close to our subjects that we have lost objectivity? Rather than critical scholars scrutinizing the role of markets and businesses, are we on our way to becoming cheerleaders for big businesses? Second, did we not engage because we have become too fragmented? While we have covered extensive ground, have we actually offered to the world a coherent and internally consistent account of how we think the world or at least the economy works? And third, do we simply not like being prescriptive, or predictive for that matter? Does our modesty prevent us from suggesting how things might be done better? However one chooses to answer these questions, one thing is clear: in the face of such colossal changes, we can no longer afford to be mere bystanders.
(The themes in this blog are developed at more length in an essay that will appear in the Journal of Management Inquiry in June 2011)
Tags: financial crisis | guest editorial | institutional theory | Kamal Munir
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