Academic journal article Business Renaissance Quarterly

The Paradox of the Market: A Critical Exploration

Academic journal article Business Renaissance Quarterly

The Paradox of the Market: A Critical Exploration

Article excerpt

Abstract

This article seeks to engage in a critical exploration of the idea of 'the market.' In recent years, the debate on the market (and the basic values, principles and ethics embodied in the market) has reached center stage. This debate is important for business scholars and practitioners alike, because it involves fundamental questions about the desirability, usefulness and effectiveness of the market principle for successful management. The article examines some of the economic and ethical limits to the usefulness of the market principle for businesses and managements, and draws certain critical conclusions and implications.

Introduction

This article focuses upon 'the market' as a phenomenon and as a principle. Markets are generally held to be important institutions for economic exchange. Markets also embody a principle: to wit, the ethic of the rational, instrumental, utility-maximizing, 'purely' economic human being (Homo economicus). In recent years, a number of forces, including those of globalization, have combined to push the debate on the market, and the market principle, center stage (Casella d Rauch, 2001; Cohen a Prusak, 2001; lkerd, 2005; Lawson & Gwartney, 2004). One of the key questions involved in this debate is: 'Should businesses and managements be guided primarily (or, even exclusively) by 'the market' and the principle of the market?' Hence, the market debate is of considerable importance to researchers and practitioners in the field of business and management.

Business and management scholars have frequently employed the concept of the market in past research. For instance, this concept plays important role in such works, among others, as (a) Williamson's (1975) transaction costs, and Chandler's (1977) marketinduced efficiency, explanations of the emergence of the large business firm; (b) population ecology accounts of organizational survival and mortality (Hannan & Freeman, 1977); (c) the industrial organization (10) school's analyses of strategy and competition (Barney, 1986), and so forth. However, for the most part, past management and organizational research has tended to consider the market to be an unproblematic phenomenon, and focused almost exclusively upon its positive aspects, largely ignoring in the process the market's negative features and characteristics. In this context, certain works seeking to investigate the technical and institutional complexity of markets (Powell & DiMaggio, 1991; Scott & Mayer, 1994), and other efforts directed at exploring the ambivalent organizational consequences of the discourse of the market (Clegg, 1990; Muetzelfeldt, 1996) or analyzing the intricate role of markets in the process of value creation by business firms (Moran & Ghoshal, 1999) seem to be exceptions rather than the rule in organizational research. However, in view of the currently raging debate on 'the market', there seems to be an urgent need to examine the deeper implications of the market for business and management.

From a historical perspective, it would appear that markets, bazaars, souks, country fairs, trading posts and the rest-all of these being places where human beings engage in exchanging goods and services at mutually negotiated prices-have existed since time immemorial. However, for most of human history, markets, bounded as they have been in time and space, have played a somewhat limited role in shaping human imagination and destiny, even as they have served as useful mechanisms for facilitating economic exchange. Lately, however, it appears that the market as a principle is being called upon to play a much larger role in our society (Lawson & Gwartney, 2004). For instance, in recent years, the discourse of the market seems to have entered organizational and institutional spheres (e.g., educational institutions, prisons, social service organizations etc.) that were formerly closed to this discourse. Indeed, it would appear that the discourse of the market has begun to be invoked even in such unlikely realms as "dating, family life, marital relations, and child-rearing" (Cox, 1999: 23). …

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