Academic journal article Michigan Sociological Review

General Motors' Road to Recovery

Academic journal article Michigan Sociological Review

General Motors' Road to Recovery

Article excerpt

ABSTRACT

General Motors (GM) came close to disappearing during the recent severe recession. Without the intervention of the Federal Government, this automaker would have been liquidated in bankruptcy proceedings. GM is a very large organization with a long history, a major international presence, and annual revenues that peaked in 2006 in excess of $200 billion. This article examines General Motors to answer two broad questions: What factors led to its near destruction? What changes must the company make in order, not merely to survive, but to reacquire its position as a very successful global enterprise? Theoretical resources for answering such questions come from the study of organizations. This includes the more recent work in the sociology of organizations on private sector entities such as firms and industries as well as the literature on corporate governance. Additional resources are the area of economic sociology and the literature on corporate strategy. Substantive contributions of the paper are in its identification of problem areas for General Motors, with suggestions about needed changes. The problem area that is most emphasized is an organizational structure and an organizational culture that no longer serve the company well, because their actual operation has repeatedly led the firm into trouble. Theoretical outcomes of the paper include the demonstration of the utility, as well as certain limitations, of the sociology of organizations and the literature on corporate governance for this problem area.

INTRODUCTION

In recent decades, the sociology of organizations has given increased attention to the analysis of entities in the private sector: industries and individual firms, as well as industrial fields and networks of firms. Prior to this period, the organizations under study were in many cases public sector units (e. g., Selznick, 1952, [1953] 2012). Whether focusing on the private sector or the public sector, however, this area of sociology has included analysis of how organizations built, maintained, and deployed power (Davis, 2005, pp. 478-502). This concern is also evident in economic sociology (see Dobbin, 2004, chpts. 15 and 16). The study of corporate governance (Blair, 1995, Gourevitch and Shinn, 2005), a domain primarily of professors of business, economics, and law, concentrates on private sector entities. Corporate governance research makes the study of power in corporations, especially at the highest levels of corporations, the centerpiece of its research, though much of the writing is on preventing malfeasance by executives. But in the sociology of organizations there is increasing research on how industries and firms sometimes weaken and even fail, in part through their misuse of power. One interest is analytic: what happens in a firm that leads to its enervation or even demise? A second interest is policy-oriented: what can be done to restore a firm that is nearing collapse? Within colleges of business, professors of strategy have emphasized how corporations need to act in order to flourish, that is, how to act in order to prevent attenuation or failure. See Ghemawat (2010) for a brief but complete and insightful treatment of the strategy field. Nonetheless, the strategy literature, with its emphasis on a thoroughly rational approach to operating business firms, says much less about the dysfunctions in organizations and about the limitations on rationality in firms and industries, especially those (Perrow, 1999) characterized by complex interactions and tight coupling. Because of such drawbacks in the business strategy literature, this paper emphasizes the sociology of organizations and the corporate governance literature in the approach to understanding two matters: (1) causes of the damage a firm can experience due to its structure and culture, and (2) possible remedies for the damage.

The subject company is General Motors, a corporation that was begun, in effect, over one hundred years ago, has a world-wide reach, and whose revenues are currently about 150 billion dollars per year. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.