PhD reqruitment: Multi Stakeholders Organizations and Organizing
Nowadays challenges facing organizations are complex due to the involvement of many parties and the number of issues that have to be addressed. The necessity, but also complexity of the involvement of multiple stakeholders becomes even clearer when organizing solutions to highly significant societal problems. Core characteristic of highly significant societal problems are that they are complex with unknown solutions and intertwined technical and social aspects and that they require sustained effort from a multitude of diverse stakeholders (Eisenhardt, Graebner, & Sonenshein, 2016; George, Howard-Grenville, Joshi, & Tihanyi, 2016). Product development and supply chain sustainability may be examples for daily multi-stakeholder challenges faced by organizations, crises resolution and the management of public safety may be examples for significant societal problems.
A variety of stakeholders is involved, such as buyers, sellers, employees, investors, interest groups, the government, citizens, and so on. They are involved and needed in order to establish an attractive outcome. However, the interactions between these parties are complicated due to conflicting interests, different beliefs, multiple coherent solutions, and different cognitive frames. Organizing multi stakeholders entails therefore making many choices.
The overarching theme regarding multi stakeholders organizations is to study how these stakeholders overcome ownership, incentive, coordination and cognition problems in order to establish attractive outcomes. These choices are delineated in four projects:
- Cooperatives / Franchises: Two Worlds in One Organization;
- Governance of Bounded Cognition;
- Governance in Crisis Situations;
- Governance of Safety and Security.
Organizations, multiple stakeholders, ownership and decision rights, grand societal challenge.
Gibbons and Roberts (2013) start their handbook with ‘… organizations are a means of achieving the benefits of collective action in situations where the price system fails, including not only business firms but also consortia, unions, legislatures, agencies, schools, churches, social movements, and beyond.’ All these organizations have to address issues regarding ownership, decision making, and incentives. Examples of organizations owned by a specific stakeholder are investor owner firms, family owned firms, buyer / seller cooperatives, public organizations, and foundations. Which stakeholder is best suited to be the owner of the organization? The owner(s) may have formal control, but actual decision making may be delegated to another stakeholder. This raises issues of decision control (ratification, monitoring), decision management (initiation, implementation), task design, cooperation, conflict resolution, access, and enforcement mechanisms. Finally, the rights to receive the benefits, and obligations to pay the costs, have to be specified, thereby creating the incentive and coordination system faced by decision makers.
More specifically, the choices that need to be made address questions of
- Organisational identity, with a focus on finding a balance between the disparate needs and demands of internal and external stakeholders.
- Organisational communication, with a focus on understanding stakeholder diversity for inclusive value creation with various stakeholder groups.
- Organisational change, with a focus on change of organisations and understanding the influence of stakeholder needs and perceptions on the sources of and reactions to change.
These issues are addressed in four projects:
Cooperatives / Franchises: Two Worlds in One Organization
The global financial crisis, and various corporate scandals preceding it, have raised the question about alternative organizational forms. Cooperatives and franchises provide such an alternative. Worldwide, cooperatives provide 100 million jobs, twenty percent more than multinational enterprises. Similarly, the annual turnover of franchises worldwide is more than ϵ1.5 trillion. These organizations are usually not publicly-listed, provide benefits to members, have democratic procedures for goal setting and decision-making, and have special rules for dealing with capitalization and profit.
Cooperatives and franchises consist of a horizontal arrangement between many independent entrepreneurs in a society of members and a vertical relationship between the society of members and an enterprise at an adjacent stage of production. The main organizational design challenge is that the society of members as well as the joint enterprise have to be addressed within one organizational form. Two features of the society of members are important. First, the composition of the members is heterogeneous in various ways. Second, the society of members requires a method for collective decision-making, e.g. a democratic decision-making procedure. These two features require value creating responses regarding many aspects of the organization of cooperatives and franchises, such as efficient collective decision making procedures, contracting, member commitment and involvement, social capital, board structure, organizational inertia, and organizational principles. Even the more basic question regarding the viability and efficiency of these organizational forms has to be addressed.
Governance of Bounded Cognition
Decision making in organizations is the result of both the limited cognitive capacity of humans and the structural influences of governance structure on an individual’s attention (Simon 1947). The primary purpose of this research theme is to examine how governance structures differ in their organization of the cognition of bounded rational agents in a supply chain, and to identify the circumstances when a governance structure is efficient. The main questions are therefore
- How do different governance structures differ in their allocation of attention?
- What determines the efficient governance structure to channel people’s judgmental errors?
The implications are analyzed regarding a variety of topics, such as governance structure and project selection, communication in cooperatives versus investor owned firms, the extent and direction contractual incompleteness, vested interests and the governance of supply chains, and so on.
Each project requires a theoretical approach on the micro and on the macro level. On the macro level the logic of incentives and coordination among different stakeholders needs to be addressed. On the micro level it is important to understand the drivers of cooperation. Professional and organisational identities can help to guide coordination in complex crisis situations, by clarifying what can be expected from a cooperation partner (i.e. focus on law enforcement, rescue, food, health, children) and by guiding the behaviour of the professional individuals in the field. For other actors such a professional and organisational identity is missing, e.g. for locals or spontaneous volunteers. Here their personal or social identity provides the source for their cooperation behaviour.
Governance in crisis situations
Crisis are characterized by ambiguity of cause, effect, and means of resolution. In such situation a multitude of actors need to coordinate who never coordinated before. Local actors act as first responders and rely on existing structures, but typically need to integrate several actors from the regional, national and international environment. The actors differ in professional expertise, their priorities and in their agendas. Specific to crisis situation is, that the cooperation for most actors only needs to be temporary. This also implies that some organisation (i.e. international governmental agencies or big NGOs) have a history of cooperation, while other actors don’t (i.e. local players or spontaneous volunteers). The refugee crisis constitutes an intriguing example as it shows the multi-layered nature of multiple stakeholder interests on many levels.
Governance of Safety and Security
The organisation of public security is undergoing a major change and the dynamics between demand and supply have been redefined. Security products and services represent a growing market of great interest to large technology companies such as IBM, CISCO, Hitachi, Samsung, Alcatel and SAS. The security market encompasses technologies and services in a wide variety of sectors, ranging from smart cities and securing major events to cybercrime prevention and fraud detection.
A broad diversification of the security market has taken place, both in terms of the formulation of security needs (e.g. for globally operating companies) and in terms of the provision of security solutions. Since the state cannot cope anymore alone with the increased complexity of security challenges, there has been significant growth in private security in the form of security services and equipment. This ranges from the increased accountability of financial institutions for money laundry and logistics companies for the (illegal) gods they transport , to hybrid forms of security solutions, in which multinational corporations in countries with fragile state structures assume broad state functions of public security. Companies build schools, roads support the reconstruction of local police forces, or even governments.
This raises questions regarding the legitimacy, norms and values of security solutions and triggers complex cooperation challenges. These new organizational forms and shifts in responsibilities between private and public stakeholders require the invention of new processes, procedures and organizational structures which make these solutions possible.
By its nature, the governance of organizations necessitates the application of a broad set of theories and methodologies, connecting the disciplines of economics, history, law, psychology, sociology, political science, and potentially others. Each project is likely to consist of a theoretical and an applied part. The theoretical part consists of a critical review of the literature and current developments, and applying a variety of methods and theories, such as game theory, contract theory, transaction costs economics, identity framework, …, to formulate new hypotheses. The choice of empirical research method (survey, case study, experiment, …) will depend on the research question.
The PhD applicant has to satisfy the ERIM-criteria regarding the GMAT or GRE (>85%) and language tests TOEFL (Internet based test: >100; or Paper based test: >600) or IELTS (>7.5). For more information on the admission requirements and application procedure please consult the ERIM website.
Articles in books and journals, and thesis.
This project focuses on the governance of organizations. There are many possibilities for cooperation with other research groups. First, many PhD projects regarding governance of enterprises are carried out in the ERIM research programs. Second, the supervisory team has many national and international contacts regarding the research topic. Third, the actual cooperation will also depend on the development of the thesis and the interests of the student.
Society is served by organizations which are governed in an efficient way.
The research program is in the tradition which started with the classic article by Coase (1937) about the ‘Nature of the Firm’. Understanding of organizations is advanced by studying and comparing different modes of coordination and motivation, such as firms, cooperatives, franchises, online platforms, public organizations, foundations, consortia, unions, legislatures, agencies, schools, churches, social movements, and beyond. The above themes are positioned in a number of ways in the literature. First, member heterogeneity in cooperatives and franchises entails extending the feature of one principal in the basic principal-agent relationship to a situation with many principals simultaneously attempting to influence the actions of one agent (Holmstrom, 2017). Second, the dramatic drop in costs of information and communication technology have made new processes, procedures and organizational structures feasible. An improved understanding of the limits and possibilities of online platforms will identify when they are efficient. Third, the analysis of governance structure is build on the assumption of either opportunism in transaction cost economics (Williamson, 1975), or bounded cognition in the cognitive approach towards organizations (Simon, 1955). The third theme highlights bounded cognition in characterizing efficient governance structures. It entails that the firm is viewed as a focusing device (Nooteboom, 2009). Fourth, successful governance assumes a minimum of an agreed-upon rule-set, such as ownership, income and decision rights. Yet, how can this joint rule-set be achieved in conditions where a multitude of stakeholders needs to coordinate action?
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