Citizen corporation as a form of social enterprise

Economic Annals-ХХI: Volume 162, Issue 11-12, Pages: 62-67

Citation information:
Slintak, K., & Tuckova, Z. (2016). Citizen corporation as a form of social enterprise. Economic Annals-XXI, 162(11-12), 62-67. doi: https://doi.org/10.21003/ea.V162-13

Karel Slintak
PhD (Economics), Ing.,
Department of Enterprise Economics,
Faculty of Management and Economics,
Tomas Bata University in Zlin
5139 Mostni Str., Zlin, 760 01, Czech Republic
slintak@fame.utb.cz

Zuzana Tuckova
PhD (Economics), Ing.,
Department of Enterprise Economics,
Faculty of Management and Economics,
Tomas Bata University in Zlin
5139 Mostni Str., Zlin, 760 01, Czech Republic
tuckova@fame.utb.cz

Citizen corporation as a form of social enterprise

Abstract. This article focuses on whether it is possible to create a more democratic corporate environment without a company losing its economic efficiency. For this purpose a case study on the company W.L. Gore & Associates has been undertaken. The purpose of the study was to find out if the organisational practices within this company have features similar to those of a citizen corporation as a potential example of the concept of social enterprise. The study has shown that W.L. Gore & Associates which employs over 10,000 people at 45 plants located around the globe is a company built on democratic principles of freedom, personal commitment, fair play and participation. At the organisational level, the company has a lattice structure, which is not based on any form of formal hierarchy, branched levels of management or lines of communication. There are no managers, executive officers, bosses or directors in W. L. Gore & Associates. There is only a handful of formal functions such as the Chief Executive Officer, as required by law. However, you will not encounter this terminology in practice within the company, as it contradicts the egalitarian ideals of Gore. What is typical for the organisational and cultu­ral environment in W. L. Gore & Associates are so-called natural (dynamic) hierarchies. A person does not become a lea­der in W. L. Gore & Associates as a result of being appointed by a higher leader, however. Leaders emerge from those whose authority is recognised by their colleagues.

The key organisational units are small, autonomous and self-managed teams that reflect the economic, as well as social, dimensions of doing business. The network form of organisation and the interconnection between the economic and social dimensions of the business have created a working environment in which natural leadership develops, a system of mutual assessment and remuneration exists, which values collegiality and personal commitment, and creates feeling of a shared purpose in the form of co-ownership. All these characteristics are similar to those found in the citizen corporation.

As a result of fifty years of management innovations, the organisation structure of Gore evolved into a form that is so unique that it defies the conventional view of business organisations. In this model, the basic terminology describing the reality within this company has changed completely. W. L. Gore & Associates has no employees. It has associates. There are no jobs. There are own commitments. The company is not run by managers. The company is managed by leaders. Profits are not resources belonging to a select interest group. They are shared wealth and a reflection of personal responsibility. These unusual characteristics, which noticeably resemble those of the citizen corporation, shows that it is possible to organise businesses in a way that leads to the development of social capital while creating economic value.

Keywords: Citizen Corporation; Social Enterprise; Democracy; Lattice Structure; Management Innovation; Personal Commitment; Social Capital; Trust; W.L. Gore & Associates

JEL classification: L31; M14; O30

Acknowledgement: The study was supported by the Programme EEA and Norway Grants for funding via grant on Institutional cooperation project No. «NF-CZ07-ICP-4-338-2016».

DOI: https://doi.org/10.21003/ea.V162-13

References

1. Aggarwal, R., & Simkins, B. J. (2001). Open book management – optimizing human capital. Business Horizons, 44(5), 5-13.
   doi: https://doi.org/10.1016/S0007-6813(01)80055-0
2. Barton, T. L., Shenkir, W. G., & Tyson, T. N. (1999). Open-book management. The CPA Journal, 69(3), 36.
   Retrieved from http://archives.cpajournal.com/1999/0399/features/f360399.html
3. Battilana, J., & Dorado, S. (2010). Building sustainable hybrid organizations: The case of commercial microfinance organizations. Academy of Management Journal, 53(6), 1419-1440.
   doi: https://doi.org/10.5465/AMJ.2010.57318391
4. Billis, D. (Ed.). (2010). Hybrid organizations and the third sector: Challenges for practice, theory and policy. Palgrave Macmillan.
5. Birchall, J. (2012). A «member-owned» business approach to the classification of co-operatives and mutuals. In McDonnell, D., & McKnight, E. C. (Eds.). The Co-ope­rative Model in Practice: International Perspectives, (pp. 67-82). Aberdeen: University of Aberdeen.
   Retrieved from http://www.stir.ac.uk/research/hub/publication/14912
6. Bourdieu, P. (1986). The forms of capital. In J. Richardson (Ed.). Handbook of Theory and Research for the Sociology of Education, Greenwood Press, Westport, CT.
7. Campos, J. L. M., Spear, R., & Frobel, L. (2007). The social economy in the European Union. Bruxelles: Groupe Editorial Peter Lang.
8. Carney, B. M., & Getz, I. (2009). Freedom, Inc.: Free your employees and let them lead your business to higher productivity, profits, and growth. New York, NY: Crown Business
9. Case, J. (1995). Open-book management: The coming business revolution. HarperCollins.
10. Coleman, J. (1990). Foundation of Social Theory, Harvard University Press, Cambridge, MA.
11. Coleman, J. S. (1988). Social capital in the creation of human capital. American Journal of Sociology, 94, 95-120.
    Retrieved from http://www.socialcapitalgateway.org/content/paper/coleman-j-s-1988-social-capital-creation-human-capital-american-journal-sociology-94-s
12. Defourny, J., & Nyssens, M. (2010, August). Social enterprise in Europe: At the crossroads of market, public policies and third sector. Policy and Society, 29(3), 231-242.
    doi: https://doi.org/10.1016/j.polsoc.2010.07.002
13. Dewey, J. (1980). The school and society. SIU Press.
14. Drucker, P. F. (2011). A Functioning Society – Community, Society, and Polity in the Twentieth Century. New Brunswick (U.S.A.) and London (U.K.): Transaction Publishers.
15. Drucker, P. F. (2008). The Essential Drucker: The Best of Sixty Years of Peter Drucker‘s Essential Writings on Management (Collins Business Essentials). New York: HarperBusiness.
16. Evans, M. (2000). CONSCISE Project: The Contribution of Social Capital in the Social Economy to Local Economic Development in Western Europe: Workpackage 1: Key Concepts, Measures and Indicators, unpublished.
17. Ferragina, E. (2010). Social Capital and Equality: Tocqueville’s Legacy: Rethinking social capital in relation with income inequalities. The Tocqueville Review/La Revue Tocqueville, 31(1), 73-98.
    doi: https://doi.org/10.1353/toc.0.0030
18. Florida, R., & Kenney, M. (1990). The breakthrough illusion. New York: Basic Books.
19. Frances, N. (2008). The end of charity: Time for social enterprise. Crows Nest, N.S.W.: Allen & Unwin.
20. Friedman, M. (1970). The social responsibility of business is to increase its profits. New York: New York Magazine.
21. Gadrey, J. (2004). L’utilite sociale des organisations de l’economie sociale et solidaire. Une mise en perspective sur la base de travaux recents. Rapport de synthese pour la DIES et la MIRE Programme de recherche «L’economie sociale et solidaire en region».
    Retrieved from http://associations.laligue.org/media/transfer/doc/ppo_t_ut_l_o_l_d.pdf (in French)
22. Galera, G., & Borzaga, C. (2009). Social enterprise: An international overview of its conceptual evolution and legal implementation. Social Enterprise Journal,5(3), 210-228.
    doi: https://doi.org/10.1108/17508610911004313
23. Hamel, G. (2012). What matters now: how to win in a world of relentless change, ferocious competition, and unstoppable innovation. San Francisco, CA, USA: Jossey-Bass.
24. Hamel, G. (2010, March 18). W. L. Gore: Lessons from a Management Revolutionary. The Wall Street Journal.
    Retrieved from http://blogs.wsj.com/management/2010/03/18/wl-gore-lessons-from-a-management-revolutionary
25. Hamel, G. (2010). Interview with Terri Kelly about W. L. Gore’s Original Management Model. Retrieved from https://www.youtube.com/watch?v=47yk2upT7tM
26. Hamel, G., & Breen, B. (2007).  The Future of Management (1st ed). Harvard: Harvard Business Review Press.
27. Hampden-Turner, C., & Trompenaars, F. (2011). A world turned upside down: doing business in Asia. In Malcolm Warner and Pat Joynt (Eds.). Managing across cultures: Issues and perspectives (pp. 275-305) (2^nd ed.). Andover, Hampshire: Cengage Learning.
28. Handy, C. (2015). The second curve: Thoughts on reinventing society. London, UK: Random House.
29. Handy, C. H. (1999). The Hungry Spirit. Beyond Capitalism: A Quest for Purpose in the Modern World. New York:  Broadway Books.
30. Handy, C. B. (1995). The age of unreason. London, UK: Random House.
31. Hock, D. (2005). One from many: Visa and the rise of chaordic organization. San Francisco: Berrett-Koehler Publishers.
32. Hock, D. (1999). Birth of the chaordic age. San Francisco: Berrett-Koehler Publishers.
33. Hock, D. W. (1995). The chaordic organization: Out of control and into order. World Business Academy Perspectives, 9(1), 5-18.
34. Inkpen, A. C., & Tsang, E. W. (2005). Social capital, networks, and knowledge transfer. Academy of management review, 30(1), 146-165.
    doi: https://doi.org/10.5465/AMR.2005.15281445
35. Jacobs, J. (1961). The Death and Life of Great American Cities, New York: Random House.
36. Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360.
    doi: https://doi.org/10.1016/0304-405X(76)90026-X
37. Kay, A. (2005). Social capital, the social economy and community development. Community Development Journal, 41(2), 160-173.
    doi: https://doi.org/10.1093/cdj/bsi045
38. Kay, J. (1996, May 1). The good market. [Blog].
    Retrieved from https://www.johnkay.com/1996/05/01/the-good-market
39. Lipnack, J., & Stamps, J. (1993). The teamnet factor: Bringing the power of boundary crossing into the heart of your business. Essex Junction, Vt.: Oliver Wight Publishers.
40. Maurer, R. (2001). Open-book management. The Journal for Quality and Participation, 24(1), 64.
41. McGregor, D. (1960). The human side of enterprise. New York: McGrow-Hill.
42. Menard, C. (2004). The economics of hybrid organizations. Journal of Institutional and Theoretical Economics JITE, 160(3), 345-376.
    Retrieved from http://www.dse.univr.it/documenti/OccorrenzaIns/matdid/matdid425733.pdf
43. Monzon, J. L., & Chaves, R. (2008). The European social economy: concept and dimensions of the third sector. Annals of Public and Cooperative Economics, 79(3-4), 549-577.
    doi: https://doi.org/10.1111/j.1467-8292.2008.00370.x
44. Plender, J. (1997). A stake in the future: The stakeholding solution. London: Nicholas Brealey Publishing.
45. Putnam, R. (1993, March). The prosperous community – social capital and public life. The American Prospect, 4(13).
    Retrieved from http://prospect.org/article/prosperous-community-social-capital-and-public-life
46. Markowska-Przybyla, U., & Ramsey, D. M. (2015). Social capital and polish students’ behaviour in experimental games designed to illustrate cooperation. Economics and Sociology, 8(4), 191-206.
    doi: https://doi.org/10.14254/2071-789X.2015/8-4/14
47. Semler, R. (2004). The seven-day weekend: Changing the way work works. New York: Penguin Group.
48. Semler, R. (2001). Maverick!: the success story behind the world’s most unusual workplace. London, UK: Random House.
49. Senge, P. M. (2010). The Fifth Discipline: The Art & Practice of The Learning Organization. New York, NY: Crown Publishing Group.
50. Senge, P. (1996). Through the Eye of the Needle. In Gibson, R. (Ed.). Rethinking the Future:Rethinking Business, Principles, Competition, Control, Leadership. (pp. 122-145). Markets and the World, London: Brealey Publishing.
51. Slintak, K. (2015). Cultural reversal: why does obedience lose with the initiative? International Journal of Entrepreneurial Knowledge, 3(2), 59-75.
    Retrieved from http://www.ijek.org/files/IJEK_2-2015v3/IJEK-2-2015,v.3_slintak,k..pdf
52. Towers Perrin (2008). Closing the Engagement Gap: A Road Map for Driving Superior Business Performance Towers Perrin Global Workforce Study 2007-2008.
    Retrieved from https://c.ymcdn.com/sites/www.simnet.org/resource/group/066D79D1-E2A8-4AB5-B621-60E58640FF7B/leadership_workshop_2010/towers_perrin_global_workfor.pdf
53. Towers Perrin (2007). Engaged Employees Drive the Bottom Line.
    Retrieved from http://www.twrcc.co.za/Engaged%20employees%20drive%20the%20bottom%20line.pdf
54. Tuckova, Z., & Tucek, D. (2013). Economic Evaluation of the Level of Knowledge Services in Selected OECD Countries. In Proceedings of the 14^th European Conference on Knowledge Management (ECKM), Kaunas University of Technology, Kaunas, Lithuania (pp. 732-740). Kaunas: Kaunas University of Technology.
55. Tuckova, Z. (2012). Importance of knowledge services in the Czech Republic and Germany: A case study.  In Proceedings of the 13^th European Conference on Knowledge Management (pp. 1202-1210). Cartagena: Academic Publishing International Limited.
56. Van Deth, J. W. (2003). Measuring social capital: orthodoxies and continuing controversies. International Journal of Social Research Methodology, 6(1), 79-92.
    doi: https://doi.org/10.1080/13645570305057
57. W. L. Gore & Associates (2016). Our Culture. Innovation, integrity and teamwork drive our business every day.
    Retrieved from http://www.gore.com/en_xx/aboutus/culture/index.html
58. Yin, R. K. (2003). Case Study Research. Thousand Oaks, CA: Sage Publications.
59. Yin, R. (1984). Case study research. Beverly Hills, CA: Sage Publications.
60. Yunus, M. (2007). Creating a world without poverty: Social business and the future of capitalism. New York: Public Affairs.

Received 21.10.2016