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Power in Organizations: Modernist and
Critical Theory Perspectives

And

Applying Theory To Understand
Organizations: The Case Of Walmart


By



Jiang Peng
S3320191






BUSM 3194
Organization Theory
RMIT University
SIM Global Education! !
! 2
Power in Organizations: Modernist
and Critical Theory Perspectives
!
!
Introduction
The very pervasiveness of the concept of power entails its significance in
organizational studies. Hence, this essay will explore into power and its related issues
in an intra-organizational context. Differing in meta-theoretical assumptions,
mainstream modernist perspective and critical theory perspective of Frankfurt School
offer different ideas about power and its related concepts such as authority, resistance,
and limits of power. Whereas modernists are interested in how power is distributed
and exercised, critical theorists focus on how power is linked to dominant ideology
and exploitation. In the following paragraphs, attention will be focused on the two
perspectives to reflect their different positions on power and the related issues.
Modernist Perspective
Modernists build their conceptions of power on Webers (1947) classic definition that
power is the probability that one actor within a social relationship can fulfill his own
will despite resistance. Bierstedt (1950) depicts power as the ability to apply
sanctions; Dahl (1957) suggests that power is relational; Wrong (1968) separates
potential power, actual power, and the potential for power. The general is that power
is embedded in social relationship and not an attribute of a person, group, or
organization; the power relationship implies dependence among actors, actors
outcomes dependent on the interrelationship between their behaviors and others; and
within the relationship, power is sometimes exercised as sanctions to overcome
resistance (Bacharach & Lawler 1980).
Modernists view power as inherent in organizational hierarchy, and use of which is
deemed a managerial prerogative, yet they also acknowledge other forms of power
stemming from various sources. Weber (1958) proposed three types of authority:
traditional, charismatic, and rational-legal. The concept of rational-legal authority
was central to his theory of bureaucracy. Within bureaucratic organizations,
legitimate power is rooted in authority, which is based on formal rationality, for
! 3
owners and managers to control means of production (Hatch & Cunliffe 2006).
Following Webers lead, numerous modernists developed various theories on forms
of power. For example, Crozier (1964) identified the ability to solve uncertainty;
Franch and Raven (1968) classified legitimacy, rewards, coercion, expertise, and
personal characteristics; and Emerson (1962) suggests the possession of scarce
resource.
Among others, Croziers contribution entails the strategic contingencies theory, which
suggests power of an organizational subunit is determined by the extent to which it
has non-substitutable skill to tackle critical uncertainty posed by environment
(Hickson et al. 1971). Whether uncertainty will translate into power depends on three
coping strategies: prevention, forecasting, and absorption. Subsuming strategic
contingencies theory is the resource-dependence view originated from Emersons
work, which suggests power is produced by subunits managing scarce resources that
are essential for tackling uncertainty. Such power, once institutionalized, is exercised
to influence resource allocation and thus to subvert power redistribution attempts by
those less powerful subunits, essentially a political phenomenon (Pfeffer & Salancik
2002).
Modernists classify the conditions under which power is exercised. They identified
four situation situations: interdependence, heterogeneous goals, heterogeneous belief
about technology, and resource scarcity, which necessitate the use of power (March &
Simon 1958; Pfeffer 1981). In these situations, those powerful often dominate
decision-making process through political behaviors. Thus, modernists call for
manager to develop power and actively participate in organizational politics, form
coalition with other interest group, and manipulate decision-making on organizational
rules and policies.
From modernist perspective, the ultimate goal for studying power is to improve
organizational effectiveness and efficiency (Hatch & Cunliffe 2006). Their ambition
is demonstrated by various control theories and mechanisms involving the
mobilization of power to manage divergent interests. For example, agency theory
attempts to align the interests of the principals and agents by utilizing shareholders
reward power, a form of authority vested in organizational structure. Likewise,
Taylorism seeks to shift the balance of power in favor of managers by eliminating
managers dependence on workers know-how (Jaffee 2008). However, since power
! 4
rarely if ever flows effortlessly as pure authority, it often elicits resistance (Clegg,
Kornberger & Pitsis 2008).
Resistance occurs when one party in power relationship oppose initiatives enacted by
another. From modernist perspective, it is illegitimate, counterproductive, as it often
opposes the legitimacy of authority and organizational interests. Resistance may
occur in various occasions, e.g. decision-making or labor process, and takes different
forms, essentially manifestations of conflict of interests. As they maintain status quo
and predictable control, modernists view conflict and resistance as the dysfunctional
aspect of organization (Jaffee 2008). Nonetheless, resistance may be also put up for
mismanagement and abuse, in which case, limits of power are implied.
Mismanagement and abuse are characterized by unilateral managerial power and
control (Hodson 2001). One suggests inadequate direction, resources allocation, and
communication, and another features arbitrary, capricious and inappropriate exercise
of power. Both contradicts organizational interests and are thus considered limits of
power under modernist perspective.
Critical Theory Perspective
Adopting critical theory perspective, one would argue that power is domination,
created by ideologies and social structures. Marxist notion of ideology describes the
process by which the dominant societal ideas reflect the interests of a ruling economic
class (Stoddart 2007). Borrowing from that, critical theorists view power as derived
from conveyance of ideas. The strength of such ideas had seeped into the
consciousness of the masses and had weakened perceptions of their own class
interests, denoting a state termed false consciousness (Burrell & Morgan 1979). In
intra-organizational context, managerial ideologies interpret facts about authority and
obedience to neutralize conflicts between managers and workers so that authority is
exercised more effectively (Bendix 1956). It legitimates the owners and managers
domination over workers and becomes prevailing because capitalists superior
economic base. The dominated workers, thus, is said to submit to their own
exploitation and be in the state of false consciousness (Hatch & Cunliffe 2006).
Gramsci (1999) used the concept of hegemony to explain dominated groups
acquiescence to domination. Hegemony, in his terminology, means ideological
domination or cultural leadership by the ruling groups over the allies or rivals.
! 5
Hegemonic power structures are legitimated by manipulating the need for order,
discipline and stability, and through decrying protest and the possibility of
revolutionary change (Crowther & Green 2004). Such ideas were fostered in schools,
families and the workplace, thus strongly established, seemingly normal and
commonsensical, and easily taken-for-granted by those being dominated. In
organizations, control mechanisms are all ideologically engineered to maintain current
power structures in which managers and owners interests reign. This is well
exemplified by concepts in the post-bureaucratic paradigm such as organizational
culture, social integration, and normative control (Jaffee 2008).
Critical theorists study power by analyzing structural mechanisms, which they believe
create unequal power distribution within organizations. Braverman (1974), who
constructed labor process theory, suggests that bargaining power of working class is
gradually eroded as management attempts to systematically subdivide the work into
petty operations that demand ever less skill and training. As this deskilling process
continues, so powerful becomes the management that any resistance put up is trifling.
Taylors one-best-way exemplifies such situation; by reducing production process to
narrowly defined tasks involving basic physical motions, organizations would operate
as harmonious well-oiled machines (Jaffee 2008). Nonetheless, it eliminates the
residual dependence owners have on workers and thus renders labor as a commodity.
Critical theorists argue that power can be exercised in a latent manner. Rather than
taking overt form of using authority to overcome resistance in decision-making with
divergent interests present, or covert form of precluding opposing interests from
decision-making by manipulating political agenda (Bachrach & Baratz 1962), use of
power could be as hidden as implanting interests in peoples minds that are contradict
their own goods. This radical view of power is termed the three-dimensional view,
which proposes that power maybe exercised latently by influencing, shaping, or
determining others very wants (Luke 1974). The conflicts manifested in power
relations, thus, may also take the latent form, unobservable and reflecting
contradiction between the interests of those exercising power and the real interests
they exclude.
From critical theory perspective, the rationale for studying power is to challenge
managerial interests, emancipate dominated group, and develop democratic decision-
making representing plural interests (Hatch & Cunliffe 2006). For example, Gramsci
! 6
(1999) attempts to change power relationships in society by evoking masses
understanding of hegemony process. Braverman endeavors to instill confidence in the
working classs potential to fulfill Marxist destiny and lead a revolutionary
transformation (Hassard, Hogan & Rowlinson 2001). The ultimate goal of critical
theorists is to establish workplaces free from domination, featuring democratic,
humanistic decision-making and communication processes (Alvesson & Deetz 2006).
To this end, they view conflicts and resistance as inevitable in capitalist organization.
As Marx argues, real resistance in and around capitalist organizations would derive
from only one source: revolutionary class-consciousness (Jermier, Knights & Nord
1994). Similarly, Gaventa (1982) suggests that to overcome powerlessness, one must
first overcome effects of the third dimension of power elaborated by Lukes, i.e.
unconsciousness of self-interests, before acting on any overt or covert resistance. For
critical theorists, resistance is interpreted as struggle against capitalist mode of
production and exploitation. This also spells out the limits of power under critical
theory. The limits consist in capitalist exploitation, which leads to conflicts and
resistance. Exploitative conditions include overwork, challenges to autonomy, and
contradictions of employee involvement (Hodson 2001). Overwork implies
intensification of labor, closely linked to Marxist concept of exploitation; challenge to
autonomy is managerial intrusion into employee control over decision-making in
labor process; contradictions of employee involvement means pressuring workers to
maximize their effort under the guise of the rhetoric of workers participation and
ownership.
Conclusion
Modernists and critical theorists hold different stance on power and its related issues.
While modernists conceptualize power based on Max Weber, critical theorists
advocate Marxs definition of power as domination. Modernists acknowledge
different forms and sources of power, including formal authority and other informal
ones like uncertainty coping capability. Differently, critical theorists argue that
ideology maintains power structure and consent is manufactured by hegemonic
process. Whereas modernists see use of power as necessary in organizational politics
to manage divergent interests, critical theorists argue that power can be exercised
latently to implant interests in the first place. Finally, modernists consider resistance
as counterproductive, representing a dysfunctional organization aspect, but admit
! 7
mismanagement and abuse as limits of power. Alternatively, critical theorists see
resistance is unavoidable in capitalist organizations where limits of power are
frequently violated by exploitative practices such as overwork.
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Applying Theory To Understand
Organizations: The Case Of Walmart
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Introduction
For better understanding of power and related issues, modernist and critical theory
perspectives and their respective associated theories are applied to a real-world
example of Wal-Mart and its relationship with the environment. Specifically,
resource dependence theory and environmental contingency theory are used for
modernist perspective to make sense of Wal-Marts power relations with various
environmental actors. It is argued that Wal-Mart is an epitome of managing
dependencies and creating countervailing power in the process of influencing and
being influenced by the environment. For critical theory perspective, the concepts of
hegemony, domination, and capitalism are employed to discuss Wal-Marts
exploitative operations in the environment. Therefore, the counterargument is that
Wal-Marts power is maintained by cultural hegemony and is exercised as domination
and exploitation over environmental actors to promote capitalism in the environment.
About Walmart
Wal-Mart is the worlds largest retailer, with $405 billion in sales, 8416 stores and 2.1
million associates worldwide (Wal-Mart 2010). Through its supply chain, Wal-Mart
has established a market-making supremacy, implying its ability to specify conduct
rules and performance standards for suppliers (Petrovic & Hamilton 2006). Indeed, it
shapes trade, pricing, contracts, and the standards manufacturers must follow to bring
goods to market; it also demands exacting product-specification and puts relentless
pressure to lower prices and improve quality (Gereffi & Christian 2009).
Nonetheless, becoming a Wal-Mart vendor remains a highly sought prize for
manufacturers because of the opportunity to reach vast amount of global consumers.
Then again, to control labor costs, Wal-Mart employs part-time labor, lets associates
work off the clock or during breaks, aggressively fights unions, cultivates a climate of
fear, and institutes wage disparities between genders (Gereffi & Christian 2009).
! 9
These practices evidence Wal-Marts extremely powerful position and irrefutable
control over its associates.
Resource Dependence Theory
From modernist perspective, Wal-Marts power must be studied in its power relations
with various environmental actors. Modernists conceive environment as an entity,
outside boundary of the organization, providing inputs such as raw materials and
absorbing outputs i.e. products, services (Hatch & Cunliffe 2006). Both Wal-Marts
associates and suppliers belong to the environment because associates offer labor
input and suppliers provide various merchandises for retailing. Thus, Wal-Marts
power is manifested as it exercises irrefutable control over associates or dictates
suppliers to follow suit its low-cost mantra.
Modernist explanation of how Wal-Mart derives power features resource dependence
theory. This theory subsumes strategic contingencies theory of intra-organizational
power. While strategic contingencies theory suggests uncertainty coping capability as
the determinant for subunit power, resource dependence theory simply takes such
capability as one critical resource among many, and extend the focus onto inter-
organizational level. It argues that organizations depend on the environment for
resources, thus necessitating organizations careful definition, scanning of the
environment and establishment of countervailing dependencies to offset external
control (Pfeffer & Salancik 1978).
Wal-Mart stores would rely on associates, the people stocking shelves, working
registers, handling retail sales, and greeting customers (Jacques et al. 2002); and
theoretically because of such reliance, the associates would have power over Wal-
Mart. However, Wal-Mart is an epitome of managing dependencies. Its antiunion
stance in the U.S. is well-known (Tilly 2007). Discouraging unionization mitigates
Wal-Marts dependence on associates and weakens associates bargaining power.
Thus, Wal-Mart is able to exercise irrefutable control over them. Meanwhile, Wal-
Marts HR management is seen as humanistic, so repercussions such as complaints,
labor turnover could be minimized.
Likewise, Wal-Mart used to depend heavily on manufacturer brands due to American
manufacturers effort to develop and promote highly identifiable products. With
distinctive branded products and gigantic advertising budget, manufacturers like P&G
! 10
could make customers in beeline for their products on retail store shelf. Nonetheless,
the 1970s saw Wal-Marts adoption of information technology; bar code and satellite-
based telecommunications system were successively introduced. With point-of-sale
data collection and electronic data interchange to assess consumer demand, Wal-Mart
developed an information trove that outweighs many suppliers knowledge about their
own products (Lichtenstein 2009). Besides, the 1970s witnessed Wal-Marts
capitalizing on cheap imports from Asia (Petrovic & Hamilton 2006). Sourcing low-
cost suppliers worldwide further reduced its dependence on domestic suppliers.
These initiatives accelerated the power shift. Therefore, Wal-Mart is considered an
epitome of managing dependencies and creating countervailing power.
Environmental Contingency Theory
In power relations with environmental actors, Wal-Mart does not always have upper
hand. It has responded to manifold environmental demands and is both influencing
and being influenced by the environment. For example, in legal system Wal-Mart
pushed for trade liberalization to ensure steady importation and is influenced by tax
incentives in location selection (Gereffi & Christian 2009). Its relationship with
environment is explained by environmental contingency theory. In modernist
terminology, this theory contends that to deal with environmental uncertainty,
organizations must follow law of requisite variety and take isomorphic forms;
fundamentally, it suggests organization structure based on environmental conditions
(Hatch & Cunliffe 2006).
Wal-Mart, with no logistic system initially, launched warehousing and trucking by
early 1970s out of environmental pressure: wholesalers unwilling to deliver to remote
locations and customer demand growing (Lichtenstein 2009). In the 1980s, Wal-Mart
established the information division with few young bright computer-literate
managers to monitor sales, expenses, profits, and inventory. That was, again, due to
investor demands. As growing bigger, Wal-Mart is attacked by general publics for
holding down wages, driving small retailers bankrupt, and indirectly shifting
manufacturing jobs overseas (Petrovic & Hamilton 2006). Responding to these
criticisms, Wal-Mart has expanded its once-tiny PR department into dozens of
employees, and assigned two senior executive positions to lead the department (Daft
2009). In international environment, Wal-Marts structures differ. For instance, in
China Wal-Mart has union office and its store layout embraces indoor wet market, as
! 11
influenced by government demand and consumer preference (Gereffi & Ong 2007).
These structural changes of Wal-Mart resonate the central claim of environmental
contingency theory. Its relationship with the environment can be defined as a never-
ending process of influencing and being influenced by the environment.
Cultural Hegemony
Conversely, critical theorists would argue that Wal-Marts power is maintained by
cultural hegemony. Cultural hegemony, coined by Gramsci (1999), suggests
domination of one social class, where its worldview is imposed as the societal norm,
through manipulating societal culture. Envisioned by Sam Walton, Wal-Mart culture
is characterized as extolling small-town values, hard work, conformism, loyalty,
strong patriotism and consumerism (Gereffi & Christian 2009). Such values are
cultivated in annual meetings, company cheers, associate manuals outlining behavior
expectations, and testimonials about why unions are bad. As Scanlon (1998) indicates,
annual meetings are cultural events, where Wal-Mart values are glorified,
fundamentally monologues from the top that perpetuates uneven power relations
while mythologizing the creation of equality. Also, Wal-Mart values small margins,
quick returns, and high sales volume (Petrovic & Hamilton 2006). These values are
systematically conveyed to suppliers, thus becoming profoundly implanted in their
business mindset. Resultantly, associates and suppliers take these values for granted
and participate in the established way of thinking and behaving that privilege Wal-
Mart, i.e. working hard with low salaries or reducing supply prices, which betray their
own interests but benefit Wal-Marts Always low prices strategy.
Domination and Exploitation
From critical perspective, Wal-Marts power is domination, exploitative in nature.
Such assertion is backed by the facts that Wal-Mart has squeezed out small
manufacturers (Gereffi & Christian 2009), and that many Wal-Mart associates fall
under poverty line, whereas the Walton family is among Forbes worlds most wealthy
billionaires (Jacques et al. 2002). Specifically, critical theorists address Wal-Marts
exploitative uses of power to increase sales at the expense of supplier profit margin,
and to have associates work hard while low paid. Wal-Mart is deemed the leading
force for the most sweeping process of proletarian industrialization since factory
revolution (Lichtenstein 2006, p. 8). Their antiunion animus again proves such
! 12
exploitative nature. They also criticize Wal-Mart stock-ownership plans. While
seemingly beneficial for them, such incentives are meant to motivate otherwise low-
paid associates to work harder by fostering hope for wealth (Ortega 1995). The true
agenda is to better serve company interest by redirecting complaints about poor pay.
With the goal to free societies and workplaces from domination (Alvesson & Deetz
2006), critical theory would uphold resistance in forms of unionization, protest, or
boycott to develop more democratic social relations.
A Capitalist Society
Drawing on Marxism, critical theory conceptualizes the relationship between Wal-
Mart and the environment as Wal-Marts maneuver to promote capitalist societies.
Capitalist society, in Marxism, is characterized as all societal institutions working to
support and strengthen the economic base in the interests of dominant class (Crowther
& Green 2004). In this process, dominant class interests are represented by capitalist
organizations like Wal-Mart to generate profits and profit-generation opportunities.
Wal-Mart strives to positively impact on the environment in exchange of profitability.
In communities, it offers college scholarships, donates funds to charities, and engages
in environmental issues (Jacques et al. 2002). These are reckoned as tactics to solicit
community and other institutions to support its private interests. For example, Wal-
Marts donations may invite news coverage by media, thus boosting Wal-Mart
corporate image. Indeed, for its own good, Wal-Mart has donated US$1 billion to
Tsinghua University in China to establish institute for retailing research and propagate
the Wal-Mart way (Gereffi & Ong 2007). Moreover, Wal-Mart can afford to lose
money to shape consumer behaviors through cultural homogenization (Jacques at el.
2002). It produces such monoculture by driving prices down to force local
competitors bust and manipulating merchandize availability to stock only culturally
and morally desired goods. Hence, Wal-Mart is able to promote its consumerism,
loyalty values and impose a single morality on hundreds of communities in different
countries, basically manifestations of intention to create capitalist societies in the
international environment.
Conclusion
The modernist argument is that Wal-Mart is considered an epitome of managing
dependencies and creating countervailing power. Its antiunion stance and adoption of
! 13
IT has marked the triumph in developing power over associates and suppliers. In its
relationship with the environment, Wal-Mart is both influencing and being influenced
by different environmental issues, and concomitantly it responds to such issues by
changing organization structures. Conversely, critical theorists contend that Wal-
Marts power is derived from cultural hegemony and is exploitatively exercised to
deceive associates and squeeze suppliers. Its relationship with the environment
reflects nature of capitalism: that whole society being organized around dominant
class interests. Personally, the mainstream modernist perspective is more appealing.
Its well-grounded theories and scientific approaches are deemed more practical in
analyzing Wal-Mart and it relationship with the environment.





























Word Count: 1599
! 14
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