Business Notions

business notions

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[accounting] [agency] [bureaucracy] [business] [capital (ism/ist)] [clan] [decision] [hierarchy] [market] [network] [productivity] [stakeholder] [system]

These notions are covered in Business and Organization courses offered by Veryard Projects and Antelope Projects.

Accounting

In sociology, accounting refers to the language that people and groups use to justifiy their actions to themselves and others. Business accounting is a popular example of this, largely based on financial calculations and reports.

Business accounting is a discursive practice, involving a special language as well as special techniques. It confers special power and influence over business affairs.

Course Material	Accounting & Finance (pdf)
Further Material	Accounting for Accounting (html) Distribution of Benefit, Cost and Risk (html) Reading List (html)

Agency

A relationship between an agent and a principal. For example, the directors of a company are the agents of the shareholders.

In agency theory, economists study the costs, risks and inefficiencies of this relationship.

The principal typically incurs monitoring costs, to guard against the possibility that the agent may be stealing from him, or concealing relevant information (moral hazard).
The agent may incur bonding costs, to align his actions with the interests and expectations of the principal. For example, publicly quoted companies are required to conform to the (short-term) expectations of the stock market, even though this may not be in the long-term interest of the company and its investors.

Course Material	Ethics (pdf)
Further Material

Bureaucracy

Bureaucracy refers to a particular form and style of administrative organization.

Course Material
Further Material	Notes on Bureaucracy (html) Reading List (html)

Business

Business can be regarded as a social system for creating value.

This indicates four founding disciplines for business studies:

Sociology - the study of social phenomena
Systems theory - the general study of systems
Economics - the science of value
Ethics - the philosophy of value

Course Material	Foundations of Business (html)
Further Material	Ethics (html) Ethics Notions (html) Sociological Notions (html) Systems Notions (html)

Capital (ism/ist)

Most human endeavour combines human effort from two sources: present and past. Past human effort is often known as ‘capital’, and the term ‘labour’ is usually applied to present human effort. It is usually thought to consist of machinery constructed by past labour, but can also consist of intellectual capital, which includes software as well as information itself.

A tool or machine may be regarded as stored-up labour from the past; it also represents stored-up information, since it captures the knowledge of the tool-maker. But this very knowledge would have been acquired by the tool-maker through education and training, and therefore represents the stored-up learning effort of the tool-maker and the teaching effort of his teachers.

Industrial processes are known as ‘capital-intensive’ if they require more capital than labour, and ‘labour-intensive’ if they require more labour than capital. For many processes, there is a range of possible methods, with different ratios of capital to labour.

The word ‘capitalist’ has three different meanings:

A person that ‘owns’ some of the capital input to a particular process, and thereby controls the process.

A person that holds certain opinions about the justice of capital ownership.

A person who believes that social progress depends on continual increases in the ratio of capital to labour.
"Computerization, automation and the use of robotic devices will automatically free human beings from soul-destroying, back-breaking tasks and leave them free to engage in more creative work."

Decision / Judgement

Decisions can be divided into three parts, in three ways.

Herbert Simon

Geoffrey Vickers

Jacques Lacan

Search (Intelligence)

Design

Choice

Value Judgement (Evaluation)

Reality Judgement (Appreciation)

Action Judgement

Instant of Seeing

Time for Understanding

Moment of Decision

Course Material	Decision-Making (pdf)
Further Material	Reading List (html)

Productivity

Also known as efficiency. The relationship between the input and the output of a clearly defined and stable system.

Course Material
Further Material	Demanding Higher Productivity (pdf)

Social Patterns: Market, Hierarchy, Network, Clan

Market	A social system based on horizontal (peer-to-peer) contractual relationships.
Hierarchy	A social system based on vertical (principal-to-agent) formal relationships.
Network	A social system based on informal (trust-based) horizontal (peer-to-peer) relationships.
Clan	A social system based on tradition. Usually inaccessible to outsiders.

Course Material	Social Patterns (pdf)
Further Material	Reading List (html)

Stakeholder

A person or community that possesses intentions and attributes value to things. A person or community that is regarded as having a legitimate interest or "stake" in something - for example a system or project.

Traditional business ethics defined the purpose of a business solely in terms of satisfying the interests of the shareholders. But some businessmen wanted to recognize the legitimate interests of other groups of people; they started to use the term "stakeholder" rather than "shareholder". The similarity of the two words is deliberate: it draws attention to the substitution of a broader concept for a narrow one.

Thus use of the term stakeholder was originally to be inclusive rather than exclusive. It leads people to argue that companies should be run for the benefit of a range of stakeholders, including employees, customers, suppliers and neighbours, and not merely for the benefit of shareholders. Similarly, housing estates should be run for the benefit of the tenants, not just the landlords; schools for the benefit of pupils and parents, not just the convenience of teachers; and so on. Some politicians talk about a stakeholder society. To label a person or community as a stakeholder is to legitimize action intended for their benefit.

To the businessman who takes the concept of stakeholder seriously, what is important is not just the specific set of people who are named as stakeholders, but the ongoing mission to identify and include people who might otherwise be excluded. Similarly in politics, the stakeholder agenda indicates a desire to recognize the interests of the people who might otherwise be left out or disadvantaged.

However, some managers and analysts seem to regard the concept of stakeholder as exclusive. There is a closed list of stakeholders, drawn up at the start of a project, who may be consulted at various stages of the project. If you're not identified as a stakeholder, then your opinion doesn't matter. I deplore the exclusive use of the stakeholder concept.

The stakeholder agenda therefore entails a renewed attention on the processes associated with stakeholdership. Who looks after the stakeholder's interests, and how? Who legitimates new stakeholders?

Course Material	Ethics (pdf)
Further Material

System

Course Material	Systems Theory (pdf) Systems Dynamics (pdf) SocioTechnical Systems (pdf)
Further Material	System Notions (html) Reading List (html)

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	A person that ‘owns’ some of the capital input to a particular process, and thereby controls the process.
	A person that holds certain opinions about the justice of capital ownership.
	A person who believes that social progress depends on continual increases in the ratio of capital to labour. "Computerization, automation and the use of robotic devices will automatically free human beings from soul-destroying, back-breaking tasks and leave them free to engage in more creative work."