The Evolution of the Employer: From Capitalist to Technocrat
The Evolution of the Employer
18th Century: The Capitalist
Adam Smith (1723-1790) described the employer as a capitalist owning the means of production during the Industrial Revolution.
19th Century: The Businessman
Richard Cantillon (1680-1734) viewed the entrepreneur as a businessman who buys means of production and resells at uncertain prices, assuming business risks. Jean-Baptiste Say (1767-1832) believed production value should cover all production costs and ensure profit.
Late 19th Century: The Organizer
Alfred Marshall (1842-1924) observed that technological advancements and expanding markets required more capital, leading to large corporations with multiple owners.
- Shareholders: Seek return on investment.
- Businessperson: Seeks continuity and increased power, dependent on shareholders and company growth.
20th Century: The Risk-Taker
Frank Hyneman Knight (1885-1972) defined the entrepreneur as the person who assumes economic risks, advancing money and earning profit. Two key risks include production shortfalls and unexpected revenue drops.
- Director/Professional: Gives orders, manages, and develops the organization.
- Asset Employer: Assumes risk, selects the director, and manages the business.
20th Century: The Innovator
Joseph Schumpeter (1883-1950) attributed employer profits to innovation, not risk. The employer must innovate until imitation reduces extra benefits.
20th Century: The Technocrat
John Kenneth Galbraith (1908-2006) argued that economic power shifted from individuals to organizations, specifically the “technostructure” of specialist managers who hold executive power and make decisions based on information and coordination.
The Shift in Power
This power is shared by technicians in large companies where shareholders are merely investors seeking returns. If returns are not met, they withdraw and invest elsewhere.
Late 20th Century: The Leader
Warren G. Bennis (1925-2014) posited that the modern employer must be innovative and a good leader with a strong strategy. Innovation encompasses technical, management, and leadership aspects, requiring specific personal qualities.
Business, Technology, Training, and Communication
Technological innovation, particularly the internet, has improved business efficiency in production, marketing, and organization, but can also lead to competitive disadvantage. Companies must adapt to this new environment characterized by:
- Economic Globalization: Expanding and dynamic markets require globally tailored strategies.
- Knowledge-Based Economy: New production factors enhance productivity and organizational efficiency.
- Internet as a New Organizational Form: The economy relies on rapidly developing information and communication technology, driven by computer advancements.
The Influence of the Internet on the Company
The internet, a global network of interconnected computers, significantly impacts business organization and employer activity:
- Improved External Communication: Easier and more intense business relationships make communication cheaper, faster, and more efficient.
- More Financing and Investment Choices: A global financial market expands funding opportunities.
- Increased Productivity: Flexible labor relations and demand for qualified labor.
- Ability to Work from Home: Offers flexibility and cost savings.