Chapter 3 Outline

Social Structure

A society's "social structure" refers to its basic social organization. Although there are many different aspects of social structure, two dimensions stand out as being of particular importance when explaining differences between cultures. The first is the degree to which the basic unit of social organization is the individual, as opposed to the group. Western societies tend to emphasize the primacy of the individual, while groups tend to figure much larger in many other societies. The second dimension is the degree to which a society is stratified into classes or castes.

Some societies are characterized by a relatively high degree of social stratification and relatively low mobility between strata (e.g., Indian), while other societies are characterized by a low degree of social stratification and high mobility between strata (e.g., American).

Individuals and Groups

A group is an association of two or more individuals who have a shared sense of identity and who interact with each other in structured ways on the basis of a common set of expectations about each other's behavior.⁸ Human social life is group life. Individuals are involved in families, work groups, social groups, recreational groups, and so on. However, while groups are found in all societies, societies differ according to the degree to which the group is viewed as the primary means of social organization.⁹ In some societies, individual attributes and achievements are viewed as being more important than group membership, while in other societies the reverse is true.

The Individual

In Chapter 2, we discussed individualism as a political philosophy. However, individualism is more than just an abstract political philosophy. In many Western societies, the individual is the basic building block of social organization. This is reflected not just in the political and economic organization of society, but also in the way people perceive themselves and relate to each other in social and business settings. The value systems of many Western societies, for example, place a high emphasis on individual achievement. The social standing of individuals is not so much a function of whom they work for, as of their individual performance in whatever work setting they choose.

The emphasis on individual performance in many Western societies has both beneficial and harmful aspects. In the United States, the emphasis on individual performance finds expression in an admiration of "rugged individualism" and entrepreneurship. One benefit of this is the high level of entrepreneurial activity in the United States and other Western societies. New products and new ways of doing business (e.g. personal computers, photocopiers, computer software, biotechnology, supermarkets, and discount retail stores) have repeatedly been created in the United States by entrepreneurial individuals. One can argue that the dynamism of the US economy owes much to the philosophy of individualism.

Individualism also finds expression in a high degree of managerial mobility between companies, and this is not always a good thing. While moving from company to company may be good for individual managers, who are trying to build impressive resumes, it is not necessarily a good thing for American companies. The lack of loyalty and commitment to an individual company, and the tendency to move on when a better offer comes along, can result in managers that have good general skills but lack the knowledge, experience, and network of interpersonal contacts that come from years of working within the same company. An effective manager draws on company-specific experience, knowledge, and a network of contacts to find solutions to current problems, and American companies may suffer if their managers lack these attributes.

The emphasis on individualism may also make it difficult to build teams within an organization to perform collective tasks. If individuals are always competing with each other on the basis of individual performance, it may prove difficult for them to cooperate. A recent study of US competitiveness by MIT concluded that US firms are being hurt in the global economy by a failure to achieve cooperation both within a company (e.g., between functions; between management and labor) and between companies (e.g., between a firm and its suppliers). Given the emphasis on individualism in the American value system, this failure is not surprising.¹⁰ So the emphasis on individualism in the United States, while helping to create a dynamic entrepreneurial economy, may raise the costs of doing business due to its adverse impact on managerial mobility and cooperation.

One positive aspect of high managerial mobility is that executives are exposed to different ways of doing business. The ability to compare business practices helps US executives identify how good practices and techniques developed in one firm might be profitably applied to other firms.

The Group

In contrast to the Western emphasis on the individual, the group is the primary unit of social organization in many other societies. In Japan, the social status of an individual is determined as much by the standing of the group to which he or she belongs as by his or her individual performance.¹¹ In traditional Japanese society, the group was the family or village to which an individual belonged. Today the group has frequently come to be associated with the work team or business organization to which an individual belongs. In a now classic study of Japanese society, Nakane has noted how this expresses itself in everyday life:

When a Japanese faces the outside (confronts another person) and affixes some position to himself socially he is inclined to give precedence to institution over kind of occupation. Rather than saying, "I am a type setter" or "I am a filing clerk," he is likely to say, "I am from B Publishing Group" or "I belong to S company".¹²

Nakane goes on to observe that the primacy of the group to which an individual belongs often evolves into a deeply emotional attachment in which identification with the group becomes all important in one's life. One of the central values of Japanese culture is the importance attached to group membership. This may have beneficial implications for business firms. Strong identification with the group is argued to create pressures for mutual self-help and collective action. If the worth of an individual is closely linked to the achievements of the group (e.g., firm), as Nakane maintains is the case in Japan, this creates a strong incentive for individual members of the group to work together for the common good. The failures of cooperation that the MIT study found in many American firms may not be a problem in Japanese firms. Some argue that the competitive advantage of Japanese enterprises in the global economy is based partly on their ability to achieve close cooperation between individuals within a company and between companies. This finds expression in the widespread diffusion of self-managing work teams within Japanese organizations, the close cooperation between different functions within Japanese companies (e.g., between manufacturing, marketing, and R&D), and the cooperation between a company and its suppliers on issues such as design, quality control, and inventory reduction.¹³ In all of these cases, cooperation is driven by the need to improve the performance of the group (i.e., the business firm).

The primacy of the value of group identification also discourages managers and workers from moving from company to company. This is the case in Japan where lifetime employment in a particular company is the norm in certain sectors of the economy (estimates suggest that between 20 and 40 percent of all Japanese employees have formal or informal lifetime employment guarantees). Over the years, managers and workers build up knowledge, experience, and a network of interpersonal business contacts. All these things can help managers perform their jobs more effectively and achieve cooperation with others.

However, the primacy of the group is not always beneficial. Just as US society is characterized by a great deal of dynamism and entrepreneurship, reflecting the primacy of values associated with individualism, some argue that Japanese society is characterized by a corresponding lack of dynamism and entrepreneurship. Although it is not clear how this will play itself out in the long run, it is possible that due to the cultural emphasis on individualism, the United States could continue to create more new industries than Japan and continue to be more successful at pioneering radically new products and new ways of doing business.

Social Stratification

All societies are stratified on a hierarchical basis into social categories--that is, into social strata. These strata are typically defined on the basis of characteristics such as family background, occupation, and income. Individuals are born into a particular strata. They become a member of the social category to which their parents belong. Individuals born into a strata toward the top of the social hierarchy tend to have better life chances than individuals born into a strata toward the bottom of the hierarchy. They are likely to have a better education, better health, a better standard of living, and better work opportunities. Although all societies are stratified to some degree, they differ in two related ways that are of interest to us here. First, they differ from each other with regard to the degree of mobility between social strata, and second, they differ with regard to the significance attached to social strata in business contexts.

Social Mobility

The term social mobility refers to the extent to which individuals can move out of the strata into which they are born. Social mobility varies significantly from society to society. The most rigid system of stratification is a caste system. A caste system is a closed system of stratification in which social position is determined by the family into which a person is born, and change in that position is usually not possible during an individual's lifetime. Often a caste position carries with it a specific occupation. Members of one caste might be shoemakers, members of another caste might be butchers, and so on. These occupations are embedded in the caste and passed down through the family to succeeding generations. Although the number of societies with caste systems has diminished rapidly during the 20th century, one major example still remains. India has four main castes and several thousand subcastes. Even though the caste system was officially abolished in 1949, two years after India became independent, it is still a powerful force in rural Indian society where occupation and marital opportunities are still partly related to caste.

A class system is a less rigid form of social stratification in which social mobility is possible. A class system is a form of open stratification in which the position a person has by birth can be changed through their own achievements and/or luck. Individuals born into a class at the bottom of the hierarchy can work their way upwards, while individuals born into a class at the top of the hierarchy can slip down.

While many societies have class systems, social mobility within a class system varies from society to society. For example, some sociologists have argued that Britain has a more rigid class structure than certain other Western societies, such as the United States.¹⁴ Historically, British society was divided into three main classes; the upper class, which was made up of individuals whose families had wealth, prestige, and occasionally power for generations; the middle class, whose members were involved in professional, managerial, and clerical occupations; and the working class, whose members earn their living from manual occupations. The middle class was further subdivided into the upper-middle class, whose members are involved in important managerial occupations and the prestigious professions (e.g. lawyers, accountants, doctors), and the lower-middle class, whose members were involved in clerical work (e.g. bank tellers) and the less prestigious professions (e.g. school teachers).

What was significant about the British class system was the extent of divergence between the life chances of members of different classes. The upper and upper-middle classes typically send their children to a select group of private schools, where they don't mix with lower-class children, and where they pick up many of the speech accents and social norms that mark them as being from the higher strata of society. These same private schools also have close ties with the most prestigious universities, such as Oxford and Cambridge. Indeed, until recently Oxford and Cambridge guaranteed to reserve a certain number of places for the graduates of these private schools. Having been to a prestigious university, the offspring of the upper and upper-middle classes then had an excellent chance of being offered a prestigious job in companies, banks, brokerage firms, and law firms that are themselves run by members of the upper and upper-middle classes.

In contrast, the members of the British working and lower-middle classes typically go to state schools. The majority left at 16, and those that went on to higher education found it more difficult to get accepted at the best universities. When they did, they found that their lower-class accent and lack of social skills marked them as being from a lower social strata, which made it more difficult for them to get access to the most prestigious jobs.

As a result of these factors, the class system in Britain tended to perpetuate itself from generation to generation, and mobility was limited. Although upward mobility was possible, it is something that could not normally be achieved in one generation. While an individual from a working class background may have succeeded in establishing an income level that was consistent with membership of the upper-middle class, he or she may not have been accepted as such by others of that class due to accent and background. However, by sending his or her offspring to the "right kind of school," the individual can ensure that his or her children were accepted.

Accordingly to many politicians and popular commentators, modern British society is now rapidly leaving this class structure behind and moving towards a classless society. However, sociologists continue to dispute this finding and present evidence that this is not the case. For example, a recent study reported that in 1994, state schools in the London suburb of Islington, which has a population of 175,000, had only 79 candidates for university, while one prestigious private school alone, Eton, sent more than that number to Oxford and Cambridge.¹⁵ This, according to the authors, implies that "money still begets money." They argue that a good school means a good university, a good university means a good job, and "merit" only has a limited chance of elbowing its way into this tight little circle.

The class system in the United States is less extreme than in Britain and mobility is greater. Like Britain, the United States has its own upper, middle, and working classes. However, class membership is determined principally by individual economic achievements, as opposed to background and schooling. Thus, an individual can, by their own economic achievement, move smoothly from the working class to the upper class in their own lifetime. Indeed, in American society successful individuals from humble origins are highly respected.

Significance

From a business perspective, the stratification of a society is significant if it affects the operation of business organizations. In American society, the high degree of social mobility and the extreme emphasis upon individualism limits the impact of class background on business operations. The same is true in Japan, where the majority of the population perceive themselves to be middle-class. In a country such as Britain, however, the relative lack of class mobility and the differences between classes has resulted in the emergence of class consciousness. Class consciousness refers to a condition where people tend to perceive themselves in terms of their class background, and this shapes their relationships with members of other classes.

One way in which this has been played out in British society is in terms of the traditional hostility between upper-middle class managers and their working class employees. Mutual antagonism and lack of respect historically made it difficult to achieve cooperation between management and labor in many British companies, and resulted in a relatively high level of industrial disputes. However, the last two decades have seen a dramatic reduction in industrial disputes in Britain, which bolsters the arguments of those who claim that Britain is moving towards a classless society. In any event, an antagonistic relationship between management and labor, and the resulting lack of cooperation and high level of industrial disruption, tends to raise the costs of production in countries characterized by significant class divisions. In turn, this can make it more difficult for companies based in such countries to establish a competitive advantage in the global economy.