Original article

By Jerry Davis

This post is part of an Aspen Institute Business & Society Program conversation series exploring ways to align the incentives of business and the capital markets with the long-term health of society. To learn more, visit www.aspeninstitute.org/bsp.

Are you Experienced – by Humphrey King (ITS)

Dell’s (DELL) buyout is the latest in a series of firms leaving the public market. Since 1997, the number of American companies listed on stock markets has dropped by more than half, from more than 8,800 to roughly 4,100. Some firms leave the market due to mergers or going private (Dell), while many are delisted due to bankruptcy or liquidation (Circuit City, Borders, or Eastman Kodak).

But Dell’s buyout represents something bigger: The triumph of the virtual corporation.

Dell’s announcement coincided with the 20th anniversary of Business Week’s famous 1993 cover story on “The virtual corporation.” The virtual corporation was described as a temporary network of specialists that could be snapped together and re-configured like Lego pieces. Designers designed, manufacturers manufactured, marketers sold. The article was prescient in many ways, but missed out on one development: The growth of “turnkey” manufacturers in industries ranging from PCs to pet food.

In the 1990s, companies like Ingram Micro and Flextronics took on the mundane tasks of assembly, supplier management, and distribution for many large PC makers — often manufacturing competing brands on the same assembly lines. During the 2000s, the vast majority of electronics assembly moved offshore. The numbers are stark: At the start of 2001, the Computer and Electronic Products industry had 1.9 million employees in the US. It now has fewer than 1.1 million — about as many as Foxconn alone empoys in China.

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“For the Executive With Everything, a $230,000 Dog to Protect It”
http://www.nytimes.com/2011/06/12/us/12dogs.html?hp

Translator: Akira Kawaguchi
Download the entire translation as a single ZIP file or individual chapter PDFs below.

Complete Japanese Translation (ZIP file containing all chapters)

Individual chapter PDF files
– Forward by Translator
– Profile of Translator
– Preface to Japanese Translation (by Author)
– Foreword (by Murray Turoff)
– Preface
– Chapter 1: Intimations of a New Order
– Chapter 2: Virtual Organization
– Chapter 3: Information Commodities
– Chapter 4: Mobile Capital and Instant Payments
– Chapter 5: Standardized Business Relationships
– Chapter 6: Emerging Virtual Enterprises
– Chapter 7: Privatization of Government, Expatriation of Business
– Chapter 8: A New Political Economy
– Chapter 9: The Virtual Manor: Consumption, Work, and Identity
– Chapter 10: The Virtual Manor: Family and Community
– Conclusion
– Bibliography

November 1, 2005 (Original article date)

Virtual organization presents two different faces to the world. One face reveals an ability to enhance the efficiency and effectiveness of management, and to achieve greater flexibility of action. The other shows the dissolution of traditional relationships in the course of realizing these desirable ends. In a word, virtual organization is a disturbing agent of social change and thus provokes ambivalent responses. It is most clearly evident as an innovation in business management, especially within multinational firms and in e-commerce. But virtual organization has implications for society as a whole and is thus treated in this book in its broad social context.

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Corrective measures envisioned by lawmakers in the heat of the financial crisis are directed toward strengthening oversight of financial markets. The regulatory system including the Federal Reserve, the Securities Exchange Commission, and other Federal agencies collectively may have been unable to detect the formation of a speculative bubble in the housing market; or perhaps the system detected problems but failed to act on a timely basis. Interest rates could have been raised to reduce the amount of credit available for house purchases, and abusive lending practices could have been curtailed giving potential buyers more accurate information about their ability to carry a mortgage, and thus reducing the chances of defaults and foreclosures later on.

Overhauling and strengthening regulatory oversight of financial markets is a sensible step, but not enough to prevent a recurrence of the frenzied pursuit of profit that precipitated the crisis. Not all mortgage lenders succumbed to the lure of higher profits through securitization of loan portfolios.

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