Poverty's Monument: Social Problems and Organizational Field Emergence in Historical Perspective

Date01 May 2018
Published date01 May 2018
DOIhttp://doi.org/10.1111/joms.12329
Poverty’s Monument: Social Problems and
Organizational Field Emergence in Historical
Perspective
R. Daniel Wadhwani
University of the Pacific
ABSTRACT This article draws on historical institutionalism as an approach to studying the
relationship between business institutions and major social problems. Using the historical case
of the emergence of savings banking as an organizational response to poverty in the
nineteenth-century United States, I develop three conceptual claims about how social
problems shape the processes of institutional and organizational change. First, I show how the
‘historical framing’ of social problems shapes the processes of problematization, design, and
legitimation related to institutional change. Second, I demonstrate how the dynamics of
cooperation, competition, and alignment between an emerging organizational field and other
fields shape the evolution of institutional responses to social problems. And finally, I illustrate
how historical revisionism as a methodological approach can help management scholars re-
consider settled empirical and theoretical claims in a way that takes social problems into
account.
Keywords: fields, historical framing, historical institutionalism, hybrid organizations,
management history, social movements
INTRODUCTION
In the introduction to his 1876 History of Savings Banks in the United States, political econo-
mist Emerson Keyes pondered the origins of a financial institution that had, over the
previous sixty years, played a pivotal role in the development of professionally managed
financial services for the general public. The savings banks he chronicled represented
not only a new organizational field that had begun to transform how ordinary people
conducted their financial lives, they had come to account for a massive portion of the
financial systems of many European and North American economies. To what, then,
did Keyes (1876, p. 4) ascribe the development of the organizational form of the savings
Address for reprints: R. Daniel Wadhwani, Eberhardt School of Business, University of the Pacific, 3601
Pacific Avenue, Stockton, CA 95211, USA (dwadhwani@pacific.edu).
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C2017 John Wiley & Sons Ltd and Society for the Advancement of Management Studies
Journal of Management Studies 55:3 May 2018
doi: 10.1111/joms.12329
bank? ‘In a word, it is Poverty!’ he exclaimed. ‘Paradoxical as this appears, such is the
legend to be inscribed on Poverty’s Monument in this country today!’
Keyes’ claim that addressing the problem of poverty was the motivating force behind
the emergence of a significant portion of the modern, professionally managed system of
financial institutions for the public poses an important challenge for the fields of organi-
zation and management research and their relationship to major social problems. Cur-
rent appeals within management and organizational scholarship to address major social
problems are often premised on the assumption that such issues pose new ‘grand chal-
lenges’ that management should or must confront (Bruton, 2010; Colquitt and George,
2011), and entail the development of novel types of ‘hybrid’ organizational solutions
that cross the private, public, and civil sectors (Doherty et al., 2014; Mintzberg, 2015).
Traditional historical accounts of the rise of modern business institutions (Chandler,
1977, 1990) reinforce this impression by failing to acknowledge how concerns about
major social problems shaped the emergence and evolution of modern business organi-
zations in the nineteenth and twentieth centuries(Djelic and Etchanchu, 2017; Marens,
2013).
A revisionist historical approach that foregrounds the social problems and struggles
that shaped the emergence of modern organizations can make significant contributions
to the growing interest in the relationship between business institutions and social prob-
lems. Historical research of this kind would not only offer an important corrective to the
tendency to see hybrid organizational forms and business responses to social problems
as new phenomena, but more importantly holds unique analytical and interpretive value
in studying the relationship between social problems and the processes of institutional
and organizational change. It does so not only because it provides a retrospective
‘macro’ point of view (Braudel, 1982) from which to grasp the relationship between
social problems and change over long periods of time, but also because it provides a
‘micro’ perspective (Ginzberg, 2012; Levi, 2012) on how the historically situated point-
of-view of actors shapes the framing of social problems and establishes motivation in
mobilizing for organizational and institutional change.
In this article, I use ‘historical institutionalism’ as a theoretical lens to examine the
emergence of the organizational field of savings banking as a response to the social prob-
lem of poverty in nineteenth-century America. Historical institutionalism is an approach
to institutional theory that derives contextually-embedded and process-oriented claims
about actors’ relationship to their historical and social contexts through studies of partic-
ular empirical phenomena or problems (Mutch, 2017; Suddaby et al., 2014). Though
historical institutionalism is relatively new as an explicit approach to management and
organizational scholarship (Rowlinson and Hassard, 2013), it is well established as a cat-
egory of research within the related fields of political science (Pierson and Skocpol,
2002; Steinmo, 2008; Thelen and Steinmo, 1992) and economic sociology (Dobbin,
1994; Fligstein, 1993; Schneiberg and Bartley, 2001), and has antecedents in a number
of empirical studies of management as well (Djelic and Etchanchu, 2017; Hargadon
et al., 2001; Leblebici et al., 1991).
Using a historical institutionalist perspective, I examine the question of how the social
problem of poverty came to be framed and explore when and how this led to the emer-
gence and evolution of the field of savings banking. I use the historical study to derive
546 R. D. Wadhwani
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two sets of conceptual claims and one methodological one pertaining to the role of social
problems in triggering and shaping institutional change. First, I find that ‘historical
framing’ played an important role in shaping how pauperism came to be seen as a
major social problem, and in shaping the design of savings banks as an organizational
response to the problem. The reinterpretation of the historical causes of pauperism
served to delegitimize existing institutional arrangements – such as the Old Poor Law –
and form the basis for the design and legitimization of new ones – such the savings
bank. The process of historical re-framing was hence crucial to both the construction of
poverty as a ‘social problem’ and the processes of problematization, design, and legitimi-
zation of the resulting institutional change. Second, the process of institutional change
depended on contextual interactions beyond the organizational field of savings banking
itself, and involved complex ‘inter-field dynamics’ with other social welfare organiza-
tions, with for-profit banks, and with the fields of politics and law. I show that shifts in
inter-field cooperation, competition, and alignment shaped the emergence and transfor-
mation of savings banking as a response to poverty. And finally, I use my interpretation
of the case to elaborate on how historical revisionism as a methodological approach can
help management researchers develop novel socially embedded theoretical insights on
management and organization.
The paper is organized as follows. In the first section, I discuss why historical institu-
tionalism provides a useful approach to studying the relationship between business insti-
tutions and social problems, and introduce ‘historical framing’ and ‘inter-field dynamics’
as two key constructs through which I interpret the history. Next, I discuss my research
design, including the research setting and empirical questions posed, the sources used,
and the interpretive methods employed. The third section provides my historical narra-
tive of the development of savings banks, including their origins and legitimization as a
response to poverty, the development of organizational practices as managers sought to
find ways to provide financial services to the masses, and the transformation of savings
banks over the course of the century from an organization designed to alleviate poverty
to a mainstream financial institution. The fourth section draws out the conceptual and
methodological contributions derived from the historical interpretation. I conclude by
discussing the implications of the article for future research.
INSTITUTIONAL THEORY, SOCIAL PROBLEMS, AND
ORGANIZATIONAL CHANGE
The Limits of Neo-Institutionalism
The relationship between business institutions and social problems is inherently com-
plex. The problems of poverty and inequality are no exception. Poverty involves not
only conditions of material deprivation, but also reflects patterns in the historical distri-
bution of power, status, and cultural legitimacy (Geremek, 1994; Himmelfarb, 1983;
O’Connor, 2009). Moreover, these patterns change over time, spill into multiple
domains of social life, and are shaped by how actors and societies define and view pov-
erty within a broader worldview (Katz, 1996; Lees, 1998). Business institutions are
themselves both products and agents of social and historical change, emerging and
547Poverty’s Monument
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C2017 John Wiley & Sons Ltd and Society for the Advancement of Management Studies

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