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Corporate News Organizations, the Managerial Revolution and
Information Diversity
By David Pearce Demers, Visiting Professor
School of Journalism and Mass Communication
University of Minnesota
Minneapolis, Minnesota 55455
612/626-1514 / E-mail: [log in to unmask]
This research was supported in part by Grants #1493-9-93 and
#1450-5-94 from the UW-RF Institutional Studies, Research and
Grants
Committee. The author wishes to thank Tami Jech and Emily Rollings
for
their assistance in this project. This paper was prepared for
presentation
at the annual meeting of the Association for Education in
Journalism and
Mass Communication (Anaheim, August 1996).
Abstract
Corporate News Organizations, the Managerial Revolution and
Information Diversity
Corporate news organizations are often accused of placing more
emphasis on profits than on information diversity and other
nonprofit goals
considered crucial for creating or maintaining a political
democracy. These
accusations contradict the managerial revolution hypothesis, which
expects
that as power shifts from the owners to the professional managers
and
technocrats, a corporate organization should place less emphasis on
profits
and more emphasis on nonprofit goals. This study reviews the
literature on
the managerial revolution hypothesis and discusses the theoretical
implications for the marketplace of ideas and democratic
government. The
major conclusion is that increasing corporatization of media does
not
necessarily mean a reduction in information diversity; in fact,
theory and
data strongly suggest that media become more, not less, critical of
elites
and dominant values as they become more corporatized.
Corporate News Organizations, the Managerial Revolution and
Information Diversity
Since the turn of the century, a number of scholars have
argued that control of corporate organizations in modern societies
has been
shifting from the owners, or capitalists, to professional managers
and
highly skilled technocrats (Bell, 1976; Berle & Means, 1932;
Burnham, 1941;
Dahrendorf, 1959; Demers, 1994a, 1994d, 1996a; Galbraith, 1971,
1978;
Parsons, 1953).[1] This proposition, also known as the managerial
revolution
hypothesis, occupies a prominent place in post-industrial theories
of
society, which contend that theoretical knowledge, rather than
capital, is
becoming the key source of power or the axial principle of society
(e.g.,
Bell, 1976). According to these theories, the managerial
revolution is
being fueled by at least four key factors or trends: (1) the death
of major
entrepreneurial capitalists or stockholders, whose concentrated
economic
power is dispersed over time as it is divided among heirs; (2)
organizational growth, which forces companies to draw capital from
more and
more sources, diluting the proportion of ownership of any single
owner; (3)
increasing complexity in the division of labor and market
competition, which
forces owners to rely more and more on the expertise of highly
skilled
professional managers and technical experts to manage day-to-day
operations
of the organization; and (4) the growth of pension, insurance,
mutual and
trust funds, which invest heavily in corporate stocks and are
managed by
professional investors, not the owners. Over time, these factors
and others
are expected to promote the growth of a professional-technical
class that
will replace existing capitalists as the new ruling class.
The notion that power may be shifting in corporate
organizations has significant consequences for media managers,
scholars and
public policy makers. Corporate newspapers are often accused of
placing
more emphasis on profits than on quality journalism, restricting
journalists' autonomy, alienating employees, destroying community
solidarity, supporting the interests of big business over those of
the
public, and, perhaps most serious of all, failing to provide a
diversity of
ideas crucial for creating or maintaining a political democracy
(Bagdikian,
1987; Baker, 1994; Herman, 1985; Herman & Chomsky, 1988; Kellner,
1990;
Kreig, 1987; Kwitney, 1990; Underwood, 1993). But if power in the
modern
corporate news organization is shifting from the owners to the
managers and
the technocrats (e.g., editors), then these criticisms may be
misplaced,
since economic and social theory strongly suggests that managers
and
technocrats place greater emphasis than owners on nonprofit goals,
such as
maximizing growth of the organization, product quality, autonomy
and serving
the interests and needs of the employees (Bell, 1976; Berle &
Means, 1932;
Demers, 1996a; Galbraith, 1978; Schumpeter, 1949).
Although research generally supports the idea that owners of
the means of production play a relatively limited role in
day-to-day
operations at large corporations, social scientists disagree on the
question
of whether power is really shifting in the system. Studies by some
economists (Larner, 1970; Monsen, Chiu, & Cooley, 1968) and mass
communication researchers (Demers, 1991, 1993, 1994a, 1994b, 1994c,
1994d,
1996a) suggest that large-scale organizations, including corporate
newspapers, place less emphasis on profits and serve the interests
of
managers and professionals before the owners. However, many
sociologists
remain skeptical (Fligstein & Brantley, 1992; James & Soref, 1981;
Zeitlin,
1974, 1976). For example, Abercrombie, Hill and Turner (1988, p.
191) argue
that post-industrial theories
can be criticized for greatly exaggerating the power and
importance of new professional and technical occupations;
there is no
evidence that these constitute a discrete social class, that
they
effectively control business corporations, or that they
exercise significant
political power. While it is true that theoretical knowledge
has become
steadily more significant as a force of production throughout
this century,
this implies no change in the locus of power in the economy
nor within
society.
Does the empirical evidence fail to support the managerial
revolution hypothesis, as the critics contend? Will news
organizations
place increasing emphasis on profits and less emphasis on
information
diversity as they become more corporatized? Or will the rise of
professional and technical occupations diminish the power of the
capitalist
and promote the growth of information diversity in media
industries? The
primary purpose of this study is to answer these questions through
a review
of the theoretical and empirical literature on the managerial
revolution
thesis.
A Brief History of the Managerial Revolution Thesis
The origins of the managerial revolution proposition are not
fully known. Ironically, though, some of the seeds appear to have
been
planted by Adam Smith and Karl Marx, neither of whom likely would
have
received it with much favor.
Smith (1952) originated the idea that manager-controlled firms
place less emphasis on maximizing profits than owner-controlled
firms, a
proposition that occupies a prominent position in contemporary
research
programs. He believed the heart of capitalism lay mainly in sole
proprietorships and partnerships, i.e., businesses that typically
are owned
and managed by the same people. Owner-managers could be expected
to keep an
eye on the bottom line because their pocket-book was directly
affected.
This could not be expected for joint-stock companies, however,
because they
often were controlled by non-owning managers. Smith conceded that
joint-stock companies could be useful in funding and constructing
large
public works projects (e.g., canals, water supply), where large
sums of
money were required to accomplish the tasks. But the directors of
joint-stock companies, "being the managers ... of other people's
money than
of their own ... cannot ... be expected ... (to) watch over it with
the same
anxious vigilance with which the partners in a private copartnery
frequently
watch over their own. ... Negligence and profusion, therefore, must
always
prevail, more or less, in the management of the affairs of such a
company"
(Smith, 1952, p. 324).
Marx is partly responsible for the idea that as businesses
grow and capital becomes more concentrated, ownership becomes more,
not
less, dispersed. He defined concentration of ownership as growth
in
capital, or an increase in the size of companies. Capitalists must
continually reinvest profits in order to remain competitive. Most
of the
reinvestment goes to production and development of new machines and
methods
for reducing labor costs. This increases the size and scope of
mass
production and the ratio of capital to the labor process. However,
concentration of capital leads to an increase, not decrease, in the
number
of owners, because, over time, capital is divided among family
members,
often through inheritance, and earmarked for new ventures (Marx,
1987, pp.
582-6). Although ownership tends to become diffused and
decentralized as a
firm grows, Marx countered that this process is slow and is more
than offset
by centralization of capital, which he defined as the combining of
capitals
already formed, i.e., a reduction in the number of competitive
firms in a
particular sector of industry through merger, bankruptcy or
acquisition
(Marx, 1987, p. 588).[2]
Despite Smith's and Marx's observations, the idea that power
could shift from capitalists to managers probably did not emerge
until the
end of the 19th century. One proponent was Social Democratic
theoretician
Eduard Bernstein, who argued that the corporate form of
organization led to
the splitting up of property into "armies of shareholders" who
represented a
new "power." The shareholder, he argued, expropriates the
capitalist class
(Bernstein, 1961, p. 54), transforming it "from a proprietor to a
simple
administrator." Max Weber's writings at the turn of the century
also may be
interpreted as anticipating more formal arguments of later writers,
even
though he personally disagreed with the idea that managers were
gaining
power over capitalists (Weber, 1947). The appropriation of
managerial
functions from the owners, he argued, does not mean the separation
of
control from ownership; rather, it means the separation of the
managerial
function from ownership (pp. 248-249). Nevertheless, Weber's
writings are
somewhat ambiguous. Elsewhere, he observed that bureaucrats, or
the
technical experts of government, often attempt to control the flow
of
information to both policy makers and the public.
The question is always who controls the existing
bureaucratic machinery. And such control is possible only in
a very limited
degree to persons who are not technical specialists.
Generally speaking,
the trained permanent official is more likely to get his way
in the long run
than his nominal superior, the Cabinet minister, who is not a
specialist (p.
338).
Despite these observations, the first comprehensive analysis
of the notion that the proprietors or owners of the means of
production were
losing power did not appear until the early 1930s. In The Modern
Corporation and Private Property, Berle and Means (1932) argued
that
"ownership of wealth without appreciable control and control of
wealth
without appreciable ownership appear to be the logical outcome of
corporate
development" (p. 69). They defined control as the "actual power to
select
the board of directors (or its majority)" (p. 69). The trend
toward
separation of ownership from management, they argued, occurs
because the
capital required to operate and own large corporations is often
beyond the
resources of any single individual or company. As companies grow,
they need
to draw upon more and more sources of capital, which over time
diminishes
the percentage of shares owned by any single individual or entity.
Berle
and Means viewed this change as largely having positive outcomes
for
society: Managers, unlike the owners, would be guided by a broader
social
conscience and professional values, rather than a selfish profit
motive.
In the early 1940s, sociologists James Burnham (1941) took
Berle and Means' argument one step farther. He argued that the
trend toward
separation of management from ownership was leading to the rise of
a new
class that would replace the capitalists. Growth of business means
more
than just increasing scale; it also means increasing technical
complexity,
and this in turn means that the owners must depend more and more on
experts
and highly skilled managers to run the new means of production.
Organizational skills and technical knowledge are the bases of
managerial
power. Burnham predicted that the "revolution" would be completed
by about
1970 (p. 71). However, in contrast to Berle and Means, Burnham was
not as
optimistic about the consequences of the transition of power. He
believed
managers would act in their own self-interest, not necessarily in
the public
interest.
During the 1940s, Schumpeter (1949) made similar arguments.
He contended that highly skilled managers and technical
specialists, not the
capitalists, were the creative force behind the innovative process
in modern
capitalism. In early capitalism, the capitalist was the
entrepreneur; the
innovator. Capitalists are driven by profits. But as
organizations grow,
this role became more specialized and routinized and is delegated
to highly
educated and trained specialists. Since entrepreneurs in modern
organ
izations are not usually the direct beneficiaries of profit,
according to
Schumpeter, they are driven not by profits but by social status.
First, there is the dream and the will to found a private
kingdom, usually, although not necessarily, also a dynasty.
... Then there
is the will to conquer: the impulse to fight, to prove
oneself superior to
others, to success for the sake, not of the fruits of success,
but of
success itself. ... Finally, there is the joy of creating,
of getting
things done, or simply of exercising one's energy and
imagination.
By the 1950s many theorists treated the managerial revolution
as an empirical fact rather than a hypothesis or theory (Zeitlin,
1974).
Parsons (1953) and Dahrendorf (1959) both believed that class
relations were
being replaced by an occupational system based on individual
achievement, in
which status was determined by functional importance. "The basic
phenomenon
seems to have been the shift in control of enterprise from property
interests of founding families to managerial and technical
personnel who as
such have not had a comparable vested interest in ownership,"
Parsons (1953,
pp. 122-3) wrote. According to Dahrendorf (1959, pp. 275-6), the
basic
source of social conflict in a modern capitalist nation is no
longer between
capital and labor, because "in post-capitalist society the ruling
and the
subjected classes of industry and of the political society are no
longer
identical; ... there are, in other words ... two independent
conflict
fronts. ... This holds increasingly as within industry the
separation of
ownership and control increases and as the more universal
capitalists are
replaced by managers."
During the 1960s and 1970s, Galbraith (1971, 1978) and Bell
(1976) continued this line of thinking, incorporating the
managerial
revolution hypothesis into larger, more comprehensive theories of
social
change. Galbraith argues that the "decisive power in modern
industrial
society is exercised not by capital but by organization, not by the
capitalist but by the industrial bureaucrat" (Galbraith, 1971, p.
xix). One
consequence of the shift in power, he says, is less emphasis on
profit
maximization as an organizational goal. Profit maximizing becomes
less
important because professional managers receive most of their
income through
a fixed salary, not from the profits; hence, it would be irrational
to argue
that those in control (i.e., managers) will maximize profits for
others
(i.e., stockholders).[3] More important to managers than
maximizing profits is
prevention of loss, since low earnings or losses make a company
vulnerable
to outside influence or control. Galbraith believes all businesses
must
earn a minimum level of profit, but professional managers place
greater
emphasis on organizational growth, planning, knowledge, autonomy,
and
expertise, because these factors are recognized as the basis of
power in the
organization and are essential for long-term survival of the
organization.
These ideas are reinforced and extended in Bell's The Coming
of the Post-Industrial Society (Bell, 1976), which contends that
theoretical
knowledge, rather than capital or practical knowledge, is the
primary source
of innovation and social organization in a post-industrial society.
In the
economy, this change is reflected in the decline of manufacturing
and goods
and the rise of service industries, especially health, education,
social
welfare services and professional/technical services (research,
evaluation,
computers, systems analysis). Universities play a central role in
the
production of knowledge and technology. A post-modern society is
an
information society. Education rather than heritage or social
position is
the key means of advancement, and rewards are based less on
inheritance or
property than on education and skill (i.e., a meritocracy). Bell
contends
that these structural changes foster a new class structure D one
based on
the supremacy of professional, managerial, scientific and technical
occupations (the knowledge or intellectual class) D that gradually
replaces
the bourgeoisie as the ruling class. Many European sociologists
also have
made similar arguments about other Western countries (see, e.g.,
Touraine,
1971).
Since the late 1960s, much of the scholarship has focused on
empirically testing the managerial revolution thesis. But before
reviewing
those studies, one important conceptual change should be
emphasized. In the
early part of the 20th century, the power struggle was framed as
one between
capitalists and top-level managers. As this brief historical
review has
shown, today the debate has widened to include professionals,
scientists and
technocrats in the noncapitalist group D i.e., individuals who are
involved
in the systematic production of theoretical knowledge.[4] As such,
in this
author's view, the "managerial revolution" is a term that no longer
seems
appropriate to describing the alleged changes. "Technocratic
revolution"
(or even better yet, "technocratic reformation") is probably more
accurate,
since it can incorporate both managers and nonmanagerial technical
experts.[5]
Nevertheless, in deference to custom and usage, the term
"managerial
revolution" will be used throughout the remainder of this paper,
with the
proviso that it encompasses professional, technical and
intellectual
occupations as well.
Empirical Research on the Managerial Revolution Thesis
A number of criticisms have been directed at the managerial
revolution hypothesis,[6] but the single most important one is the
argument
that there is little or no empirical evidence to support it. In
1974,
Zeitlin (1974) argued that predictions of the demise of the
capitalist class
were grossly premature and that there was relatively little
empirical
evidence to support such claims. "I believe that the 'separation
of
ownership and control' may well be one of those rather critical,
widely
accepted, pseudofacts with which all sciences occasionally have
found
themselves burdened and bedeviled." More recently, Jary and Jary
(1991, p.
375) write that Daniel "Bell's concept (post-industrial society)
has also
been widely criticized as failing to demonstrate that the undoubted
increase
in the importance of knowledge in modern societies actually does
lead to a
shift of economic power to a new class, especially to a new
noncapitalist
class." Other reviewers have made similar arguments (Abercrombie,
Hill, &
Turner, 1988, p. 191; Scott, 1994, pp. 353-5).
Although the empirical research fails to provide unqualified
support for the managerial revolution thesis, claims by some
scholars that
there is no support for it are exaggerated. The empirical research
can be
divided into two major categories or approaches. One attempts to
answer the
question: Is ownership becoming more diversified as organizations
and the
economic system have grown? The research here is primarily
descriptive and
focuses on how much stock is controlled by families or individuals
and the
extent to which they are involved in top management. Research
shows that
owners or capitalists play less and less role in the day-to-day
operations
and decision-making as a corporation grows. Many decisions must be
delegated to managers and lower-level technocrats, which suggests
that
managers have more potential for control.
The second line of research attempts to answer the question:
Even if ownership is becoming more diversified as organizations
grow and
become more structurally complex, are those organizations still
serving the
interests of the owners above managers or other groups? Research
on this
question involves explanatory analysis and examines the
relationship between
organizational structure and organizational outcomes (i.e., profit
maximization, job loss, product quality). The results here are
more mixed.
The debate of continuing interest here is whether managers and
technocrats
are incorporated into the ownership class (either by cooptation or
coercion)
or whether they pursue policies and practices that serve their
interests
before those of the owners.
Is ownership becoming more diversified? Research on this
question strongly suggests that owners play less and less role in
the
day-to-day operations as organizations grow, that the proportion of
manager-controlled firms has increased, and that most large
companies are
manager- rather than owner-controlled. These studies usually use
4-10
percent stock ownership, membership on the board of directors or in
top
management, or a combination of both to determine whether
organizations are
owner-controlled. But regardless of the different definitions
used, most
support the notion that ownership becomes more diversified as an
organization grows. This finding should not be taken to mean that
managers
are displacing capitalists as the key decision-makers, since
managers may be
incorporated or coopted into the ideology of the capitalist class
or be
coerced to follow its orders. But it does imply that owners are
less
involved in decision-making at lower levels, and thus do not have
the same
level of involvement as owner-managers.
Berle and Means (1932) apparently conducted the first
quantitative empirical analysis. Using data compiled from
Standard's
Corporation Records, Moody's manuals, The New York Times and The
Wall Street
Journal, they concluded that families or groups of business
associates owned
more than half of the outstanding voting stock in only 11 percent
of the top
200 largest nonfinancial corporations. Using 10 percent stock
ownership as
the minimum criterion for family control, they classified 44
percent of the
top 200 largest nonfinancial corporations as management controlled.
In
1937, the Securities and Exchange Commission, using more reliable
and
comprehensive data, reported that minority ownership control
existed in the
vast majority of the nation's largest corporations (U.S. Temporary
National
Economic Committee, 1940, p. 104). However, R. A. Gordon
challenged the
government study, pointing to a number of shortcomings and
concluding that
probably fewer than a third of the companies were controlled by
families or
small group of individuals (Gordon, 1961). A study by Fortune
magazine in
the 1960s also concluded that 71 percent of the 500 largest
industrial
corporations were controlled by management (Sheehan, 1966), but the
methods
and data have been attacked by some scholars (Burch, 1971).
Using a methodology similar to Berle and Means, Larner (1970)
concluded that only 3 percent of the largest 200 nonfinancial
corporations
were controlled by families in 1963. At the same time, 84 percent
of the
companies were controlled by managers, nearly double what Berle and
Means
had found. The remaining 13 percent were partially controlled.
Larner
argued that the managerial revolution was nearly complete,
fulfilling
Burnham's prediction (ahead of time). "A corporation may reach a
size so
great that, with a few exceptions, its control is beyond the
financial means
of any individual or interest" (p. 20).
However, a year later Burch (1971) challenged Larner's and
Berle and Mean's findings, arguing that they had used a too
restrictive
definition of control. Burch argues that control should include
not only
some measure of stock ownership but also membership in top
management or on
the board of directors. Using this broader definition, he found
that about
36 percent of the top 300 public and private industrial
corporations were
probably family controlled in 1965. However, Burch also found that
the
proportion of family-controlled firms had declined about 3 to 5
percent a
year since 1938, when they controlled about 50 percent of all large
companies. These data support Larner's and Berle and Mean's
argument that
family or individual control declines as a company grows.[7]
Do Managers Serve Themselves or Owners? The second line of
research has focused to a large extent on Smith's 200-year-old
hypothesis,
which posited that managers are less likely to serve the interests
of the
owners than themselves. Often this has involved examining whether
managerial-controlled firms or large corporations are less
profitable or
place less emphasis on profits. Noneconomic researchers have also
examined
the impact on organizational goals and practices, with the
expectation that
managers will place greater value on organizational growth, product
quality,
and innovation. Findings are mixed.
Several studies are interpreted as supporting the managerial
revolution thesis. Monsen, Chiu and Cooley (1968) examined the
impact of
ownership structure on the level of profitability for the 500
largest
industrial firms. A firm was considered to be owner-controlled if
one party
(individual, family, family holding company, etc.) is represented
on the
board of directors and owned 10 percent or more of the voting
stock, or if
one party owns more than 20 percent of the voting stock.
Manager-controlled
firms were defined as those in which no single owner held more than
5
percent of the voting stock and there is no evidence of recent
owner
control. Using these definitions and government data, the
researchers were
able to track 36 firms of each type over a 12-year period. The
result: the
net income to net worth ratio (return on owner's equity) for
owner-controlled firms was 12.8 percent, compared with 7.3 percent
for
manager-controlled firms.
Palmer (1973) also found that manager-controlled firms
operating in markets with a high degree of monopoly power report
significantly lower profit rates than owner-controlled firms, but
no major
differences emerged between firms in moderate or low monopoly
markets. The
reasoning here is that managers can pursue goals other than maximum
profits
only in the absence of competition, which acts as a constraint on
all types
of organizational structure. Larner (1970) found that
manager-controlled
firms have slightly lower profit rates.
In contrast, other studies have found no differences or that
manager-controlled firms are more profitable. Fligstein and
Brantley
(1992), for example, found that manager-controlled firms actually
outperformed family- or bank-controlled firms in terms of profits.
However,
they argue that ownership overall has little effect on the economic
actions
undertaken by large firms; rather, the key determinants are
existing power
relations within the firm, the concept of control that dominates
the firm's
actions, and the action of competitors. Several other studies
(Kamerschen,
1968; Hindley, 1970) also have found that management control exerts
no
important influence on profit rates. James and Soref (1981)
studied the
relationship between dismissal of corporate chiefs and five
measures of
managerial/owner control, with the expectation under the managerial
revolution thesis that corporate chiefs at managerial-controlled
would have
more job security. However, they found that corporate heads are
retained or
fired on the basis of profit performance, not ownership structure.
Breaking with previous theorists, at least one researcher has
argued that a positive correlation between managerial-control and
high
profit rates is compatible with the managerial revolution thesis.
Demers, a
mass communication researcher, argues that the corporate form of
organization D which he basically defines as a complex bureaucracy
that has
a high degree of managerial control[8] D is structurally organized
to maximize
profits, but places less emphasis on profits as an organizational
goal.
Using national probability samples of daily newspapers in the
United States,
Demers has found that large, complex corporate newspapers are more
profitable than smaller, less "corporatized" ones. Corporate
newspapers are
more profitable because they benefit from economies of scale and
superior
management and human resources. However, corporate newspapers also
place
less emphasis on profits as an organizational goal and more
emphasis on
other, nonprofit goals D such as product quality, maximizing growth
of the
organization, using the latest technology, worker autonomy, and
being
innovative D because they are controlled by professional managers
and
technocrats, not the owners (Demers, 1991, 1993, 1994a, 1994b,
1996a). He
also reports that journalists at corporate newspapers are more
satisfied
with their jobs because they have more autonomy, status and
prestige than
journalists at noncorporate or entrepreneurial newspapers (Demers,
1994b,
1994d). And, more importantly, he found that as organizations
become more
corporatized, editorials and letters to the editor published in
them become
more, not less, critical of mainstream groups and ideas (Demers,
1996a), and
established news sources (mayors and police chiefs) in communities
served by
corporate newspapers also believe that those newspapers are more
critical of
their policies and city hall (Demers, 1996b). These latter
findings
contradict many neo-Marxist theories which hold that media become
more
hegemonic as they become more corporatized (e.g., Tuchman, 1988).
Demers
(1994c, 1996a) traces the growth and development of the corporate
newspaper
to the economic and social division of labor in society (i.e.,
structural
pluralism) and argues that the corporate form of organization helps
to
explain many of the social changes that have taken place,
especially in the
last century.
While findings that corporate newspapers place less emphasis
on profits as an organizational goal and increased emphasis on
nonprofit
goals and editorial autonomy support the managerial revolution
thesis, a
fundamental question is whether these changes can be generalized to
other
industries as well. The newspaper industry is widely believed to
operate in
markets where there is little direct competition (Demers, 1994c),
which is
not characteristic of most markets. Thus, these findings may not
be
representative of businesses as a whole. At the same time,
however, the
empirical research by economists and sociologists also cannot be
generalized
to the entire population of businesses, because virtually all of it
is based
on national data for only the largest corporations D populations of
firms
have rarely been studied. The major problem with these studies is
that they
truncate variance on both the dependent and independent variables,
increasing the risk of Type II measurement errors.
But at least one study has attempted to circumvent these
problems. Demers (1996a) tested the managerial revolution
hypothesis by
examining changes in source attributions in news stories over time.
The
assumption underlying this approach is that media content reflects
in a
crude way the power structure of a society. A large body of
research shows,
in fact, that mass media are highly responsive to political and
economic
centers of power and promote values generally consistent with
capitalist
ideals and elite interests (see, e.g., Bennett, 1988; Ewen, 1976;
Fishman,
1980; Gans, 1979; Gitlin, 1980; Molotch & Lester, 1975; Paletz &
Entman,
1981; Tichenor, Donohue, & Olien, 1980; Tuchman, 1978, 1988). This
emphasis
on bureaucratic, especially governmental, institutions for the news
means
that media eschew alternative, unorthodox points of view (Cirino,
1974;
Cohen & Young, 1981; Gitlin, 1980; Molotch & Lester, 1975;
Tichenor,
Donohue, & Olien, 1980; Tuchman, 1978; Tunstall, 1971). As a
consequence,
the construction of social problems usually is framed from the
position of
those in power (McCarthy & Zald, 1977). Challenging groups also
seek to use
media to reach their goals, but they are often marginalized by
established
powers and, thus, are perceived by the media to be less credible
and
newsworthy (Fishman, 1980; Herman, 1985; Gitlin, 1980; Olien,
Donohue, &
Tichenor, 1984; Paletz & Entman, 1981). As a rule of thumb, the
greater the
power of a group or organization, the greater its ability to
command the att
ention of the media.
If this power-reflection proposition is correct, then one
could postulate that changes in the power structure should be
reflected in
the sources that journalists use to report on the news. More
specifically,
under the managerial revolution thesis, Demers expected that during
the 20th
century attributions of capitalists declined, while attributions of
scientists, technicians, researchers and others who roles involve
the
production of theoretical knowledge increased. A content analysis
of source
attributions on the front page of the New York Times over a 90-
year period
during the 20th century supported for Demers' hypothesis.
Attributions of
capitalists declined from 8.8 percent in 1903 to 4 percent in 1993.
In
contrast, attributions of technocrats increased, going from 2.7
percent to
10.5 percent (Demers, 1996a, see Chapter 10).
Summary and Discussion
The notion that control of corporate organizations in modern
societies is shifting from the capitalists to professional managers
and
highly skilled technocrats dates back to the turn of the century.
Many
contemporary social scientists have argued that there is little
empirical
support for the managerial revolution hypothesis. This is an
overstatement.
This paper's review of the literature showed that owners play less
role in
day-to-day operations as organizations grow, that the proportion of
manager-controlled firms has increased, and that most large
companies are
manager-controlled rather than owner-controlled. Results are mixed
in terms
of studies that examine the relationship between organizational
structure
and outcomes (profits maximization, organizational goals), but
there is just
as much evidence supporting the managerial revolution thesis as
opposing it.
One of the problems with much of the research in this area is that
it is
based on data from very large corporations and has a limited time
frame,
both of which increase the risk of Type II measurement errors.
More recent research on newspapers also supports the
managerial revolution hypothesis. As newspapers become more
corporatized
(i.e., bureaucratic), they place less emphasis on profits and more
emphasis
on product quality and other nonprofit goals. Newspapers that
exhibit the
characteristics of the corporate form of organization also publish
more
editorials and letters to the editor that are critical of
mainstream groups
and values, and this criticism is perceived by public officials in
those
communities. A content analysis of the New York Times over a
90-year period
showed that attributions for capitalists and their representatives
declined
more than 50 percent, while attributions for technocrats increased
more than
four-fold. These findings should be interpreted cautiously, since
newspaper
sources are a crude measure of power, and only the front pages of
one
newspaper were analyzed. However, at a minimum, the social
scientific
literature suggests that arguments which dismiss outright the
notion that
managerial and technocratic occupations are gaining power relative
to
capitalists are premature. At a maximum, the literature suggests
that a
major transition of power is taking place in society. The latter
conclusion
has at least two major implications for media managers, scholars
and policy
makers.
First, if a transition of power is occurring, then the growth
of the corporate form of organization in mass media industries will
not
necessarily lead to greater emphasis on profits at the expense of
product
quality or a diversity of ideas. Indeed, social and economic
theory
strongly suggests that professional managers and editors would
place greater
emphasis on information diversity, product quality and other
nonprofit
goals, since power and prestige among professional groups are
strongly tied
to skills and knowledge. Second, if a transition of power is
occurring,
then corporate media would be expected to have a greater capacity
to promote
social change. This does not mean that hegemonic models are wrong.
But
they often overstate the social control consequences of the mass
media and
understate the media's capacity to promote social change. In fact,
the
growth of corporate media may help to explain many of the social
changes
that have occurred during the last century or so (e.g., increasing
rights
for consumers, women and minorities). To the extent that media
managers and
technocrats control the news production process, one might also
expect that
these groups will have an increasing impact on public policy.
Future
research should focus more closely on the impact that media
management
structure has on organizational goals and behaviors, as well as the
impact
dependence on technocrats has on audiences and policy makers.
Endnotes
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[1] Corporate control is usually defined as "the power to
determine the broad policies guiding the corporation, although it
does not
necessarily imply active leadership or specific influence on the
day-to-day
operations of the enterprise" (Larner, 1970, p. 2). For a similar
definition, see Fligstein and Brantley (1992, p. 282).
[2] Centralization occurs in one of two ways. The first is
when larger, more successful companies purchase the assets of
weaker, less
competitive and innovative firms. Economies of scale are primarily
responsible for this. The second method of centralization occurs
through
the formation of joint-stock companies, which, he argued, often
pool large
amounts of capital together for the purpose of gaining greater
control over
a particular market. The credit and banking system plays an
important role
in funding such ventures (Marx, 1987, p. 588).
[3] Galbraith calls the belief that professional managers
are more profit-maximizing the "approved contradiction."
[4] Although some top-level managers may also be classified
as technocrats, in most large corporations the roles are usually
separate.
[5] The use of the term "revolution" also is probably
misplaced. More accurately, it should be called a reformation,
since the
change occurs over a long period of time.
[6] Scholars have argued that even if managers run the
day-to-day operations, this does not mean they control the
organization,
since top management is accountable to the board of directors.
Moreover,
Aldrich (1979) argues that even though there is no direct evidence
that
owners exert direct control of corporate organizations, they retain
potential for control. Zeitlin (1974, 1976) and others also have
argued
that corporate leadership, even if it does not have sole ownership
of a
company, nevertheless makes its decisions on the basis of continued
acquisition of power and wealth. And Pennings (1980) has attempted
to show
that interlocks among boards of directors of corporations ensures
that a
relatively small number of capitalists hold power.
[7] For another analysis of the studies reviewed in this
section, see Allen (1976).
[8] Corporate newspaper structure can be defined as an
organization that has (1) a clear- cut division of labor, (2) a
hierarchy of
authority, (3) rules and regulations, (4) formalistic
impersonality, (5)
employment based on technical qualifications, (6) rationality, or a
high
degree of efficiency, and (7) a complex ownership structure (e.g.,
chain
ownership, public corporation). For heuristic purposes, the
corporate
newspaper may be contrasted with the entrepreneurial newspaper, an
ideal
type that is structurally simple and is owned and managed by the
same
individual or family. However, ideally corporate newspaper
structure should
be conceptualized and operationalized as a continuous variable.
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