5.2 Institutionalising French bread
The context-specific nature of rationality is such that, as we have just indicated, many insider norms are not apparent to outsiders. From the point of view of an organisation, the institutional rules of practice that prevail in any given context enable and constrain the dimensions of viable practice. Managers who try to do things that violate accepted norms about practices that insiders judge to be sacred or profane tend to encounter resistance. The capacity to achieve a difference – the practice of power – is normally intertwined with established expectations about what is, and what is not, legitimate. Organisations that have evolved in tandem with the evolution of institutional rules of practice might rely on practices that outsiders would judge to be irrational – yet, they ‘work’ in that particular context. The case study of French bread presented in the attached document below illustrates these points.
Click the link below to open Institutionalising French bread (PDF of pages 52-56, 0.1MB)
The French bread story is long and complex, yet it teaches us some profoundly important things. First, the boulangeries of France are small organisations in which the practice of bread making generates reciprocal expectations, on the part of both practitioners and their customers, that things will continue to be done in that way: it is socially embedded in the order of things. The boulangeries comprise a form of organisation that has proved to be capable of reproducing itself from generation to generation. Yet, to some outsiders, French bread making might appear to be irrational.
For the bakers, the costs are high. They have to endure a long, arduous and unremunerative apprenticeship; they borrow heavily at the beginning to become proprietors, and lend heavily at the end to become retirees; they have to take extraordinary risks that at the end of their lives the costs associated with retirement will be recouped; they leave themselves open, when they are most vulnerable, to opportunistic or foolish behaviour. They place their fate in the hands of a party they can never be sure to trust in a transaction that has no guarantees. Yet, they chose to be bakers. In addition, their customers choose to eat baker's bread rather than its industrial counterpart.
There are pressures for rationalisation and efficiency. In the extract, we saw how the industrial flour millers sought to exercise power and dispense with the preferences of French consumers not to purchase the kind of industrial bread that they could make. The transaction costs are expensive and inefficient for all concerned. The customers have to shop for bread both in the morning and again in the afternoon – with industrial bread just one weekly supermarket trip would suffice. Nevertheless, French bread ‘works’ in the sense that people make it, buy it, eat it and enjoy it.
The lesson we learn is simple: these bakers act rationally, as do their industrial counterparts equipped with methods of rational management-seeking economies of scale – even though they each act radically differently. Thus, do not expect a singular scientific rationality to be played out in organisations; rather, rationalities exist in plural, each based and legitimised in its own logic. No rationality is necessarily ‘more rational’ than another. Rather than focus on bread per se, it is also possible to consider bread as part of a wider social process that is embedded in the institutionalised rules of practice.
French bread making is a testament to what Granovetter (2002, p. 363) has termed the ‘embeddedness’ of economic action: ‘The argument that the behaviour and institutions to be analysed are so constrained by ongoing social relations that to construe them as independent is a grievous misunderstanding.’ Granovetter attempts to correct this misunderstanding by focusing on the central role of networks of social relations in producing trust in economic life. Seen from this perspective, the reproduction of the boulangerie is not only a mode of organisation but also a complex of cultural and economic practices. It is a classic case of embeddedness. One consequence of an embedded analysis is a perceptible transformation in the object studied. It enables one to appreciate that ‘small firms in a market setting may persist … because a dense network of social relations is overlaid on the business relations connecting such firms’ (Granovetter, 2002, p. 385).
Granovetter's emphasis on embeddedness is quite at odds with the conventional perspective on a singular rationality of market efficiency. Such theories operate with an ‘under-socialised’ conception of action in their models and analysis, one modelled on the abstractions of economic rationality. The people who inhabit the theories of singular economic rationality are truly one-dimensional characters: they can calculate but not do much else. In Oscar Wilde's phrase, they know the price of everything and the value of nothing. (‘What is a cynic? A man who knows the price of everything and the value of nothing.’ Oscar Wilde, Lady Windermere's Fan (1892), Act 3.) They have been reduced to a calculus, while every other aspect of their social being has been stripped away. The reductionism of an under-socialised view of economic action has been dealt an effective counter-factual blow by the case of French bread, with its insistence on the institutionalisation of value and the centrality of culturally framed economic mechanisms in ensuring the survival of a seemingly archaic form into contemporary times.