Marginal Organizations

Analyzing Organizations at the Edge of Society's Mainstream

Dennis W. Tafoya

• Publisher: Palgrave Macmillan
• Year: 2014
• ISBN:
  9781137361134
• Topic: Negocios y empresa
• Subtopic: Estrategia empresarial

On one hand, marginals are complex organizational systems. On the other hand, they are an example of elegant, applied organizational operations. In The Marginal Organization, Tafoya focuses on organizations often described as part of an informal economy, informal sector, underground economy, or unofficial economy. He presents these systems first as organizations and then as organizations operating outside of society's mainstream, as marginal organizations. He outlines a means for studying marginals so that underlying behavioral patterns can be identified, examined and, if needed, addressed. A simple approach to a study of marginal organizations might conclude they exist simply to meet the needs of their stakeholders - they do not. Thinking of marginals as competing in the context of other organizations allows the reader the opportunity to explore new themes, such as when and how marginals may be more inventive and innovative that mainstream organizations, and what one might conclude about illegal marginals like drug pushers and prostitutes. Tafoya's newest contribution to the field of organizational study is not to be missed.

CHAPTER 1

Introduction to the Concept of the Marginal Organization

People invent opportunities. Sometimes these opportunities result in a business venture, at other times in a means for escape from a difficult or dangerous situation or in an opportunity for advancement, and at still other times in a simple chance to eat, to survive. Whatever the result, if necessity is the mother of invention, invention is the nexus of opportunity. In this book, we explore a by-product of human efforts to construct opportunities for themselves and others; it is an investigation into the ways an individual’s or a group’s bond with society translates into action that leads to the formation of an economic way of life that exists outside of the society’s mainstream.

Invented opportunities do not always produce good or legitimate outcomes. Prostitution, drug sales, undocumented aliens or crime in general may be opportunities for one to earn a living or to gain wealth, but that does not mean they are acceptable pursuits. These are activities on the fringe of society, not at its core. Likewise, there is a panoply of other occupations or endeavors that, while generally viewed as acceptable, are still constrained to exist in society’s margins. The food wagon is a great place for a quick lunch but it hardly offers the convenience and certainly not the luxury of a good, sit-down restaurant. Likewise, the team that shows up to mow the lawn, the subcontractor who installs a new dishwasher or the fellow hired to paint the house all provide needed services but still aren’t mainstream; they offer limited, sometimes “cut-rate” services and typically without the splashy range of features as their full-service mainstream counterparts. They are probably not legally incorporated organizations, they are just people who do needed work. The yellow pages or the local coupon mailer do not feature them; they make their contacts via word of mouth, perhaps through a friend or a friend of a friend. These dynamic subsystems may comprise facsimiles of a larger, formal economy or a broader society but, however metamorphosed, as street vendors, backroom shops, legal or illegal labor, corruption or any number of other organizations, they are not the same as organizations in the mainstream (Sassen, 2009).

Taken at face value, these organizations are described in ways that make them seem like vanguards of a liberated mentality. Indeed, some have labeled these collectively as part of society’s informal sector (Thomas, 2001), others as informal situations (Sabatini and Farnsworth, 2006) and still others as the informal economy, a “low cost, grassroots and potentially revolutionary way to create jobs in the context of overregulated states” (Henken, 2008). However they are labeled, in the absence of grand sentiments or euphemistic titles, these organizations are motivated by more mundane pursuits than providing quality products or services. Their aim is to construct opportunities that earn money to pay the bills or at best to “get by,” to avoid taxes, dodge social security payments and generally skirt, where possible, labor laws (Andrews et al., 2011; Williams and Round, 2009; Hart, 1973, 1990).

Yet, these organizations merit study or examination for many reasons, not the least of which is that in some parts of the world they can account for nearly half of a country’s gross national product (Becker, 2004; Schneider et al., 2010). Our approach begins by conceptualizing them as existing in the margins of a greater society. To this extent they are not in the mainstream, which defines most of the organizations in a society but, rather, they operate on a society’s fringe, periphery or edges. So the state-controlled lottery or casino are mainstream organizations while the unsanctioned, online gambling or the person “running numbers” on the street corner are the marginal operations seeking stakeholders willing to risk some money in the hopes of winning more. The store selling beer, wine and liquor can find itself competing with a group operating an illegal distillery making moonshine, and the concession stand in the sports arena selling team memorabilia competes with the street vendor hawking similar but contraband items.

Our view of marginalized organizations is that they are illegal operations. The aforementioned street vendor may not need a license to sell the goods offered but the vendor is expected to collect and pay sales taxes, to adhere to labor laws and to ensure that the merchandise sold is legal and not in violation of trademark or copyright infringements. The owner of a lawn care operation may pay personal income tax while paying those who mow the lawns, rake the leaves and trim the hedges cash “under the table,” thus avoiding payroll and social security taxes. Parts of the lawn care operation are legitimate and some others are not (La Porta and Shleifer, 2008).

Organizations in the marginalized society are not necessarily set up as profit entities either. A “charitable” organization may accept donations to support its soup kitchen or “outreach” programs but may not seek classification as a particular type of for-profit or nonprofit entity. Indeed, some of these organizations are notorious for using the income they collect to support a lavish lifestyle or to provide extreme compensation for the organization’s leadership.

History is filled with examples of organizations characterized as offering goodwill or charitable services while really operating as a front for illegal activities. The organization that offers “protective services” to local residents, businesses or whole communities is one example. The scam here is simple: if you don’t pay us for “protection,” we won’t protect you from us . . . if “you don’t pay, you can’t play.” At other times, marginal organizations operate as fronts for more nefarious activities or missions. Vigilante groups organized to promote or “protect” a particular way of life are an example. Societies such as the Ku Klux Klan or even organizations classified as terrorists, like al-Qaeda, frequently claim to exist to perform protective functions on moral or religious grounds. Whatever their claims might be, when they are not performing in ways that are sanctioned by a society, they are examples of organizations operating out of the mainstream and are thus included within the scope of our research and this book.

A key feature of marginal organizations is autonomy; they see themselves as independent, self-sufficient and often self-governing entities. One result of this orientation is that marginals always have the attention of two groups: their patrons who want and sometimes need their products and services, and elements of the mainstream who watch, observe and sometimes scrutinize marginals as potential trouble or threats to established order. Many marginals look like mainstream organizations in that they have structure, hierarchies and control mechanisms, but their structure, functional nature or overall design is often fluid, capable of quickly adapting to the conventional norms and organizations of the society with which they are associated. Their relationship to the mainstream is important to understand. On the one hand, they are often dependent upon the mainstream for their livelihood; mainstream citizens and consumers are often primary stakeholders in a marginal organization’s social and economic network. On the other hand, however, mainstream organizations and institutions often are a marginal’s primary adversary. The mainstream comprises organizations who may see marginal organizations as threats or competitors to their own operations, those whose job it is to regulate and enforce rules, regulations and laws a marginal organization may violate and those who simply don’t see marginal organizations or those associated with them as appropriate for the “mainstream way of life.” In the end, these threats of mainstream attacks or action often serve as a catalyst for a marginal’s inventiveness or general desire to know and capacity to adapt to the mainstream environment around which they function. As suggested above, this does not mean they have to behave in manners or ways prescribed by the mainstream; it just means marginals have to be capable of adapting their organization so that they can operate despite the mainstream’s rules, regulations or prescriptions. Think about it. Puppy mills, illegal gambling, smugglers, drug operations or prostitutes can all operate within the same geographic region, the same political or legal environment as each other and their legitimate, mainstream counterparts.

So the mainstream is an inescapable backdrop against which marginals operate and the foundation that defines a marginal’s intrinsic nature. It’s as though the marginal is a hybrid organization—a close copy of mainstream organizations but just different enough to be distinguished from society’s economic and behavioral standards. However, while the structural makeup of mainstream organizations may serve as a template for understanding a marginal’s operation, these features alone do not provide enough perspective to help understand marginal organizations and their operations. For example, Becker (2004) directs her readers to three theoretical approaches she believes summarize most of the literature explaining links between marginal and mainstream relationships: those promoting a legalist interpretation of marginal organizations, the structuralists who focus on the marginal organization’s makeup and the dualists who approach marginal organizations as separate from the dominant mainstream and its organizations. The legalists see marginals as entrepreneurs who rebel against overregulation by mainstream, government organizations (11). Like the other two theories, the legalist approach has its merits but it’s the inherent nature of this theory to restrict its scope to some of the smallest of marginal organizations, and that’s too great a limitation for us.

Dualists see marginal organizations as separate from the mainstream. Dualists may acknowledge that the marginal and mainstream populations are a spectrum containing a range of organizations defined in terms of, for example, their degree of legality or the formality of their structure, but in the end, the dualist perspective is a “black or white” orientation; there may be gradations within the mainstream and its margins but organizations are either in one or the other. This doesn’t mean an organization can’t migrate from one side to the other, just that the two segments are independent and it’s the nature of the organization that ultimately determines if it is classified as marginal or mainstream. Finally, the structuralists often approach marginals as subordinate to the mainstream (Castells and Portes, 1989). This view clearly sees marginals as being on the lowest rungs of an organizational hierarchy. This view might work if marginals were being judged by their earning power, and then only if the earning power of marginals was, say, always in the lower 5–10% of the hierarchy. But some marginals are economic powerhouses earning hundreds of millions of dollars. Drug-trading organizations, Somali pirates or those who deal and trade in illegal weapons or armaments are among the wealthiest organizations in their countries of origin. The number of marginal organizations worldwide or within most countries also makes them a major presence, to say nothing of the number of people they employ. Other times the marginal may be a dictatorship or a military tribunal that controls and directs an entire population or country. A structural theory bends when these types of organizations are accounted for; so, while there’s some validity to the orientation structuralists take, it doesn’t offer a single best theory accounting for the relationship between marginals and their mainstream.

In fact, there’s probably no single best theory to account for marginal organizations, but just effective definitions or parameters stipulating the scope of one’s study. In this book, any organization, for example, economic, social, political, religious, military or cultural, can be classified as operating in society’s margins. Our approach is to simply include any and all organizations that operate outside a mainstream’s set of laws, rules and regulations. The literature seems to support this criterion and, as importantly, it avoids the romantic notions like those that approach marginals as ventures or entrepreneurships that create employment or economic opportunities for their membership or society.

Our orientation doesn’t use an organization’s motivations as a delimiter; if the organization operates outside the law, rules and regulations, it is a marginal, not a mainstream, organization. This approach also rectifies an ambiguity created in some existing studies. For example, some treatments of marginal organizations muddy the relationship between the marginal and mainstream when they approach marginals as being defined by exceptions: as organizations that may not operate as mainstream organizations (e.g., pay taxes or adhere to local labor laws) but provide goods and services that are otherwise perfectly legal (Becker, 2004, 11).

Given the scope of this book, as presented above, we are open to including any and all organizations that operate outside of society’s legal, rules and regulations parameters as examples of marginal organizations. We take this approach because it seems in line with general treatments in the literature and, more importantly, it provides us with coherent populations to use when seeking to understand if and why marginals are successful, why they may be perceived as a burden on the mainstream or how and why they operate in society’s margins in the first place; it also is important to understand the ways in which these organizations “behave” and act in their environments. Simplifying our notion of what is and isn’t a marginal organization greatly facilitates our understanding of what particular features are needed for marginals to survive and sometimes flourish without creating unwanted ambiguities or confusion.

We take this orientation for several reasons, beginning with the fact that society’s margins include a mix of organizations with economic, social, political or even cultural motivations, and also that too narrow a focus or definition of what is a marginal organization is both misguided and misleading. Let us consider the following observations.

First, a marginal’s role in society should never be discounted. These organizations can have significant influence in every society and they do so because they meet the needs of people, stakeholders, that are not being met by mainstream organizations. Marginals emerge to capitalize on opportunity; it’s often a win/win situation. The marginal and the stakeholder gain from the relationship, and whether the relationship is defined by drugs, sex, politics or religion it’s the opportunity for a relationship that fills one’s needs that counts.

Marginal organizations are opportunistic. If there is an opportunity for easy money, an opportunity to gain needed followers or an opportunity to enhance the organization’s position, even if those benefits antagonize mainstream organizations, do it. Why not? Marginals know they’re already on the outside, so some see any opportunity as only a means for gain and, at best, only resulting in nominal increases in the discrimination, hazing or harassment they may feel they experience.

Some marginals provide stakeholders with the recreational fix or outlet they need and can’t get in the mainstream. In this capacity, the marginal provides an escape, a release point for the stakeholder in need and, of course, willing to pay the price for pleasures received. All organizations exist to meet some stakeholder’s needs; it’s just that marginal organizations often handle needs mainstream organizations seldom see as important or worthwhile in addressing.

Organizations emerge outside the mainstream because there are low entry requirements in the marginal sector. Anyone can steal, sell one’s body or join a gang, and that’s because almost anything can be ripped off, almost anybody can be sold and there’s always a gang somewhere looking for a new member. In these instances, the individual has all the equipment needed to participate; it’s that simple. Some characterize this as an example of an entrepreneurial spirit, but in many instances, choosing to move into the marginal sector is more a last resort than a planned opportunity.

Marginals are ubiquitous; they are the perfect universal opportunity. Crimes can occur anywhere, anytime. So if there’s a way to access the mainstream, there’s a marginal organization seeking to capitalize on this opportunity. One should be careful, however, not to associate commonality with competence or even to assume competence to be a marginal’s prominent trait. The opportunity to act, more than the possession of particular skills or competencies, is what facilitates the marginal’s capacity to act, to travel within the mainstream or to multiply. Marginals also benefit from their simultaneous capacity to engender a social dimension that both nurtures the organization and gives members another reason for being involved in a sometimes dangerous environment. This is a powerful feature many organizations seek to possess but it is perhaps most pronounced in marginals because it serves as a binding agent for both the organization and its members. The marginal that is set up as a business enterprise may experience greater stakeholder bonding than a given business enterprise operating in the mainstream. A marginal’s membership knows that both the organization and the membership are excluded, are outcasts, from the mainstream; it’s typically not one or the other.

The margins provide a place for organizations engaged in criminal activity to exist, where they can recruit, orientate and train new members in the organization’s rites, rules and procedures. This is an invaluable opportunity and one critical for a marginal organization’s survival. There’s a level of privacy, cover and concealment the marginal may not be able to secure in the mainstream. A society’s margins may not offer the same comforts as regions within the mainstream but it is home to many outcasts. Indeed, while the marginal organization is familiar with moving back and forth between the mainstream and its margins, most mainstream organizations would not know how to begin these types of excursions even if they wanted to make them.

The mainstream is only a partial opportunity for the marginal. The mainstream is an economic resource to be mined and, at times, a unique learning opportunity for the marginal. But the marginal must be on guard and constantly vigilant. Some mainstream stakeholders use their position as guardians or vanguards against the marginal to use and interpret the law when it’s convenient, to engage in illegal activities like wiretapping if necessary or to restrict or unlawfully detain a marginal if this seems warranted. These behaviors and experiences teach the marginal to be cautious, to be prudent. But, despite the dangers, what marginals need is a place where criminal activity can be consummated. Places where money can be laundered, goods can be fenced and police can be avoided, uneven or unenforced regulations can be used to the marginal’s advantages. When possible, marginal organizations rely on their own territories outside the mainstream to fulfill these needs. If, however, it’s not possible to stay within the safety of the marginal’s own environment, they must move into the mainstream to meet their needs.

Anyone can be a leader or important person in a marginal organization, provided they “fit in” and embrace the organization and its mission. Once in, however, there seldom is a need for a formal education to participate or advance. It is a self-governing, self-ruled environment. The mainstream doesn’t dictate who or what the marginal ...

Table of contents

• Cover
• Title
• Chapter 1  Introduction to the Concept of the Marginal Organization
• Chapter 2  Profiling the Marginal Organization: A Framework for Operational Analysis
• Chapter 3  The Emergence of Marginal Organizations in a Mainstream Society: Translating Influence into Strategy in an Effort to Drive the Marginal Organization’s Success
• Chapter 4  The Emergence of Marginals in the Active Context of Mainstream Society
• Chapter 5  Analyzing the Marginal’s Persona: Existence as a Marginal Organization and the Marginal’s Impact on the Mainstream
• Chapter 6  For Marginal Organizations within a World of Mixed Certainty, Surviving May Be Just Enough
• Chapter 7  Mapping the Decline and Loss of Organizational Influence in the Marginal Economy: A Case Study
• Chapter 8  Conclusions: Strategies for the Management of a Society’s Marginal Organizations
• Bibliography
• Index