Individuals, interactions and institutions: How economic inequality affects organizations

Abstract

Research in a number of disciplines has shown that high levels of economic inequality adversely affect individuals and societies. Surprisingly, research examining the business consequences of societal level economic inequality is virtually nonexistent. In this article, I present a framework to study how economic inequality affects organizational performance. I suggest that economic inequality indirectly affects organizational performance via human development in the society, and directly via its effects on individual employees and their workplace interactions, as well as via the institutions in which the organizations are embedded. Further, I present a brief research agenda that seeks to illuminate the relationship between economic inequality and management and conclude with an overview of this special issue.

Two replications of an investigation on empathy and utilitarian judgement across socioeconomic status

“…A discussion on the righteousness of a utilitarian moral framework is beyond the scope of this paper, but it will suffice to say that the means through which high SES individuals make moral decisions is a point worth investigating. As the recent work of Côté et al 3 suggests a possible mechanism—the induction of empathy—that may affect the moral decision-making process, it is not surprising that these findings have been referenced by works within the fields of criminology 4 , industrial-organizational psychology 5 , and social psychology 6 , among others.…”

Income Inequality, Entrepreneurial Activity, and National Business Systems: A Configurational Analysis

“…Not only will this help small businesses and high-growth enterprises raise capital more efficiently, but it will also allow small and young firms to expand and hire faster. (Van Roekel, 2012) Scholars have also argued that high-income inequality leads to higher EA (Bapuji, 2015;Lippmann et al, 2005). The logic for this perspective is based on the assumption that those segments of society with greater wealth will possess the financial means to invest in entrepreneurial ventures, thus increasing the rate of EA driven by market opportunities (Lippmann et al, 2005).…”

“…The complex interconnected nature of how income inequality is associated with EA and institutional factors has been recognized in the related literature (Bapuji, 2015;Beramendi & Rueda, 2014;Khoury & Prasad, 2016;Lippmann et al, 2005;Xavier-Oliveira et al, 2015). Lippmann and colleagues (2005) highlight that multidisciplinary research has shown that institutional factors affecting levels of income inequality also affect levels and outcomes of EA.…”

“…[with] little consensus about the explanations for these patterns" (Neckerman & Torche, 2007, pp. 347-348), and "large gaps exist in our understanding of how business activities contribute to economic inequality" (Bapuji, 2015(Bapuji, , p. 1070). This study not only helps address an important shortcoming in the literature but also highlights the salience of using a configurational approach to theorize about the complexity of these relationships.…”

Understanding Economic Inequality through the Lens of Caste

“…Business organizations not only generate and maintain inequality, but are also affected by its consequences (Alamgir & Cairns, 2015;Andrews & Htun, 2017;Bapuji, 2015;Bapuji & Neville, 2015;Bapuji & Mishra, 2015;Jiang & Probst, 2017;Muckenhuber, Burkert, Großschädl & Freidl, 2015). Therefore, organizational researchers have recently turned their attention to income inequality to understand how organizations contribute to income inequality, and are, in turn, affected by it Cobb, 2016;Davis and Cobb, 2010;Fotaki and Prasad, 2015;Leana and Meuris, 2015).…”