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Democracy in a Knowledge Economy

Democracy, the power of the people, takes many meanings. It can include political processes such as public debate, election, and representation, as well as consensus building and active decision making. The term is used to characterize societies and organizations that value economic justice, property rights, freedom of contract, and broad access to information and education. However, the meaning of “democracy” differs across nations and between the workplace and community. As we gather in Seattle, the site of recent conflict and demonstrations concerning the global impact of institutions, the Academy of Management has the opportunity to both learn from and inform an on-going worldwide debate. The challenges inherent in achieving both economic growth and stability have sparked clashes between people and organizations, between developing nations and industrialized ones. At the same time, democracy in its many forms has become not just a source of dilemmas but also a source of solutions to the problems associated with globalization, economic development, and environmental sustainability. The key to democracy’s role as a solution may be in the particular characteristics it gives rise to in organizations.

The theme of this conference juxtaposes democracy with the forces that have been set in motion by the shift to a knowledge economy. A knowledge economy changes traditional bases of power by decentralizing key resources, especially information, and creating a heretofore unheard-of variety in choices for individuals, firms, and communities regarding work, leisure, learning, and civic involvement. Although industrialization led to a decline in self-employment, a knowledge economy broadens the array of employment forms beyond self-employment and corporate jobs to include networked and boundaryless careers. Expanded access to information coincides with greater competencies and on-going development on the part of knowledge workers. In turn, information and competence underpin democratic institutions, through effective expression of individual preferences and choices. 

The professional activities Academy members engage in closely align with much of the infrastructure supporting democratic practices. Our research, teaching and practice focus considerable attention on developing the competencies of workers, managers, and rganizations to cooperate and resolve conflicts, make informed decisions, and incorporate the interests of multiple stakeholders. At the same time, the prevailing frameworks from which organizations are viewed elevate the interests of some stakeholders over others, a focus objected to by many critics of globalization. The Academy is well positioned to explore the many meanings of democracy that operate in the mental models and practices of firms, interest groups, individuals, and disciplines. 

The many meanings of democracy are often in conflict. Although democracy in the abstract seems to encompass undeniably good things, difficulties arise when the term’s different meanings become contradictory in practice. Democracy with a big D is related to many little d’s, both figuratively and literally: 

  • Political democracy - political systems based on electoral competition.
  • Egalitarianism - diminishing differences among people of varying power (e.g., based on income, gender, or race).
  • Equal access - universal availability of education and information, including “transparency” where individuals are kept informed about the activities of their government and other organizations that wield power over them.
  • Interactivity - access to people in power.
  • Expression - freedom of speech and open exchange of ideas.
  • Economic democracy - legal protection of property rights and freedom of contract.
  • Direct democracy - individual participation in decisions affecting one’s interests.
  • Civic culture - collective problem solving or societal intelligence.

With respect to knowledge economies, the role and scope of democracy in its various connotations merit careful and informed reflection. Forms of democracy often compete with each other, particularly when exercised at their extremes. Economic democracy can be threatened by radical egalitarianism. Political democracy and equal access can suffer against the backdrop of unbridled market influences arising from economic democracy. A pluralistic approach to democracy suggests that an on-going balancing of interests may be necessary. In the spirit of healthy debate and empiricism, the Academy’s 2003 meetings provide a setting to consider these issues.

Two sets of questions provide a useful starting point for our deliberations:

1) What does democracy mean in 21st century workplaces and societies? How does the shift toward a knowledge economy impact the meaning, functioning, and reach of democratic practices inside and outside organizations? What impacts do different forms of democracy have on the well being of workers, organizations, and the larger society? 

2) Regarding democracy’s potential limits, does democracy within and outside organizations have universal value, or is it bounded by cultural and political institutions? What alternative forms can democratic practices take, and how is their effectiveness influenced by the broader society? How might organizations be effective under non-democratic conditions?

What is the meaning of democracy?

The first set of questions calls attention to the shifting meaning of democracy depending upon who uses the term and in what context. Democracy can mean decision making by representatives who rely on governance mechanisms such as election processes to reflect the interests of their stakeholders. In a more organic, yet also more complex form, democracy can mean deliberation, public debate, and consensus building. Democracy in the workplace can manifest itself differently from political or governmental democracy. Few contemporary organizations might be viewed as democracies in the conventional sense of the word. This is because organizational stakeholders differ widely in their rights to participate in the decisions of an enterprise and to obtain the benefits and proceeds of the organization. It is important to understand when and where an organization employs these various forms of democracy in order to understand their effectiveness (interests served, impact on stakeholder well being) and efficiency (resources utilized, costs, timeliness, flexibility). 

Note that this theme goes beyond the narrow form of “workplace democracy” typically addressed in industrial relations research. It recognizes that democracy in the workplace is multifaceted, ranging from access to accurate financial information by firm stakeholders to the power workers exercise in shaping the terms of their employment. Adding to the mix and complexity of democratic forms, technological change has brought about more widely distributed information and easier access to people in power. Referred to as “the death of distance,” such changes can substantially alter when, where and how democratic practices arise. 

Changing beliefs about power can also create new demands for democratic practices. At a minimum, democracy is protection from abuse of power. But while the use of power might be legitimate in some places and at some times, it is not always so. What is considered to be appropriate conduct on the part of managers and workers has changed, particularly as motivated, highly skilled workers more often form part of the comparative advantage of firms. The definition of appropriate use of power also defines what constitutes abuse of power. For example, industrial democracy was once synonymous with unionization, which worked to guard against abuses by employers. But the decline of unions, along with relatively weak worker rights in some nations, means that the rights workers take for granted outside the workplace are often absent within, unless alternative mechanisms to protect workers are in place. It is perhaps not surprising, then, that the Baldridge National Quality Award, established in the United States in the late 1980s, allocates 85% of points to “improvements in management methods and processes,” and allocates only 4% to “employee involvement.”

As we have noted, the concept of democracy overlaps with a variety of contemporary organizational issues that warrant consideration by scholars, practitioners, and the general public. These issues reflect the particular expertise and interests of Academy members, including transparency, legitimacy, stakeholder interests, justice, power, competency, autonomy, control, and responsibility. We hope that this year’s theme stimulates productive theory development, research and debate on these and related topics.

Does democracy have its limits?

Regarding the second set of questions, we seldom address publicly whether democracy has limits and what those might be. In the political arena, Western commentators often assume that more democracy is better. Note that above, we queried whether this assumption is thought to hold true in workplaces. In all cases, we need to ask whether assumptions regarding democracy rest on scientific theory and evidence as well as on values. Active experimentation with democracy goes on in organizations all the time via efforts at distributed decision making, information sharing, and experimental incentive systems mixing equity and equality or collective and individual rewards. Organizational researchers have a crucial role to play as public scholars to inform the discussion of democracy in a knowledge economy, whether it be manifest in workplaces, in marketplaces, or in the broader community. 

Whether there are limits to democracy’s benefits probably depends on the organizational and societal contexts in which democracy arises and whether the opportunity for democratic forms is growing, declining or in crisis. It may be that democracy and the values promoting it are less universal than we realize. Though democracy offers protection from abuse of power, there may be other means of organizing that provide similar protections. As scholars of organizations and organizing, who operate increasingly cross-nationally, we must give more attention to alternative means of protecting against abuse of power, addressing functional organizations underpinned by institutions that differ from those we typically study. 

Our focus upon the role of democracy in a knowledge economy, in 21st century workplaces and society, intersects with themes of previous Academy meetings. How Governments Matter (2001) and Building Effective Networks (2002) addressed the impact of governments and social structure on fundamental processes in modern organizations and the workplace experience. In response to complex change, both A New Time (2000) and Change and Development Journeys in Pluralistic World (1999) focused attention on how individuals and organizations are challenged to transform themselves. Building on the good work of previous years, we invite you to join us in exploring the richness and intricacies of this year’s focus in Seattle on “Democracy in a Knowledge Economy.”

Some topics submissions might address include:

  • What is the role of secrets in relation to democratic practices in organizations? How are issues of economic and political democracy affected by secrecy in pay systems, a lack of transparency in decision making, or by the information a firm makes available about its performance and actions? 
  • Stakeholders including workers, union members, managers, shareholders, and others differ in their abilities to participate effectively in organizations. What competencies affect their ability to participate? Does stakeholders’ ability to access and understand business information play a role? What are the formal and informal constraints upon their participation?
  • How do we prepare managers and management educators to participate in democratic institutions? How well do we support voluntariness in contemporary organizations or representation of multiple stakeholder interests?
  • Political scientists speak of civic competence as a requirement for effective democratic governments. Is there an organizational parallel of civic competence? What forms would within-firm civic competence take? What complementary institutions (e.g., educational institutions, the broader society) are required to promote democratic practices in and around organizations?
  • Highly skilled workers typically have greater say over how their work is performed as well as the context in which it occurs. Is the kind of influence that mobile, skilled employees access due to their market power comparable to direct democratic participation? What opportunities are there in organizational design for reintegrating managing the work with doing it? 
  • Do the qualities that make certain leaders and followers effective vary across different levels and forms of democracy? If so, what mechanisms promote the development of these qualities? How might these qualities and/or mechanisms change in the future? 
  • Worker mobility can impact the effectiveness of democratic processes. Theories of political democracy indicate that identification plays an important role in promoting use of participative structures and in continuing support when the political process leads to adverse outcomes. How is member identification with organizations and work groups affected by high turnover and career models where each job is just a stepping stone to the next opportunity?
  • There is evidence of a developmental cycle in political democracy, in which democracy is more effective in societies once they become stable, and may be less so when they are fragile. Do comparable developmental patterns occur in workplace democracy? Similarly, democratic governments typically have checks and balances to filter the whims of individuals. Are there organizational parallels, and what impacts do they have?
  • Choice or freedom can mean different things in a workplace (e.g.. creating an organization of my own or to choose the organizations I belong to). To what extent do workers, managers, shareholders, or other constituents believe they have a right to choose their own paths? To what extent can they say ”no?”
  • Consider the effects of information technology - including e-democracy, virtual marketplaces, and virtual communities - on the development of democratic innovations. How does information technology affect the different forms democracy takes? 
  • Workers increasingly are expected to act as managers and participate as owners through stock options and other plans. Is stock market participation a parallel or a substitute for industrial democracy? What conflicts result from the multiple roles workers play in organizations? Does the increasingly prevalence of self-management and investment in one’s employer give rise to cognitive conflicts for workers?
  • Consider the relationship between efficiency and democratic practices. Hierarchical processes have appeal as a way of increasing efficiency and timely problem solving. How can organizations increase the quality of the decisions that democratic processes produce, not just increase the responsiveness and timeliness of those processes? What structures, human skills, support technologies, and cultural supports are required? 
  • How do decision support systems contribute to workplace democracy? Are different kinds of democratic processes suited to different settings and decisions. For example, there could be “quick processes” based on voting, “thick consensus” based on interaction, and “thin processes” based on market-based choices. 
  • “There is very little difference between one man and another; but what little there is, is very important”, according to William James. What is the role of individual flexibility or special treatment in a democratic system? Can “equality” take different forms? 
  • Are there alternatives to democracy that provide comparable outcomes? How might contemporary firms address and alleviate the downsides of democracy (e.g., the tyranny of the minority, or of the majority as referred to by political scientists)? 
  • What impacts do institutions and political regimes have on democracy within and outside the workplace? We note that as firms and countries move to increase their democratic practices, they often need to develop new infrastructure – sometimes as basic as new vocabulary (e.g., “teams” instead of departments, “facilitators” instead of managers). In preparing to introduce democratic practices to Tibet, about 2,000 concepts have been identified, many of which have no mode of expression in that country’s traditional language. Coining new Tibetan words is just one step toward a democratic society, albeit an important one. As changes are introduced into a knowledge economy, what processes are necessary to create new democratic forms? 

These are just a sample of the many issues our Seattle conference theme raises. Issues of democracy relate to our teaching, research and practice. Come to Seattle and join the extended conversation at the 2003 meeting.


Denise M. Rousseau
2003 Program Chair
Andrea Rivero-Dabós
2003 Program Coordinator

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