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- Title
CAPITALISM, CRONYISM, AND MANAGEMENT SCHOLARSHIP: A CALL FOR CLARITY.
- Authors
KLEIN, PETER G.; HOLMES JR., R. MICHAEL; FOSS, NICOLAI; TERJESEN, SIRI; PEPE, JUSTIN
- Abstract
Capitalism is characterized by private ownership, coordination through markets, and decentralized decision-making by buyers and sellers rather than the state. Capitalism is blamed for a variety of economic and social ills. We argue that these critiques are often misguided because they often confuse capitalism with cronyism, which is a system of government favoritism toward particular firms. We begin by outlining the basic principles and advantages of capitalism as a system of economic exchange, and we explain how cronyism is antithetical to the basic tenets of capitalism. We then delineate various forms of cronyism and explain how cronyism diverts resources from more productive uses, undermines government institutions, insulates firms from market-based competition, and discourages innovation, economic growth, and social welfare over the long term. We further argue that the failure to differentiate capitalism fromcronyism has contributed to the view that capitalism itself is unjust, rigged to benefit the politically connected, and responsible for various harms that can and should be attributed to cronyism. The article concludes by demonstrating the negative consequences of conflating cronyism and capitalism for research, teaching, and practice, and by making suggestions to thwart cronyism.
- Subjects
ECONOMIC systems; SOCIAL services; ECONOMIC expansion; SCHOLARSHIPS; PUBLIC institutions; CAPITALISM
- Publication
Academy of Management Perspectives, 2022, Vol 36, Issue 1, p6
- ISSN
1558-9080
- Publication type
Article
- DOI
10.5465/amp.2019.0198