How does business knowledge (e.g. financial ideas, educational visions) affect business reality (e.g. valuation practices, consultancy work)? “New Perspectives in the Sociology and Anthropology of Business”, a PERFORMABUSINESS research symposium organized in association with East China Normal University, 18 April 2014 at ECNU Zhongbei Campus in Shanghai, will be an occasion to share views and discuss responses to this question. Program and details available here.
PERFORMABUSINESS is proud and happy to announce the publication of the first installment of “L’agence financière”(“Financial agency”), a special issue of Sociétés Contemporaines edited by Horacio Ortiz and Sabine Montagne. From their introduction:
“This is about deconstructing the notion of “the investor” [...]. Rather than just considering that there are “investors”, fully invested within their investing mission, we explore, through a set of empirical studies, how investment decisions are taken as the outcome of a wide array of relations established between different types of actors. This division of financial labor is grounded in a compound of devices (juristic, technical and representational) which constitute what we call “financial agency” — a notion quite divergent from the liberal, economic view that reduces the subject matter to a bilateral exchange between an seller and a purchaser.” (from S. Montagne & H. Ortiz, 2013, “Sociologie de l’agence financière: enjeux et perspectives”, Sociétés Contemporaines, 93, p. 7).
As promised in an earlier post: Alaric Bourgoin‘s doctoral dissertation titled “Le conseil en management à l’épreuve de sa mise en valeur” is now freely available on-line here — an in-depth ethnographic exploration of the performance of value in the ordinary practice of management consultants.
The Second Critical Studies in Accounting and Finance Conference, held on December 15-17, 2013, at the College of Business and Economics of the United Arab Emirates University, in Abu Dhabi, gathered tens of scholars from around the world. It discussed the limits of current paradigms in accounting and finance, from the point of view of practitioners, regulators and scholars. Among other topics, presenters discussed the future roles of sovereign funds, the impact of Bale III regulations, the capacity of innovation in accounting to tackle new social issues such as environmental problems.
I presented preliminary findings of research on cross-border investment in China, in particular how practitioners negotiate different valuation models, different social identities and the conflicting encounter of multifarious institutional and legal environments and traditions. These findings were also presented and discussed at the Seventh European Encounter for the Analysis of Political Societies held in Paris on February 7, 2014 (see previous post here), with a focus on the conflicts between foreign investment professionals and local sellers of small and medium enterprises, in particular the opposition between asset-based valuation methods and discounted cash flow valuation methods.
Of possible interest to blog readers is the forthcoming “Septième rencontre européenne d’analyse des sociétés politiques” to be held in Paris, 6-7 February 2014 — an initiative from REASOPO (Réseau européen d’analyse des sociétés politiques). The title of the conference: “L’économie est-elle un appareil idéologique de naturalisation?” (“Is economics an ideological apparatus of naturalization?”). A number of relevant scholars will be discussing the naturalizing power of economics and economic techniques, including finance. Please check program and details here (in French). PERFORMABUSINESS will be there.
Alaric Bourgoin, doctoral research at the Center for the Sociology of Innovation and visiting fellow at the Department of Sociology of Harvard University, will be defending his doctoral work, titled Le conseil en management à l’épreuve de sa mise en valeur (“Valuation processes in management consulting”), on December 12, 2013, at Mines ParisTech. This thesis has played a crucial role in the formation of PERFORMABUSINESS‘s insights on the performative condition of management consulting.
The thesis explores the fabric of the “value” of management consulting. Getting around the classic opposition between a functionalist (rational-technical) and a critical (psycho-social) approach, the thesis understands to the practice of management consulting as a performance geared toward a practical efficacy. Based on lengthly participant observation in a large French consulting firm, the thesis scrutinizes specifically five processes that aim at prompting a sense of “added value”: the singularization of service, the rise in competence, the production of authority, the graphical presentation of assessment and the signaling of activity. The empirical study of such mechanisms fuels a pragmatist theory of value as a practical attachment and furthers understanding of the issues of business culture in contemporary capitalism.
A PDF version of the thesis shall be available soon on-line.
I had the opportunity to present research on Discounted Cash Flow (DCF) conducted as part of PERFORMABUSINESS at the Annual Meeting of the Society for Social Studies of Science (4S) that was held on October 9-12 in San Diego, California. I talked about DCF and drug development (“What’s a molecule worth? Discounted cash flows and drug development”), drawing on a paper presented last month at the Congress of the French Sociological Association. My talk was part of a session on “Calculability and performativity” which explored processes of making things calculable through case studies in natural resource management, corporate social responsibility, risk modeling, and drug development. Kathrine Tveiterås from the University of Tromsø showed how marine systems are economized to be made manageable, through the 2009 Norwegian Marine Resources Act which broadened the scope of regulation from commercially interesting stocks to include all living marine resources. Laure Cabantous from Cass Business School discussed how the implementation of new European insurance regulation (Solvency II) induced changes in risk management practices in insurance companies. Jean-Pascal Gond from Cass Business School described the construction of the French responsible investment market, highlighting the role of calculative infrastructure and uncertainty displacement. The discussions, opened by Peter Karnøe’s comments on truthfulness, contestations and dynamics in processes of calculability and performativity, raised issues relating to the interplay between tool-supported calculations and professional judgment, the different forms and roles of uncertainty, and the effects of responsible investment practices.
From my paper’s abstract:
Research and development of new drugs increasingly relies on partnerships between pharmaceutical companies and biotech start-ups. The latter are, in most cases, new ventures founded to commercialize results originating from public research. While the ability of biotech start-ups to translate scientific knowledge into knowledge that “the market will value” has been emphasized in the literature, little is known about this valuation process in practice. The paper examines how the market value of scientific knowledge is demonstrated and measured in partnerships between pharmaceutical companies and biotech start-ups, by focusing on a calculative device that is central in this process: the discounted cash flow formula (DCF).
DCF calculates the value of a project by estimating the future cash flows that this project is likely to generate, reducing them by a certain factor due to their distance in time and their probability to occur, and adding them up to obtain the project’s “present value”. Faced with drug development projects, and their considerable length and uncertainty, the formula produces puzzling results: seemingly strategic projects turn out to have insignificant, or even negative, value. In order to account for the widespread use of a seemingly false, or even dangerous, formula, the paper adopts a performative approach and examines the effects that DCF induces in practice. Building on interviews with managers and consultants involved in project valuation, as well as on the analysis of scholarly and practitioner publications, we highlight two “felicity conditions” for the formula’s performativity, which pertain to its network and its affordances.
PERFORMABUSINESS team member Alvaro Pina-Stranger has being recruited as an assistant professor at the Université de Rennes 1. His new position include teaching at the European Institute of Innovation and Technology and research at the Centre de Recherches en Economie et Management. Alvaro is still affiliated with the Center for the Sociology of Innovation at Mines ParisTech, and will continue to carry out his research in the context of PERFORMABUSINESS (see previous post here with summary of ongoing work). Congratulations!
The Provoked Economy: Economic Reality and the Performative Turn is not published yet, but it has a publisher – Routledge – and is to appear soon, sometime in early 2014, as part of the CRESC Series (first in hardback, then in a more affordable paperback edition). The book demonstrates the performative condition of economic reality, and renews its understanding through a set of theoretical proposals and empirical studies.
The latest issue of the Journal of Cultural Economy is devoted to “The Device”. The special issue, edited by John Law and Evelyn Ruppert, explores a number of aspects of performativity and materiality in social-scientific methods. The concerns explored in PERFORMABUSINESS are indirectly present in the special issue through “Provocative containment and the drift of social-scientific realism”, a piece in which Javier Lezaun, Fabian Muniesa and Signe Vikkelsø develop some insights from their conversation on the methodologies of realization — a conversation that played an inspirational role in the establishment of PERFORMABUSINESS’s research agenda.