Civil Society and the Professions in Eastern Europe - Social Change and Organizational Innovation in Poland (Nonprofit and Civil Society Studies, An International Multidisciplinary Series)

Civil Society and the Professions in Eastern Europe Social Change and Organizational Innovation in Poland

NONPROFIT AND CIVIL SOCIETY STUDIES An International Multidisciplinary Series Series Editor: Helmut K. Anheier London School of Economics and Political Science London, United Kingdom

PRIVATE FUNDS, PUBLIC PURPOSE Philanthropic Foundations in International Perspective Edited by Helmut K. Anheier and Stefan Toepler CIVIL SOCIETY AND THE PROFESSIONS IN EASTERN EUROPE Social Change and Organizational Innovation in Poland S. Wojciech Sokolowski

A Continuation Order Plan is available for this series. A continuation order will bring delivery of each new volume immediately upon publication. Volumes are billed only upon actual shipment. For further information please contact the publisher.

Civil Society and the Professions in Eastern Europe Social Change and Organizational Innovation in Poland

S. WOJCIECH SOKOLOWSKI Johns Hopkins University

Baltimore, Maryland

KLUWER ACADEMIC PUBLISHERS NEW YORK, BOSTON, DORDRECHT, LONDON, MOSCOW

eBook ISBN: Print ISBN:

0-306-47177-9 0-306-46250-8

©2002 Kluwer Academic Publishers New York, Boston, Dordrecht, London, Moscow All rights reserved No part of this eBook may be reproduced or transmitted in any form or by any means, electronic, mechanical, recording, or otherwise, without written consent from the Publisher Created in the United States of America Visit Kluwer Online at: and Kluwer's eBookstore at:

http://www.kluweronline.com http://www.ebooks.kluweronline.com

To my parents

This page intentionally left blank.

Hegel remarks somewhere that all facts and personages of great importance in world history occur, as it were, twice. He forgot to add: the first time as tragedy, the second as farce.... Men make their own history, but they do not make it just as they please; they do not make it under circumstances chosen by themselves, but under circumstances directly encountered, given and transmitted from the past. The tradition of all the dead generations weighs like a nightmare on the brain of the living. And just when they seem engaged in revolutionizing themselves and things, in creating something that has never existed, precisely in such periods of revolutionary crisis they anxiously conjure up the spirits of the past to their service and borrow from them names, battle cries and costumes in order to present the new scene of world history in this time-honoured disguise and this borrowed language.... Thus the awakening of the dead in those revolutions served the purpose of glorifying the new struggles, not parodying the old; of magnifying the given task in imagination, not of fleeing from its solution in reality; of finding once more the spirit of revolution, not of making its ghost walk about again. Karl Marx, The Eighteenth Brurnaire of Louis Bonaparte, New York: International Publishers, [1852] 1987, pp. 15–17.

This page intentionally left blank.

Preface This research project owes its inspiration to the desideratum of the renowned French sociologist Alain Touraine (1988) to “return to the actor” in sociological analyses. It therefore adds a new dimension to the sociology of voluntary organizations: an empirical investigation into the motives of people who establish this type of organization. While collective interests of various stakeholders in nonprofit services have been examined by major theories of nonprofit organizations, the interests of the social actors most directly involved in the creation of the entities in question—professional service providers—received less attention. Organizations do not emerge ex nihilo, by the power of the invisible hand. It is real people who create them. Moreover, different people create and use different types of organizations for various reasons. Uncovering those specific reasons can offer important insights that add to our understanding of the origins of formal organizations. The recent proliferation of organizational forms (called “voluntary,” “nonprofit,” or nongovernmental’’ in English) is a worldwide phenomenon (Salamon and Anheier, 1994). However, Eastern Europe offers a unique opportunity for studying this phenomenon. The social–political reform which swept that region upon the end of nearly fifty years of Soviet domination spurred the creation of a significant number of organizations under a similar set of conditions. Moreover, the circumstances of that creation defy the conventional wisdom enshrined in major economic theories of nonprofit organizations. Central and Eastern Europe occupy a rather peculiar place in cognitive cartography (conventional representations that mix chunks of geographical space with cultural values and stereotypes). Until the beginning of the twentieth century, it was the place that, in the words of the French playwright Alfred Jarry, epitomized “nowhere,”a metaphor for uncivilized quagmire of conflicting interests and messy politics that give birth to such cliches as “balkanization” or “Polnische wirtschaft,”1 and “Russian banks.”2 ix

x

PREFACE

After the Russian Revolution of 1917 and after the Soviet domination of the region that followed World War II, Central and Eastern Europe became a place endowed with two contradictory meanings: for some it was a “promised land” of new social order that was to deliver humankind from poverty, inequality, and exploitation; for others it epitomized the totalitarian bastion of oppression and the graveyard of human freedom. This cognitive cartography of Eastern Europe set the stage for endless narratives, reiterated in popular media and scholarly work, of a mortal struggle between the menacing juggernaut of the bureaucratic state and the popular will to pursue liberty and happiness. This book attempts to move beyond such imagery of the cosmic struggle between Good and Evil that dominated accounts of the social–political changes taking place in Central and Eastern Europe upon the demise of the Soviet empire. The book grew out of my frustration with the conventional paradigm that views Central and Eastern Europe as a sui generis entity, a separate island that has little in common with the rest of the world and thus can be understood only in its own terms. Instead of treating Eastern European development as a unique experience that defies the rules of rational organization of economy and society, I view it as an essentially rational response of social actors to their specific social–political environment. This approach has the obvious benefit of a comparative study: It allows observations of a similar theme under different conditions in order to discover causal relationships among social facts. This book takes a case study approach as it is understood in Weberian sociology, where “case” represents a geographically and historically specific social phenomenon that requires an explanation (Ragin and Becker, 1992). The specific case under investigation is the emergence of service-providing organizations established by health and human service professionals in Poland. This phenomenon is important mainly because of its strategic position defined by the juncture of professional and political interests of the people involved in the process, and the historical circumstances that pushed them to seek novel institutional venues to pursue those interests. The case study approach offers an opportunity to investigate connections between organizational forms, social organizations of production, and occupational interests of professional service producers. To explain these connections, I propose a theoretical model, which I call organizational uses and gratifications, that posits formal organizations and policies serve as tools and resources that different individuals use to accomplish their interests and goals. This model can explain not only the behavior of various groups of social actors under the central planning regime but also the peculiar uses of Western institutional resources transferred en masse in the aftermath of the 1989 reform (Wedel, 1998).

PREFACE

xi

The organizational uses and gratifications model holds that nonprofit, nongovernmental organizations have their origins rooted in the interests of service providers. In the specific case of human service professionals, these interests involve marketing their services to the public and establishing or protecting their occupational status in the face of numerous challenges ranging from public distrust to indifference or resistance of public authorities, and to competition from other kinds of service providers. Therefore, they have vested interests in building public trust in their service, and they deflect or neutralize potential or actual challenges to that trust. This book will show how the nonprofit organizational form was used by these professionals to overcome an information asymmetry problem, build public trust, and influence public policy. The analysis offered in this book will thus allow us to formulate an empirically grounded theory of the origins of nonprofit, nongovernmental organizations, as well as add to the understanding of Eastern European development. It highlights the relationship between major social forces in that development, professional and occupational groups, different types of institutional resources, and different types of social–political constraints under which they operate. The model can be a theoretical guidance in further analysis of social, political, and economic changes in the neighboring Eastern European countries, as well as other regions of the world. While the books orientation is primarily aimed at theory building, the empirical material also has more practical implications. For one part, it contributes to a better understanding of the key role of professionals and human service organizations in social policy. For another part, it helps us to systematically explore cross-cultural and normative differences in perceptions of nonprofit organizations and their social functions. In turn, this knowledge can foster a more meaningful dialogue and understanding between researchers studying the nonprofit sector and the practitioners in the field. This project would not have been possible without the generous support and assistance of many people. I would like to thank my graduate advisor at Rutgers University and friend, Helmut K. Anheier, for his comments, suggestions, and assistance since the inception of this project. His grant on behalf of the editorial board of VOLUNTAS (International Journal of Voluntary and Nonprofit Organizations) made the journey across the ocean and the collection of the qualitative data possible. I would also like to thank my Polish friends, especially the Research Team KLON and Jakub Wygnanski and Filip Rosciszewski in particular, for making the electronic data file KLON available for this research, and for their assistance in selecting and contacting the organizations for in-depth interviews. Ewa Les of Warsaw University provided useful comments, suggestions, and

xii

PREFACE

invaluable assistance in data gathering. Krzysztof Frysztacki of the Jagiellonian University kindly provided organizational resources, which made it possible to include Krakow-based organizations in the qualitative phase of this project. No scholarly work is created in an intellectual vacuum. It needs a nurturing and challenging intellectual atmosphere to stimulate the investigator to examine different ideas, look at facts from different angles, and provide explanations that will sustain critical examination. I was lucky to find such an environment at the graduate program in sociology at Rutgers University. I am particularly indebted to Eviatar Zerubavel for his inspiration to examine the role of cognitive factors in the structuring of everyday life, and to Lee “Chip” Clarke for his lessons in critical approach to organizational behavior. This book also benefited from the knowledge of Jozsef Borocz and Joanna Regulska who reviewed and critiqued an early version of this manuscript. Last but not least, I am especially grateful to the people I interviewed who served as sources for this project—Anna Banas, M.D., Wojciech Biernat, Artur Dobrowolski, Father Eugeniusz Dutkiewicz, Krystyna Duto, Jan Dziedzic, Ryszard Jasniewicz, Barbara Klopocka, Stanislaw Kowalski, Elzbieta Luczywek, M.D., Tomasz Majewski, Zygmunt Mieroslawski, Krystyna Mika, M.D., Krystyna Roginska, Anna Struminska, Tomasz Tomasik, M.D., Andrzej Urmanski, Aleksandra Wlodarczyk, and Grzegorz Zalewski—for sharing their knowledge about their own organizations, as well as the health and social service sector in Poland. As with any investigative project, the final task of interpreting empirical data requires a great deal of intuition and judgment calls in addition to systematic analysis. The investigator must decipher the oft ambiguous or incomplete bits of information and then decide which pieces are relevant and which are not, which provide useful links and which are dead ends. The responsibility for those judgment calls and any errors of fact or interpretation inevitably falls on the investigator, and I accept that responsibility gladly.

NOTES 1 2

“Polish economy”: a derogatory term denoting disorderly conduct of business affairs. Cf. a derisive comment that the Russian banks operate on a principle that translates into English as “your deposits won’t be wasted with us, but you won’t get them back either.”

Contents Chapter 1 . • Introduction: The Goading of History: A Comment on Political-Economic Development in Eastern Europe . . . . . . . . . . . . . . 1

Depicting the Undepicted: A Comment on Terminology . . . . . . . . . . . . . . . 13 Book Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Chapter 2. What Is to Be Explained and Why? . . . . . . . . . . . . . . . . . . 25

The Puzzle of Conventional Actors in Unconventional Roles . . . . . . . . . . . 25 The Misdemeanors of Conventional Wisdom . . . . . . . . . . . . . . . . . . . . . . . 30 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Chapter 3. Professional Aspirations to Class Power: A Comment on Civil Society in a Centrally Planned Economy . . . . . . . . . . . . . . . . . 47

Civic Aspirations under a Central Planning Regime . . . . . . . . . . . . . . . . . . 47 Caretakers and Reformers: Healthcare and Social Service Professionals under Central Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Chapter 4. • Professional Innovation and Information Gap . . . . . . . . .

71

Challenges of Professional Innovations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Bridging the Esoteric with the Mundane . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98

xiii

xiv

CONTENTS

Chapter 5 . • Organizations and Social Construction of Expert Commodity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Formal Organizational Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Public Benefit Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

101 102 114 126

Chapter 6. • Organizations and Social Processing of Information . . . 127

Social Schemata and the “Information Glut” . . . . . . . . . . . . . . . . . . . . . . . 127 Organizational Form and Cost–Benefit Perception . . . . . . . . . . . . . . . . . . 137 Chapter 7. • Professional Service and Public Benefit Status . . . . . . . .

143

Physicians Improving the Quality of Conventional Healthcare . . . . . . . . . 147 “Organic Intellectuals” Solving Social Problems . . . . . . . . . . . . . . . . . . . . 155 Paraprofessionals Striving for Recognition . . . . . . . . . . . . . . . . . . . . . . . . . 166 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189 Chapter 8 . • Toward a Partial Theory of the Origins of Social Proximity Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191

Uses and Gratifications of Social Proximity Organizations . . . . . . . . . . . . 191 Value–Rational Entrepreneurs and Social Change . . . . . . . . . . . . . . . . . . . 210 Lessons and Caveats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232 Epilogue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233 Appendix • Primary Data Sources and Methodological Notes . . . . . .

235

KLON Database . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235 Interviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237 Other Data Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

241

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247

Civil Society and the Professions in Eastern Europe Social Change and Organizational Innovation in Poland

This page intentionally left blank.

Chapter

1

Introduction The Goading of History: A Comment on Political-Economic Development in Eastern Europe General George Lee Butler, commander of the United States strategic command, once remarked “The United States abandoned the difficult intellectual work of trying to understand the motivation of [the USSR and its allies] in favor of simple demonization of [them] .”1 This statement aptly summarizes a cognitive dissonance I experienced as a Polish immigrant in the United States—a dissonance between my own observations, experiences and understanding of Eastern European societies and the received wisdom of the American media and the academe. Simply put, the prevailing American view of Eastern Europe and its economic development can be characterized as a morality play that pins two archetypal forces against each other: the menacing juggernaut of the centralized state and the popular desire for material prosperity and political freedom. When considered from that perspective, the entire post-World War II period in that part of the world appears as a popular struggle against the irrational command economy, culminating in the “collapse of communism” in1989 and the unquestioned embracing of Western political institutions, the market, and parliamentary democracy. Yet, the reality I experienced appears to be more complex. First and foremost, contrary to popular perceptions in the West, Eastern Europe is not a monolithic, carbon copy assemblage of nation–states. Beneath a thin crust of economic–political institution of central planning imposed under the Soviet hegemony lurks a wide variety of different cultures, historical traditions, and political and economic institutions. Until the first decade of the 20th century, 1

2

CHAPTER 1

the region was dominated by three major imperial powers: Russia in the east; Prussia in the west; and Austria in the south. While the breakup of these empires in the aftermath of World War I created a space that allowed the reemergence of sovereign states, such as Czechoslovakia, Hungary, Poland, or Yugoslavia, the much different political and economic legacies of that imperial domination persisted, interacting at various levels with multinational cultures and traditions of the new nation–states. Poland epitomizes this melange of local traditions and imperial legacies. At the time of gaining national independence in 1918, the Polish state comprised sizeable ethnic minorities, Ukrainian, Belorussian, Lithuanian, Pomeranian, Silesian, German, and Jewish, as well as territories previously under the jurisdiction of three imperial powers: Austria, Prussia, and Russia. The western part of the country was relatively developed and industrialized, but the eastern part was grossly underdeveloped, rural, and struggling with the legacy of feudalism that was abolished by a tsarist decree only by the end of the 19th century. A similar situation existed in Czechoslovakia and Yugoslavia. This fragile medley of peoples and historic traditions was highly volatile, punctured by regional conflicts, class struggle, and ethnic animosities. The outbreak of World War II in 1939 further exacerbated these divisions. Bulgaria, Hungary, the Baltic states, as well as Ukrainian nationalists aligned themselves with the Nazis. As Poland was overrun by Germans, the Soviet Union recaptured the eastern territories it lost during the Polish–Soviet war of 1920. The Polish government went into exile in London, while two factions, pro-Western and pro-Soviet started organizing resistance groups in the Nazi-occupied territories. Similar divisions emerged in occupied Yugoslavia, which was split between two vying resistance movements: progovernment-in-exile Chetniks and Soviet-backed partisans led by Josip Broz Tito, and—to a lesser degree—in Czechoslovakia. The end of World War II produced a significant realignment of national borders, which resulted in much more ethnically homogenous nation–states. Moreover, the Soviet domination of the region created a major push toward unification and industrialization accompanied by a massive-scale institutional transfer: the establishment of the Soviet-style centrally planned economies. Yet the Soviet hegemony failed to obliterate the preexisting differences. Some of the countries, such as Czechoslovakia, already had a considerable industrial potential that sustained relatively little damage during the war. In contrast, Poland emerged from the war not just with enormous loss of human, cultural, and economic resources, but also with a backward agrarian economy eons behind the industrialized nations of Western Europe, and with a deep political split resulting in an exodus of whatever remained of that country’s intelligentsia. Therefore, the two most urgent tasks faced by Polish govern-

INTRODUCTION

3

ment were the reconstruction of the war losses and a rapid development of the backward economy. Post World War II economic development in Eastern Europe can be characterized as interplay of two major forces. First is the hegemonic influence of the Soviet-introduced institutions of central planning, which varied in its intensity from country to country. Second is the centrifugal influence of the variety of traditional institutions and regional cultures inherited from the past. Each country in the region thus represents a quite unique combination of these two influences. Despite their geographical proximity and not quite voluntary military alliance with the Soviet Union, these countries are more dissimilar than similar to each other. Lumping them together into a single “bloc” serves little analytical purpose and can lead to quite misleading perceptions. An alternative approach to analyzing Eastern European development is grounded in the ideal-type methodology proposed by Weber (1978). The ideal type is an abstract model created by a researcher to emphasize relationships among phenomena under investigation. Such a model can rarely be found in its pure form in empirical reality, yet it serves as a gauge or a “yardstick” against which empirical reality is evaluated. Stated differently, the ideal type is a set of expectations how “things ought to be” if certain theoretical assumptions are true. The empirical investigation that follows focuses on differences, if any, between these expectations and observed phenomena, and it seeks causes of these differences.2 A variation of that method is the case study approach (Ragin and Becker, 1992), which involves two steps. First, a phenomenon (i.e., case) under investigation is described as it emerges from empirical data. The next step is the construction of a theoretical model that explains this case. An advantage of this variant over the “classical” ideal-type methodology is the reduction of arbitrariness that may enter the a priori construction of the ideal type. In other words, this is an inductive methodology known as the grounded theory approach (Strauss and Korbin, 1990) that aims at building theory rather than merely describing facts. Following these precepts, this book offers an alternative look at Eastern European economic development and uses Poland as an “ideal type” of such development. Poland is an interesting case for two reasons. The first, somewhat opportunistic, reason is the availability of empirical data. Unlike many other countries in the region, Poland has a rich tradition of empirical sociological research (Kennedy, 1992), and relatively well-developed statistical data bases of decent quality. Thus data availability creates a promising opportunity for finding sufficient information on various aspects of social and economic development that can serve as a basis for theory building. Second, Poland is a watershed of all the major forces that shaped the mod-

4

CHAPTER 1

ern history of that region—the hegemonic influences of the USSR and the massive scale institutional transfer of central planning institutions it ensued, and the centrifugal tendencies created by traditional institutions and informal social relations. In no other Eastern European country did the interplay of these forces, which the anthropologist Janine Wedel (1998) aptly summarized as “collision and collusion,” come to such visible prominence as they did in Poland. Economic development was a serious challenge for the postwar authorities, whose entire political legitimacy depended on their promise of building a prosperous and just society for all. The war put them in a rather peculiar position. On the one hand, it created an opportunity by destroying the old order and its political–economic institutions that usually thwart economic development. 3 On the other hand, it left them with little material means to take advantage of that opportunity. Not only did an entirely new industrial infrastructure have to be built, but the industrialization project also required new social institutions and also the transformation of a backward illiterate peasant population into skilled industrial labor force and urban dwellers. Given the nature of postwar reality, political constraints created by the Yalta agreement (which effectively established the Soviet domination in that region, international competition, and internal political divisions and struggles), the actors pursuing economic development did not have much room for maneuver or experimentation with innovative designs. In short, the post-World War II situation in that part of the world could be characterized by two words: constraints and uncertainty. The constraints came mainly from the world order dominated by two competing superpowers, the United States and the USSR. The uncertainty came from the challenge to create a new social-economic order, a modern industrial society, that had no precedence in the history of most Eastern European nations. So it comes as no surprise that, rather than being an “exporter of revolution,” as the cold war propaganda claimed, Poland (and her Central and Eastern European neighbors) was mainly an “importer” of organizational forms and technologies developed elsewhere. After all, doing what others do seems to be a natural human response to uncertainty. Copying solutions developed and tried in advanced countries is the easiest shortcut to economic progress. First and foremost, Poland and her neighbors “imported” the institution of central planning from the USSR which, in turn, “borrowed” it from the industrial cartels developed in Western countries.4 Second, they imported Western technologies and organization of production to the point that Fiat, Grunding, Berliet, or Volvo became almost household names. Third, Western standards were constantly evoked as a benchmark against which the progress was measured. On the one hand, the government media constantly boasted new technological accomplishments, invariably adding that these accomplishments “meet

INTRODUCTlON

5

the Western standards.” On the other hand, the critics of government policies routinely pointed out that such standards are far from being met by the living conditions in Eastern Europe. The importance of Western norms and models in Poland’s development can be illustrated by the following anecdote I once heard from my father, an executive in the shipbuilding industry. During the heyday of Stalinism, the technical establishment came under a strong political pressure to abandon the German Industrial Norms (DIN) hitherto used in the Polish industry in favor of the Soviet industrial standards (known as GOST). The technocrats opposed the change on the grounds that it would isolate Polish industry from its European counterpart where the DIN standards were universally accepted. Despite the political climate characterized by witch-hunting for the “imperialist agents,” the technocrats prevailed. While Western technological, institutional, and cultural influences constantly trickled to Eastern European countries during the central planning era, they virtually flooded the region after 1989. With the fall of the “iron curtain,” an army of foreign experts and policy advisors rushed to offer their advice and assistance, whether needed or not (Wedel, 1998). The transfer of political and economic institutions from Western developed countries, dubbed the “return to Europe,” became an official policy of many political factions and parties that emerged and gained legitimacy in the aftermath of the 1989 reform. Just as was the case under the planning regime, the influx of Western assistance and influences was a highly selective process on both the giving and receiving ends. Separate groups of donors attempted to accomplish different political objectives, ranging from building local capacities, to dismantling the institutional apparatus of central planning, to peddling political influence. Lacking the understanding of the specificity of local conditions, they often cooperated with groups actively seeking foreign contacts but necessarily best suited to accomplish the donors’ goals. The local groups, on the other hand, frequently treated foreign assistance as a resource to promote their own political agendas, boost their own power and influence, or even enrich themselves rather than implement policies intended by the donors (Wedel, 1998). So for someone who grew up on the “other side” of the iron curtain, Eastern Europe was like the Platonic cave, where various people chased after different shadows of “the West” on the walls: technology, organization, institutions, policies, living standards, values. While “catching up with the West” was a dream shared by almost everyone—including government decisionmakers— the specifics of that dream divided not only supporters and critics of state socialism, but also various factions under the central planning regime (Kennedy, 1991) as well as the political reform movement that came to the fore in late 1980s (Wedel, 1998).

6

CHAPTER 1

Central planning was never a set of consistent and unified policies. From its inception, it was an array of more or less impromptu responses to political pressures and social and economic problems created by rapid development, and it was geared to accomplish changing objectives. Moreover, there was no unanimous opinion, both among policy makers and professionals, as well as society at large, on which solutions worked and which did not, which were “good” and which were “bad.” Different factions pushed for their own agendas and policies, only to see their efforts reversed by the rival factions (Feiwel, 1965; Kennedy, 1991). The entire post World War II period in Poland was in essence muddling through various problems created by economic development and “catching up” with the developed nations. The well publicized “perestroika,” “systemic transformation,” or “velvet revolution”—the catchy words denoting social and political changes taking place in Eastern Europe around 1989—are the continuation of that muddling through trend. The changes instituted in 1989, far from being a univocal “rejection of communism” (whatever that term means) and embracing Western political and economic institutions, are just another maneuver, perhaps a bit more radical and daring, in the half-century-old game of catching up with the West. Emulating and adapting Western technologies, organizational forms and solutions has been a norm rather than an exception in that part of the world, propagandistic proclamations notwithstanding. Thus, the 1989 reform was not the “end of history” and vindication of “Western” values and institutions, but a change in the patterns of emulating and adopting those values and institutions. The phrase “rejection of state socialism,” repeated ad nauseam in both popular and academic publications, has virtually no clearly defined meaning. Evidently, not everyone in Eastern and Central Europe rejected every aspect of state socialism: What is interesting from the social scientist view of the entire post-war period (not just the 1989 changes) is who supported or rejected what organizational form, and for what reason. Just as there was little unanimity on the point of departure, there was even less agreement on the goals of the 1989 reforms. With the demise of Soviet hegemony, each of the Soviet-bloc countries pursued a separate trajectory of changes. At one end of the spectrum is the German Democratic Republic, which ceased to exist as a separate state and was incorporated into West Germany. The process of German unification created one of the largest movements toward coercive isomorphism ever (DiMaggio and Powell, 1983) as a result of the transfer of organizational forms from one system, i.e., the Western market economy, to another, i.e., the previous state socialist society. The full extent of this transfer becomes clear when we consider Ralph Dahrendorf’s statement that “West Germany downright thoughtlessly sent the steamroller of its [orga-

lNTRODUCTlON

7

nizations] institutions over the landscape of East Germany . . . the total imposition of the [organizations] institutions of another [country] must have some consequences.” At the other end of the spectrum is Slovakia, which emerged as a sovereign state after the breakup of Czechoslovakia. In that newly created state, the pace and scope of reform was one of the slowest in the region, because much of the institutional apparatus of central planning remained relatively intact. The Czech Republic, Hungary, and Poland can be placed in between these two polar extremes, each country experimenting with different mixtures of institutional designs imported from abroad. A cursory perusal of the Polish press revealed a wide gamut of fiercely debated proposals, ranging from straightforward adaptations of different organizational forms found in various developed countries, to innovative solutions summarily labeled as the “third way.” Again, from a sociological view, the most interesting aspect of that process is who proposed what solution and why. Thus, the dissonance between my perception of Eastern European development and the portrayal of that development in the mainstream American publications led me to form conclusions that differ from the popular views in two major ways. First, rather than portraying the 1989 reform as a cataclysmic end of an era and a reversal of attitudes from being anti-Western to being proWestern, I view it as a step in a more or less continuous process of economic development that started at least with the end of World War II. The loosely defined aim of that process, bridging the gap that separated most Eastern and Central European countries from their developed Western neighbors, remains relatively unchanged. However, the strategies to achieve that end changed over time and involved a substantial degree of adopting technological and organizational solutions pioneered in the more developed countries. Second, political proclamations notwithstanding, I view the Central and Eastern European development as a muddling through process rather than the implementation of a master plan, let alone a coherent ideology. The main actors in that process are rather narrowly defined interest groups, the political apparatus of the state, industrial managers, industrial workers, trade unions, the intelligentsia, and religious organizations. Their interests and goals cannot be reduced to generic ideological orientations, such as being pro- or anticommunist, pro- or anticapitalist, or pro- or antireform. Instead, their interests and goals are defined by sundry objective and subjective factors such as occupation, education, social connections, values, norms of behavior, and expectations. Consequently, any particular group’s interests, goals, or stakes in the 1989 reform cannot be taken for granted or assumed a priori; they need to be examined empirically. My second frustration with popular stereotypes of Eastern European soci-

8

CHAPTER 1

eties occurred when I began studying nonprofit organizations as a part of a large comparative research project at the Johns Hopkins University. My interest in nonprofit organizations grew from both my own political activism in the Solidarnosc movement in Poland in 1980, as well as my subsequent fascination with social movements and their impact on social change. Often, spontaneous and loosely organized collective actions were transformed into more permanent and structured organizational forms (Zald and McCarthy, 1987). That perception was reinforced by my study of nongovernmental organizations in other countries, especially in Latin America and Asia, many of which originated as social movements. It seemed natural to me to view civic associations and nonprofit organizations as a special case of social change and social movements (Sokolowski, 1996). Yet the conventional theories ofnonprofit organizations missed that aspect altogether. These theories had little to say about the social forces that brought this type of organization to existence and the processes whereby they became institutionalized and incorporated into the more or less permanent social-political landscape of most countries. Instead, they linked nonprofit organizations to the specific nature of their product: the so-called public goods. Public goods represent a special class of goods and services that cannot be sold on the market, because they have such properties that make it difficult for the vendor to collect payment from all people who benefit from that good. Since this difficulty conflicts with the profit incentive, such good must be delivered by vendors for whom making profit is not a major consideration (e.g., the government or nonprofit agencies). Although the major conventional theories of nonprofit organizations vary in specific details, they share one common feature. They portray the social organization of production as a consequence of the properties of a particular good being produced. Thus, we are told, goods that are private in nature require the institution of the market to be produced and distributed most efficiently. Those goods that are public in nature, by contrast, cannot be efficiently distributed through the market. Instead, they require a different institutional vendor, such as public agencies or the nonprofit organization. The private or public nature of those good is treated as given, and little effort is made to investigate social factors, which determine that nature. Since the private or public nature of goods is treated as given, this theoretical paradigm leads to a conclusion that the same types of goods or services will be distributed by the same institutional sector, regardless of social–cultural environment. I found such a conclusion too remote from the empirical reality I knew. First, commodities that qualify as public goods can be provided by different institutional sectors in each country. For example, culture and arts are seen as a public domain and subsidized by the state in France, whereas in

INTRODUCTION

9

the United States they are distributed mainly through commercial markets. The same can be said of education, healthcare, or transportation, which can be provided by both private and public institutional sectors. This fact implies that the link between the nature of the commodity (if there is such a thing) and the social organization of its production is not as straightforward as these theories seem to suggest. Second, organizations do not emerge out of thin air, by the power of the invisible hand. It is flesh and blood people who create them. Yet the conventional theories do not have much to say about the motives of individuals who establish nonprofit organizations. That omission is not critical for theorizing behavior of commercial producers, because for better or worse, we can reasonably expect these individuals to be to some extent driven by the anticipation of profits. But if the profit expectation is ruled out by definition, the behavior of people who establish this kind of organization becomes an inexplicable mystery. Third, a focus on the nature of the product rather than the social organization of production altogether misses an important aspect of nonprofit behavior: Why is it a collective rather than individual phenomenon? In other words, why is it that most providers of nonprofit goods and services are organizations rather than individuals acting alone? In 1992, I met a fellow countrywoman, Dr. Ewa Les, who at that time was an exchange scholar at the Johns Hopkins University. Our often heated discussions directed my attention to a phenomenon new on the Polish scene—the nongovernmental organizations (NGOs) which were emerging in considerable numbers after the 1989 reform. Although our interpretations of that phenomenon differed quite substantially, we agreed on one thing. It was a manifestation of a social movement aiming at changing the nature of Polish society. I then learned that this emerging phenomenon had already become the focus of a nationwide survey undertaken by a group of Polish researchers. The survey, known as the KLON/JAWOR study, targeted nearly 10 thousand newly emerged NGOs believed to exist in Poland in 1992. Although its main objective was to compile a directory of the existing agencies and their services, the survey also asked questions about the circumstances surrounding their establishment, the background of their founding members, and the details of their operations. Even without knowing what the survey would reveal, I saw it as a promising opportunity to address my frustrations with the conventional wisdom, its portrayal of social change in Eastern Europe, and its theorizing of nonprofit organizations. In 1993, courtesy of the principal investigators, Mr. Jakub Wygnanski and Mr. Filip Rosciszewski, I obtained the electronic file with the KLON survey data. The data were in a “raw” narrative form and required care-

10

CHAPTER 1

ful coding before they could be systematically analyzed. Moreover, there were substantial information gaps in the many cases on file. Despite these limitations, I found that working with those data had an exciting flavor of mapping an almost uncharted territory. This tedious data analysis paid off, because it led to an unexpected and intriguing discovery. Based on my knowledge of the Polish scene and my theoretical inclinations, I expected to find these newly emerging NGOs to be “spinoffs” of the Solidarnosc movement, widely credited for initiating the reform process. This hypothesis proved to be untrue. Solidarnosc was conspicuously underrepresented on the Polish NGO scene. I found a high number of agencies established by healthcare professionals and providing services in a field already dominated by the comprehensive public healthcare system. This was a big surprise. When I reported these findings at a nonprofit sector conference in Pecs, Hungary (Sokolowski, 1994), I was still uncertain how to interpret them. I strongly suspected that the reasons behind creating new NGOs were not purely altruistic. One of the critics of my presentation, the economist Theresa Van Hoomissen, even doubted if treating these agencies as bona fide nonprofits was justified. However, the shortcomings of the conventional wisdom in explaining the motives of nonprofit actors made it clear that further empirical research was necessary. Thus, the second phase of my investigation involved a series of indepth interviews with representatives of selected organizations. Again, I initially encountered considerable difficulties in obtaining contacts, ranging from the quite prosaic such as an organization’s lacking a telephone or its representative’s being on vacation, to quite bizarre such as suspicions of me being an undercover agent or, in one case, the entire board going into hiding to avoid prosecution. Those contacts which materialized provided a true wealth of information. My dual citizenship proved to give me an unexpected advantage. On the one hand, my informants often perceived me as a foreigner who needed a thorough explanation of details to be able to grasp “what’s really going on.” Thus, they were eager to volunteer information or answer my detailed questions that otherwise might have raised their suspicion, especially since most of them had had negative experiences with journalists. On the other hand, I had sufficient knowledge of the language and local customs to catch subtle nuances in my informants’ narratives. During those interviews it became clear to me that the phenomenon I investigated was, after all, a case of a social movement, albeit of a very specific kind. That social movement was, in fact, a professional project aiming at introducing novel professional services and redefining the role of service professionals in society. Consequently, my investigation promised to provide a crucial link I was hoping to find, the link connecting theorizing nonprofit

INTRODUCTION

11

organizations to theorizing collective action on the one hand, and theorizing the social organization of economic activities on the other. College-educated professionals, or intelligentsia as they are commonly called, have traditionally played a prominent role in Eastern Europe where they became a major power player (Konrad and Szelenyi, 1979). That role was particularly conspicuous in Poland because of the combination of historical circumstances and policies of the central planning regime. Polish intelligentsia had traditionally played a national culture guardian role during the long years of foreign occupation. However, at the turn of the 20th century as Poland, or rather its territory occupied by foreign powers, found herself seriously behind the European development, parts of the intelligentsia assumed a new role: purveyors of progress and social change. Many prominent physicians and literati embarked on ambitious efforts to eradicate poverty, diseases, and social ills caused by economic backwardness and predatory capitalism. These projects, called “organic work,” were documented in the literary works of the era, of which the most famous is the novel Ludzie Bezdomni (The Homeless People) by the renowned Polish writer and social critic Stefan Zeromski. The protagonist, a young physician, gives up personal happiness and the respectability of bourgeois life for his “organic work” for the betterment of society. He thus becomes “homeless” just like the people whom he decided to serve. The “organic work” initiated a new tradition, ethos and role models, especially for the progressive intellectuals. The idea of civic responsibility and commitment to social progress, reinforced by the socialist ideology nominally adopted by the post-World War II government, shaped the self-definition and aspirations of the post-war professional class. Despite growing disillusions about the ruling elite’s capability to manage the economy, the intelligentsia actively sought ways to influence and reform public policies, either through government-controlled political and occupational organizations, or through alternative venues (Kennedy, 1991; Konrad and Szelenyi, 1979). While the most spectacular forms of social protest, sit-in strikes, street demonstrations, and street-fighting with the riot police were staged by bluecollar workers, many professionals used such outbursts of social protest as an opportunity to introduce organizational reforms (Feiwel, 1965; Kennedy, 1991; Touraine et al., 1983). In the late 1970s, the public healthcare system, weakened by hasty and inept administrative reorganization (Sokolowska and Moskalewicz, 1987), became an area of professional political activism toward a comprehensive reform. Healthcare professionals played a major role in the emergence and initial success of the Solidarnosc movement in 1980 (Kennedy, 1991). This historical backdrop is essential for understanding the theoretical sig-

12

CHAPTER 1

nificance of the case under investigation. On the surface, this case involves a rather small group of social activists and professionals who used the nonprofit organizational from to introduce novel healthcare services, found elsewhere, to Poland. But it is not the number of the people involved in the process that makes this such an important case—it is their strategic position. That strategic position is defined by their choosing, under a set of specific historical circumstances, a specific organizational form to implement what they perceive as social progress. That juncture allows us to describe and analyze the connection between the nonprofit organizational form, the interests and goals of the founders, and culturally defined norms and expectations. In other words, this case allows us to develop an empirically grounded theory of nonprofit organization that is linked to social organization of production and historically specific processes of economic development rather than abstract properties of the produced goods. I call that theory the organizational uses and gratifications model, because it hinges on the key assumption that formal organizations and policies serve as tools and resources which individuals use to accomplish their interests and goals. This model can explain not only the behavior of various groups of social actors under the central planning regime, but also the peculiar uses of Western institutional resources transferred en masse in the aftermath of the 1989 reform (Wedel, 1998). In a nutshell, the organizational uses and gratifications model holds that human service professionals striving to market their services and establish or defend their occupational status face numerous challenges ranging from public distrust, to indifference or resistance of public authorities, and to competition from other kinds of service providers. It is, therefore, in their interest to build public trust in their novel service and deflect or neutralize potential or actual challenges to that trust. As this book will show, one method for accomplishing that goal is to select an organizational form to produce and deliver the service in question. More specifically, the nonprofit organizational form can be instrumental in overcoming information asymmetry problems and in building public trust, because it can help define the novel service in question as a form of public benefit. Such a definition not only can give the producers an upper hand against competitors and critics, but also create a greater opportunity to influence public policy and establish the providers’ status as purveyors of social progress. The nonprofit organizational form is a tool that links a professional project with the ethos of “organic work.” Finally, the uses and gratifications model challenges some established views of nonprofit institutions. As already noted, the conventional theories draw a causal connection from the nature of the good being produced to the organiza-

INTRODUCTiON

13

tional form of its delivery. My model reverses this causal direction. It shows that, at least in some instances, the organizational form, or more generally, social conditions of production and delivery, determines the “nature” of goods being produced. Some goods are “public” because they are produced or distributed by institutional agents that have a public status in a given society, rather than the other way around. The analysis offered in this book will thus allow the formulation of an empirically grounded “ideal type” of Eastern European development which, I argue, is the case in Poland. This approach will highlight the relationship between major social forces in that development, professional and occupational groups, different types of institutional resources, and different types of social– political constraints under which they operate. The model thus developed can serve as a theoretical guidance in further analysis of social, political, and economic changes in the neighboring Eastern European countries, as well as other regions of the world.

DEPICTING THE UNDEPICTED: A COMMENT ON TERMINOLOGY “There must be something identical in a picture and what it depicts. . . ” Unfortunately, Wittgenstein’s ([1922] 1961) dictum hardly applies to the terminology used in the research on voluntary associations. Formal nongovernmental organizations providing professional services either for free or belowmarket cost to the clients are the focal point of this inquiry, since they constitute an institutional framework that links professional interests to the interests and value systems of society at large. Yet, they remain largely anonymous amid the terminological confusion that fails to render their proper character. That confusion is created by the fact that while nonprofits have became a truly international phenomenon, the attempts to study and analyze them are still grounded, for the most part, in experiences and cognitive frameworks of individual, predominantly Western, nations. The term “voluntary associations,” even though long established in the sociological tradition, is clearly a misnomer. Most formal organizations in a modern European or American society have voluntary character in the sense that nobody is coerced to work or otherwise collaborate with any particular organized entity. There might be a few exceptions to this rule, such as mandatory membership in certain associations as a precondition of practicing one’s occupation, or obtaining a license to engage in certain leisure activities (e.g., hunting). The issue of mandatory participation deserves special attention in

14

CHAPTER 1

the context of Eastern European societies under the central planning regime, because of the widely spread perception of involuntary enrollment in statesponsored organizations, such as labor unions, professional associations, or political parties. To be sure, there were strong informal pressures and material incentives to encourage membership in political associations, especially the ruling party5 or the youth organizations. Such membership was commonly perceived as a necessary condition of a successful professional career; getting a good job; or being admitted to a university. Despite such perceptions, no formal mandate of compulsory membership existed in Poland, and after 1956, nobody was fired or refused admission to a university solely for refusing to join a particular organization. The total number of memberships in five main political organizations (the ruling Polish United Workers Party (PUWP), the United Peasant’s Party, the Democratic Party, the Union of Polish Socialist Youth, and the National Defense League) reached its peak in 1980, totaling 7.9 million. That constituted only a third (37%) of the economically active population, and a fifth (22%) of the total population. Because of multiple memberships, the actual number of people belonging to these organizations was even lower. It is therefore clear that despite informal pressures, incentives, and opportunism, the associations operating in Eastern Europe were voluntary for the most part. That, of course, does not mean the absence of government intervention in associational life in that part of the world. However, such intervention was not exercised through coerced membership. As Chapter 3 will detail, the most common means of government control was the refusal to register new organizations, in spite of the constitutional guarantee of the freedom of association. Other mechanisms included financial control and the appointment of the organizations’ officers. For that reason, organizational autonomy and freedom from government control became the principal goal of many social and political activists in that part of the world, especially during 1970s and 1980s. That desire for greater organizational autonomy was even reflected in terminology. The official name of the Solidarnosc movement that emerged in 1980 was Independent Self-Governed Labor Union (Niezalezny Samorzadny Zwiazek Zawodowy). When new organizations started to appear on the Polish scene at the end of 1980s, they were collectively called “nongovernmental organizations” (organizacje pozarzdowe) or NGOs. The term “nonprofit organizations,” commonly used in American literature, is virtually unknown in Poland. The Polish language does not even have an equivalent for it, and the English term “nonprofit” is sometimes used verbatim in specialized academic publications (cf. Ilczuk, 1995). Instead, two terms are commonly used. “Nongovernmental organization” conveys the ideological

INTRODUCTION

15

importance of organizational autonomy from the administrative structures of the state in the governance of this type of associations. “Social self-help organization” on the other hand, conveys the importance of self-reliance and spontaneous citizen action. Like the term “voluntary association,” these three terms (nonprofit, nongovernmental, and self-help) are clearly misnomers which poorly reflect the nature of what they are trying to depict. The term “self-help” can be accurately applied only to a handful of entities of this kind, namely mutual-help associations. Since this study focuses on organizations established by professionals to serve nonmembers, the term “self-help” is clearly inappropriate. The first two terms, on the other hand, indicate only what the entities in question are not, while telling us little what they actually are. This was aptly observed by one of my Polish informants. When she heard me using the term “nonprofit,” she replied with the following pun. A small child who just learned how to read wanted to show off his newly acquired skill. Holding a book, he says to his mother “Mommy, I’m reading a vel.” The mother laughs and replies “No-vel , my darling, it is novel.” The child looks nonplussed and asks “Then what is it?”7 An additional problem with the terms “nonprofit” and “nongovernmental” is that they reflect normative intent rather than empirical content. “Nonprofit” implies a normative point of view that assumes pecuniary gain as being the primary motivater of human behavior, and evokes the black-and-white imagery that dichotomizes the organizational universe into the market and the public sector. In societies permeated by the market culture, “nonprofit” has a clearly understood connotation, indicating cognitive differentiation from the dominant ideology of the market. In other cultures, however, the distinction from the market institutions may be either unimportant or even undesirable and the term “nonprofit” ceases to be a distinctive characteristic. The same can be said of the term “nongovernmental.” In Eastern European societies, preoccupied with shedding the remnants of authoritarian government control, that term draws attention to what is supposed to be the most salient feature of this form or organizational activity. Yet, this normative connotation hardly gives justice to the empirical reality, for as this book will demonstrate, the leaders of the organizations in question either actively seek cooperation with public authorities, or see such cooperation as highly desirable. As the renowned writer and social commentator George Orwell (1946) observed, terminology reflecting normative intents rather than empirical reality can make good politics, but it is a poor way of communicating ideas. Similar concerns were voiced by the French sociologist Pierre Bourdieu (1988), who chastized the academic professions for creating classification systems that stealthily mix ideology with analysis, and normative intents with empirical

16

CHAPTER 1

facts. For that reason, I became quite reluctant to use either “nonprofit” or “nongovernmental” in this book, even though these terms are commonly used in the literature. Yet, there are few alternatives available, and neither of them seems to be desirable. The term “independent sector organization,” sometimes used in the United States, is a misnomer for the same reason as “nongovernmental.” These organization are hardly independent of public or private donors (Salamon and Anheier, 1992a, 1994). The French term “social economy” is, in fact, a pleonasm, because all economic activities are by very nature social, and the term poorly distinguishes among different types of economic activities. The “social movement organization” (Zald and McCarthy, 1987) while emphasizing the social-political mobilization aspect of this organizational form, which turned to be quite important in the Polish context, altogether misses the service aspect, the key factor that distinguishes the organization under investigation from civic and advocacy groups. Facing this terminological confusion, I had little choice but to search for an alternative term that could be applied internationally as well as could convey the essential characteristics of the organizational entities under investigation, while avoiding negative qualifications and normative connotations. While introducing a new term into a subject area already rife with neologisms and cryptic acronyms striving for recognition may appear as unnecessary extravagance, it is also imperative that terminology, especially in research, contain something identical to what it depicts. If the researcher cannot find a term that aptly describes complex phenomena, then who will? So what is the essential characteristic, if any, of the organizational form this book set out to investigate? To answer that question, let us begin with the observation that despite their obvious shortcomings, both “nonprofit” and “nongovernmental” hint at an important aspect of this organizational form, namely its relationship to the prevailing mode of social organization of production and delivery of goods or services. Both terms identify this organizational form as distinctively different from the prevailing mode of such an organization that relies on the institutions of the market or administrative hierarchy. Indeed, the mode of social organization of production and distribution is the concept that plays a key role in this investigation and thus deserves a closer look. The notion of social organization of the economy, characteristic for different historical periods, played a central role in classical sociological analyses of modern industrial society, from Marx ([1867], 1977), to Weber (1978), and to Polanyi (1944). In essence, this theoretical paradigm attempts to explain the historical phenomenon known as Western rationalism, capitalism, or modern industrial society by referring to various social, historical, political and economic forces that created its institutional framework. Its key assumption is

INTRODUCTION

17

that political and economic institutions, rather than being a product of “natural evolution,” have been socially constructed8 to accommodate goals and interests of social actors, individuals and groups endowed with different resources and power. In its modern incarnation, it takes the form of a debate over the efficiency of two major economic institutions, the market and the complex organization. As Williamson (1975) argued these two institutions are, in fact, complementary responses to a common problem—economic efficiency jeopardized by transaction costs. Complex economies create an exponentially growing number of transactions, or exchanges of goods and services among individuals. If these transactions were to be carried through contracts between independent parties in a free market environment, the overall cost of doing business, that is, the costs of constant monitoring of the markets, drafting contracts, monitoring their execution, and enforcing violations and non-compliance with their terms, would be high indeed. If, on the other hand, the suppliers of various raw materials, subcomponents, logistics and so on are integrated into a single corporate entity under a centralized management, the argument goes, most of those elaborate monitoring and legal procedures necessitated by the complexity of market transactions are replaced with administrative supervision, and that substantially cuts the cost of doing business. This argument provoked an immediate criticism by sociologists of organizations (Grannovetter, 1985; for a review see also Perrow, 1986) who proposed two closely related counterarguments. First, the transaction cost approach misses the role of social ties and cultural norms and values in business transactions that act as informal social control mechanisms reducing the need for formal monitoring. Furthermore, even if the large organizations did eliminate some of the costs associated with market transactions, they would also add new costs of their own. It is well-known that officers in large organizations use their positions to advance their own goals or personal careers, often at the expense of achieving the organization’s stated mission. Taking into account informal rules and networks that reduce the cost of transaction monitoring, and the cost resulting from opportunistic behavior of the organization’s officers, the supposed economic efficiency of large organizations is a non sequitur. If large organizations offer any advantages at all, the critics argue, these advantages stem not from their purported economic efficiency, but from their power to shape their environment to their advantage, undercut competition, and monopolize the markets. The essence of this debate can be summarized as follows. Both sides agree that transaction costs make economic interaction between otherwise disconnected individuals less efficient. The bone of contention is what specific social mechanism improves that efficiency Williamson proposes formal organizational

18

CHAPTER 1

rules and regulations, or administrative “hierarchies,” while Grannovetter opts for social proximity, or social ties, shared values and norms of behavior, for that role. These two positions are not mutually exclusive, however. It is possible that both social mechanisms can reduce transaction costs, or perhaps fail to do so, under different circumstances. It is also possible that certain formal organizations deliberately rely, to varying degree, on social proximity to alleviate their transaction costs. This observation has important implications for the understanding of the nature of nonprofit–nongovernmental organizations. From that standpoint, the essence of this organizational form can be defined as the systematic and conspicuous utilization of social proximity to reduce the cost of doing business. Reliance on social proximity distinguishes the nonprofit organizational form from the institution of the market which, at least in its “pure” form, relies exclusively on individual self-interest and the values of the exchanged goods. Social connections between the involved parties are irrelevant or even detrimental for the proper functioning of the market. That function of nonprofit organizations was highlighted by Hansmann (1987) who argued that legal constraints in profit distribution create trust that reduces transaction cost (that argument will be discussed in greater detail in the next chapter). The systematic use of social proximity also distinguishes the organization form in question from administrative hierarchies (government agencies or corporations), which in its “ideal” form, bureaucracy (Weber, 1978), rely exclusively on impersonal rules and regulations. Again, social connections between office holders and their clients are either irrelevant or harmful for the proper functioning of a bureaucracy. The feature that distinguishes the nonprofit–nongovernmental organizational form from the two major forms of social organization of economic activity is its social embeddedness—that is, deliberate and systematic utilization of social contacts and proximity to reduce the social cost of production and distribution of goods or services. The key words here are “deliberate and systematic,” because they differentiate this organizational form from both market institutions, which rely on profit expectation, and administrative hierarchies, which rely on formal rules and regulations. That is not to say that social networks and norms of behavior do not de facto play a significant role in both market and corporate behavior, as Grannovetter (1985) argued. But playing a role is not the same as being the essential or distinctive feature of an institutional form. An essential feature is one that is visibly central to one class of entities, but not to the other kinds. As this book will show, embedding transactions in social networks, values and expectations to redefine their cost–benefit balance is one of the main reasons why people use this organizational form over others. Such cost reduction

INTRODUCTlON

19

is not limited to the material sphere (i.e., by placing restrictions on profiteering, or using volunteers instead of paid employees), but also involves subjective perceptions, which are as important as any material savings. In that respect, my argument substantially expands that proposed by Hansamann (1987). At the moment, however, the most important task is finding suitable terminology that contains something identical to what it depicts, namely the essence of the nonprofit–nongovernmental organizational form. That essence was just identified as systematic and conspicuous reliance on social proximity. There needs to be a term that can clearly depict that essential feature. The term I propose is social proximity organization (SPORG). This term not only underscores the essential and distinctive feature of the organizational form in question, but also summarizes various features connoted by the conventional terminology. It stresses the importance of social connections, values such as compassion, altruism, or benevolence, and expectations of what constitutes a “proper thing to do,” as opposed to self-interested calculations of individuals in the market, hinted by the term “nonprofit.” It also conveys the notion of spontaneous action that is absent from bureaucratic hierarchies, implied by the term “nongovernmental.” Finally, it divulges the idea of participation in collective action, suggested by the terms “voluntary association” and “social movement organization” (SMO). To be sure, the proposed term diverges from certain uses of the conventional terminology, especially “nonprofit,” to denote a sector of the national economy (Salamon and Anheier, 1994). The main difference is that the term “nonprofit sector” often includes agencies that would not qualify as social proximity organizations under any stretch of imagination. Examples include large hospitals or universities whose organizational behavior does not substantially differ from their public or private (for-profit) counterparts (Clarke and Estes, 1992). Because such entities have amassed large financial resources, they create an impression of being the dominant part of the “sector.” For example, educational and healthcare institutions account for 75% of nonprofit sector’s operating expenditures in the United States, over 45% in Germany, and over 40% in France (Salamon and Anheier, 1994). Despite their financial salience, these entities hardly qualify as typical “nonprofits,” even though they enjoy tax exempt status under their respective national jurisdictions. Hospitals and universities are a tiny minority among the plethora of nonprofit establishments, less than 1% of the total number of 1.1 million establishments in the United States (Salamon, 1995). Therefore, the “nonprofit sector” seems to be more a creation of the peculiarities of the tax law and government policies, rather than being a coherent class of organizations sharing the same essential features. That concept might

20

CHAPTER 1

be instrumental from the point of view of public policies seeking to redefine the traditional role of the welfare state, but its usefulness for studying organizational behavior is rather limited. That is yet another reason for introducing an alternative term that can clearly distinguish between the proverbial wolves in the sheep’s skin, large corporate entities that enjoy a tax exempt status, and the organizations that by definition form an alternative to both markets and bureaucratic hierarchies. The proposed term “social proximity organization” makes that distinction quite clear. For these reasons, SPORG will be used in this book in lieu of more conventional terminology: nonprofit, nongovernmental organization (NGO) or voluntary association. The only exception to that rule are situations when this neologism is clearly out of context, for example in Chapter 2, which discusses the existing theories of nonprofit organizations.

BOOK OVERVIEW The central theme of this investigation is the use of institutional resources by social actors in Eastern Europe during the period of social changes initiated by the 1989 political–economic reform. This theme will by explored using a case study approach. The case under the scrutiny is the conspicuous involvement of an occupational group, the professional service providers, in the creation of new social proximity organizations in Poland. This case will serve as the basis for the development of a theoretical model that explains the relationship between social actors and their collective interests on the one hand, and cultural and institutional resources on the other. The proposed model, derived from a narrowly defined empirical case (a specific occupational group—service professionals—operating in a specific geographic and historical setting—Poland during systemic transition—and pursuing a specific set of objectives—reforming the public health and social service system), is not intended to be automatically generalized to other cases or countries in the region. Instead, it is conceived as a “gauge” or “ideal type” that can guide future investigations of similar phenomena under different geographical, cultural, and political settings. The central research question pursued in this book pertains to the reasons or motives that prompted some Polish professionals to create social proximity organizations after the 1989 dissolution of the central planning system. As I will show, those reasons are to a great extent a product of the social–political conditions that existed in Poland, and to some extent in other Eastern European nations, under the central planning regime. The investigation will unveil a connection between occupational interests, the choice of institutional venues

INTRODUCTION

21

to pursue those interests, and broader social changes also known as the “systemic transition” in Eastern Europe. The inquiry will begin with a detailed description of the empirical phenomenon that prompted this investigation: the prominent presence of healthcare professionals among founders of newly formed SPORGs in Poland. That phenomenon is puzzling, because it cannot be satisfactorily explained by the existing theories of nonprofit organizations. Chapter 2 explores those theories in an attempt to identify both their strengths and the specific reasons why they failed to predict new empirical facts. The analysis of the existing theories and the reasons behind their failure to explain the Polish case will provide theory-building hints that will guide further investigation. Chapter 2 identifies three such hints. The reasons why social proximity comes into existence should be sought among the specific behavior and motives of people who create them, rather than among general needs of society or its broadly defined segments. The behavioral model employed in that investigation should take into account differences between types and levels of information that professionals and the lay public have about the nature of the service. Finally, this investigation will focus not just on a particular legal status (e.g., the “nonprofit” status) but on all essential features of the organizational form in question: its formal structure, distinctive organizational behavior, and the public perception of that behavior. Having outlined the theoretical background that justifies the need for this investigation, the inquiry will proceed in three steps. The first step (Chapter 3) is to explore the general conditions of the professional class, also known as the intelligentsia, under the central planning regime implemented after the World War II. Taking into consideration a broader historical background will help us understand the peculiar value system and group interests that were conducive for establishing social proximity organizations. Contrary to some recent views of civil society (especially Fukuyama, 1995), the authoritarian structures of the central planning regime did not kill the independent citizen initiative in Poland, but rather redirected it to the alternative to the state-controlled venues. In the next step, the investigation will focus on the select group of service providers: professional innovators who strived to introduce novel forms of service to the Polish service market. This group is a part of a larger professional movement aiming to reform public institutions in Poland. An exploration of the goals, motives, and institutional models they use to accomplish these goals will contribute to our understanding of microstructural processes that are a part of Poland’s “systemic transformation.” In this part of the investigation, the principal research question outlined in Chapter 2 is answered by introducing the uses and gratification model of

22

CHAPTER 1

organizational behavior. This model holds that professional service providers use formal organizations in a way that serves their own occupational interests and goals. It follows that when given a choice, practitioners of a profession will use the organizational form that best suits their interests and needs. The correspondence, or elective affinity, between the practitioner’s needs (interests, goals, aspirations) and the organizational form that seems to be best suited to meet those needs explains that practitioner’s motive to use that particular organizational form in his professional practice. Empirical support of organizational uses and gratifications hypothesis is constructed by matching specific interests and needs of these professional innovators with the specific uses of the SPORG organizational form, as revealed by the KLON data and indepth interviews. Chapter 4 identifies various social factors that create different types of information asymmetry problem that affect professional practice. Overcoming that problem is crucial for a successful implementation of a novel type of service. Among the social factors that contribute to information asymmetry problems are social expectations, professional status of the practitioner, or the practitioner’s relations with other professions and public authorities. Chapter 5 identifies different types of the reported uses of the SPORG organizational form and matches them with different types of information asymmetry problem faced by the practitioners. In the process of the inquest it will become necessary to reflect on the role of social proximity organizations in addressing the information asymmetry problem that affects professional services. Chapter 6 introduces a model of selective processing of information that takes into account social relations that affect rational decisionmaking. It holds that rational decisions are affected by a priori expectations rooted in social conventions and stereotypes that lead to the selective consideration of various interests that seem relevant in a given situation. As a result, these a priori expectations affect the perceived values of different alternatives, making them appear more or less attractive. The proposed model of selective information processing serves as a heuristic device for the analysis that constitutes the final step of our investigation. The purpose of that analysis is the identification of different uses of the SPORG organizational form as they appear in the interview data. Chapter 7 explores the information provided by founders of selected social proximity organizations in Poland to link the reported uses of the social proximity organizational form to different types of information asymmetry problems that affect different types of professional work. This part of the investigation may depend heavily on the interpretation of qualitative (indepth interview) material, but it nonetheless follows the canons of inductive logic, especially the Mill’s method of agreement and difference. That method compares similarities and differences among selected cases to iden-

INTRODUCTION

23

tify specific conditions or causes that are associated with specific outcomes or effects.9 Chapter 8 summarizes the results of the investigation and discusses its implications for the organizational theory and social policy. This investigation is not limited to an explanation of a rather narrow empirical phenomenon— the motives of professional’s recourse to the social proximity organizational form. It also has implications for our understanding of the process whereby human actors use formal organizations as a social–cultural resource to achieve their collective goals and change the society in which they live (Touraine, 1988). Those goals and aspirations must be taken into account by policy makers pursuing social reforms or systemic changes, because they can contribute to the reform process.

NOTES 1 2

3

4

5

6 7

Quoted in The Nation, February 2/9, 1998, p. 54. Such methodology is routinely applied in statistical hypothesis testing, such as the Chi square test. The null hypothesis is an “ideal-type” or the frequency counts expected on the assumption of no-relationship between two variables under investigation. These expected frequency counts represent the joint probability of having a certain value on one variable and a certain value on the other variable. The differences between the expected and the actually observed frequency counts enter the calculation of the Chi square statistic that is a measure of the goodness of fit between the “ideal type” (the null hypothesis) and the empirical data. For a discussion of the relationship between social–political institutions based in agrarian economy and modernization, see Moore (1966), Paige (1975), and Rueschemeyer, Stephens, and Stephens (1992). These works demonstrate that existence of a strong landed gentry is a factor that often hinders social, political, and economic modernization. For a discussion of the Russian policy to overcome economic backwardness see Gerschenkron ([1952], 1992). Gerschenkron argues that the institutions of central economic planning were developed in Western Europe, especially France and Germany, where they took the form of industrial cartels controlled by banks. The Russians basically emulated that design with one important modification. Since they lacked an efficient banking system (which the Western countries had), they used the state to finance the industrialization project and to control the industry I use this term to avoid another common misnomer, the “Communist” Party. The official name of the ruling party in Poland was the United Polish Workers’ Party (PUWP), and it was not “communist” even according to its own ideology. That ideology claimed communism was a future stage in historical development that had not yet been achieved in any of the Eastern European states. When the PUWP was formed, the official stage of development was the “dictatorship of the proletariat,” which later evolved into “state socialism.” 1956 marks the end of draconian policies implemented under Stalinist regimes in Poland and other Eastern European countries. In the original version, the word in question was “bat” (an animal) whose Polish equivalent is nietoperz. The first three letters of that word also happen to be the Polish negative par-

24

8

9

CHAPTER 1 ticle an a prefix that means “no” or “non-.” In the original story, the child sees a bat and calls it toperz (a meaningless cluster of letters), while the mother corrects him by saying nietoperz. Since that version of the story is difficult to translate verbatim without losing the point, I took the liberty of replacing “bat” with “novel” and dropping the article “a” (the Polish language does not have articles before nouns) to convey the nature of the pun. In sociological literature, the term “socially constructed” denotes phenomena that have been created by social conventions rather than by natural forces independent of human volition. Unlike natural phenomena, “social constructs” are arbitrary in the sense that they can take different forms, depending on the collective will and social conventions that created them. For a more detailed discussion and application of this method to social science, see Skocpol (1984), Ragin (1987), and also Rueschemeyer, Stephens, and Stephens (1992).

Chapter

2

What Is to Be Explained and why? THE PUZZLE OF CONVENTIONAL ACTORS IN UNCONVENTIONAL ROLES As someone once observed, life in Eastern European societies was marked by dreadful boredom: a colorless mass of people who rode crowded buses to work, dozed until quitting time, and returned home to watch ad nauseam sanitized television reporting on industrial plants meeting their production quota and farmers increasing the yield of their crops. That blissful slumber was punctured by occasional outbursts of pro test over unpopular government decisions, after which life would return to its dull monotony. This situation started to change, especially in Poland during the 1970s. Outbursts of social protest became more frequent, and took on a radically different course in the late 1980s when the prolonged political impasse sparked a host of new citizen initiatives. Finally, the integument of political constraints burst asunder in 1989, and a wide array of new institutional forms, from private enterprises to political parties, and to nongovernmental civic associations appeared like the proverbial mushrooms after the rain. This institutional revival created an urgent need for survey and documentation, not just for analytical, but mainly for political reasons. The rapid growth of new organizational forms called for cooperation of different actors pursuing similar goals, efficient allocation of scarce resources, and coordinated efforts to achieve recognition and political representation. In 1991, a group of Polish researchers initiated a nationwide effort to survey nongovernmental organizations the emerged during the poli tical-economic reform. The survey, known as the KLON/JAWOR study, targeted nearly 10 thousand nongovernmental organizations believed to exist in Poland. Although the 25

26

CHAPTER 2

main objective was to develop a directory of the existing agencies and their services, the survey also asked questions about various aspects of their organizational behavior. Nearly 5 thousand returned questionnaires, and the 1,796 entities reporting that they provided some form of human services were entered in the database KLON. My initial analysis of this database (Sokolowski, 1994) revealed a picture that is puzzling not only for many foreign observers of the Polish reform, but for the existing theories of the origins of nonprofit organizations as well. First and foremost, the data reveal that over 80% (1,417) of all agencies included in the KLON database were created in 1985 or later; only 307 agencies (18%) existed prior to 1985. What does this tell us about the organizational birth rate in Poland? Obviously, organizations that became defunct before the survey was launched could not be included. This raises a suspicion that the young age of the majority of the organizations included in the KLON data set is an artifact of the “natural selection” process. The older organizations represented in that data set are only those that survived the 1989 turmoil. Consequently, the age distribution of the KLON organizations may not necessarily be a greater organizational birth rate after 1989. Yet, that possibility seems unlikely in the Polish context. It is a well-known fact that prior to 1985, organizational birth and death rate were rather low. Under the central planning regime, organizacje spoleczne (social organizations, as SPORGs were officially called) served as an instrument for promoting government policies and were funded by the state. Because of the state funding and the reluctance of public officials to change the existing organizational structures, the survival of the already established agencies was virtually guaranteed. Moreover, any citizen initiative aiming to establish a new organization was met with stiff bureaucratic resistance. Although Poland had constitutionally guaranteed freedom of association, any new organization needed a permit from the local authorities in order to register and function. As a rule, such permits were denied on the grounds that the proposed activity could either be accommodated within the already existing structures or else it served no “SOcially useful” purpose (Kurczewski, 1992). In other words, the official policy toward civic associations prior to 1985 was to treat new associations as either redundant or “antisocial” in their mission and therefore unnecessary. That policy resulted in a stagnation of the associational life in Poland under the central planning regime. Few new organizations were created, and the few established organizations ceased their existence. This is apparent in Table 2.1, which shows membership in major social organizations between 1960– 1983. Of the 20 organizations shown in Table 2.1, only one, the Polish Women’s

27

WHAT IS TO BE EXPLAINED AND WHY? Table 2.1. Membership in Selected “Social Organizations’’ in Poland, 1960–1983 Organizations

1960

PROFESSIONAL ASSOCIATIONS Polish Economic Society Polish Medical Society Association of Polish Lawyers Association of Polish Bookkeepers Supreme Technical Organization

1970 1980 membershipª

4.3 10.2 9.4 16.9 155.1

53.1 17.5 16.2 78.3 313.2

2,960 69.4 90.5 — —

5,369.5 1,128.1 518.6 83.7 —

126.1 1,898.1 188.8

903.4 384 418.9

POLITICAL AND SEMIPOLITICAL ORGANIZATIONS Polish United Workers’ Party 1,154.7 United Peasants’ Party 258.7 Democratic Party — Union of Polish Socialist Youth — National Defense League 1,000 Association of Combatants for Liberty Democracy 159.4 Society for the Propagation of Secular Culture 111.5

2,320 413.5 88.4 2,361.1 2,310.1 392.5 308.3

SOCIAL—CULTURAL ORGANIZATIONS Social service and health organizations Polish Red Cross Polish Committee for Social Aid Friends of Children Society Social Anti-alcohol Committee Antidrug Youth Movement (MONAR) Civic associations League for the Preservation of Nature Polish Women’s League Polish Tourist Society

71.1 24.4 21.4 126.4 549.6

1983

49.7 24.4 18.1 129.3 473.7

5,076.8 4,305.7 1,970.3 1,448.8 1,100.7 981.8 243.8 229.2 0 0.5 1,415 517.7 730.9

1,414.3 429.2 593.1

3,091.9 2,185.7 478.6 470.9 113.7 100.9 1,993 1,499.8 2,218.8 1,909.8 662.6 708.9 370 151.6

SOURCE: GUS, various editions; ªmembership is given in thousands

League, underwent a major administrative change that substantially reduced its membership base between 1960–1970, but did not terminate its existence. Only two organizations, the Social Antialcohol Committee, and the Antidrug Youth Movement (MONAR) were created between 1960–1980, mainly to deal with the growing social problem of substance abuse. Only the MONAR movement can be considered a genuine citizen initiative “from below,” originated by a group of young professionals, and explicitly patterned on a similar project (the Synanon) developed in the United States. This situation started to change in 1985 with the introduction of new laws liberalizing the rules for establishing new associations (Les, 1994). New organizations started to emerge, and the existing government-sponsored social organizations were substantially restructured or reformed, frequently serving as organizational “building blocks” of newly emerging entities. Moreover, many

28

CHAPTER 2

of these newly emerging entities could not survive the political turmoil and the lack of resources. According to Filip Rosciszewski, representing the KLON/ JAWOR research team (personal communication, November, 1993), about 45% of the entities targeted for the survey were defunct, and thus not included in the database. This, in turn, implies that the post-1985 organizational birth rate was even higher than the KLON data indicate. In that light, we can reasonably conclude that organizations in the KLON database represent a new phenomenon created, for the most part, during the transition period. This suggests that studying these entities can shed some light about the goals and motives of people and groups who were active in the reform process. Who were those people and what did they want to accomplish? To answer that question, let us examine Table 2.2, which shows the distribution of the founding members of the organizations included in the KLON database. It is well known that the opposition to the pre-1989 regime was dominated by the Roman Catholic church and the labor movement Solidarnosc seeking greater independence from the state. Based on that knowledge one would thus expect these forces to dominate the post-1989 nonprofit scene in an obvious attempt to implement and solidify their newly gained freedom to form organizations (Anheier and Seibel, 1992; Wunker, 1991). But this is not what the data show. Perhaps the most striking feature of the distribution shown in Table 2.2 is that professionals are the single largest category of founders (nearly Table 2.2. Social Proximity Organizations in Poland, by Founder Category, 1993 Founder Category

Organization Number % of total

Professional Medical

43 1 294

30.8 21.0

Clergy Roman Catholic

273 262

19.5 18.7

Civic association affiliates Labor unions

259 51

18.5 3.6

Activists Stakeholdersª

242 188

17.3 13.4

Public officials or employees Provincial or local government

127 50

9.1 3.6

Other

68

TOTAL

1400

4.9 100

N = 1,796 DATA SOURCE: KLON, 1993 “Stakeholders are members who directly benefit from the organization’s acitivity.

29

WHATIS TO BE EXPLAlNED AND WHY?

31% of all identifiable founders). This also holds for healthcare professionals (including physicians, psychologists, physical therapists, and registered nurses) who comprise 21% of all founders.1 Another surprise emerges when we examine the fields of service in which the newly established organizations concentrate. This information is shown in Table 2.3, where types of service provided by these organizations are classified by the International Classification of Nonprofit Organizations (ICNPO) proposed by Salamon and Anheier (1992b). Since the KLON database was constructed by selecting only those organizations that report providing any kind of service to the general public, that fact may explain a relatively inconspicuous presence of civic and advocacy groups in the sample. What is surprising, however, is that health is the largest category (39% of all organizations), greater than all other services combined (social services, including income maintenance, represent 31%, and other services, including education, 3%). Why is it surprising? Under central planning, Poland implemented a universal public healthcare system, and few nongovernmental alternatives to the public sector existed in this service field. In 1980, 97% of all ambulatory visits in the urban areas were provided by public clinics, while only 3% by the private sector (GUS, 1991), comprised mostly of cooperatively owned clinics (Sokolowska and Moskalewicz, 1987). Moreover, the tiny private healthcare sector shrunk during the 1980s. By 1990, the number of visits in the private sector declined to 2.2% of all visits in urban healthcare establishments. The number of privately owned (coop) healthcare establishments declined by 27% between 1980–1990, while the number of public establishments rose by 13% during the same period (GUS, 1991). In the light of these trends, it seems odd that anyone would want to establish Table 2.3.

Service Providing Social Proximity Organizations

Field of Activity Health Services Social Services Income Support Civic and Advocacy Community Development Research and Science Professional and Unions Other TOTAL

Organizations Number % 70 1 295 264 233 128 67 54 54 1,796

39.0 16.4 14.7 13.0 7.1 3.7 3.0 3.0 100

DATA SOURCE: KLON, 1993 All foundations are active service providers and are classified in the areas of their activities.

30

CHAPTER 2

new organizations in the field where the alternatives to the public sector were visibly losing ground. For American readers, who may associate the healthcare business with high earnings, a simple explanation of that sudden interest in healthcare provision may lie in the expectation of high rewards. But even a cursory look at the earning structure tells a different story. Healthcare workers were one of the most underpaid occupational groups in Poland, whose earnings fell below the national average (Kennedy, 1991; Sokolowska and Moskalewicz, 1987). They frequently supplemented their low salaries by private services which they could semilegally provide because of their access to the public sector resources (Sokolowska and Moskalewicz, 1987; author’s interviews, July, 1994). If the pecuniary motivation were a factor, then one would expect that when the opportunities for private initiative emerged, these professionals would rush to the private, fee-for-service sector, rather than creating social proximity (i.e., nonprofit) organizations in the area dominated by the universal public healthcare system. However, healthcare workers were generally reluctant, if not hostile, toward the possibility of privatizing the healthcare sector (author’s interviews, July, 1994). The puzzle that emerges from these initial observations can be formulated as follows. A significant portion of the SPORG organizational revival that took place during the social and political changes in Poland in late 1980s and early 1990s occurred in healthcare, a field already dominated by the public sector. Assuming that the founders of these entities are rational goal-seeking individuals, there must be explainable human motives behind this observed trend. Yet, these motives are not immediately apparent for the following reasons. Given a rather low compensation level of healthcare workers in Poland, one could reasonably expect these people would want to improve their financial situation by offering commercial services. However, the social proximity organizational form they chose, and the existence of the relatively well developed public healthcare system seem to preclude any immediate financial gains almost by definition. So what are the motives of these people who forego other opportunities and undertake considerable efforts to establish organizations that by the virtue of their status offer little financial gratification?

THE MISDEMEANORS OF CONVENTIONAL WISDOM None of the existing theories of the nonprofit2 organizations can offer much help in answering that question. These theories can be grouped into two broad categories. First are the theories in the “social capital” tradition (Putnam, 1993: Fukuyama, 1995) that view civic associations as more or less spontaneously

WHAT IS TO BE EXPLAINED AND WHY?

31

created institutions that constitute a form of social resource facilitating the functioning of other institutions, especially government and business firms. Since this approach treats nonprofit organizations as an independent variable, or a factor that explains the behavior of other organizational forms, its usefulness for shedding light on the origins of the nonprofit form is at best limited. The second type of theories, in contrast, sees nonprofits as a puzzle in need of explanation, but as this chapter will show, the explanations they offer are not very helpful in the Eastern European context. These theories have their origins in the neoclassical economic philosophy, especially popular in the United States, and share the common trait of linking nonprofit organizations to the need for maximizing economic utility. Despite having different approaches, they are variations on the single theme that nonprofits exist because they offer unique economic advantages in the production and distribution of certain goods and services, which other institutional forms (for-profit firms and public agencies) presumably lack. Instead of simply rejecting the economic theories as insufficient or inadequate for the puzzle we seek to explain, a more prudent approach is to examine the reasons behind their failure. This critical examination will help us develop a new theoretical model by identifying and salvaging useful hints and observations offered by these theories while avoiding their pitfalls. To accomplish that task, it is useful to classify the theories into groups that represent different types of explanations of social facts that can be found in the social sciences. These explanations are defined by two general characteristics: the units of analysis they assume and the causal mechanism they propose. Unit of analysis simply denotes the type of object under investigation. Social phenomena generally encompasses three types of objects: individuals, more or less coherent groupings of individuals (such as the family, circles of friends, work teams, social movements, or formal organizations), and relationships between individuals or groups. These units of analysis also imply different attributes that become the focus of explanation. In analyzing individuals and their behavior, the researcher typically focuses on phenomena that can be attributed to individual human beings, such as their beliefs, interests, or motivation. In contrast, the attributes of interest in studying social groups may involve the number of individuals in the group, rules defining group membership, the roles and the conduct of members, and the processes of group formation or dissolution. The attributes in studying interaction may encompass the number of actors, the roles of these actors are expected to perform (e.g., wife, boss, advisor, or friend), and the frequency and characteristics of interchanges taking place between actors (e.g., exchange of goods, services, information, or favors; power; giving and following of orders; conflict; collaboration; or competition). The causal mechanism or model describes processes that produce specific

32

CHAPTER 2

attributes or behavior of objects under investigation. In its simple form, the causal model describes a sequence of events whereby an onset of observable phenomena (causes) is followed by a predictable outcome. The fundamental requirement of causal logic is the strict adherence to the temporal order of events. The cause must precede the effect in time, but that time span must not be too long to preclude the dissipation of the hypothesized effect by other influences, not specified in the causal model. For example, the 1998 influenza epidemic in Baltimore (the outcome) was preceded by the appearance of a new strain of the influenza virus (the cause) that within a specified time period spread from one person to another. It would be quite pointless to seek the root causes of that epidemic in, say, the introduction of the influenza virus to the American continent by European colonists some 500 years ago. While factually accurate, the initial effect of that introduction has been mitigated by a plethora of other factors that render such an explanation virtually meaningless. However, causal models used in social sciences differ from that simple variety in that the objects under investigation (individual and groups) are endowed with consciousness, which makes them capable of anticipation and planning. Consequently, an outcome can be produced by the anticipation of an event (cause) that has not yet occurred. The anticipation of future events by conscious human actors per se does not necessarily violate the fundamental rule of causal logic stipulating that the cause must precede the effect in a reasonably short period of time. It simply posits that human behavior may be caused by the state of mind (i.e., anticipation) that precedes that behavior. But researchers usually cannot directly observe the states of mind of the people whose behavior they seek to explain. This inability may lead to a situation in which the researcher imputes certain states of mind (such as beliefs, interests, or motives) rather than positively ascertains them as a matter of fact. A typical scenario under which such imputation takes place is the assumption of rationality in human actors. Since human actors are rational, we are told, they are capable of anticipating future benefits and perils (which the researcher typically knows ex post facto) and act accordingly to achieve the maximum future benefits while minimizing future losses. The end result of such casuistry is the teleological fallacy that explains social facts by its future consequences. Following this discussion, we can distinguish two types of causal models in social sciences: teleological and positive. The teleological causation model3 does not shy away from (even though it may not be limited to) explaining social facts by presumably anticipated outcomes that typically materialize after these facts occur. This model rests on the full rationality assumption; that is, it posits the capacity of human actors to fully anticipate all consequences and

WHAT IS TO BE EXPLAlNED AND WHY?

33

constraints of their current behavior. While this assumption per se is not necessarily fallacious, it can easily lead to the teleological fallacy if the anticipation of future consequences is imputed by the researchers (e.g., in the form of an axiom) rather than positively established. The positive causation model, in contrast, will posit causal relation between human behavior and its anticipated consequences only if it can positively establish that the human actors actually anticipated specific outcomes prior to engaging in the behavior under investigation. This positive determination usually takes the form of an empirical inquiry into the motives of human actors under scrutiny (e.g., by examining written records, or by interviewing the actors themselves or knowledgeable witnesses), but it may also be inferred from the actor’s known social roles or declared positions. For example, if a general sends his troops on a highly risky mission, we can reasonably infer that his action was caused by his anticipation of a military victory, because the pursuit of victory can normally be expected of his role as a commander. Our conclusion is valid regardless of the actual outcome of the operation, which may be defeat. Applying this discussion to categorizing the economic theories of nonprofit organization, I propose a fourfold classification scheme formed by crosstabulating the unit of analysis and the causal model dimensions. Thus, one group of theories assumes individuals, whereas the other group uses transactions (interaction) as its units of analysis. Each of these two groups has also the teleological and the positive variant. The main difference between these two variants is that the former does not positively identify motives of human actors who establish nonprofit organization (it implicitly imputes them as some form of altruism), whereas the latter does. This classification scheme is shown in Table 2.4. It needs to be underscored that the theories under scrutiny form a more or less coherent and integrated body of arguments and lines of though that share common themes and borrow from each other. Therefore, the arguments classified under each of the four categories shown in Table 2.4 are not mutually exclusive. The proposed classification serves mainly as a heuristic device that highlights principal models of explanation employed by various writers in this theoretical tradition. The teleological causation approach to nonprofit organizations is represented by two theories. The demand heterogeneity goods theory (Weisbrod, 1978) assumes a fixed, predetermined relationship between the public nature of certain goods and the institutional sector of their delivery. To reiterate, public goods are those that are offered to people regardless of their ability to pay. A vendor cannot prevent anyone who is unwilling or unable to pay from benefiting from these goods. This creates a disincentive for profit-oriented vendor to

CHAPTER 2

34

Table 2.4. Major Economic Theories of Nonprofit Organizations, by Unit of Analysis and Causal CAUSAL MECHANISM Teleological

Positive

UNIT OF ANALYSIS Individual

Transactions

Theory:

Demand heterogeneity Public good variant

Transaction cost Contract failure variant

Explanation:

Organizations emerge because there is unmet demand for idiosyncratic collective goods.

Organizations emerge because there is a need to reduce the monitoring costs in transactions encumbered by substantial information asymmetry between the parties.

Theory:

Demand heterogeneity Moral entrepreneur variant

Transaction Cost Demand-side stakeholder variant

Explanation:

Moral entrepreneurs use non-profit organizations to promote value systems.

Buyers use nonprofit organizations to reduce monitoring costs in transactions encumbered by information asymmetry between suppliers and buyers.

provide such goods. Consequently, public goods must be provided by a vendor who is not motivated by profit. Under ordinary circumstances, this vendor is a public agency. The demand heterogeneity model explains why, under certain conditions, public goods cannot be effectively provided by public agencies. Such a condition is created by political restrictions to public funding of the production of such goods. This happens when the public good in question serves only a narrow constituency. Under these conditions, the majority of the voters would find it in their best interest to oppose the financing of such goods by their tax dollars. Consequently, these goods must be provided by a noncommercial and nonpublic vendor-that is, a private nonprofit organization. An alternative explanation that falls into the same functionalist paradigm is offered by the contract failure theory proposed by Hansmann (1987). In contrast to the demand heterogeneity model which explains why some public goods are not provided by public agencies, this theory explains why certain goods are not provided by the market. It stipulates that contractual transactions are bound to fail under certain conditions because of the lack of trust between the involved parties. This typically happens in three-way transactions, where the payer and the recipient of a good or service are two different people. Such a situation makes it difficult to monitor the quality of the delivered goods,

WHAT IS TO BE EXPLAINED AND WHY?

35

the situation known as information asymmetry. That, in turn, creates an opportunity for the provider to profiteer by delivering goods of inferior quality. Knowing that providers in such situations cannot be trusted, the payer has a disincentive to enter a three-party transaction. That disincentive can only be remedied by legal constraints stipulated by the nonprofit status, limiting the rewards the provider could reap. These two theories differ in their treatment of information available to the parties involved in the provision of public goods. For the contract failure theory, the unequal information among the parties (the “information asymmetry”) is the essential feature that explains the need for the nonprofit organizational form. The public good theory, by contrast, implicitly assumes that all interested parties have full information about the nature of the good in question. Without such an assumption the theory would simply fall apart. If one is to conclude that voters’ opposition prevents the government from delivering certain kinds of public goods, one must make certain assumptions about information the voters have to stage an effective opposition. Specifically, to oppose “special interest projects,” the voters must not only know in advance what public projects are being contemplated in every part of the country, but also know that those projects will not serve their interests. Without the “full information” assumption, the whole argument is a nonsequitur because the “median voter” cannot reasonably be expected to oppose projects the nature and benefits of which are unknown to her. Despite their different starting points, both arguments rely on a similar explanatory scheme that posits the existence of unsatisfied (due to political constraints or information asymmetry) demand for certain types of goods or services. It then stipulates that unsatisfied demand creates the incentive to satisfy such demand through an alternative venue that does not have the limitations of the markets and the public sector, namely the nonprofit organization. But this is precisely a flaw in this line of argument, although this flaw is much more serious for the public good theory than for the contract failure approach. Assuming a rational actor (i.e., a person motivated by self-interest or an expectation of personal gain), the existence of unsatisfied demand is both the necessary and the sufficient condition4 explaining the motives behind the production of a good or service for commercial markets. It is so because in the free market, which by definition assumes the absence of any compulsion, the only factor that motivates a person to act (sell or buy) is free will which, in turn depends solely on the expectation of material gain resulting from the action. The presence of such expectation is all that is required for anyone to act (the sufficient condition), and the absence of it—the only factor that prevents anyone from entering a transaction (the necessary condition). However, when the expectation of personal gain is excluded by definition

36

CHAPTER 2

or legal constraints, as is in the case of a nonprofit organization, unsatisfied demand may be the necessary but not the sufficient condition for a rational person to act. The reason is quite simple: Unmet demand alone may create a potential opportunity for an action, but the actual incentive to act exists only if such an action is expected to bring rewards. Since nonprofit organizational form precludes the possibility of such a reward by definition (or by law), no incentive to act exists. And without the incentive, there is no will to act. Without a will and compulsion, there is no sufficient condition for a person to enter such a transaction. Consider this problem from a different angle: Public goods are procured by government agencies precisely because private suppliers have no incentive to provide such goods because of their limited ability to collect payments from all who benefit from said goods. The presumed incentive of the government agency is a political or legal mandate to act in common interest and provide goods that cannot be provided by the market. But if that legal mandate is curtailed by the presumed political will of the electorate, it follows that nobody has an incentive to provide the public good in question. Consequently, the constraint on profit distribution creates a disincentive for any rational individual to procure any goods at all under such a condition. Thus the only logical conclusion that can be drawn from the assumptions made by the public good theory is that nobody will provide such goods. Since the public good theory can at best explain the necessary but not the sufficient condition of the creation of nonprofit organizations, the existence of these organizations remains an inexplicable mystery without making additional assumptions stipulating the motives of the nonprofit service providers. One possibility is doing away with the rationality assumption and admitting the existence of nonrational motivation, such as emotions or altruism. Another possibility is to relax the rationality assumption by admitting the possibility of information asymmetry, which is the approach taken by the contract failure theory. Yet, both solutions introduce internal inconsistency with the public good theory’s central claim of the “median voter” opposition. If some people (i.e., nonprofit service providers) can act on nonrational motives (such as altruism) or on limited information, then why can’t the “median voter”? And if the “median voter” can indeed be altruistic or not fully informed, how do we explain this stubborn opposition to government provision of idiosyncratic public good, as the theory in question wants us to believe? While the contract failure model also fails to account for the motives of nonprofit service producers, such a failure is not a mortal wound to the internal consistency. It is so because this model does not rely on a full-information assumption to explain the existence of the necessary condition (unmet de-

37

WHAT IS TO BE EXPLAINED AND WHY?

mand for certain types of goods) for the nonprofit action to take place. Consequently, relaxing the rationality assumption (by admitting imperfect rationality) to explain the sufficient condition (motivation to act) does not introduce an internal contradiction to this line of theorizing. Stated differently, the absence of the full rationality assumption makes room for introducing an auxiliary hypothesis that can explain what interest the providers have in using the organizational form that reduces information asymmetry. The identification of such interests will satisfy the sufficient condition for the existence of the organizational form in question. This book is aimed at accomplishing that theoretical objective. In addition to its logical flaws, the public good theory fails in the Polish context for empirical reasons as well. Let us recall that the intervening condition this theory identifies to account for the unmet demand for certain types of public goods is inadequate public funding to produce such goods. Thus we can reasonably expect that if at least that part of this theory holds true, then changes in public funding can explain changes in the birth or death rates of nonprofit organizations in certain service fields. Specifically, a decrease of public funding should increase the birth rate of nonprofit organizations (assuming a constant level of demand for the service in question). With that in mind, the changes in the state budget in Poland (see Table 2.5) should be a reasonably good predictor of the structure of the emergent nonprofit sector. That is, substantial cuts in the state budget should result in a growth of nonprofit production of the services in question, and increases in the state budget should result in a decline of nonprofit production. Table 2.5. State Budget by Budget Category, Poland, 1985–1990 State Budget Category State-owned enterprises Health and social services Education Social security Defense Higher education Cultural arts Justice and law enforcement Sports and recreation Science TOTAL (billions zls)

Share of 1990 Budget

1985–1990 Change Inflation Adjusted (billions zls)

1985–1990 Change as % of 1985 Level

29.1 19.0 12.8 9.6 7.9 3.6 1.8 1.2 0.6 0.2

–718.7 172.2 56.1 –59.2 –76.0 35.3 –4.8 7.2 0.4 –23.9

–44.9 42.8 16.9 –16.9 –24.1 47.7 –8.0 24.6 2.3 –76.3

172,165

–458.7

–13.2

SOURCE: Compiled by the author from GUS, 1991 1985–1990 inflation ration 1/56.84 (IMF International Financial Statistics Yearbook)

38

CHAPTER 2

Yet, this is not what the data show. A comparison of Table 2.5, showing inflation-adjusted changes in the Polish state budget between 1985–1990, and the structure of the nonprofit sector in Table 2.3 reveals a relationship that is exactly opposite to that predicted by the theory in question. Science, the area experiencing the most substantial cuts in the state budget, corresponds to a minuscule field in the emerging nonprofit sector, research. At the same time health, the area where the public outlays grew most significantly in both relative (as percent of the budget) and absolute (net change) terms, is also the largest field of the nonprofit sector. It is, therefore, clear that the public good theory offers little help in explaining the development of the Polish nonprofit sector for both theoretical and empirical reasons. As to the contract failure theory, although it is insufficient to account for the nonprofit service providers’ motives, it can offer valuable insights into developing a more elaborate theory of such motives. This theoretical task is persued in subsequent chapters. For now suffice it to say that, as the data will show, information asymmetry between service recipient and service providers posited by this theory can be viewed as the necessary (but not sufficient) condition for the service provider’s recourse to the nonprofit organizational form. The positive causation approach to nonprofit organizations departs from the teleological causation that implies the need of system of exchange (unmet demand or limitations implicit in certain types of economic transactions). Instead, these theories focus on the human actors who actually establish or maintain nonprofit organizations, and attempt to identify positively their specific interests that explain their actions. This group also comprises two different approaches to nonprofit organizations: the moral entrepreneur model; and the demand-side stakeholder model. The moral entrepreneur model proposed by James (1987) closes the gap in the previously discussed public good model by specifying the sufficient condition that explains the existence of some nonprofit entities. This sufficient condition, as we already know, must comprise the motives of the private suppliers of nonprofit services in question. Based on the observation that educational services are frequently provided by religious groups, James argues that their motivation is “not to maximize profits but to maximize religious faith or religious adherents and [nonprofit] schools are one of the most important institutions of taste formation and socialization” (p. 405). As we already observed, relaxing the rationality assumption by introducing nonrational motives of human actors may create internal inconsistencies in the public good theory. The moral entrepreneur model cleverly avoids that difficulty by positing the motive—maximization of religious services—that is fully purpose-rational but not necessarily limited to material gains.

WHAT IS TO BE EXPLAINED AND WHY?

39

Yet, motivation of the nonprofit service producers is the Scylla and Charybdis of the conventional theories of nonprofit organizations. The introduction of nonmaterial gains helped to avoid the risk of internal inconsistency, but it creates another potential problem: the vicious circle fallacy. Since motives often cannot be observed directly, then how do we know what actually motivates nonprofit service providers? If one assumes that the proof of having nonmaterial motives is the fact that the providers established a nonprofit organization whose raison d’être one seeks to explain then such an argument is clearly circular. Why did the moral entrepreneur establish a nonprofit organization? Because this entrepreneur had a nonmaterial interest in doing so (e.g., “maximizing faith”). How do we know the person had such an interest? Because he or she established a nonprofit organization. The circular reasoning fallacy can be avoided, however, if the existence of the claimed motives is established independently of the behavior that we seek to explain (i.e., the creation of a nonprofit organization). James takes that route and infers the existence of such motives from the known occupational interests of moral entrepreneurs. It is in the best interests of the clergy to have as many followers as possible. If the number of followers is lower than expected and the conventional religious proselytizing fails, for various social reasons, to win new converts, then alternative means to that end become an attractive to the clergy option. This is an important observation that will guide our investigation. One of the main research questions addressed in this book is to identify the occupational interests of service providers that can explain their recourse to the social proximity organizational form. However, in its existing formulation, the moral entrepreneur theory is limited to the occupational interests of the clergy, so the first task at hand is to determine if that particular formulation satisfactorily explains the phenomenon under investigation. Before we can apply this theory to the Polish context, we must resolve a theoretical difficulty arising from the fact that James’ model was built upon the public good theory. Specifically, the starting point of James’ argument is the existence of demand heterogeneity, which makes the satisfaction of that demand by public authorities difficult, if not impossible, as the public good theory claims. Yet, the public good theory failed in the Polish context, because we determined that it cannot account for the structure of the Polish nonprofit sector, as reflected in the KLON data. That is, the largest growth of that sector occurred in the field that this theory could not predict. This raises the question whether that failure also dooms the moral entrepreneur model. If the existence of the unsatisfied demand is logically necessary to explain the actions of moral entrepreneurs, it then follows that the moral entrepreneur theory fails for the same reason as the public good model did.

40

CHAPTER 2

We have already stated that the public good model identifies a necessary, but not a sufficient, condition for the creation of an entity (nonprofit or otherwise) aiming to meet that demand. It is obvious that without customers, any service providing entity loses its raison d’être and will sooner or later folds its operations. Yet a moment of reflection reveals that the proposition “unmet demand is a necessary condition for the nonprofit organization’s existence” needs to be modified in an important way. Purposive human behavior takes place in real time that involves three distinctive stages: conception, implementation, and assessment of results. First, the entrepreneur must plan the entire operation, even if only in a rudimentary way. Next, this person must assemble the necessary resources to start the production of the good in questions. Further down the road, the entrepreneur must organize the distribution of that good and, finally, determine how that good is selling. It is clear that the enterprise will fold its operation due to insufficient demand in the final stages of that sequence—that is, when the entrepreneur ends up with inventory that cannot be distributed. It thus follows that adequate demand is a necessary condition for the sustained operation. But is it also necessary for the organization’s creation? As already noted, these stages of operation take place in real time. They are implemented sequentially, so it may take months, sometimes even years, between the first and the last stage. It is the last stage, the assessment of the results, that determines the life or death of the enterprise. However, the enterprise is created during the two initial stages (conception and implementation) during which the existence and the magnitude of demand for the good or service in question is uncertain. Oftentimes, consumers do not realize they need a particular good or service until that good or service has become available on the market. This certainly is true of many commercial goods, and there is no reason to believe that public goods are any different in that respect. So what really motivates an entrepreneur to create an enterprise is her anticipation of the demand for the service. That anticipation may be based on more or less adequate knowledge of the market, and thus may or may not materialize in the form of actually articulated demand—that is, consumers buying the service in sufficient quantities. But even if the anticipated demand fails to materialize, this is usually not known until the product is offered to potential buyers. For the entrepreneurial effort to fail, it must first take a material form. In plain English, a nonprofit enterprise must first be created before it fails due to the lack of expected demand for its services. Since we seek to explain the emergence of this kind of entity, rather than its life span or mortality rate, the problem of insufficient demand is not of primary concern here. What really matters is the cause that brought the organization to life rather that what caused its death. From the entrepreneur’s point of view, the only necessary condition for

WHAT IS TO BE EXPLAlNED AND WHY?

41

creating a service delivery organization is the expectation of the demand for service. The foregoing discussion suggests that to apply the moral entrepreneur theory to any context, all we need to assume is the entrepreneur’s expectations of the demand rather than the actual demand for his services. Those expectations may prove completely wrong, but that does not necessarily prevent him from acting on those expectations—that is, from creating an enterprise producing that service. It thus follows that the apparent failure of the public good theory to predict the existence of the actual demand should not be construed as an automatic failure of the moral entrepreneur theory to explain the creation of an entity ostensibly intended to meet that demand. This may sound paradoxical from a timeless, ahistorical point of view, but this becomes less so when applied to the real world, where organizations emerge or cease to exist at a particular point in time. With that in mind, the moral entrepreneur theory can account for a relatively large presence of clergy among the founders of nonprofit agencies in Poland (nearly 20%, as Table 2.2 shows). A great majority of these moral entrepreneurs are Roman Catholic clergy, and this leads to the question: Why would the Roman Catholic clergy want to “maximize religious faith” in a country that is already predominantly Catholic (nominally 95% of the population)? Stated differently, does converting the remaining 5% of the population offer sufficient marginal utility to explain the considerable efforts on the part of Roman Catholic clergy to establish nonprofit entities? This question signals another important issue in the moral entrepreneur theory of nonprofit organization: specifying the scope conditions. The claimed affinity between the provision of nonprofit services and the maximization of religious faith stipulates that every religion or denomination has an incentive to become involved in the nonprofit sector. The stipulation sets the moral entrepreneur theory for a certain failure, because it can be easily contradicted by instances of religions that are not involved in nonprofit activism. James (1987) addressed this problem by defining the scope condition under which the clergy are likely to get involved in nonprofit activities: moral entrepreneurs who face competition from well-established denominations. This assumption allows us to predict that minority religious entrepreneurs, who have much to gain from expanding their influence, have an incentive to use nonprofit service organizations as a platform for proselytizing. Participation in a nonprofit service organization’s activity is certainly less objectionable to nonbelievers than attending “alien” religious services. On the other hand, following the law of diminishing returns, a majority religion derives lesser marginal utility from winning new converts and thus will view using nonprofit services to increase its appeal to potential converts as “too costly” when com-

42

CHAPTER 2

pared to the value of the expected returns. Consequently, we can predict that a greater number of nonprofit organizations will be established by minority religious entrepreneurs than by their majority counterparts. Yet, the KLON data do not support that expectation. Non-Catholic religions constitute only about 5% of Polish population (GUS, 1991), but only 11 organizations (less than 1% of the total and only 5% of all organizations founded by clergy) were established by minority religious entrepreneurs (Table 2.2). It should be noted, however, the religious entrepreneur theory was off the mark in predicting which denomination would be most involved in the nonprofit sector, but it was essentially correct in predicting a substantial involvement of the clergy in general. A closer examination of this issue once again reveals the importance of expectations in predicting the moral entrepreneur’s behavior. Under the central planning regime, the Roman Catholic church was popularly perceived as the counterweight to the power of the state. Because of this perception, public discontent with state policies was a powerful factor, pushing people toward the church. This tendency was particularly strong after government crackdown of the Solidarnosc movement and the declaration of the martial law in 1981, when the church was considered the “oasis” (Lewenstein and Melchior, 1992) of the civil society in Poland. Churches served as a safe space for public gatherings, which often were political in nature, yet thinly disguised as religious functions. In addition, the church initiated and sponsored numerous social movements, attracting especially youth while aiming to promote Catholic values, culture, and moral philosophy. As a result, the church did not have to do anything to attract crowds except to literally open its doors to gain a windfall profit of public discontent with the state. In the late 1980s this situation started to change, as the policies of state were liberalized, and the secular influences from Western Europe increased quite dramatically. The church could no more automatically count on the dissatisfaction with the state policies to attract crowds, and its very image as the positive force in Polish society started to be increasingly questioned. One of the reasons behind such changes in public attitudes were the frequent attempts of the clergy to influence the political process, and their rigid stance on moral issues, especially abortion.5 Public opinion surveys reveal that even before the reform, the number of respondents perceiving the church as acting in public interests dropped from 80% in 1985 to 74% in 1988, while the number of those who viewed the church as not acting in public interests increased from 10% to 13% respectively (CBOS, 1994). Clearly, it was not the religious competition for new converts, but the prospect of losing a favorable public image, and thus the followers, that must have been on the Polish clergy’s minds. To counteract those negative trends, they decided to preserve their public image by establishing nonprofit service-

WHAT IS TO BE EXPLAINED AND WHY?

43

providing organizations. Why separate nonprofit entities, rather than relying on the “oasis” networks already existing in the parishes? Here we touch the theme that I will later discuss at length, the theme that both priests and professional have in common. This theme is not spreading the gospel and attracting new converts, as James incorrectly speculated. Throughout the two millennia of its existence, the Catholic Church has become a proselytizing expert, developing ecclesiastic structures far better suited for proselytizing than a soup kitchen or a homeless shelter. And far less costly too, for spreading the word from the pulpit costs virtually nothing, while the same cannot be said about feeding the poor except, perhaps, distributing seven loaves of bread to 4,000 people in Galilee some 2,000 years ago, but that is another story. The common theme underlying priests’ and professionals’ recourse to nonprofit organizations is that this organizational form can be helpful in shaping the public image of their respective professions. This conclusion anticipates the results of the investigation that will be conducted in the subsequent chapters. For now, suffice it to say that a general scope condition under which moral entrepreneurs seek a recourse to social proximity organization is the existence of adverse conditions that may affect their professional practice. As we shall see, such adverse conditions may result from different circumstances, such as information asymmetry, competition, or an entrepreneur’s undefined occupational status. Although the moral entrepreneur theory does not explicitly deal with the motives behind professional involvement in the social proximity organizations, it clues us in to how to investigate them. First, it suggests inferring such motives from occupational interests of the entrepreneurs as service providers. Second, it prompts us to focus on the expected benefits of using that particular organizational form. Third, it draws attention to the conditions that may affect the different uses of the organizational form under investigation. The other theory of nonprofit organizations in the positive causation group is the demand-side stakeholder model proposed by Ben-Ner and Van Hoomissen (1993). It holds that nonprofit organizations emerge when the respective services are encumbered with information that make quality monitoring difficult. Unlike the similar approach proposed by Hansmann (1987, see above), however, this theory provides the motives of human agents involved in creation of entities under investigation. Such agents, identified as the demand-side stakeholders, have an incentive to monitor the services they need. Because the only venue outside government that effectively allows such monitoring is the nonprofit organizational form (as for-profit forms give more control to supply-side stakeholders due to information asymmetry), these agents have a clear motive (self-interest) to either establish or actively participate in nonprofit organizations.

44

CHAPTER 2

The stakeholder control model thus predicts that the demand-side-stakeholder control is the prevalent form of governance among the nonprofit service-providing organizations. Yet the data in Table 2.2 do not support that hypothesis. Although the demand-side stakeholders constituted the third largest group among the founders (over 13% of the total), the professionals, who are par excellence supply-side stakeholders, outnumbered them by the ratio of over 2 to 1. This is a serious problem, because the supply-side control increases rather than reduces information asymmetry, and thus it does not fit the information asymmetry reduction scheme that underlies this model. Although the demandside stakeholder model can explain a visible presence of demand-side stakeholders, it cannot explain the conspicuous presence of professionals among the founders of nonprofit organizations in Poland. Existing theories on nonprofit organizations cannot satisfactorily account for the puzzle we seek to explain: the motives of professional service providers to create new social proximity organizations in Poland. However, these theories provide us with valuable insights into how we should proceed with our investigation. First, two theories that could partially account for the motives of some founder groups, religious entrepreneurs (James, 1987) and the demand-side stakeholders (Ben-Ner and Van Hoomissen, 1993), relied on positive determination of social actors and their motives for establishing nonprofit entities. Following that lead (also suggested by Majone, 1984), I focus on identifying occupational interest of professional service providers. Our investigation will thus expand the moral, or value-rational, entrepreneur model outlined in this chapter. Second, the transaction cost approach invoked the concept of information asymmetry as a necessary condition for recourse to the nonprofit organizational form. This approach proved to be a successful theory-building strategy, because it avoided internal contradictions present in the full-information model (public good theory). The demand-side stakeholder model also scored some empirical success in predicting the emergence of self-help groups in Poland. This suggested the need for a detailed investigation into the relationship between information asymmetry and the nonprofit organizational form. Additional investigation is needed for a simple reason: The information asymmetry model can explain why the provision of certain services should face the profit distribution constraint, but it fails to explain why such provision takes the form of an organization. In other words, if profiteering was the only concern resulting from the information asymmetry problem, then profit distribution constraint should apply to individuals rather than to organizations. It is so, because nonprofit enterprises can generate surplus or “profit,” they are only

WHAT IS TO BE EXPLAINED AND WHY?

45

prohibited from distributing it to individuals who run or control the enterprise. Yet, what we see is the emergence of nonprofit organizations rather than nonprofit individual providers. Obvious yet ignored by the theories in question, this observation suggests that more than simple monetary gain is at stake here. Finally, the failure of the public good theory in the Polish context has revealed that our investigation need not be concerned with the existence of actual demand for a particular good or service. As I have shown, all we need to account for the actions of entrepreneurs is the existence of the anticipated demand for the service, as subjectively perceived by these individuals themselves. Consequently, the existence and extent of the actual demand for the services offered by the entities we investigate here will not be explored in this book. With that in mind, let us now investigate the reasons that prompted some Polish healthcare professionals to create social proximity organizations after the dissolution of the central planning system in 1989. Our investigation will begin by exploring the general conditions of the professional class, also known as the intelligentsia, under the central planning regime implemented after World War II. The next chapter provides a historical background to help us understand the peculiar value system and group interests that were conducive for establishing social proximity organizations.

NOTES 1 2

3

4

See the methodological appendix for the description of the classification system developed to tabulate the founders of KLON organizations. I use the term “nonprofit” instead of “social proximity organization” (SPORG), because the constraint on profit distribution is central to the arguments proposed by the theories under investigation. Consequently, the neologism SPORG, introduced in the preceding chapter, is clearly inappropriate in this context. A good example is the functionalist sociology of Talcott Parsons (1951) that explains the origins of social institutions by the claim that they are needed for the proper functioning of society, or a “social system.” In this argument, the final outcome (the purported usefulness to society as a whole) is construed as the cause of the social phenomena (institutions) and the shape they take. In causal logic, the necessary condition is a condition that must be present for the effect to occur. If (c) denotes the hypothesized condition and (e) represents the effect to be explained, the necessary condition is expressed by the following statement: if (e) then (c) or conversely, if not (c) then not (e). The sufficient condition, by contrast, is a condition whose presence always produces the effect in question. This type of conditionality is represented by the statement if (c) then (e). It clearly follows from the truth function for the implication that the sufficient conditionality statement does not imply if not (c) then not (e). In substantive terms, the absence of a sufficient condition does not necessarily preclude the effect from taking place. For example, if rain is a sufficient condition for my plants to grow, the

46

5

CHAPTER 2 absence of rain does not automatically imply that the plants will die. I can make them grow by watering them from a faucet. In 1992, the conservative members of the parliaments introduced a bill banning all forms of abortion. The bill attracted considerable public opposition, and the liberal and left-leaning members of parliament called for a referendum. The idea of the referendum was vehemently opposed from the pulpit, and one parliament member, representing the right-wing Christian–Nationalist Party (ZChN) which was openly endorsed by the Church, said in a nationally televised interview that “important moral questions cannot be decided by casual populace (przypadkowe spoleczenstwo) .” The unpopularity of the Church’s political position during the transition period is reflected by the term “Black Commies” (czarna kornuna), which was applied to clergy and equated the position of the Church with the totalitarian practices of the pre-1989 regime.

Chapter

3

Professional Aspirations to Class Power A Comment on Civil Society in a Centrally Planned Economy CIVIC ASPIRATIONS UNDER A CENTRAL PLANNING REGIME Until World War II, Poland, when compared to her western neighbors, was predominantly a rural country with a rather backward economy. The country regained national sovereignty in 1918 after nearly 200 years of partition and foreign rule. In 1938, only 30% of the total population of 35 million lived in urban areas (GUS, 1970). During the war period (1939–1945), the country sustained heavy losses in national wealth and population. Over 38% of national wealth (as compared to the 1939 level) was destroyed. The losses were particularly heavy in communication, education, trade, and public administration where the reached over 60% of the pre-war level (Feiwel, 1971). The loss of life, estimated at over 11 million, or one-third of the pre-war population (Alton, 1955, Halecki, 1957), was particularly heavy among the intelligentsia: 40% of teachers, 50% of physicians, and over 30% of engineers (Halecki, 1957). The post-war government thus faced a rather peculiar situation. On the one hand, it legitimized its mandate1 on the promise of land reform, rapid reconstruction and modernization of the economy and social institutions. But to make good on that promise, the new regime needed skilled industrial labor, technicians and engineers, and these were in a short supply. The post-war authorities therefore implemented a public education system aimed at eradicating illiteracy and creating a sufficient supply of skilled labor to meet the need of the rapidly growing industry. 47

48

CHAPTER 3

In addition to producing specialists, the newly created public education system had to perform two important social functions. First, it had to facilitate occupational mobility of the traditionally underprivileged classes: workers and peasants. This was accomplished by opening a high number of publicly funded vocational, secondary, and tertiary educational institutions (Simon, 1955). Second, the public education system needed to socialize the new generation into a modern industrial society, and built mass support for the new political–economic regime. This required curricula that challenged the traditional values and counterbalanced the influence of primary social groups (the family) and traditional institutions, especially the Roman Catholic church (Fiszman, 1972; Morrison, 1968; and Pirages, 1972). This educational policy created a steady and robust growth of skilled and professional labor throughout the entire post-war period. Between 1960–1980 alone, the number of college graduates quadrupled from 20,5000 per annum in 1960 to 84,000 per annum in 1980. The number of employees with a college degree grew in the same period from 268,000 to 938,000 or, in relative terms, from 9 to more than 26 per 1,000 population (GUS, various editions). Moreover, the new curriculum, especially at the college level, strongly emphasized active participation in public affairs. Students were strongly encouraged, and often even pushed, to join youth and student organizations and perform volunteer work for public benefit. Union and professional association membership was virtually required to obtain most jobs and work benefits. Political party2 membership became a necessary requisite for a successful professional or a managerial career. Civic activism was almost exclusively channeled through governmentcontrolled institutions, known as organizacje spoleczne (social organizations). Any independent citizen initiatives to form alternative civic associations were strongly discouraged and faced insurmountable bureaucratic hurdles. On the rare occasions when independent associations did emerge, they were shortlived. For example, in 1944 immediately after the USSR liberated Poland from Nazi occupation, workers in many factories spontaneously resumed industrial production and formed factory committees in cooperation with the management and local administration. The government initially supported these initiatives, mainly for publicity reasons. However, in 1945 the official policy turned around, endowing management with exclusive power to decide all matters relating to employee relations (Reynolds, 1978). The 1956 labor unrest triggered the liberalization of government economic and social policies. This event was known as the Polish October (after the Eight Plenum of the ruling Polish United Workers Party that instituted those changes in October 1956). An important outcome of the Polish October was the spon-

PROFESSIONAL ASPIRATIONS TO CLASS POWER

49

taneous establishment of the independent workers councils. The councils demanded decentralization of the economy, and for that reason received support from factory managers. However, by 1958 the workers councils were either eliminated or incorporated into the official trade unions controlled by the state (Feiwel, 1965; Kennedy, 1991). Government hesitance toward independent civic initiatives was not limited to the highly contested terrain of power relations in the sphere of production. In 1972, a group of otherwise respectable citizens attempted to form a naturalist association to obtain a “seal of authorization” for a growing nudist movement. The bureaucrats, uncertain how to handle the situation, initially refused to issue a registration permit even though they acknowledged that the activities themselves were legal. Only after prolonged vacillations turned the entire situation into a farce did the local government-sponsored sports and recreation centers agreed to open nudist clubs under their auspices (Kurczewski, 1992). This set of conditions persisted throughout the entire postwar period until 1989 and created one of the bitterest paradoxes in the nation’s modern history The educational institutions implemented to strengthen the state socialist regime eventually sowed the seed of destruction of the system that created them. To paraphrase the famous portent envisioned by Karl Marx: [the professional class is] constantly increasing in numbers, and trained, united and organized by the very mechanism of the [centrally planned] process of production. The monopoly of [central bureaucracy] becomes a fetter upon the mode of production which has flourished alongside and under it. The centralization of the means of production and the socialization of labour reach a point at which they become incompatible with their [bureaucratic] integument. This integument is burst asunder. The knell of [central planning bureaucracy] sounds. The [executives] are [executed] 3 (Marx, [1867], 1977, p. 929).

Ironically, the people who ascended to political power by professing allegiance to Marx’s historical dialectics were in the end themselves obliterated by the laws of that dialectics. Although the central planning bureaucrats were not executed in the literal sense of the word (except in Romania), as the Eastern European “velvet revolution” was a remarkably peaceful process, their political power was effectively terminated by the class their own policies had created—the intelligentsia. Moving beyond historical metaphors, Eastern European central planning created a social class that not only grew in numbers, but also became increasingly conscious of its own key role in their societies and economies (Konrad and Szelenyi, 1979; Kennedy, 1991). This consciousness was manifested by growing aspirations to influence public policy and public decisionmaking pro-

50

CHAPTER 3

cess. Such attitudes were nominally encouraged by the set of values embedded in educational curricula as well as in the progressive intellectual tradition, but the institutions of central planning limited the opportunity to put these aspiration to practice. The pro-active attitudes and civic ambitions of Polish intelligentsia have been well documented. Reykowski (1992) found intelligentsia (defined as people with higher education) was more likely to believe an individual should have the opportunity to participate in the shaping of the social life of the state and the work place. At the same time, this group was less likely to espouse purely materialistic values. Misztal (l986) found that professionals in technical fields and managers tended to view altruistic social action equally important to “utilitarian” values: happy family life, educational achievement, and high income. By contrast, other occupational groups tended to place such action below the utilitarian values. Misztal explains the findings by the influence of education and by the elective affinity between that part of socialist ideology and the traditional values of Polish intelligentsia. According to a 1984 opinion poll, 70% of the respondents stated the most important issue facing Polish intelligentsia was to increase its significance and social status, mainly material conditions and a greater role in governing the country (CBOS,4 1994, pp. 129–137). Yet another indication of the civic aspirations of the Polish (and Eastern European) intelligentsia came from the World Values Survey (1994). The survey, conducted in nearly 50 different countries, asked a representative sample of respondents a number of questions pertaining to their views on a wide range of social and political issues. For the purpose of this analysis, I selected 27 Western and Eastern European countries5 to examine the attitudes of the intelligentsia6 toward citizen participation in public policy decisions.7 The results are shown in Table 3.1. Poland is presented separately from other Eastern European countries. As a group, the intelligentsia was more favorably disposed toward citizen participation in government decisions in all three regions (28% in Western European countries, 31% in Eastern European nations, and 35% in Poland) as compared to other occupational groups (24%, 25%, and 26%, respectively). This effect was visibly stronger in Eastern Europe, and strongest in Poland. Clearly, the aspiration to influence public policy and public decisionmaking process, although not ubiquitous, differentiates intelligentsia from other occupational groups—much more so in Eastern Europe than in Western European countries. We can thus say with reasonable confidence that growing professionalization of Polish labor turned into the major force demanding a greater say in public affairs. These political aspirations became fully visible during the time of political reforms culminating in the 1989 “velvet revolution.” The removal

PROFESSIONAL ASPIRATIONS TO CLASS POWER

51

Table 3.1. Civic Aspirations, By Region and Occupational Group, 1990 % of respondents who selected “most important”

N

Western Europe Intelligentsia Other All occupations

27.8 24.1 25.4

5,704 11,368 17,071

Eastern Europe Intelligentsia Other All occupations

30.9 25.1 27.2

4,366 7.780 12,146

Poland Intelligentsia Other All occupations

34.9 25.5 27.2

169 754 923

Geographic Region/ Occupational Group

Significance (Pearson Chi2) p < 0.01

p < 0.01

p < 0.01

DATA SOURSE: World Values Survey, 1990–1991 ITEM: Giving people more say in important government decisions.

of bureaucratic restrictions created favorable conditions for the establishment of new, independent of state control, civic associations that become a major vehicle for political mobilization for a plethora of civil rights, from women’s rights (Figure 3.l), to representation of ethnic minorities and special interest groups, and to campaigns to influence specific public policy issues (Figure 3.2). While the revival of civic associations’ life during the 1989 reform leaves little doubt about the existence of civil society in Poland, the roots of this civil society bear closer examination. Many casual observers believe civic associations date back to the pre-central planning era. They were dormant during the period when restrictions were imposed by the autocratic state and came back to full blossom when the restrictions withered away with the regime that imposed them. Yet, such a simplistic view does not fully reflect the relationship between centrally planned state and civil society. It is possible to distinguish two contradicting trends in that relationship. On the one hand, the institutional framework of central planning proved inadequate to meet the popular demand for participation in public affairs. On the other hand, the pre-1989 “social organizations” can be viewed as an “incubator” of civil society, perhaps too restrictive to allow its full blossom, but nonetheless sustaining and feeding the growing civic ambitions and skills. First, the tightly coupled (Perrow, 1986, pp. 146–155) centrally planned system provided little slack for independent decisionmaking. Detailed direc-

52

CHAPTER 3

Figure 3.1. In contrast to “social organizations” of the central planning era that served as a conveyor belt for government policies, the post-1989 associations engaged in grassroots mobilization and political lobbying. Shown is a demonstration against restrictive abortion laws organized by a Cracow-based organization eFKa (the acronym stands for “Women’s Foundation” but it’s also a diminutive form of Eva, a popular female name). The banner reads “Yes to free choice, no to forced maternity.” (Photo: Urszula-Masny-Sokolowski)

tives regarding productive tasks and their implementation were handed down by central authorities, and the role of plant management was, at least in theory, limited to the implementing those directives. To be sure, the rigidity of central planning substantially relaxed over time, especially after 1956, and the persistence of informal networks gave the industrial managers a wide defacto latitude in executing the directives of the plan (Feiwel, 1965; Kaminski, 1991; Wedel (ed.), 1992). Nonetheless, there was a wide spread belief, especially among the intelligentsia, that the central planning system was generally unresponsive to the input “from below,” and the key policy decisions were handed down in an autocratic fashion, with little or no consultation with the parties affected by those decisions (Kaminski, 1991; Kennedy, 1991). To be sure, corporate bureaucracies in general do not create much room for democratic participation in decisionmaking. In that respect, Eastern Europe’s central planning was not that much different from large-scale corporations elsewhere in the world. What separated Eastern Europe from the rest of the world,

PROFESSIONALASPIRATIONS TOCLASSPOWER

53

Figure 3.2. Post-1989 associations were often formed mainly for lobbying to influence public policies. The picture shows a signature-gathering campaign for a referendum to decide the fate of restrictive abortion laws passed during the 1989 reforms. The sign on the right reads “Committee for the Referendum—Signature Gathering Campaign.” (Photo: Urszula Masny-Sokolowski)

however, was that central planning regimes turned the entire country into a gigantic corporation, leaving little space outside the control of its hierarchical bureaucracy. In developed Western European nations, different components of the public sphere—government, the economy, politics, civic life, and leisure— are clearly separated and relatively autonomous of each other. By contrast, under the central planning regime all these components of the public sphere were fused together and subjected to tight administrative control of central authorities (Kaminski, 1991). As a result, the shortages of participatory democracy under the bureaucratic-corporate organization of the economy could not be compensated by opportunities created in other sectors of the public sphere, especially civil society and associations. While civic associations, called ovganizacje spoleczne (social organizations), were a major institutional component of the centrally planned regime that received official support and public funding, in reality these institutions were treated as a “conveyor belt” (pas transmisyjny) for handing down government policies. Although the Polish Constitution nominally guaranteed freedom of

54

CHAPTER 3

association, few civic associations could exist outside the government control, and those that did generally operated under religious auspices, especially the Roman Catholic church. To exist, an organization had to serve an “ostensibly useful social function,” and that was even reflected by another official term “organizations of higher public utility” (organizacje wyzszego uzytku spolecznego). Needless to add that it was government bureaucrats who decided what constituted such “higher public utility.” Among the organizations that after World War II were denied the “higher public utility status,” and subsequently dissolved, were foundations and charitable institutions, such as “Caritas” (Les, 1994). The rationale behind such treatment of these organizational forms was that the post-war regime eliminated mass unemployment and introduced state-sponsored social welfare and social insurance plans (Les, 1992) which eliminated the need for private charity. Human rights organizations were another type of organization whose social usefulness was deemed superfluous. An example of such an association is the prominent pre-war organization “Patronage” (discussed in subsequent chapters) that provided legal and social assistance to inmates. Again, the official rationale behind the decision to dissolve it was the constitutional amendments declaring Poland a “people’s state” and outlawing all forms of discrimination. To its credit, the post-war authorities made some efforts to eliminate certain forms of discrimination, especially that related to class, gender, and ethnicity. The right to work policy virtually eliminated unemployment and substantially limited the management’s power to fire or lay off workers. Employers provided generous benefit packages which included subsidized recreation, culture, sports and leisure for workers and their families. Higher education became available to all traditionally underprivileged classes, regardless of financial status and ability to pay. Women could enter occupations and professions previously closed to them. Moreover, the state created the entire infrastructure (daycare centers for children, cafeterias, etc.) that relived working women of the burden of domestic work. The legal treatment of violence against women was among the most progressive in Europe.8 However, these efforts fell short of recognizing independent representation of the interests the government policies intended to protect. The paternalism of the welfare state was coupled with open hostility toward independent voices “from below.” Deprived of the right to strike and collective bargaining, unions became a rubber stamp for the decisions made by central authorities. There were virtually no independent institutional venues available to the workers to voice their employment-related concerns. To be heard, the workers had to turn to wildcat strikes or riots, to which the authorities responded with force. Even more telling is the Women’s League. In the aftermath of the “Polish October,” the organization adopted a bold policy of representing genuine con-

PROFESSIONAL ASPIRATIONS TO CLASS POWER

55

cerns of working women, and formulated resolutions demanding changes in the workplace, such as the added protection of single mothers, or lowering the retirement age for women. This uncompromising stance earned the league wideranging support among women, attracting nearly 2 million members. The central authorities responded in a typically paternalistic fashion. In clear violation of the law of associations, the government revoked the league’s right to organize any activities in factories and rural areas (Les and Piekara, 1988). Its activities were confined to residential areas, which limited its appeal only to women outside the labor market. By 1970, the League’s membership fell by 80%, from nearly 2 million to fewer than 400,000 (Table 2.1). The rationale behind the “switching off” women’s activism was that government policy is a more effective tool of solving all women’s problems (Les and Piekara, 1988). To reiterate, the post-war administration treated “social organizations” in a paternalistic way characteristic of statist regimes (Salamon and Anheier, 1998)—as an instrument of the state social and economic policies. The organizations deemed detrimental to those policy objectives were either dissolved, restricted, or denied legal registration, while those deemed beneficial were taken under the state tutelage. This tutelage translated into a substantial public funding on the one hand, but also a tight government control of its activity on the other. The only officially recognized organizational form was association (Les, 1994). Legally recognized associations in Poland could be grouped by their areas of activities into three major categories: (1) work-related; (2) politics and ideology; and (3) culture, recreation, and social assistance. The first category consisted of professional associations (e.g., the Supreme Technical Organization, Polish Economic Society, Polish Medical Society, or the Association of Polish Lawyers) and labor unions grouped in the Central Council of Trade Unions (CRZZ). The second category included groups whose mission was political or ideological mobilization. This category encompassed political organizations, such as the three official political parties that existed prior to 1989, semipolitical organizations combining progovernment political mobilization and cultural–recreational activities (such as the Socialist Youth Association, the Polish Scouting Association, the Friends of the USSR Society, or the Associations of Combatants for Liberty and Democracy), as well as semireligious organizations promoting religious world views, such as the Catholic Intelligentsia Club, or the PAX Association. The third category comprised a variety of apolitical organizations that provided services in the areas of culture, sports, and recreation. Examples include the Polish Tourist and Country-Hiking Society, the Nature Preservation League, the Polish Anglers Association, the Polish Automobile Association, as well as community cultural centers, community gardens, or associations preserving

56

CHAPTER 3

regional or ethnic cultures. An important subgroup of this category had organizations dedicated to address social problems, such as substance abuse, or assistance for the youth or the elderly and the handicapped. In this subgroup were the Social Antialcohol Committee, MONAR centers (drug treatment programs modeled on the Synanon organization in the United States), Friends of Children Society, or the Polish Committee for Social Aid. Of these three categories, work-related organizations were central to government policies, and they often acted as state agents in resolving conflicts and distributing fringe benefits and entitlement. They were, however, subjected to strict government control, losing many legal rights that labor unions enjoyed under the pre-war legislation (Halecki, 1957), among them the right to collective bargaining (pay schedules, benefits, and job duties were set by central planning authorities) and the right to strike. The 1949 legislation placed all unions under the authority of the Central Trade Union Council whose members were usually appointed by the ruling party (Polish United Workers’ Party). Although the post-war government never passed any legislation revoking the right to strike, work stoppages were considered crimes against the state. The creation of independent workers’ council in 1956 was a citizen initiative to regain power the official unions lacked. However, by 1958, this effort was all but dead. The councils were either eliminated or incorporated into official trade unionsstructures (Feiwel, 1965; Kennedy, 1991). Professional associations, especially the mammoth Supreme Technical Organization which represented engineers and technicians, did not fare any better in carrying out their mission. They were generally perceived as bureaucratic dinosaurs acting as “conveyor belts” for government policies in a top-down fashion (Kaminski, 1991; Kennedy, 1991). The political organization landscape was clearly dominated by associations representing the official ideology of the state, although a few alternatives, mainly representing Roman Catholic interests, were permitted to operate after 1956. Membership in political organizations was not legally mandated, but it was considered highly desirable for individuals seeking professional careers. As a rule, most appointed officials and executives were members of the Polish United Worker’s Party (the official ruling party), although there were a few exceptions. The social–cultural associations experienced the least degree of government control, mainly because of their apolitical character. This organizational field was also diverse, ranging from an association promoting social tourism (organized and subsidized vacations for low income people), to community craft centers (the so-called Domy Kultury or “Houses of Culture”), to regional development organizations, to ethnic cultural associations (such as dance companies or musical ensembles), to sports associations, and to community gar-

PROFESSIONAL ASPIRATIONS TO CLASS POWER

57

dens. A distinct group of associations provided social assistance to the disadvantaged groups, such as alcoholics, drug addicts, or the handicapped. These organizations played an important function in promoting cultural and leisure activities in the underdeveloped or rural areas, but they had a limited role in major urban areas. Despite their lack of autonomy and their dependence on the state, social organizations offered a limited opportunity for citizens’ voice in public affairs, or at least the illusion of such an opportunity. Consider the membership changes recoreded in the organizations listed in Table 1.1 in Chapter 2. The 1960-1983 changes in the total number of membership in these organizations is shown in Figure 3.3. Until 1980, membership showed a steady growth followed by a clearly visible decline after 1980, when alternatives (the Solidarnosc union) became available. As the case of the Women’s League suggests, membership changes may reflect the organization’s ability to provide independent “voice” to its constituents. When that ability increases, so does the membership, but when the organization’s voice becomes muted or is silenced, its membership drops. To be sure, growth in membership alone does not necessarily imply the growth in civic activism. People may join organizations for purely utilitarian reasons, such as an opportunity for a promotion or for material benefits, that have little to do with civic responsibilities. Even if that is the case, a membership drop at a historical turning point tells a different story. The utilitarian

Figure 3.3. Membership changes in major “social organizations” excluding labor unions. (Source: Table 2.1)

58

CHAPTER 3

aspect of membership, if any, did not change. Thus it cannot explain such a sudden change in the “hearts and minds” of so many people. If anything, the people decided to renounce their benefits by renouncing their membership. Why? One plausible answer is that people’s expectations in joining official social organizations were dashed. If some people joined social organizations expecting these institutions would perform their advertised mission of facilitating participation in public affairs and those expectations later changed, so must have their willingness to keep their membership. The outburst of social protest which birthed the independent labor union Solidarnosc in 1980 clearly triggered such a change in expectations. This turning historical event, in which this writer was a willing and active “coconspirator,” made it evident to many that an independent civic initiative was, after all, possible. It opened a new, previously unavailable and promising venue for ordinary citizens to take an active role in public and occupational affairs (Kennedy, 1991; Touraine et al., 1983). People joined the Solidarnosc movement for different reasons, but it was obvious to the casual observer that all those people shared the belief they would have a real voice in public matters, from politics, to economic policy, and to personnel decisions at the factory level. The availability of a new, more promising organizational venue could plausibly explain why many renounced their membership in the old social organizations, which were associated with the corrupt regime. Any rational individual would do so, if the reason for membership involved expectations of participation in public affairs. Thus the drop in membership shown in Figure 3.1 can be reasonably construed as yet another evidence of growing civic aspirations of the Polish society. The point of this discussion is to show the existence of a paradoxic, or perhaps dialectic, situation characterized by a growing hiatus between the aspirations of the professional class, the intelligentsia, the central planning regime created, and the inability of its institutions to fulfill those aspirations. This conclusion runs contrary to the popular wisdom, espoused by other Western scholars (Fukuyama, 1995; Putnam, 1993), that centralized, autocratic political regimes permanently stymied the development of civil society. This thinking is grounded in a simplistic view of the relationship between human actors and social institutions that tends to portray the latter as the major force determining aspirations and behavior of individuals. A more realistic view is informed by theories of formal organizations that emphasize the importance of subjective goals, motives, and interests of human actors in explaining organization behavior in addition to formal directives, rules and regulations (Granovetter, 1985; March and Simon, 1958; Selznick, 1957; see also Perrow, 1986; Scott, 1995; and Swedberg, Himmelstrand, and Brulin, 1990). From that perspective, formal organizations and institutions provide

PROFESSIONAL ASPIRATIONS TO CLASS POWER

59

different actors or groups of actors with different opportunities to achieve their own aspirations, goals, and interests that may, to a greater or lesser degree, coincide with the formally stated missions, rules, and procedures governing these organizations. The central planning regime, implemented in Poland and other Eastern European countries after World War II was a modern version of Hobbesian Leviathan, a bureaucratic juggernaut whose stated mission was to impose its own version of rational control of an entire society, from the economy to politics, to culture, to leisure. Yet, beneath the veil of formal bureaucratic rationality lurked the aspirations, goals, and interests of human actors. These actors, or at least some of them, used the existing organizational forms, as well as the processes of social change, as an opportunity, even if limited, to put their own goals and aspirations into social practice. This becomes evident when we examine the birth rates of civic associations in Poland before and after 1989. The year 1989 marks the spectacular electoral defeat of the Polish United Workers Party which had ruled the country for the entire post World War II period, and the subsequent official renouncement of state socialism and the central planning regime created under it. Therefore, 1989 constitutes a historical turning point that separates two distinct periods in Poland’s pos t-war development. As already noted, the pre-1989 era is characterized by the existence of rather rigid bureaucratic constraints of civil society. Few civic associations were created, and any citizen’s aspirations to become involved in public affairs had to be channeled through the existing, government-controlled, organizational venues. Most of these restrictions were effectively lifted in 1989, thus creating a unique opportunity to establish new, more responsive to public demand, organizational forms. Following that sea change in state policies toward civil society, unprecedented numbers of new organizations started to emerge on the Polish scene (Table 3.2). This dramatic policy shift toward nongovernmental institutions in Poland and the rapid birth of new organizations allows us to test two alternative hypotheses about the role and function of “social organizations” (organizacje Table 3.2. Service-Providing Social Proximity Organizations in Poland, By Year Of Establishment Year of Establishment Prior to 1985 Between 1985 and 1989 After 1989 All organizations

Organizations Number

307 402 1,1015 1,724

% 17.8 23.3 58.9 100

60

CHAPTER 3

spoleczne) that existed under the central planning regime. We can view these entities as a mere product of central planning authorities aimed to accomplish their policy objectives. Beyond government policy objectives, however, “social organizations” had little usefulness and appeal to their members and society at large. If anything, they stymied the development of civil society by absorbing the energy of civic initiatives and promoting obedient acceptance of government policies. Because this view is grounded in the political theory that views centralized state as a factor suppressing both civic initiatives of the population and the development of civil society (Putnam, 1993; Fukuyama, 1995), I call it the political control model of social institutions. It leads to the hypothesis that the behavior and functions of “social organizations” were for the most part determined by the formal political structures and rules of governance. An alternative view is that “social organizations” were not limited to their official functions, but served some genuine needs of their members. This view, suggested earlier in this chapter, follows the insights of the institutional school in economic and sociology that views organizations and organizational behavior as a product various social forces that cannot be reduced formal rules, policies and governance structures. Organizations are a form of social resource whose role and functions are defined, at least in part by human actors, sometimes along with and sometimes against the formal rules and policy objectives governing these institutions. Borrowing the term coined by the students of the role of the mass media in society (Katz, Blumler and Gurevitch, 1973–1974), I call this hypothesis the organizational uses and gratifications model. It implies the “social organizations” served some goals and aspirations of their members, regardless of their official mission and the constraints imposed by it. If the uses and gratifications model is correct, we should expect the organizations that existed in Poland prior to 1989 had some “social life of their own,” rather than being a mere “conveyor belt” of government policies with a life sustained totally by the government fiat. Because this “own social life” was a force that existed independently of government policies, it affected organizational behavior both before and after 1989, when the central planning regime was officially abandoned. Consequently, we can expect that the level of organizational activities after 1989 will be commensurate to the level prior to 1989. From the political control point of view, however, “social organizations” were mere creatures of the central planning regime. Their raison d’être was limited to serving government policies, and they either had no effect or else they stymied independent civic initiatives. Their life terminated with the regime that created them. New initiatives that emerged in their place are independent of their predecessors from the central planning era. We can thus expect that the level of organizational activity after 1989 either bears no relation to that before 1989 or, if the view that government has adverse effect on civic

PROFESSIONAL ASPIRATIONS TO CLASS POWER

61

initiative is correct, the post-1989 organizational activity is negatively affected by the pre-1989 activity. Using the number of organizations created before and after 1989 as a proxy for the level of organizational activity in those two distinct periods of time, we can formulate the following two propositions representing, respectively, the uses and gratifications, and the political control models. The first proposition states the greater the number of organizations created in a geographical region prior to 1989, the greater the number created in that region after 1989. The second proposition states the number of organizations created in a geographical region after 1989 has either no relation to or is smaller than the number of organizations created in that region before 1989. These two hypotheses can be tested on the KLON data which list the entities by the prefectures in which they are located. Until 1999, Poland had 49 prefectures,9 or administrative subdivisions, that differ markedly in the level of urbanization. While some of them are predominantly rural, with relatively scarce urban population, others encompass major urban centers with substantial concentration of economic, political, and cultural resources that attract collegeeducated professionals. If the political control hypothesis is true, we should expect the number of entities created after 1989 is mainly the function of the size of the urban population in the region, while the size of the organizational population in that region prior to 1989 has no (or a negative) effect on that number. On the other hand, if the organizational uses and gratifications hypothesis is true, we should find the size of the pre-1989 organizational population is a significant predictor of the number of entities created after 1989. I tested these hypotheses by constructing two nested linear regression models (Table 3.3). The dependent variable in both models is the number of entities established in each of the 49 prefectures after the 1989 transition. The two predictor variables in Model 1 are the size of the urban population in each prefecture, and the variable indicating whether the prefecture is also one of the eight major urban centers.10 The second variable was added to account for the possible stimulating effect the geographic concentration of economic, political, and cultural resources may have had on the propensity to establish new civic associations. In Model 2, one variable is added: the number of organizations created in the prefecture prior to 1989. Although the size of the urban population and the major urban center turned out to be only a modest predictor of the number of entities established during and after the 1989 transition (Model 1,49% of the variance explained), adding the number of entities created prior to 1989 boosted the predictive power of the model (Model 2) nearly two-fold (93% of the variance explained). Every entity created in the prefecture prior to 1989 “gave birth,” so to speak, to over

CHAPTER 3

62

Table 3.3. Regression Model of Organizational Births After 1989, Poland Variable Urban population (thousands) Major urban center (0 = no, 1 = yes) Number of establishments created prior to 1989 transition Constant Adjusted R2

Model 1 Model 2 unstandardized coefficients 0.02* 33.98 8.6 0.488

0.008* -5.5 2.1** 0.07 0.929

N = 49 Dependent variable: number of establishments created in each prefecture after 1989 transition. * significant at p < 0.05 ** significant at p < 0.01 DATE SOURCE: KLON, 1993; GUS, 1991

two new entities created after 1989 (the unstandardized coefficient 2.1). Moreover, initially observed in Model l, the effect of the major urban center disappeared after the number of pre-1989 entities was added to the regression equation. The most plausible explanation is that the effect of the urban center (resource concentration) was also a factor prior to 1989, and thus its effect was subsumed, so to speak, by the effect of the number of entities created during that period. Clearly, the strong positive effect of the number of entities created prior to 1989 on the number of organizations created after 1989 supports the uses and gratifications model and is inconsistent with the political control approach. “Social organizations” did have a social life on their own that was not limited to their official function. They reflected the citizen initiative and sustained it, until it could develop more freely after the 1989 reform. That “social organizations” of the central planning period often provided “building blocks” for the entities that emerged after 1989 is also supported by other information in the KLON data. Among the total of 270 organizations that were established in 1989 or later and provided information on their organizational models, at least a third (89 entities) reported the precursor of their current form was an entity which can be positively identified as a pre-1989 “social organization.” Most of these “social organizations” were active in social services and healthcare. The story told by these figures can be aptly summarized by a Polish folk tale about a dragon lived in a cavern by the Vistula River and caused great damage to the livestock. The beast was finally defeated, the folk tale tells us, by a shrewd cobbler who filled a sheep skin with sulfur and dropped it by the creature’s den. After devouring the prey, the dragon developed an insatiable thirst. It crawled to the river and drank until its stomach exploded from the water. The cobbler quickly picked up the pieces of the monster’s skin and made

PROFESSIONAL ASPIRATIONS TO CLASS POWER

63

boots out of them, which he then sold to the villagers at a handsome profit. When the integument of the central planning regime burst asunder, the professional entrepreneurs picked up the pieces of the Leviathan of central planning institutions, turning them into providers of socially useful services. As in the case of their mythical ancestor, these entrepreneurs were motivated largely by a desire to avert a calamity, yet their gratification was not to be limited to mere gratitude of those whom they served. This historical backdrop demonstrates the exponentially growing aspirations of the Polish professional class not only for greater autonomy, but also for a greater voice in shaping public policies and institutions (Touraine, et al., 1983; Touraine, 1988). While self-serving economic demands, pay rise, price control, alleviation of shortages, were an important element of the push for reforms, an equally, if nor more, important aspect was the demand for an institutional venue to use their professional skills and expertise to create a system better serving public needs. These civic aspirations motivated social activists to use the available organizational forms as a vehicle that allowed them at least some participation in public affairs. As long as the state-controlled “social organizations” were the only civic institutions that were available, they served as such a vehicle, despite their limitations and restricted autonomy. However, when the restrictions were lifted and alternative organizational forms emerged, they quickly became the preferred vehicle for social activism. This, in a nutshell, is the essence of the uses and gratifications model of social proximity organizations. It stipulates that the role, function, and meaning of an organizational form is not determined by government policies and formal rules of governance alone, but also by people who use that form to their own ends. This is an important observation and underscores the role of formal organizations as tools with various capacities to serve different interest groups. The organizational uses and gratification model explains a seemingly paradoxical phenomenon that baffled many Western observers—the survival of independent civic activism and initiative in an environment tightly controlled by an autocratic bureaucracy. As subsequent chapters will show, this model will also explain the reasons behind the emergence of new social proximity organizations after the 1989 systemic transition.

CARETAKERS AND REFORMERS: HEALTHCARE AND SOCIAL SERVICE PROFESSIONALS UNDER CENTRAL PLANNING Parallel to educational policies, the second major accomplishment of the central planning regime in Poland was the implementation of a universal public

64

CHAPTER 3

healthcare system. In sharp contrast to the pre-war period, when only 30% of the population was covered by health insurance, the socialized health system implemented under central planning covered 77% the entire population11 by 1970, and nearly 100% of the population by 1981 (Sokolowska and Moskalewicz, 1987). Between 1946 and 1990, the number of physicians grew nearly tenfold, from less than 8,000 to nearly 82,000, while the number of nurses increased over 30 times, from 6,000 to over 200,000. In relation to the population, these figures represent 555% increase in the per-capita number of physicians, and over 200% increase in the per-capita number of nurses (Table 3.4). By the 1980s, the per-capita number of physicians in Poland reached the level comparable to that of the developed countries (Table 3.5). On the other hand, the growth of healthcare infrastructure was much slower than growth in the supply of healthcare professionals, During the entire postwar period, the number of hospital beds grew only by 177%, from 91,000 in 1946 to 252,000 in 1990. When compared to the level of utilization of hospital facilities, however, these figures represent a negative growth, from 76 beds per 1,000 patients in 1946 to 55 beds per 1,000 patients in 1990 (Table 3.4). Most of the hospital facilities were quite old, only about 23% of all hospital buildings were constructed after World War II. The actual investments in healthcare and social welfare were considerably lower than planned (Sokolowska and Moskalewicz, 1987). The public health system was further weakened by the hastily implemented administrative reforms in 1970s. Breaking up 17 provinces into 49 much smaller prefectures had a detrimental effect on the organization of the healthcare system based on the pre-1970 division. Although the material base of the public healthcare system deteriorated, the demand for services increased quite substantially in 1972, when 6.5 million of individual farmers became eligible for public healthcare insurance. Despite a relatively large number of physicians, certain prefectures (especially in rural areas) experienced acute shortages of medical personnel (Sokolowska and Moskalewicz, 1987). Even though the availability and quality of basic “lifesaving” treatment (especially in major cities) was comparable to that in neighboring European countries, the post-treatment care and rehabilitative services lagged far behind (author’s interviews, July, 1994). The small private healthcare sector, organized as medical cooperatives, could hardly counterbalance the deteriorating conditions in the public sector. In 1980, there were only about 400 private clinics in the country (7% of all ambulatory clinics) that provided 7,900 visits (less than 3% of all visits in the nation). By 1990, the number of private establishments shrunk to 300, providing less than 2% of all ambulatory visits (GUS, 1991). Since unlike the public

Physicans* Year

Number (thousands)

1946 1950 1960 1970 1980 1990 1946-1990 growth

7.7 9.2 28.7 46.5 63.3 81.6 960%

Hospital beds

Nurses

per 1,000 patients**

per 1,000 population

Number (thousands)

per 1,000 patients**

per 1,000 population

Number (thousands)

6.42 5.70 11.19 14.25 14.53 17.75 177%

0.33 0.37 0.96 1.42 1.77 2.14 555%

6.1 18.4 61.9 98.6 157 207.8 3307%

5.08

0.26

91

11.40 24.13 30.22 36.04 45.20 789%

0.74 2.08 3.02 4.40 5.44 2005%

100 165 205 237 252 177%

per 1,000 per 1,000 patients** population 75.83 61.96 64.33 62.83 54.41 54.82 -28%

3.86 4.00 5.54 6.27 6.64 6.60 71%

PROFESSIONAL ASPIRATIONS TO CLASS POWER

Table 3.4. Growth of the Health Care Sector in Poland, 1946-1990

SOURCE: GUS, 1991 * Excluding dentists * * In general hospitals

65

66

CHAPTER 3

Table 3.5. Supply of Physicians ca. 1988, Poland vs. Selected Countries Selected countries Czechoslovakia (1988) Hungary (1988) West Germany (1988) Sweden (1988) East Germany (1988) U.S.A. (1987) Poland (1988) 7-country average

Physicians per 10,000 population 31.2 29.1 28.7 27.7 24.3 24.3 20.8 26.6

SOURCE: GUS, 1991

health sector, medical coops operated on a fee-for-service basis, this decline was probably due to the decline in the real income of the population throughout the 1980s. A peculiar Polish phenomenon was the existence of the gray market for medical services. This phenomenon has its roots in two structural factors: (1) shortages of hospital beds and medical equipment; and (2) low wages in the health sector.12 A typical scheme would involve a public clinic referral to a private practitioner. Patients who sought care in a public clinic would be referred to a private practitioner, either the same physician who saw the patient in the public establishment or a colleague. Oftentimes, patients who wanted to be admitted to a hospital ahead of a waiting list sought referrals from private practitioners who were also resident physicians at public institutions where the treatment was to be performed. There were widespread instances of bribes offered to both doctors and support personnel in public establishments (author’s interviews, source #1913). These practices were silently tolerated by the authorities, because there was no clear-cut policy toward private medicine (Sokolowska and Moskalewicz, 1987). The situation of the healthcare system in Poland thus reflected the general situation of the country. On the one hand, there was growing demand not only for the services, but also for a better quality of those services. That demand was fueled, at least in part, by a relatively fast growth of the professional cadres. On the other hand, however, the institutional and material base of the healthcare system was increasingly inadequate to meet that growing demand. The medical establishment experienced little direct interference from political authorities (Sokolowska and Moskalewicz, 1987) that plagued other branches of the socialized economy (Kaminski, 1991), but healthcare was rather low on the priorities list of the central planning authorities. Even though the

PROFESSIONAL ASPIRATlONS TO CLASS POWER

67

deteriorating material base and organization of the healthcare system created a sense of urgency among many medical professionals, little was done to improve the situation. Some of those professionals frustrated by the unwillingness and inability of the public authorities to address the crisis sought alternative venues for action. The first such venue emerged during the 1980 strikes that gave birth to the independent labor union Solidarnosc. During that protest, junior healthcare practitioners in Gdansk were instrumental in adding a demand for a sweeping healthcare reform to the postulates presented to the government by the striking workers. These demands included better personnel training, more social services, rehabilitative services and services for substance abuse and occupational diseases, wage increases, as well as increase in research and capital investment for healthcare. Yet, despite numerous meetings and signed agreements with healthcare officials, none of those demands were implemented at that time (Sokolowska and Moskalewicz, 1987; Kennedy, 1991). That newly open venue for dialogue with government officials was shut down for a few years with the imposition of martial law and outlawing Solidarnosc in 1981. However, the situation started changing again in 1985 with the liberalization of government policies toward civic associations (Kurczewski, 1992; Les, 1994; Wunker, 1991). As the political “thaw” opened the door for legalizing independent civic associations, the opportunity was immediately seized by the advocates of healthcare reform. Associations devoted to healthcare in social services were among the first to emerge in large numbers. The early response to the emerging opportunity is demonstrated by Table 3.6, showing the newly created social proximity organizations by the year of establishment and field of activity. Nearly half of the entities created prior to the 1989 transition were in the field of healthcare, and the additional 17% were devoted to social services. These two fields combined constitute nearly twothirds of all agencies established during this pre- transition period. This initial recourse to SPORGs can be easily understood from the vantage point of knowing the historical background of Poland’s economic development. Prior to 1989, no one could predict the demise of the central planning regime and its ossified institutional structures. The deteriorating public healthcare and social service system needed reforms, and those could hardly be accomplished without meaningful input from below, from practitioners in the field. Yet, given the long history of government nonresponsiveness to citizen demands, the only natural venue for providing such input was the existence of independent of the official tutelage civic associations. Hence the push toward creating such associations, revealed by the data in Table 3.6. However, the trend that emerged prior to 1989 persisted after the “velvet

CHAPTER 3

68

Table 3.6 Social Proximity Organizations in Poland, By Year of Establishment and Field of Activity Year of establishment Prior to 1989 1989 or later All organizations

Healthcare*

Social services*

Income maintenance*

Other*

48.1 35.8 39.4

17.4 15.8 16.3

10.3 16.2 14.4

24.2 32.2 29.9

Number of organizations 505 1,219 1,724

Statistical significance (Pearson Chi2) p < 0.01 * % of establishments in the field DATA SOURCE: KLON, 1993

revolution,” and healthcare continued to be the field with the largest number of organizational birth. Why? After all, the newly elected democratic government and the political reforms it implemented offered not just a new hope, but also real opportunities for civic dialogue and private initiative. Public outlays for healthcare and social services increased quite substantially (Table 2.4), employee compensation in that field visibly improved—from 22% below to 1% above the national average (GUS, 1991). Not only were the roadblocks to private for-profit initiatives lifted, but also the new government adopted a policy that encouraged the formation of private enterprises. According to a 1989 opinion poll, only less than 10% of the respondents (mainly people over 40 years of age and with only elementary education) had negative expectations about the new government policy toward private initiative. The great majority saw it as an opportunity for at least some people, particularly those with necessary material resources (32%), and entrepreneurial drive (27%), while 14% believed privatization would create a chance for all people in the country. About 11% (mostly those under 39 years of age with higher education and who perceived their material situation as being above average) declared their intent to start private for-profit activity in the future (CBOS, 1994, pp. 430–432). Clearly, the 1989 reforms created a widespread perception of budding opportunity for private initiative, especially among the younger, better educated members of Polish society. With all those changes and new venues for democratic participation open, it might appear that the need for organizations to mobilize citizens for volunteer action would have lost its raison d’être, and the rapidly growing for-profit sector should have absorbed society’s entrepreneurial energies. Why, then, were so many non-commercial and non-governmental organizations created in just that period? Thus we return to the question posited at the beginning of this inquiry: What motivated the Polish professionals who created social proximity organizations during the systemic transition? The brief analysis of the historical back-

PROFESSIONAL ASPIRATIONS TO CLASS POWER

69

ground, attempted in this chapter, can offer only a partial answer: the demand for a greater voice in public policy issue. The need for alternative to government-sponsored organizational form had its origins and justification in the rigidity of the central planning institutions. To be sure, after nearly 50 years of negative experiences, it is unreasonable to expect that trust in public institutions wilI reappear overnight. But given the infatuation of the Polish society with market economy in that period, the great majority favoring private initiative in major branches of the economy (CBOS, 1994, p. 437), one would expect for-profit initiatives to be more attractive to the social proximity organizational form that could not offer the same rewards as the market institutions did. Yet, according to a well-informed source (source #19, a government advisor and expert on healthcare systems), the Polish medical establishment showed considerable reluctance toward privatization of healthcare services. Partial explanation of that reluctance lies in the fear of competition and the quite lucrative gray market that still persists within the public health sector. With the tacit agreement of clinic administrators, many physicians could still use public facilities and equipment in their private fee-for-service practice, paying only nominal fees to the clinics. But none of these rather pathological phenomena can explain the seeming attractiveness of the SPORG organizational form in the field (Table 2.3). Assuming the founders of social proximity organizations are, after all, rational actors, we need a closer look at their activities to explain their motivation. In 1994 I interviewed a select group of Polish professionals who founded social proximity organizations in the aftermath of the 1989 reform. The information obtained from those interviews, augmented by the analysis of the KLON data, forms the factual basis of the investigation pursued in subsequent chapters.

NOTES 1

2

3

The post-war government was installed by the Soviets in 1944 when their troops entered the territories that, pursuant to the 1943 Yalta agreement, were to remain under the Polish jurisdiction. That move was designed to counterbalance the influence of the proWestern government in exile in London, which many Poles considered the only legitimate authority. Until 1989, Poland had three officially recognized political parties whose representatives could occupy seats in the diet: the Polish United Workers Party, the People’s Party, and the Democratic Party. There was also the tiny Catholic Parliamentary Club, which did not have party status. Of the three parties, the Polish United Workers Party had the guaranteed absolute majority of the seats. Much smaller People’s and Democratic Parties represented, respectively, agrarian and small business interests. In the original passage, the words in square parentheses are, respectively, “working class,”

70

4

5

6

7

8

9 10

11 12 13

CHAPTER 3 “capitalist,” “capital,” “capitalist,” “capitalist private property,” “expropriators,” and “expropriated.” CBOS (Center for Public Opinion Research) is a research agency established in 1982 by the military government to survey public opinion during the time of acute political crisis. Between 1983 and 1989, the center provided confidential reports to the government about public attitudes toward current political, economic, and social problems. After 1989, these reports were declassified and published. The Western European countries are: France, Great Britain, West Germany, Italy, the Netherlands, Denmark, Belgium, Spain, Ireland, Northern Ireland (a separate sample), Norway, Sweden, Portugal, and Austria. The Eastern European countries are: Hungary, Belorus, the Czech Republic, East Germany, Slovenia, Bulgaria, Romania, Lithuania, Latvia, Estonia, Russia, Moscow (a separate sample), and Poland. For more details abut this data source, see the Appendix. Intelligentsia is defined as membership in one of the following occupational groups: employers, managers, line supervisors, professionals, and midlevel office employees. Manual workers, junior office workers, military personnel, farmers, agricultural workers, and unemployed were labeled “other.” Those attitudes are represented as the first choice of “giving people more say in important government decisions: from among four different answers to the question “If you had to choose, which one of the things on this card would you say is most important?” For example, Polish law treated rape as a crime against personal liberty rather than crime against morality. The Polish Supreme Court issued directives prohibiting rape cases from considering a rape victim’s past sexual conduct well before “rape shield” laws were introduced in the United States. In reality, however, these directives were seldom followed by lower courts, influenced by conventional morality (Urszula Masny-Sokolowski, unpublished research report to the Fulbright Committee, Krakow: The Jagiellonian University, May 1992). Effective January 1, 1999 the 49 prefectures were merged into 16 larger provinces. Major urban centers are defined as urban agglomerations around the largest Polish cities: Gdansk, Katowice, Krakow, Lodz, Poznan, Szczecin, Warsaw (the nation’s capital) and Wroclaw. Individual farmers were initially not covered by public health insurance. Prior to 1989, wages in the healthcare and social service sector were nearly 23% below the national average, the lowest among all major sectors of the economy (GUS, 1991). Table Al (see Appendix) lists all interviewed for this study and their organizational affiliation. All sources cited in this book are identified by their informant ID number, and all organziations are identified by their case numbers listed in Table Al.

Chapter

4

Professional Innovation and Information Gap CHALLENGES OF PROFESSIONAL INNOVATIONS A short bus trip across the Vistula River to the so-called “right-bank Warsaw”1 is a journey to a strange world. Unlike the downtown section housing government offices, foreign embassies, five-star hotels, corporate headquarters, and a tourist trap known as the “Old Town,” the “right-bank Warsaw” is where Eastern Europe begins. This is the world of bazaars and flea markets, frequented by sundry colorful characters—Russian smugglers, Gypsy fortune tellers, Asian healers, snake-oil peddlers, con artists, AWOL soldiers, small-town girls and boys seeking big city adventures, and sulky peasants selling their produce or just waiting for a bus that may or may not arrive. One such peasant strolled through a makeshift stand filled with sundry merchandise, when he noticed a crowd of people buying small round tin boxes labeled “Rat Ointment.” Nonplussed, he asked the vendor, “What is rat ointment?” “It is the latest wonder of modern technology that will solve your rat problem quickly and efficiently,” replied the merchant. “But how does it work?” “Hold a rat with your left hand, scoop a small amount of rat ointment with your right index finger and spread it around the rat’s mouth. The rat dies within seconds. Guaranteed.” “Hey, mister,” said the peasant sarcastically, “once I get that rat in my hand, I can simply break its neck. So who needs your ointment?” “You can do it either way,” replied the merchant turning his attention to another customer. This popular anecdote2 gives an important insight into the nature of economic transactions. The value of the product resides in its image created by the vendor, especially when the product’s usefulness is not immediately apparent to the buyer. 71

72

CHAPTER 4

The reason the peasant scoffed at the ointment lies in a wrong cultural reference the vendor used to construct the image of his merchandise. “Modern technology” had little appeal to someone who experienced it largely as waiting for buses that fail to arrive on time. Having rejected the value of this cultural reference, the peasant determined the potential usefulness of the ointment not on the terms defined by the merchant, but on his own. From his perspective, the cost of the product was simply too high to justify the expense of purchasing it, because the next available alternative—breaking the rat’s neck—cost him virtually nothing. The story tells us, however, there was a market for the ointment. That is, there were people who perceived the cost of buying the product quite differently than the peasant did. Apparently, they did not mind the expense in exchange for exterminating the pesky rodents in a “modern,” hi-tech manner. Their cost-benefitanalysis of the purchase included an element that was clearly absent from the peasant’s calculations: the public appearance of killing an animal. It is difficult to imagine an image-conscious urbanite killing a rat with his bare hands to save a few pennies. Thus we arrive at the philosophical question of profound importance for our understanding of economic behavior: If there is a cost to a commodity, but nobody counts it, does it still count as cost? In the same vein, if there is a benefit that nobody counts, does it still count as benefit? The conventional economic wisdom addresses that question indirectly, mainly while considering the problem of externalities, that is, unintended factors associated with the production or distributions of commodities. Although externalities (such as environmental pollution, or social consequences of people losing jobs to outsourcing), can create a substantial cost that can be measured, that cost is often downplayed or altogether ignored by producers, employers, or public officials charged with regulating the industry. Of course someone, usually the taxpayer, has to eventually bear the cost, but that cost as such does not enter the cost–benefit balance of doing business. Instead it is often portrayed as a government program that wastes taxpayers’ money. Hiding the cost of externalities is one way of altering the perceived value of a commodity. An alternative strategy is to include the added value of invisible benefits and culturally sanctioned appeals. A friend of mine was a successful door- to-door peddler of grossly overpriced home cleaning equipment. His success was baffling, .because the vacuum cleaners he was selling could be purchased for much less at appliance stores. When I asked for his trade secret, he laughed and replied, “I am not selling vacuum cleaners; I am selling clean homes.” It turned out that his trick was to demonstrate to an unsuspecting homemaker that her home was “dirty.” He vacuumed her carpet, usually near the

PROFESSZONAL INNOVATION AND INFORMATION GAP

73

front door. However, instead of a regular attachment, he used one made of clear plastic showing a white filter mounted inside. As dirt started to accumulate on the filter, my friend would tell the lady that it did not mean she was a bad homemaker. She just did not have the right equipment to keep her house clean. And what self-respecting homemaker would refuse to spend a few extra dollars for a “clean home”? As this book will show, adding cultural appeals to cost–benefit calculations plays an important role in marketing strategies, especially when the product involves a substantial information asymmetry between the buyer and the seller. Such is the case of professional services, especially in the field of healthcare. The provider might be a first class specialist or a quack, but the buyer has no way of knowing which is true until the treatment is completed. And this may be a hard and expensive way to learn, indeed. To convince their clients beforehand that the products are safe and sound, the providers add certain cultural references to the cost–benefit calculations. These references are designed to maximize the benefits while minimizing the cost of the treatment in the buyer’s eyes. Under ordinary circumstances, such elements usually involve symbols of a professional status: framed university diploma hanging on the wall; prominently placed thank-you letters from former patients; a white lab coat; a voice that projects authority. These symbols signal to the patient both benefits he can gain from the service, namely the effective alleviation of the ailments others before him have experienced, as well as costs he can avoid—namely the risks of unprofessional treatment. Sometimes, however, the ordinary symbols of professional status are insufficient, either because the treatment itself is novel, controversial, seemingly beyond the conventional area of the provider’s expertise, or because the professional status of the provider himself appears questionable or controversial. In such situations, the professional may turn to another device to signal the value and trustworthiness of his product. This book will show that such an alternative signaling device is the organizational form of service production and delivery. In the preceding chapters, we learned that professional service providers established a considerable number of social proximity organizations during the systemic transition in Poland. We also found that neither the conventional theories of nonprofit organizations, nor the analysis of historical circumstances could fully account for the motives of these individuals. I now propose that the motives behind their actions can be explained as a form of marketing strategy for their professional services. As we will see, these people chose the SPORG organizational form as a signaling device to create public trust in their products, which otherwise would remain controversial for various reasons. The explanation I propose follows the argument introduced by Hansmann

74

CHAPTER 4

(1987), who argued that nonprofit organizational form generates trust in transactions involving considerable information asymmetry. However, I substantially expand this argument in two ways. First, I will demonstrate there is a link between professional interests and the organizational form (rather than mere profit distribution constraint alone) that was essentially absent from Hansmann’s theory. Second, I bring this theory to a logical conclusion that turns the conventional economic wisdom back on its feet. Conventional economic wisdom treats the “public” nature of certain goods as given, and portrays the social organization of their production (e.g., by the public or the nonprofit sector rather than commercial markets) as an outcome of that nature. By contrast, the model I propose holds it is the social organization of production and delivery that determines the extent of a good’s benefits and costs. If the production or distribution of a good is organized in such a way that externalities (i.e., availability of benefits to those who did not pay for the good in question) are visibly included in its cost–benefit balance, then such a good becomes “public.” This argument, in essence, claims the choice of the organizational model of production and delivery defines a good or service as either “public” or “private.” It assumes the choice of the “public” or “private” organizational model of production is available to the vendor. That assumption may not always hold, because certain services are conventionally expected to belong to one particular institutional sector, and their vendors cannot chose an alternative venue. Such is the case of automotive repair or investment management. These services involve considerable information asymmetry, which according to the conventional economic wisdom should qualify at least some of them for the public or nonprofit sector venue. Yet, in most Western societies they have been traditionally provided on a commercial basis, and that norm effectively excludes alternative venues. However, when a new type of service is being introduced to a society, there are few preconceived notions about the “proper” venue of delivery, and innovators may have a greater leeway in choosing the organizational form for their services. This applies especially to the providers of professional services. Professionals have been recognized as a major force behind spreading innovation (DiMaggio and Powell, 1983). Most professions maintain close contacts and information exchange networks among its members to disseminate knowledge about available solutions and treatments. Such networks often exert normative pressure to adopt those solutions and treatments that most members of that profession consider effective and successful. The mere popularity of measure or a treatment among practitioners tends to define it as a professional standard, and this in turn motivates other practitioners to implement that measure in their own practice. In Poland, the inducement for professional innovation is health services

PROFESSIONAL INNOVATION AND INFORMATION GAP

75

came from two independent sources. First, as we discussed in Chapter 3, the operations of the public healthcare system came under harsh criticism from the practitioners in the field. The professional demands for reforms, summarized as “quality of service over the number of lives saved,” prompted many practitioners in the field to look for alternatives to the existing treatment (author’s interviews, July, 1994; see also Sokolowska and Moskalewicz, 1987). The second source is the value system embedded in society at large. Despite the nationalistic and autocratic nature of the political regimes, both before and after World War II Polish society remained relatively open as far as the attitudes toward foreign, especially Western European, countries are concerned. For historical reasons, such attitudes were particularly strong among the intelligentsia. Until 1918, Poland was partitioned by three major European powers, Russia, Prussia, and Austro-Hungary, most of her territories being under Russian domination. Consequently, Polish nationalists, represented mainly by the intelligentsia and upper echelons of society, traditionally sought alliances with Western powers, especially Napoleonic France, to gain national sovereignty. France served also as an exile for intelligentsia and gentry who escaped Russian persecution. After gaining independence in 1918, Poland formed an alliance with France and England, first against the USSR, and later against Nazi Germany. When the Nazis overran Poland in 1939, many public officials and intellectuals exiled in England. After World War II, these emigres formed a cultural center in Paris, and their numerous publications carried considerable influence in the intellectual circles in Poland. Pro-Western attitudes started gaining popularity as the educational level increased during the 1960s. This was particularly widespread among college students and graduates, the social group that had the most contacts with Western European countries. The idealized image of Zachod (the West) commonly served as a reference point and a benchmark of progress and modernity against which Polish society was judged. Western European cultural imports, philosophy, sciences, art, literature, music, values, and lifestyles, traditionally exerted a strong influence on Polish intellectuals and through them, on the rest of society. This attitude is well illustrated by a statement made by one of my sources, a court probation officer who helped found an organization that provided social services to prisoners and their families. He justified his organization’s mission as an effort to bring Polish society closer to Western European standards: [ O]ur country made a giant leap forward during those past five years—in prisons alone, even though it is far away from the Western European ideals. But comparing to what I saw in Moscow, I say to the inmates “Man, you should kiss the soil3 [in appreciation] that are you doing time here

76

CHAPTER 4 not there” because it is horrible over there. Fortunately, we are already beyond that stage. However, as far as changes in the legal system and the methods of law enforcement are concerned, there is still much to be done (informant 9).

To contrast Western Europe and Russia is not a coincidence. Many Polish intellectuals perceive their country as the last bulwark of Western civilization against Eastern “barbarism.” Such perceptions are often reflected in popular literature and mythology. For example, the works of the 1905 Nobel Prize laureate in literature Henryk Sienkiewicz prominently feature the themes of Polish protagonists valiantly fighting a sundry of assorted “barbarian” characters: Cossacks, Turks, Tartars, and even African tribesmen. The works of the 19th century poet Adam Mickiewicz, considered to be the “national bard of Poland,” center on the theme of Polish struggle against Russian domination. Interestingly, in 1968 Mickiewicz’s play Dziady (Beggars) served as the basis of a performance staged in one of the most prominent theatres in Warsaw. The cancellation of the performance by the authorities, who perceived the play as antiRussian, sparked a nationwide protest and a student rebellion. Given such intellectual climate, it should come as no surprise that Western institutions often served as models for solving problems faced by Polish society A good example of that trend is the drug treatment program implemented in late 1970s by a young psychologist, Marek Kotanski. As the baby boomers came of age, drug abuse hitherto a minor phenomenon, emerged as a growing national problem. It was clear the existing substance abuse programs, geared toward treating alcoholism, were inadequate to treat that growing social ill. In response, Kotanski looked into “Western” solutions of the problem, especially the U.S. program known as the Synanon, popularized in Polish psychological literature. He emulated the Synanon model to create the antidrug movement MONAR that heavily emphasized therapeutic community over the traditional drug-based therapies favored by the psychiatric establishment in treating the root causes of substance abuse. From fewer than a hundred participants in 1980 (Table 2.1), MONAR quickly grew into a nationwide network of treatment centers and shelters, and later expanded its services to include people suffering from AIDS (KLON, 1993). The political–economic reforms initiated in late 1980s opened the door for much broader East–West contacts. Under the central planning regime, such contacts took essentially two forms: official, carried through pre-arranged exchange contacts between selected official agencies in Poland and their Western counterparts; and informal, between private citizens who had resources to travel abroad. After the downfall of the “iron curtain,” Western aid programs brought an unprecedented number of foreign experts, consultants, and representatives of nongovernmental organizations to Eastern Europe (Wedel, 1998).

PROFESSIONAL INNOVATION AND INFORMATION GAP

77

The net effect of this development was the vastly increased availability of Western ideas and institutional models for “domestic use” in Eastern European countries. Such models were used by local actors for purposes ranging from personal enrichment and self-promotion (Wedel, 1998), to the legitimation of political programs and reform agendas (Figure 4.l), and to the introduction of new service technologies and organizational forms. The latter are particularly significant because they help explain the interest of professional service providers in alternative forms of service delivery. An examination of the KLON (1993) directory reveals that of all entities on which that information was available, nearly 16% followed a foreign organizational model at the time of establishment. Moreover, there were significant differences in using foreign organizational models by professionals and other types of domestic4 founders. Professionals were almost twice as likely as non-

Figure 4.1. The post-1989 association actively engaged in popularizing foreign models and cultural influences in Poland. Promotion of foreign ideas and models often serves as a strategy to advance an organization’s domestic agenda. The eFKa foundation, whose mission is to promote women’s rights and professional advancement, used its foreign contacts to organize a cultural event to popularize its agenda. Pictured is an event, sponsored in part by the U.S. consulate in Cracow, showing the accomplishments of American female artists and film directors. (Photo: Urszula Masny-Sokolowski)

78

CHAPTER 4

professional founders to rely on foreign models (21% versus 13%, accordingly) when helping to establish nonprofit organizations (Table 4.1). This finding is consistent with the theory of organizational isomorphism proposed by DiMaggio and Powell (1983), who identified professionals as a major force behind organizational mimicry, or spreading organizational models the professionals perceive as successful. Clearly, a significant part of the professional founders of Polish SPORGs, at least a fifth but perhaps even more, are innovators attempting to introduce novel models and services to their native society. What is the nature of their innovations? To answer this, let us examine the data I obtained from interviewing representatives of nonprofit service organizations selected from the KLON directory. The 14 agencies I studied indepth for this project provide different kinds of healthcare and social services.5 They were founded by people with different occupational backgrounds: medicine, psychology, physical therapy, law, engineering, art, an priesthood. Some had a recognized professional status, while others strove to achieve such a status. What most of those agencies have in common is that they offer services that have an element of novelty in the Polish context . Specifically, seven agencies provided services that were undisputed novelties on the professional service market in Poland, and four introduced some novel aspects to the conventional, already existing services. Table 4.2 gives the list of organizations selected for this study, and describes their mission and the type of innovation (if any) they introduced to the Polish market. Among the “full” innovations were the treatment of Alzheimer’s disease (Case #3), hospice care for terminally ill patients (Case #4), the horse-riding therapy for children with psycho-motor disorders (Case #5), social and rehabilitative services based on performing arts (Case #6), support services and advocacy for inmates and their families (Case #7), meditation and spiritual guidance (Case #9), and the popularization of the institution of “family doctor” (Case #13). Table 4.1 Effects of Occupational Status on Selection of Organization Model % of agencies reporting following organizational models

Occupational Status of Founder* Professional Other domestic founders All founders

Domestic

Foreign

Idiosyncratic

Number of organizations

56.1% 63.8% 61.4%

21.4% 12.9% 15.6%

22.4% 23.3% 23.0%

196 425 621

Statistical significance, Pearson Chi2p = 0.023 *Organizations reporting foreign nationals as their founders are excluded.

PROFESSIONAL INNOVATION AND INFORMATION GAP

79

Table 4.2 Professional Innovation in Selected Organizations Case ID

Organization

Founder’s Conventional Occupation

Organization’s Mission

Type of Innovation

1

The Club for Women after Physicians, Mastectomy (The Amazons) physical therapists Warsaw

Postsurgical therapy for female cancer patients; change public attitudes toward cancer

New element in existing service

2

The Association of People with Disabilities (Ami), Gdansk

Psychiatrists

Substitute for hospitalization in psychiatric treatment

New element in existing service

3

The Polish Association for Assistance to People with Alzheimer’s Disease, Warsaw

Physicians, psychologists

Recognition of Alzheimer’s Entirely disease in Poland; train new service caretakers of Alzheimer’s patients;

4

The Hospice, Gdansk

C l ergy, physicians

Comprehensive care of Entirely terminally ill patients; new service institutionalize and legitimize hospice care as an alternative to euthanasia

5

The Foundation for the Assistance of Disabled Children (Hipoterapia) Warsaw and Krakow

Amateurs, horseback riding instructors

therapy Horseback riding for children with psychomotor disorders; legitimize hippo-therapy as a new profession

Entirely new service

6

The Cultural Association (Theater, Education, Rehabilitation), Gdansk

Actor

Fusion of performing arts with work, education, conflict resolution and rehabilitation

Entirely new service

7

The Alliance for Penitentiary Protection (Patronage), Warsaw

Lawyers, probation officers

Support for inmates and their families; defense of human rights, prison reform

Entirely new service

8

The Coastal Environment Society, Gdansk

Amateurs

Legitimize traditional herbal therapy as alternative to conventional medicine; develop working relations with medical profession

New element in existing service

9

The Foundation (Homo Homini Frater), Gdansk

Engineer

Meditation and spiritual guidance; the agency facilitates only administra tive aspects of service production

Entirely new service

(continued)

CHAPTER 4

80 Table 4.2 Continued Case ID

Organization

Founder’s Conventional Occupation

Type of Innovation

10

The Children’s Foundation, Warsaw

11

The Movement in the Sociologist, Defense of the Life of clergy Unborn Children (Gaudium Vitae), Warsaw

12

The Society for Aid to the Youth, Warsaw

Social workers Shelter, counseling, and psychologists behavior modification for youth in difficult life situations

None

13

The Foundations for the Development of Private Health Care in Poland, Krakow The Foundation for the Free Market and Medical Services, Warsaw

Physicians

Entirely new service

14

Engineer/ manufacturer

Organization’s Mission

Economist

“All profits to charity” operation of a private toy manufacturing firm

New element in existing service

“Moral entrepreneurship” toward alternatives to abortion; material support and shelters for pregnant women

None

Reform of healthcare, introduction of the institution of “family doctor” Volunteer mobilization, advocacy for privitization of healthcare

Unclear

SOURCE: Interviews conducted by the author “Foundation” generally indicates legal form rather than grant-making activity (except Case # 10).

Case #3 is an organization providing training and support services for the caretakers of Alzheimer patients. Its founder, a psychologist at a Warsaw public mental health center, became familiar with the concept of Alzheimer’s disease during her internship in the United States. After returning to Poland, she discovered the Polish medical establishment did not recognize Alzheimer’s disease as a medical condition, but tended to perceive its effects as a natural process of aging. She and her colleagues established the organization as a form of the demonstration project of services available to Alzheimer’s patients. Case #4 is a nationwide network providing home hospice care for terminally ill patients. It was established by a Catholic priest who provided religious services to cancer patients, and a physician at the Gdansk Medical Academy Hospital who studied hospice care in Great Britain. The reason cited for creating the organization was the lack of hospice care in Poland. At the time of the interview, the agency reportedly served about 200 people for which it was remunerated by the prefectural public health authorities. This figure represented

PROFESSIONAL INNOVATION AND INFORMATION GAP

81

about 20% of all terminally patients in the prefecture, and about 60% of such patients remaining outside the hospital care.6 Case #5 is a network operating in two major urban centers, Warsaw and Krakow. It provides a novel form of physical therapy, utilizing horseback riding, to children with severe psychomotor disorders. The agency was founded by a group of physical therapists and a horseback riding instructor who learned about similar services provided in West Germany and other Western European countries. At the time of the interview, these service providers did not have a recognized professional status, but were working toward attaining it. Case #6 is an organization providing a variety services that range from conflict resolution, to social work with blind children, and to art education. It was founded by a professional actor, who was inspired by his work with a French theater company. The novelty of the service was a holistic approach to human relations that combined the elements of art, communication, rehabilitation, and conflict resolution. Case #7 is a Warsaw-based agency with a nationwide area of operations. It was founded by a group of lawyers and probation officers. Although the organization existed prior to World War II and was later dissolved by the authorities, it was reactivated to promote modern Western–European models of penitentiary and post-penitentiary care in Poland. The organization cooperates with the Boell (transcribed from continuous speech, spelling not confirmed) Foundation from Germany that helped to establish and fund two shelters for people released from prisons. Although the organization provides conventional social services (income support, shelter), the novelty of the service is the population being served (inmates) and the advocacy component of the organization’s mission. Case #9 is an agency that organizes personal counseling and meditation that combine elements of Indian philosophy and parapsychology, and popularizing English language publications on the subject. My source described its founder as a spiritual guru, but did not clearly described this person’s occupational status. Finally, Case #13 is a consulting agency aimed at reforming Poland’s public healthcare system. It was established by a group of physicians who also act as consultants to public authorities. One of its main tasks is to introduce the institution of the “family doctor,” similar to that in the United States and other Western countries. The family doctor is a private practitioner coordinating healthcare for individuals or families, and providing referrals for specialized medical assistance, if necessary. The detailed list of family doctor’s tasks and competencies is described in the organization’s brochure published in both Polish and English.7 The second group consists of four organizations that were created to add a

82

CHAPTER 4

new element to already existing services. Case #1 is a nationwide network of organizations providing rehabilitation and support services for women who have had a mastectomy. According to my source and the organization’s founder, the director of the rehabilitation ward at the prestigious Warsaw Oncology Center, the service and its organizational structure were patterned after the Reach to Recovery “movement” (the informant’s term) in the United States. After studying the movement for her doctoral dissertation, she decided to implement its ideas, citing the absence of similar services in Poland. Although the specific services offered by the agency were new to the Polish market, they were integrated into the rehabilitative treatment at the Oncology Center. Case #2 is an organization facilitating group therapy sessions for patients leaving the Psychiatric Clinic of the Medical Academy Hospital in Gdansk. The organization was formed by a group of psychiatrists at the clinic, but my source (a psychiatrist herself) stressed the importance of patients’ initiative in that endeavor. According to her, the idea for the organization was inspired by the observations of the medical staff that the patients who formed social bonds during their treatment at the clinic and extended those bonds after their release, showed better chances for recovery. Consequently, the staff decided to sponsor an organization that for therapeutic reasons would help maintain social contacts between former patients. However, my other source representing that organization, a former patient herself, suggested that the role of professional staff in the formation and work of the agency was more involved than this account suggested. Case # 8 is interesting, because it represents services that, according to my source, have been provided in Poland for centuries. The agency promotes traditional herbal remedies for various physiological ailments. However, this traditional folk medicine became seriously threatened by two recent developments. First, opening the borders with the former USSR resulted in the influx of traditional healers, mainly from the Asian part of that country, who started to comPete with the domestic healers. Second, in response to the reports of mistreatment and charlatanry, the medical establishment and public health authorities waged a campaign to ban traditional herbal medicine altogether. In response to those challenges, Polish herbalists formed an organization to promote folk medicine as a part of an ecological movement and holistic lifestyle associated with it. The environmentalist ideology was thus a new element introduced to the traditional practice. Finally, Case #10 is a small, family-owned and operated business (a toy making manufacturer) functioning on the all-profits-to-charity8 basis. The agency provides funding and goods to selected public orphanages and centers for disabled children. The charity was established in memory of the founder’s wife, who died in a car crash. Although the existence of trust funds supporting

PROFESSIONAL INNOVATION AND INFORMATION GAP

83

these types of activities is not new in Poland, the private organizational form and the mode of its operation certainly are. Of the remaining three organizations covered in this investigation, one (Case #14) mainly engaged in activities that did not substantially depart from those of the state-run pre- 1989 social organizations, such as mobilizing volunteers for various community projects. The agency reportedly served as an advocate of private medicine, but the source did not explain the exact scope of these efforts or their relationship to the volunteer mobilization. The two remaining agencies (Cases # 11 and 12) provided conventional social services to, respectively, pregnant women and troubled youth. Similar services had been offered by the entities affiliated with Roman Catholic church and social organizations under the central planning regime. That 11 out of 14 nonprofit organizations I studied engaged in promoting some form of novel services in Poland’s service market unmistakably suggests this organizational form must be instrumental as an innovation dissemination vehicle. Such finding alone is hardly new and has already been suggested in the literature (Kramer, 1981). But there is something else we can learn from this rather odd assortment of exotic treatments, some of which may appear to the unsuspecting reader as snake oil,9 or perhaps “rat ointment.” In addition to being novel to the Polish market, these forms of treatment appear odd to an unsuspecting layperson. Transcendental meditation or herbal healing may be common practices in India or Asia, but they must surely smack of witchcraft for most ordinary people in Eastern Europe and, for that matter, the rest of the Occidental world as well. To the average layperson, “hippotherapy” may look more like an extravagant hobby for the rich rather than, as many Western experts believe, a valuable form of rehabilitation for children with autism or cerebral palsy. Alzheimer’s disease may be a household name in the United States, but for most Poles—experts and laypersons alike—it is nothing but a difficult to pronounce foreign word used to justify committing scarce resources to do what is not humanly possible: undoing the effects of the old age. In other words, the problem with novel, often exotic treatment is not whether it works, but whether those who can potentially benefit from it believe it does. This problem cannot be simply solved by ex-cathedra pronunciation of expert authorities. According to the founder of the “Amazons” (Case #1, source #5), an expert in postsurgical rehabilitation, the diagnosis of cancer is frequently viewed as a “death sentence” in Poland. Although the survival rate of cancer patients in Poland is relatively high by international standards, most patients develop fatalistic attitudes that adversely affect their rehabilitation process. My source found that attitude almost impossible to change. Often she found that her prognoses of recovery were met with skeptical remarks, such as “Well,

84

CHAPTER 4

doctors are paid to encourage their patients, but I know there is no hope for me.” The issue is further complicated in that most problems (be it rat infestation, antisocial behavior, disability, or terminal illness) faced by people living in a particular society can be addressed by many alternative solutions that require different resources and the involvement of different social agents. For example, problems associated with terminal illness can be solved through euthanasia, palliative treatment, psychological counseling, or spiritual consolation. The problems of postsurgical rehabilitation, chronic illness, emotional or mental disorders, or substance abuse can be addressed by hospitalization, outpatient therapy, counseling, or home-based care. Furthermore, each solution involves different individuals claiming unique qualifications to address the problem at hand: physicians, psychologists, conventional and nonconventional therapists, counselors, social workers, clergy, or family. Each solution also asks for the commitment of vastly different material and social resources on the part of the patient and his relatives as well as society as a whole. Hospitalization may accord a more stringent control of undesirable behavior, but it also requires building a sufficient number of hospital facilities; training and employing adequate staff; procuring proper equipment and medications; and implementing a legal system that regulates the access to those facilities, as well as individual and collective responsibility for payment for services rendered. Counseling, although less costly, also requires a proper motivation system (peer pressure, employer’s sanctions, court orders, to name a few) as well as conditional withdrawal of sanctions for undesirable behavior (such as absenteeism, or unsatisfactory work performance) during treatment to encourage patient participation. Moreover, the responsibility for solving such problems can be defined at vastly different levels, not only among various societies, but also within the same society. Western societies largely consider mental disorder to be an individual’s problem, to the point that it is a valid reason for dislodging most social obligations toward the affected person (termination of employment, divorce, incapacitation, involuntary institutionalization). But in many African societies, mental disorder is viewed as a community problem, requiring the participation of the entire village (not just the immediate family) in the affected person’s psychiatric treatment. But even in Western societies the responsibility of the same problem may be defined by social status, religious or ideological background, occupation, or adherence to different bodies of knowledge. Thus, care for the elderly can be defined as individual responsibility (one should secure sufficient resources for one’s retirement), family responsibility (children should take care for their parents), or public responsibility (the state, the society as a whole, should

PROFESSlONAL INNOVATlON AND INFORMATlON GAP

85

provide adequate services) level. The same pertains to healthcare, education, substance abuse, care for the disabled, housing, transportation, and even crime control (armed citizen militia vs. private security guard vs. public police in the United States). What results (between providers and buyers of professional commodities) is a condition students of economic behavior call information asymmetry. In other words, the buyers not only do not know what the providers do about the important aspects of the treatment, such as effectiveness or potential side effects, but they may not even have adequate information to evaluate the products of different types of providers who claim expertise over particular problem areas. Under ordinary circumstances, such information asymmetry problems can be solved by the existence of a system of professions (Abbott, 1988). A system of professions is a generally accepted division of expert labor that defines the boundaries of professional jurisdiction over different problem areas, and also provides guidelines for referring specific kinds of problems to specific groups of experts. Thus, even if the potential client does not know what expert can best address his specific problem, there is an understanding between different experts in the system to refer that client to the appropriate specialist. The system of professions not only helps the client to overcome information asymmetry, but also works to benefit the service providers by reducing or eliminating competition among different groups of experts. In the case of novel procedures, the system of professions may provide little or no guidance to address problems arising from information asymmetry. Because the treatment is new, no prior agreements or social conventions exist to determine which group of experts has the proper jurisdiction over it. It might be that different professional groups may view that treatment as being within their area of expertise and make competing claims of jurisdiction over that specific service area. Another possibility is one group of experts may altogether reject the value of the novel treatment proposed by another group of practitioners. This rejection could arise from a wide range of considerations, from bona fide doubts about the value of the novelty to ethical concerns or to a perceived threat to entrenched professional interests. Either case is likely to cause in competition between rival groups of providers who will not only try to justify their own claims, but also undermine their rivals’ claims. But it is also clear that not all parties have equal footing in such disputes, and this is affected by their own professional status (if any) and the nature of the treatment itself. Thus, physicians may have a clear advantage over herbalists if the “professional turf dispute” involves herbal remedies, because physicians generally enjoy a higher professional status and have demonstrably better knowledge of illnesses and its underlying causes (even though

86

CHAPTER 4

their knowledge of herbs may be limited). On the other hand, their high professional status would not offer them much of an advantage in a dispute over, say, resocialization of convicts, because it would be difficult for them to make a convincing claim linking that resocialization to medical expertise. Generally speaking, the process of introducing a novel professional service to society is affected by three factors: (1) nature of the service itself; (2) level of opposition, apprehension or dispute associated with that service or perhaps the problem it seeks to solve; and (3) professional status of the innovators vis a vis that of the contesting parties (if any). Stated differently, the strategy of professional innovators to successfully reduce information asymmetry associated with their new product will depend on (1) how that product can be convincingly linked to their area of expertise, (2) the degree of opposition that product faces, and (3) who their main opponents are in terms of their professional status.

BRIDGING THE ESOTERIC WITH THE MUNDANE Thus far we found that one of the major problems faced by professional innovators is information asymmetry. The professional knows that the treatment is sound and effective, but the potential clients do not. Worse, they generally do not have the specialized knowledge required to evaluate the novel treatment. So to successfully promote the innovation, our practitioner must bridge that knowledge gap and use the commonly recognized forms of knowledge to express the value of the novelty to the potential clients. One common knowledge form is the system of professions whose function is to direct clients with specific problems to the appropriate specialist who is a recognized expert in that problem area. In cases of professional innovations, however, the system of professions may not work precisely because there may be no established experts for that problem. In such cases, professional innovators need an alternative recognized knowledge form to bridge their esoteric expert knowledge with the problems they seek to solve. Social proximity organizations can be such a recognized knowledge structure that solves the information asymmetry problem. This organizational form can be used as a vehicle of professional innovation, a tool to successfully introduce a novel form of services to the market. This function of social proximity organizations has been suggested in literature (Kramer, 1981), and it also logically follows from the organizational uses and gratifications model introduced in the previous chapter. If interest groups can use formal organizations to serve their specific needs and interests, then it follows that professional innovators can also use them to promote their services.

PROFESSlONAL lNNOVATlON AND INFORMATION GAP

87

To demonstrate that this indeed is the case, we need to find some sort of correlation between the professional innovators’ need to solve the information asymmetry problem (the “independent” variable) and their use of the social proximity organizational form (the “dependent” variable). More precisely, if the organizational uses and gratifications model is correct, the varying need to solve problems related to information asymmetry should correspond to varying uses of the social proximity organizational form. To demonstrate this relationship, we must first identify types of professional needs, defined by the three dimensions outlined in the previous section. Next, we will see if the organizations whose founders belong to the same need category have some common characteristics, and determine the connection (if any) between these common characteristics and needs. With that in mind, let us reexamine Table 4.2 and consider the similarities and differences between these cases in terms of (1) nature of service; (2) nature of opposition faced; and (3) professional status (if any) of the advocates and their adversaries.

The Nature of Services. The nature of services listed in Table 4.1 obviously represent an assorted variety of remedies against two common societal problems: bodily illness; and adaptation to accepted social norms and rules of behavior. These remedies can potentially address already existing social needs without having to convince the public that there is a problem that needs to be solved. Contrast that with a situation when the problem for which the remedy is being offered is not perceived as a problem at all. Examples may include plastic surgery (such as breast augmentation), birth control, or debt management services. In a society where breast shape and size is not considered a valuable asset, where a high value is placed on female fecundity, and where level of personal indebtedness is rather low, these services will be considered not “goods,” but “bads,” or at least an extravagant waste of resources. Consequently, a service provider would find it difficult to convince potential clients they have a “problem” when they do not know such a problem exists. Services provided by the entities selected for this investigation address commonly recognized social problems. Therefore any reasonable person can expect demand for such services. This is important for two reasons. First, our discussion in Chapter 2 established that the condition necessary for an enterprise to come to existence (as opposed to sustaining its operation) is the entrepreneur’s reasonable expectation that there is a potential demand. The fact that the services under investigation address commonly recognized social problems implies that the necessary condition for an enterprise to emerge has been met. Second, because these services address commonly recognized social ills naturally yields itself to a claim that the professional innovators act in genuine

88

CHAPTER 4

public interest, as solvers of a legitimate social problem, rather than mere snake oil peddlers interested mainly in ripping off unsuspecting people. Claims to acting in public interest played an important role in my informants’ choice of the organizational form for their service as well as in defining their own mission. The founder ofthe “Children’s Foundation” (Case #10), was initially drawn to philanthropic activity by a personal tragedy—the death of his wife in a traffic accident. My whole world collapsed in that moment, because my wife was my right hand. I received a disability pension and was not quite able to run the business alone. It was actually she who administered and represented it outside, so everything collapsed at that moment. Since I had some financial resources, and realized that . . . my daughter, she was 13 at that time, and also my driver died in that accident, his wife was pregnant at that time . . . so I figured that there might be more cases like that, children whose parents died in car accidents, so I felt an urge to do something, to establish a foundation that would give some symbolic support for children like my daughter, or my driver’s son who was born shortly after [the accident]. I made an announcement in Gazeta Wyborcza [a major Polish daily] that there was a foundation helping children whose parents died in traffic accidents. Unfortunately, I received only two letters, and even those two were not related to traffic accidents. It really surprised me, I was even angry, it was such a shock, such a disappointment.” (Source 1)

Acting on the advice of one of his board members, he then redefined the organization’s mission to provide assistance to handicapped children in public shelters. His story clearly showed that purely personal motives (such as honoring a deceased family member) provide insufficient justification for recourse to social proximity organizational form. As soon as our entrepreneur learned that the foundation he had established would not serve an expected public mission, he redefined that mission to include a recognized public need. Similar motives transpire from the case of a woman providing “hippotherapy” to disabled children (Source 2). After the interview was over and I had switched my voice recorder off, she told me a personal story, one she apparently did not want to be a part of her “official” statement as the organization’s spokesperson. It turned out that what drew her to this kind of work was also a personal tragedy. Several years ago her own child became disabled from cerebral palsy. As she searched for the right form of treatment, she came in contact with “hippo-therapy.” The treatment reportedly helped, and she decided to popularize it to help other parents in a similar situation. After describing the countless bureaucratic hurdles she and her colleagues had to overcome, she told me the following anecdote, which reflected her attitude toward her work. A knight spotted a little sparrow lying on his back,

PROFESSIONAL INNOVATION AND INFORMATION GAP

89

stretching his feet upward. “What are you doing,” he asked. “Haven’t you heard?” replied the sparrow. “They say the sky will fall down, so I am trying to hold it.” “Who told you such foolishness?” the knight laughed and added “Besides, don’t you think that such an important task should be left for the king?” “Well” answered the sparrow seriously “one does what one can.” Everyone does what one can without waiting for the king, or the government, to act aptly summarizes the attitudes I have encountered time and again throughout my interviews. Source 18, a professional actor, first started working with blind children as a part of his artistic experimentation. I was interested, above all, in the concept of space. The blind and spacethey are contradicting each other . . . When I was still in Zielona Gora [a city and a prefecture in Western Poland], I had friends who worked with the blind. But they had to guide them, even to the stage. So I thought to myself how can that be changed, it must be possible through work. (Source 18)

What was initially his artistic experiment with space soon turned into social work. As he befriended many of the blind performers, he quickly realized the problems they faced were not limited to their disability, but also involved social isolation and inadequate care. When I asked how could this be true for a country with a universal welfare system, he replied: Sure, the government takes care of the blind, but that is throwing them to a ghetto. “You want a co-op? OK, work, drink, and make love. You want a refrigerator or a watch? Here, take it, and get lost.’‘ Those people live marginal lives, and for me it was the question of quality of life, so I came up with the idea of meeting them as a troupe of performers. (Source 18)

Essentially, this source relied on his personal talents, skills, and experience to improve the services hitherto provided by the welfare state. Somewhat similar views stressing the importance of independent initiative, although much more carefully worded, since the sources were high ranking employees in the public healthcare sector, were expressed by the physicians representing cases #1 (The Amazons) and #2 (Ami). The idea to set up an organization that helped women who had undergone mastectomy originated in my source’s study of healthcare systems in Western Europe and the United States. Q: “Could you tell me how the organization was formed? A: “It was my idea, but I cannot say it was an original one. I’ve been working as a rehabilitation specialist for 25 years. I wrote my doctoral dissertation on that subject, and searching the literature I found that in addition to professional treatment, the kind I’m doing [in this hospital], Western countries also have a self-help movement, such as the “Reach To Recov-

90

CHAPTER 4 ery” in the United States. That sparked my interest and I devoted a substantial part of my dissertation to that subject. Later, when [ I started working] at the Oncology Center in Warsaw, I implemented that idea, but with certain modifications, [more appropriate] to the Polish situation. Because the quality of healthcare in the West is very high, and much different [than here] .” (Source 5)

The Amazons received substantial public funding and in-kind assistance from the Oncology Center (a public hospital), so its director was reluctant to describe this organization as “nongovernmental.” Instead, she preferred the term “social organization” because we have the initiative, we have plans, we have ideas, many people volunteer, only some specialists are paid, so we are a social organization, but not strictly non-governmental, since we take advantage of public funding. We are called non-governmental, because the initiative and the idea of our clubs do not fit the organizational structures of the Ministry of Health. (Source 5)

The club Ami operated in a very similar organizational environment, being a de facto extension of a public mental health clinic. Our club is the second attempt [to form an organization]. The first attempt was in the late 1970’s. It originated in our observations that patients who stay for some time at our clinic [ . . . ] develop close friendship with each other, they can understand each other through group therapy and other social activities [ . . . ] And as they need each other, they tend to extend they stay [at the clinic]. Therefore, leaving the clinic can be very difficult for them, because they became close to each other, they felt safe here. It was a problem for us, because we want our patients to return to their normal lives rather than being too dependent on us. So when we observed that they help each other [ . . . ] we suggested that they meet voluntarily [after leaving the clinic]. (Source 15)

These four cases demonstrate an important link between the nature of the service and the motivation of its providers to use SPORG as a venue of its delivery. By addressing commonly recognized social problems, these service providers could believably claim that they were acting in the public interest. Such a claim clearly helps their efforts to popularize their service and make it available to the public. Their choice of social proximity organizational form is yet another element in that strategy, because it reinforces the message that their service has some indisputable public benefit. The need for sending such a message arises from information asymmetry problem that invariably affects innovative professional services. If a treatment is to be an effective solution to a problem, those who can potentially benefit

PROFESSIONAL INNOVATION AND INFORMATION GAP

91

from it must first recognize it as such. Otherwise, the benefits of that treatment will fail to materialize because of the lack of demand. However, potential clients, who lack the knowledge of the specialists who introduce that treatment to the market, have few means of ascertaining its value and effectiveness other than judging from the appearances. And those appearances are created, among other, by the organizational venue of service delivery. We need to emphasize that the providers’ claim that they act in the public’s interest is not an arbitrary advertisement stunt designed to market their organization. It is a bona fide conviction grounded in professional ethos, aspirations, and struggles for a voice in public affairs under the central planning regime. As I showed in Chapter 3, professional demands for self-governance and better quality of life motivated the push for social and economic reform since 1956 and the desperate acts of social protests that culminated in the emergence of the Solidarnosc movement in 1980. These demands and aspirations found their continuation and realization in the organizational forms that emerged after the 1989 reform. The struggles and acts of social protest that periodically erupted during the central planning period in Poland were neither self-serving demands for more “bread and butter,” nor selfless holy wars for “God, honor, and fatherland.” They were the acts of what I call ‘‘organic10 self-interest,” the interest in improving the actors’; own lives by improving the society in which they lived (Touraine et al. 1983; Touraine, 1988). I found the same set of attitudes defining the motives of professionals providing their services through social proximity organizations I examined for this study. Most of these providers had more or less clearly articulated occupational interests in mind when they decided to form their organizations. Some wanted to improve the efficiency of their own professional work. Others (as will be discussed later in this book) hoped to attract public funding for their professional projects. Still others wanted to legitimate their professional status. But their motives went clearly beyond their professional or personal interests. They believed their particular skills and expertise could not only solve the problems of others, but also make their society a better place to live (see the remarks on the work of “Patronage” on pp. 75–76). To summarize our discussion, the consideration of the nature of services offered by professional innovators provides us with an important hint to the motives behind the selection of the nonprofit organizational form. There is an elective affinity between that particular organizational form and the “organicself-interest” of the professional service providers. The exact nature of that affinity will be explored in the subsequent chapter. For now, suffice it to say that the established in the Western culture perception of social proximity organizations as agents delivering “public benefits”11 makes that organizational form a vehicle of choice for those individuals who want to use their talents to ad-

CHAPTER 4

92

dress social problems or improve the quality of life in their society. It is the organizational form that links, so to speak, the occupational interests of individuals to the interests of a larger community or even society as a whole (Durkheim, 1958; see also Gramsci’s (1971) notion of “organic intellectuals” and Touraine’s (1988) concept of “historicity”).

The Nature of Opposition. The second factor determining the strategy of implementing a professional innovation is the nature of opposition,12 which the innovation faces in a society. In that respect, the organizations under scrutiny fall into three distinct groups. The first group consists of those entities that encountered little opposition to their activities. In the second group are those organizations that reported suspicion or mistrust toward their activities, but no open hostility or claims of doing harm. The third group includes practitioners who reported hostility, accusations of doing harm, or competition with providers of alternative treatments. The organizations whose services faced little or no opposition were “Ami” providing group psychotherapy (Case #2), “Theater, Education, Rehabilitation” (Case #6), “Homo Homini Frater” providing meditation and spiritual guidance (Case #9), and the “Children’s Foundation” (Case #10). In cases #2, #6, and #10, it comes as no surprise, given the ostensibly noncontroversial nature of the services involved13 However, Case #9, the meditation gurus, requires some explanation. Because its service may appear as witchcraft and charlatanry to many Poles, these practitioners could reasonably fear public mistrust or even hostility. Yet, I found no indication that the organization faced this kind of problem. It turned out these practitioners carved out a unique niche for their services by espousing a radically individualistic philosophy of personal choice. Q: “What do the participants expect from their participation in your courses? ” A: “Perhaps some sort of spiritual guidance in everyday life.” Q: “And how do you expect them to follow your guidance?” A: “It is difficult to tell. Some will follow the path, while other will find another path, as they attain some basic insight [rozeznanie]. That is exactly what we say in those courses, that everybody should seek his own path. And if he follows our path or finds another master-that is his private business.” (Source 13)

Consequently, any potential act of opposition or disagreement with that particular form of counseling was defused beforehand by the argument “if you disagree with me, you are free to seek something else.” This not only placed the provider outside potentially competitive relations with other providers of simi-

PROFESSIONAL INNOVATION AND INFORMATION GAP

93

lar or alternative services, but it also renounced any claim to “public benefit” of the service, making it the sole realm of individual taste and choice. The second group consists of five agencies that faced moderate to considerable suspicion or mistrust among their clients or the public in general but no open hostility or fierce competition. The founding director of the “Amazons,” an agency providing postsurgical treatment to female cancer patients, repeatedly stressed the adverse consequence of negative attitudes toward cancer patients in Poland. She cited examples: ostracism by friends and relatives; divorces; loss of the will to live; and mistrust in doctors’ prognoses for recovery. Many patients denied having the illness or attempted to hide it from their peers and families. Her point is further illustrated in the following exchange: Q: “What do the patients expect from your services?” A: “Emotional support. We offer them interpersonal contacts, friendship, because they feel very lonely I . . . ] they escape from contacts with the [outside] world. We once tried to organize a New Year party, but when our ladies had to bring their partners, someone from outside, everything just disintegrated.” (Source 5)

The “Patronage” (Case #7), a social service agency for inmates and their families, suffers from a negative attitude of Polish society toward its clients. This negatively affects the organization’s mission that depends, for a large part, on private donations. Our society demands stiff punishment. We would approach a potential sponsor, and ask him for assistance, saying “We want to help those people, so they can leave prison emotionally stable” and he would say “For prisoners? I can give for a children’s shelter or a hospital, but for prisonersno way!” . . . [Because of such attitudes] our situation is very difficult.” (Source 7)

But being the sole provider of this kind service for the entire country, the organization faces little competition. The only available alternatives are efforts of religious organizations to help the same group of people, but the sources did not consider such efforts as competition, because they perceived them as having different goals. There are many religious organizations that moralize [umoralniaja] prisoners. The Patronage provides the most comprehensive and broad range of services, while other organizations are limited [in their scope]. As far as legal and material assistance is concerned, there is no other organization like ours in Poland. All other organizations focus on the spirit, whereas we-on the body and the mind.” (Source 8)

CHAPTER 4

94

The Foundation for the Development of Private Healthcare in Poland (Case 13) is a borderline case, because my source mentions that healthcare practitioners generally oppose privatizing healthcare. He cited the fear of competition and the lucrative gray market arrangements with public healthcare clinics as being the roots of this opposition. Physicians fear privatization will jeopardize their economic interests. The source acknowledged these fears may be grounded for those practitioners who are less competent. These remarks should qualify case #13 under the next rubric: hostility of professional providers. However, because the organization’s main mission is to popularize the institution of the “family doctor” among the Polish medical establishment, physicians can be more properly considered the organization’s clients. Hence I classified it under the rubric “apprehension among clients.” Two other organizations, the Association for Assistance to People with Alzheimer’s Disease (Case #3), and the Hospice (Case #4) reported moderate mistrust or indifference among the professional establishment. For the Alzheimer’s disease association, the problem was created mainly by the lack of recognition of Alzheimer’s disease as an illness that requires specialized treatment. According to my source, both medical professionals and public health authorities tend to view this disease as natural consequences of aging. The source cited lack of adequate support as being the cause of the initial failure (one organization she earlier helped to establish collapsed) and the slow progress of her efforts. “Our political situation is not clear, it is not stable, and that does not give us a sense of security, on the contrary, we are worrying what will happen tomorrow. ” Q: “How does that affect the organization’s work?” A: “It affects people’s attitudes. For example, if we have another change of the government, if there is a change in the Ministry of Health [ . . . ] if we have a new Minister of Health, will he be interested in the elderly people, will there be funds for helping people with Alzheimer disease? [ . . . ] That situation is not at all clear.” (Source 10)

The problem faced by the hospice movement stems from two distinctively different approaches to cancer patients in Poland. One stresses the purely medical aspects of palliative treatment or rehabilitation when possible, the other adds a spiritual dimension to that care. For example, the founding director of the “Amazons,” who also practiced medicine at a public hospital, drew a sharp distinction between these two trends. Q: “Does the organization provide hospice care?” A: “Of course not. This is the organization of hope. We should not be

PROFESSlONAL INNOVATION AND INFORMATlON GAP

95

associated with death. We should emphasize that death is far, far away. We give support to people who are either before or after surgery.” (Source 10)

The founding director of the “hospice movement” (the source’s term), a Roman Catholic priest, also made a similar distinction. For him, however, the other alternative was the manifestation of secularism, which he believed led to dehumanization of life and euthanasia. The first years of the hospice movement [were dominated] by medical problems of relieving pain, but now we have new problems, ethical and philosophical. You have to remember one thing, euthanasia is coming, very quickly, Holland has been completely taken over, and other countries are in line . . . And the hospice movement is an alternative to euthanasia, because it [addresses] the problem of dying with dignity, so one does not have to die in pain [ . . . ] In Paris, before my own eyes, a nurse killed a mother. Her son was supposed to come in an hour to conciliate [with her] [pojednac sie] , and [the nurse] killed her because she could not stand seeing her suffering any longer, because for them life is only a function. ‘The function of life is existence and when that existence is unbearable 1 can terminate it, because I am free.”’ (Source 14)

It needs to be recognized that although this source clearly perceived the alternative form of care for cancer patients as competing, he nonetheless downplayed the differences between these two approaches. While he clearly acknowledged that the two forms of care in question were based on opposing philosophical views, he repeatedly stressed the need for cooperation in the name of common good, the improvement of hospice care in Poland. Such an attitude is probably linked to the fact that his organization actively sought contracts contract with the local health authorities for the provision of hospice care. Emphasizing disagreements with the views of medical professionals could have an adverse impact on these efforts. The third group includes practitioners who faced open hostility, accusations of charlatanism, or fierce competition. The organization facing the fiercest form of opposition, both in the form of hostility form the professional establishment, and in the form of competition was the Coastal Environmental Society (Case #8). This organization offers holistic treatment of certain body ailments and distributes a wide variety of herbal remedies. There have always been many herbalists [in this country] . . . But we established [this organization] because the situation forced us to do so. There is a pressure from pharmacists and physicians to eliminate Polish herbal medicine, because [ . . . ] the doctors saw competition and organized a powerful lobby to get rid of herbal medicine. So we had to get together to defend ourselves.” (Source 17)

96

CHAPTER 4

This information again reveals that choosing the SPORG organizational form served the function of promoting a service in a hostile environment. This theme will be further explored later in this book. For now, let’s focus on another source of the Polish herbalists’ troubles: competition with the Far Eastern healers who flooded the country after 1989. In the words of my source: Nowadays, many healers came from the East, from Russia . . . many came from Tibet, Vietnam, China, and they also practice nonconventional medicine [ . . . ] It is a big problem in Poland, but we cannot throw the baby with the bath water. Our herbal medicine has a long tradition, and if you select the right herbs, they can help.” (Source 17)

Interestingly, this informant did not report any mistrust on the part of general public, even though his remedies could possibly be viewed by many urbanites as snake oil. Instead, he emphatically stressed popular demand for the herbal treatment that, in his view, was fueled in part by growing dissatisfaction with more conventional (surgical and chemical) forms of therapy. The main source of professional troubles for “hippo-therapists,” (Case #5), who offer therapeutic horseback riding sessions to children with psychomotor disorders, is competition from the “quacks,” stable owners who offer similar treatment, but who lack the proper qualifications and training. In the words of my source: The problem has become widely spread, and we receive many signals [ . . . ] about people who provide this form of treatment without even elementary qualifications. There were instances of serious accidents. Therefore we took the initiative [ . . . ] to legitimate [usankcjonowac] both the method itself and the profession of hippo-therapist [by forming this organization] .”14 (Source 3)

Another source from this organization also mentioned skepticism, especially among parts of the medical establishment, but she did not perceive it as serious. I frequently meet with opinions that are more important things, such as saving lives, and all you offer is horse-back riding. But, I get those children whose lives were saved, and we have to do something with them, rehabilitate them. So I do not care too much about those opinions anymore.” (Source2)

Professional Statuse of the Provider: Finally, the professional status of the provider is the third factor that affects the strategy of professional innovators to successfully reduce information asymmetry associated with their new service. For the organizations listed in Table 4.2, their founders fall into three distinctive status categories.

PROFESSIONAL INNOVATlON AND INFORMATION GAP

97

First are the organizations whose founders have a well established professional status: physicians (Cases #1, #2,15 #3, #4,16 and #13; lawyers and court officers (Case #7), and a professional17 actor (Case #6). In all seven cases, the professional skills and knowledge of the founding members were crucial for the service offered by their respective organizations. However, in solving cases the organization’s mission could extend beyond the conventional boundaries of their founders’ professional expertise. Second are two organizations whose founders do not have a recognized professional status (Cases #5 and #8). In both cases, the sources emphatically stressed they use the organizations they helped to establish as a vehicle to attain professional recognition. It needs to be emphasized, however, these informants reported using other vehicles to that end as well-namely, professional associations that operated separately from the service agencies of interest here. The third group consists of two agencies whose founders’ professional status is largely irrelevant for their missions. The founder of the “Children’s Foundation” (Case #10) is a mechanical engineer by training, but his main contribution to the organization’s mission is the financial resources he obtained from his small business activities. The founder of “Homo Homini Frater” (Case #9) has an engineering degree as well, but his role in the organizations does not seem to be related in any way to that area of expertise. Moreover, the nicheseeking behavior of that organization (see the discussion on p. 92) effectively places that individual outside potentially competitive relations with other providers of similar services.

SUMMARY The discussion in this chapter can be summarized as follows. The social proximity organizations under scrutiny were founded by practitioners introducing new services to the Polish market. Because of their new to the local context character, these services faced the problem of information asymmetry. That is, their benefits, although apparent to the providers, were not immediately recognized by potential clients, public authorities regulating professional practice, or other professional groups. The problem of information asymmetry could not be solved in the usual professional fashion: by recourse to the system of professions. The system of professions is a set of semiformal rules and understandings about the scope of competencies of different professional groups. It forms the basis for referring clients seeking solution to different life problems to the proper types of specialists. In the case of novel services, the system of professions does not work because no consensus yet exists about the proper place of innovation in the

CHAPTER 4

98

existing system. Until such consensus is reached, the innovators must use an alternative means of marketing their services and protecting their occupational interests and status against competing claims. Such alternative strategy of promoting professional innovations is affected by three factors: (1) nature of the service itself; (2) nature of opposition or mistrust (if any) it faces; and ( 3 ) professional status (or lack of it) of the advocates and the adversaries of the service. A review of the interview data revealed that founders of these SPORGs fell into distinctive groups defined by different types of opposition and different occupational status of the founders. The levels of opposition ranged from low to moderate mistrust to open hostility, charges of charlatanry, and competition. The occupational status of the founders also ranged from low (no recognized professional status) to high (members of recognized professions, such as physicians or lawyers). If, as we have argued, the SPORG organizational form is a vehicle for professional innovation and for overcoming any information asymmetry problems created by its novel character, it follows that the innovators will use that vehicle in demonstrably different ways, depending on the three factors just outlined. Thus the task we face is to determine how these ways of using nonprofit organizations differ, and whether that different usage corresponds to differences in the nature of obstacles the professional innovators face. To accomplish that task, we need to focus on two essential features of the social proximity organization. First, it is an organization, i.e. it has a relatively permanent, formally organized structure, and a recognized status as a distinct entity. Second, it relies on social proximity relations, which distinguishes it from both commercial firms and government agencies. As our discussion in Chapter 1 suggested, social proximity relations embed social or economic activity in social networks, shared values, and common expectations, in a word, in what is conventional and familiar. Consequently, it affects human perception of the value, and costs-benefit balance of these activities. The next chapter identifies different uses of the formal structure and the social proximity nature of the SPORG organizational form among different groups of practitioners, and links these differences to various types of obstacles these practitioners face. The evidence used in that investigation comes mainly from the KLON data base. Chapter 7 continues this inquiry by analyzing the indepth interview data.

NOTES 1

A popular term denoting the part of the city located on the east bank of the river and consisting, for the most part, of working class neighborhoods.

PROFESSIONAL INNOVATION AND INFORMATION GAP 2

3 4 5

6 7

8

9

10 11

12

99

In my translation, I tried to preserve the original concept of “rat ointment” (masc na szczury) as closely as possible. It may sound absurd in English, but it is also absurd in Polish. After all, the absurdity of certain commercial claims and forms of speech is the punchline of the original story. A gesture and an expression symbolizing gratitude to one’s fatherland. Organizations reporting foreign nationals among its founding members were excluded from this analysis. The distinction between healthcare and social services is often blurred in Poland, because both come under the jurisdiction of the same ministry. For the purpose of this investigation, I defined healthcare as treatment of involuntary conditions (including substance abuse) that impair the normal functioning of the body or the mind. Modification of voluntary behavior (e.g., counseling to correct antisocial behavior), income support and shelters were classified as social services. By 1996, these numbers grew to 44% and 98%, respectively. The reform of healthcare system, which introduced the institution of a private “family doctor” whose services are reimbursed by public health insurance, was implemented effective January 1, 1999. Although my source demonstrated the organization provided substantial charitable donations, he also indicated some of the proceeds from the business activities covered “internal expenses” that included employee compensation. I did not attempt to determine the exact share of business proceeds expended in that manner, partly because the sensitivity of that issue could potentially jeopardize the interview, and partly because this information was not essential to this investigation. Although I took every reasonable effort to include in this study only organizations that provide bona fide services (in addition to mere advocacy or special interest representation), I made no attempt to verify my informants’ claims about those services’ effects, usefulness, technical soundness, or other purported values. Making such verification lies not only beyond my area of expertise, but also beyond the scope of this inquiry, which is the study of human motives rather than the evaluation of different forms of therapy. The sole aim of my interviews was to determine the statements made by my sources are factual in the sense of representing what my sources ostensibly believe, regardless of how these beliefs may be viewed by others, including experts in various areas of healthcare. Consequently, none of the statements made in this book should be construed as either endorsement or reproof of any of the treatments or services under investigation. See the comments on the tradition of “organic work” in Poland in Chapter 1. I use this term to emphasize social rather than economic (i.e., nonexcludability of the nonpayers, and nonrivalry) aspect of the product. The term “public benefit” is meant to suggest affinity to social values or usefulness of the service instead of, or perhaps in addition to, its remunerative aspects. I determined the nature of obstacles based on the informants’ narratives, using the following criteria. The organization was judged to face considerable public apprehension or mistrust, if the source mentioned the existence of such attitudes and reported that they pose an obstacle to the fulfillment of the organization’s mission. Mere indifference toward the agency’s mission, or ordinary bureaucratic hurdles on the part of public authorities did not count as opposition. The same criterion was used to determine the existence of competition. Again, the mere existence of alternative services did not count, unless the source specifically identified them as detrimental or troublesome. In all cases reporting the existence of opposition, the relevant information was initiated by the sources, without

100

13 14

15 16

17

CHAPTER 4 any prompts from the interviewer. However, 1 asked follow-up questions to determine the exact nature of the opposition, once the source mentioned its existence. The “all profits to charity” mode of operation of Case #10 could possibly raise some questions by tax authorities, but the source did not indicate any such problems. “Hippo-therapists’’ formed two separate associations; one offering hippo-therapeutic services to the public, and the other one exclusively devoted to the representation of the professional interests of the providers. By contrast to psychologists, psychiatrists have the title of lekarz medycyny or doktor medycyny (medical practitioner or doctor of medicine, respectively) in Poland. According to my source, he asked a physician at the Gdansk Medical Academy to study home hospice care in Great Britain for the purpose of emulating that model in Poland. This physician later actively participated in founding the “hospice movement.” The founder had a college degree in the performing arts and an established acting career in a local theatre.

Chapter

5

Organizations and Social Construction of Expert Commodity As the anecdote which opened the previous chapter told us, any novel commodity, especially that claiming a link to esoteric knowledge, faces the problem of information asymmetry. Because potential buyers generally lack the provider’s expertise, be it real or purported, they have no way of assessing whether the commodity in question will meet their needs or, for that matter, the advertised purpose. Consequently, the provider must embark on a marketing strategy that will bridge the information gap by embedding the commodity in socially recognized knowledge structures. We hypothesized that the choice of the organization venue may serve as such a marketing device. This chapter examines how that process of embedding in socially recognized knowledge structures is accomplished in a specific social–historical context: professional innovations introduced during the 1989 systemic transformation in Poland. The previous chapter identified two essential features of the social proximity organization (formal organizational structure and social proximity character) that may be used differently by the service providers, depending on the set of circumstances they face when introducing their innovations. Let us examine those different uses and link them to the particular circumstances that affect the implementation of the novel service: type and degree of opposition or mistrust; and the professional status of the provider.

101

102

CHAPTER 5

FORMAL ORGANIZATIONAL STRUCTURE Economic theories of nonprofit organizations (reviewed in Chapter 2) do not explain why nonprofit service providers are organizations rather than individuals. These theories focus on the nature of the commodity itself or at best on the properties of the transaction involving commodities rather than social organization of commodity production and distribution. This is a sad legacy of the neoclassical economic philosophy that views institutional organization of economy and society as a mere backdrop that at best can account only for deviations from the rational choice model. Yet, formal organization is one of the main factors that shaped both the way professional technologies developed and how today’s professional services are produced and delivered. Modern medicine grew up from a marriage between the knowledge of human anatomy and formal organizations, hospitals and prisons, designed to control human behavior on a mass scale—which allowed a systematic observation (surveillance) of human body and the systematic application of the corrective treatment procedures to the human body (Foucault, 1979). There is a clear connection between organization and technology in the sense that most modern technologies, from railroad to the automated production line, would not be possible without the development of organizational forms making the functioning of technological apparatuses possible (Chandler, 1977). Technology and expert knowledge need an organization not only to assemble and coordinate human and material resources to “make things happen” but also to make them happen in a way that is understood and acceptable in a particular social–historical context. This is especially important in cases when the professional technology in question is either a novel or a controversial form of treatment that raises considerable public concern, mistrust, or even apprehension. Of course, the magnitude of that mistrust is usually mitigated by the need for an effective treatment. An AIDS patient, the parents of a child affected by cerebral palsy, or a woman who underwent mastectomy may be inclined more than everyone else to try a novel procedure. But even the most desperate patients need some form of assurance that the treatment being offered to them procedure is sound. The practitioner performing the treatment might be a quack or a first-class specialist, but most recipients have no way of knowing other than judging from the practitioner’s appearances. An established and officially recognized organization is perceived quite differently from a back alley facility staffed by a single individual who may not be there tomorrow. Organizations accord the innovator the perception of permanence, respectability, and trust. Everyone can operate a back alley facility, but organizations

ORGANZZATZONS AND EXPERT COMMODITY

103

exist as collective, relatively permanent entities with clearly identifiable boundaries. The function of the boundary, or entry barrier, is to create trust by projecting the impression of supervision and omniscience (Foucault, 1979). The boundary signals that not everybody is let in, only a select group presumably meeting the quality criteria. To effectively generate public trust, organizational boundaries must be permeable, otherwise the organization would appear too esoteric, but not too permeable to safeguard against incompetence and fraud. The organizational structures of a profession must be reasonably transparent but off limits to quacks and unscrupulous profiteers, at least in their appearances. Professions themselves form an organized system (Abbott, 1988) that sets its own barriers of entry, rules of conduct, and quality standards. Therefore, there is little need, especially among established professions, to rely on other organizational forms to institutionalize the production of their services. This, however, may change in cases of innovations that do not enjoy unanimous support among the professionals, or in case of occupational groups that have not yet attained a professional status. The professional establishment may reject the value of the novel service for reasons that range from bona fide doubts about the validity of the theory underlying the novel treatment, to ethical considerations, or to the perceived threat of competition to the entrenched professional interests. These reasons may be amplified in cases of new occupational groups attempting to carve a niche for themselves in the professional labor market. In such cases, the absence of “traditional” organization of professional labor creates an incentive for alternative organizational forms to act as conduits for transforming abstract knowledge into professional technology. These observations hint at how the problems of the lack of public trust and doubts about the usefulness or validity of the treatment are addressed by the providers of novel (or controversial) professional commodity. It is formal organization that serves as a vehicle that transforms abstract knowledge into professional technology and commodity by setting institutional procedures allowing a systematic application of that knowledge to practical problems. Formal organization not only makes the efforts of many people better coordinated and more effective, but also embeds it in the socially recognized and accepted knowledge structures. In other words, formal organization not only makes a procedure more sound and effective, but it also makes it look as such for the lay public. The importance of organization might have eluded the advocates of conventional theories of nonprofit organization, but it certainly did not escape the attention of service providers whom I interviewed. Moreover, there is a relationship between the importance my sources attributed to that organizational structure, coordinated teamwork, or formal guidelines and procedures, and

104

CHAPTER 5

the level of challenges they faced in marketing or delivering their services. The greater the challenge, the greater the importance attributed to organizational structure. Thus, organizations that faced substantial challenges, either in the form of public mistrust and doubts about the validity of the treatment they offered, or questionable or ambiguous professional status or practice of the provider, also reported the importance of structured organization in their work. In contrast, organizations that did not face such challenges did not attribute any great significance to organizational structure during interviews. The greatest challenge faced by the hospice care (Case #4) was not only the difficulty of working with dying people, but also the controversy of adding a spiritual dimension (grounded in Roman Catholic moral philosophy) to patient care. To address that potential problem, my source emphasized close cooperation between two types of specialists, medical practitioners and “spiritual” counselors, working on a single team. This is teamwork, a physician, a nurse, a priest, a nonmedical volunteer, and the family. This is the essence of hospice. Where there is hospice, there must be teamwork with the dying [patient] .” (source 14)

According to my source, the formal team structure not only united the seemingly controversial component of their approach to patient care, but also guaranteed a holistic form of treatment that was superior to other alternatives in that it created more humane conditions for dying people. The challenge faced by “hippo- therapists” (Case #5) was the controversial appearance of their service, which might appear to lay persons as an extravagant hobby rather than an innovative treatment for children with severe psychomotor disorders. The model we popularize here implies team work, where the hippo-therapist, the person who works directly with horses treats the patient, but in cooperation with the certified rehabilitation specialist and a physician who supervises the entire process of therapy, including specific directions and restrictions, it must be a team, a group. (source 3)

The treatment per se requires one or two therapists to work directly with the patient, as well as doctors and rehabilitation specialists to supervise the patient’s progress. Therefore, from the source’s perspective teamwork is what distinguishes professional “hippo- therapy” from similar services provided by quacks—individual stable owners offering horseback riding sessions marketed as “therapy.” The problem faced by post-mastectomy rehabilitation services (Case #1) was deep mistrust on the part of the patients, who doubted the effectiveness of any form of treatment. The solution was recourse to an organizational form that allowed cooperation between volunteer, professional, and hospital staff.

ORGANIZATIONS AND EXPERT COMMODITY

105

In the therapeutic treatment, we work together for the benefit of the patients, we have to follow certain guidelines . . . If we started making mistakes, they [i.e. hospital administration] would throw us out of here right away. We have to work for the patients . . . and we have to know what we can and cannot do.” (source 5)

Still another entity, Coastal Environmental Society (Case #8), reported using the formal organizational form, as opposed to informal solo practices that prevailed in the folk medicine in the past. The herbalists have done so (see page 95), to legitimate this form of treatment in the face of severe adversity, both from competitors and from the medical establishment. Challenges faced by the founder of a theater company attempting to do social work (Case #6) are similar to those reported by the hospice care providers (Case #4), albeit clearly lacking the urgency of caring for dying patients. The common theme reported in these two cases is the somewhat controversial nature of the service itself that violates conventional boundaries of professional expertise. The hospice team attempted to introduce a spiritual dimension to patient care that had been hitherto defined as the exclusive realm of medicine. Similary, the theater company tried to introduce the element of professional entertainment to social work and parental guidance. I had some friends, psychologists and physicians, and we established and registered our organization in 1992 [to implement the idea of] . . . developing scenarios for parents, playing with children as a scenario, turning everything into a play, and thus making it easier. (source 18) It is particularly noteworthy that the organization’s founder, who introduced himself to me as “an actor and an anarchist,” nonetheless did not miss the importance of a structured organizational environment to his mission. Take the simplest things. We have to develop team work, punctuality, loyalty. Not only actors work in the theater, but also technicians, shoemakers, tailors. So we can combine all that into one, this is socialization par excellence, even therapeutic effects, theater as a way of life, theater as work. All that was the effect of my teamwork with blind children. (source 18)

Finally, Case #12, which involves an organization assisting delinquent youth, represents yet another type of challenge a professional project may face. Although the organization’s mission is quite conventional, its modus operandi created unforeseen problems for the professional staff. Part of the organization’s mission includes empowerment of their participants to take the leadership roles within the organization. To achieve that goal, the organization encouraged experienced long- term participants to mentor new participants. That created tension between participants and the professional staff who felt that their expertise and authority were being challenged. To deal with the problem, the

106

CHAPTER 5

leadership was forced to partially abandon the informality that had previously characterized the organization’s work and devise a set of formal structures, procedures, and guidelines to define roles and responsibilities and avoid future conflicts. These six cases demonstrate that service practitioners face various challenges and obstacles to marketing or delivering their professional treatment, especially when that treatment is a novelty in the service market. The challenges result from information asymmetry between practitioners and program participants. To overcome those obstacles and challenges, service providers use organizational structures to bridge the information asymmetry gap and convince the participants or the public about the value of their program. Such a conclusion is, of course, nothing new. Throughouot human history, organized cooperation and structured teamwork have been a ubiquitous human response to all kinds of challenges or threats, from coping with natural disasters, to staging conquests or thwarting outside invasions, to organizing production and distribution of resources, to going about everyday business. But despite its congruence with common sense, this conclusion needs to be demonstrated in a more systematic manner by consideration of counterexamples. Counterexamples, or counterfactuals, are empirical instances that demonstrate that the absence of the premise results in the absence of the hypothesized outcome. In our case, the counterfactuals show that the absence of a significant challenge to a professional project results in the absence of substantial reliance on formal organizational structures in implementing that project. The first and most obvious counterexample is the organization Homo Homini Frater (Case #9) whose service, meditation and spiritual counseling aim at enhancing the quality of life of otherwise well-off people. By establishing a niche and avoiding competition and conflicts with public authorities, the organization managed to prosper without any serious outside challenges. Consequently, its representatives repeatedly stressed the individual person- to-person nature of their service and downplayed the importance of organizational structures for their mission (this case will be discussed in detail in Chapter 7). The other counterexample if the treatment of Alzheimer’s disease (Case #3). The disease is quite serious and severely impacts the patient’s ability to function, but in Poland it tends to be perceived not as a medical condition but as a natural outcome of aging. This attitude, according to my source, diminishes the public perception of urgency in dealing with the problem of assisting Alzheimer patients. Moreover, the treatment itself is a rather conventional form of home-based patient care that emphasizes training of volunteers recruited mainly from the patient’s families. If there is any controversy about the treatment at all, it involves arcane points of medical expertise (i.e., whether Alzheimer’s patients suffer from a “legitimate” disease or simply conditions

ORGANIZATIONS AND EXPERT COMMODITY

107

that result from aging) rather than important aspects of interaction between practitioner and patient. It is fair to say that the organization providing this treatment does not face any serious obstacles. According to Karl Popper’s falsificationism rule, a true test of any claim waiting to be admitted to the hall of science comes not from corroborating evidence (which we so far have produced) but from unsuccessful attempts to produce contradicting evidence. Of course, falsification is an open-ended process, and failure to falsify a claim using one set of evidence does not preclude future falsifications based on new evidence. But at the very least, we need to examine the evidence gathered for this project for facts that may contradict the claimed relationship between information asymmetry problems face by practitioners and their use of organized structures to resolve them. To falsify the claimed relationship, we need to find an instance of a professional project that faces substantial information asymmetry-related challenges but does not substantially rely on organizational structures to address them. One case seems to fall into this category, the “Patronage” (Case #7) that protects the civil rights of inmates in Polish prisons and provides various social services to their families as well as those just released from penitentiaries. This kind of activity is highly challenging for two reasons. First, there is mistrust between clients and practitioners, inmates often are suspicious of any institution that cooperates with law enforcement and penitentiary authorities. Yet such cooperation is necessary for the “Patronage” to accomplish its mission. Second, helping inmates is a very controversial issue in Poland because of the high crime rates that plague the country. My sources reported numerous problems their organization faced as a result of public distrust, such as difficulty raising funds and public support for the organization’s mission. Yet the same sources did not attach any special importance to organizational structures in their work. Does this case falsify our claim of a relationship between information asymmetry challenges facing a professional project and the use of organizational structures? Not necessarily. Let us recall that the organizational role central to our investigation is not its capacity to mobilize and coordinate human and material resources (that role can hardly be doubted), but its power to shape the public perception of those resources (this will be discussed in detail in Chapter 6). In most circumstances faced by service practitioners, the goal of shaping is to project the image of structure, institutionalization, and respectability. That image bridges information asymmetry and convinces the lay public of the value of the offered program. In the case of lawbreakers who are the clients of the “Patronage,” that image would set up the organization’s mission for certain failure, because conventional respectability and institutionalization is precisely what the inmates despise, mistrust, or fear. To break the barrier of mistrust and

108

CHAPTER 5

convince their clients that the “Patronage” case workers are not “snitches,” secretly collaborating with prison authorities or courts, the organization must avoid theses images, which are simply intended for a different kind of audience. Therefore, the case of the “Patronage” can be treated as the proverbial exception that confirms the rule. Because of the special circumstances of its operation and unconventional clientele, projecting images of institutionalization and conventional respectability is likely to jeopardize the professional project, even though that project faces considerable information asymmetry challenges. A different type of challenge to the claimed relationship between obstacles to the implementation of a professional project and the use of organizational structure is the instance of reported reliance on such structure in the absence of clearly identifiable obstacles. Such is the case of the outpatient psychotherapy group “Ami” (Case #2). Our club is [ . . . ] a result of our observations that our patients need each other, because the organization of our clinic follows the idea of a therapeutic community . . . and the patients develop deep bounds of friendship with one another, through group therapy, social events and the like. We were not very happy with that, because we wanted them to go back to their community rather than prolonging their stay at the clinic. But when we noticed that they really need each other, we came with the idea that they could meet other voluntarily. (source 15)

In this particular case, the decision to formalize the agency’s status (registration, bylaws) has its roots in the failures of the previous efforts to form a similar group therapy, but on much less formal basis. According to my source, the informal nature of the treatment resulted in excessive physician surveillance, which was responsible for the initial failure of the therapeutic mission. The initial effort to form an outpatient group therapy on an informal basis was short lived. Drawing lessons from that failure, the physicians at the clinic reportedly attempted to avoid the previous mistakes and sponsored the second organization, the club “Ami,” emphatically stressing its organizational autonomy as a key to its success. The previous cases demonstrate that the information asymmetry-related obstacles faced by a professional project are a sufficient condition for requiring the practitioner to turn to organizational structure to popularize and market her project. The case of “Ami,” on the other hand, shows that these obstacles may not be a necessary condition for that recourse. That is, a practitioner may decide to rely on organizational structure for reasons unrelated to information asymmetry problems (if any) in his professional project.

ORGANlZATlONS AND EXPERT COMMODlTY

109

For example, the nature of the treatment itself may require a relatively high level of coordination and organizational structure. That seems to be the case with a psychotherapy group for otherwise unconnected adults who want to live normal lives. Structures created by “Ami” seem to be an attempt to simply hold the group together amidst the distractions of everyday life, that is, to perform the resource mobilization and coordination function organizations ordinarily play. This finding should serve as a caveat that information asymmetry and occupational interests of the provider are one of many factors affecting professional practice and its recourse to various organizational forms. To summarize, the eight cases discussed in this chapter demonstrate that formal organizational structures can be instrumental in addressing information asymmetry problems that service practitioners face. In most cases, the visible structure projects an image of professionalism, competence, and effectiveness of practitioners and their programs, who otherwise may raise mistrust. Suspicion may arise not only from the controversial nature or appearance of the treatment itself, but from various ambiguities surrounding the practitioner’s status or the area of her professional competence. For example, in some instances the practitioner may offer a treatment that seemingly lies beyond conventional norms or the area of his conventionally recognized competence. In other instances, the practitioner may lack a recognized status or competence altogether, or that status may be challenged by other experts. In most instances, formal organizational structure is instrumental in transforming expert skills and knowledge into services that are recognized as solutions to some life problems. Formal organization not only coordinates and structures the resources needed to provide the service, but also redefines the practitioner’s status and role in such a way that the existing ambiguities and doubts are resolved or at least substantially reduced. For example, the organizational structures allowed formal cooperation between physicians and hippotherapists (Case #5, discussed in detail in Chapter 7), which redefined the occupational status of the latter as rehabilitation specialists and placed it within the system of healthcare professions. On the other hand, using the organizational form that routinely delegated some of the conventional roles of the professional staff to volunteers created greater confidence among the mastectomy patients. Of course, the instrumentality of organizational structures in transforming expert skills and knowledge into a trusted service addressing life problems is not unique to social proximity organizations. Most formal organizations can define and structure services that address the contingencies of everyday life. Hospitals and prisons are a crucial factor that define what constitutes today’s healthcare or social service (Foucault, 1979). We can easily say organizations structure most of our everyday life experience, by setting the pace and rhythm

110

CHAPTER 5

of work and leisure, defining how we raise and interact with our children. The organization of our schools not only circumscribes the daily activities of children and their parents, but marks important rites of passage through different stages of childhood to adulthood,1 as well as to the attainment of occupational status in the young person's life. In that respect, the function of SPORG organizational form for professional work is not unique, but quite similar to that of other formal organizations: schools, corporations, or hospitals. Moreover, organizations bridge everyday life problems and abstract knowledge. In that capacity organizations, like magic rituals of premodern societies (Malinowski, 1948), bring the unknown and the esoteric into the sphere that can be controlled, if only symbolically by virtue of ritual, by human cognitive faculties. Therefore, more esoteric forms of treatment are likely to produce greater reluctance and mistrust, so they may require more assuring organizational forms to create a sense of trust and confidence among potential clients. Since the organizational forms that are well established in a particular society, and thus familiar, tend to be more trusted, we can expect such forms to be called upon when the service is innovative or esoteric—that is, when the need to overcome information asymmetry is greater. The inverse relationship between the level of information asymmetry (e.g., due to innovative nature of service) and the need for a familiar organizational form becomes apparent when we analyze the effect of service area on the organizational model followed by the founders of KLON organizations (Figure 5.1). Figure 5.1 shows three service fields that vary by level of information asymmetry from high (health) to low (income maintenance). These fields are further divided by organizational models used by founders of organizations in each field. The models represent different levels of familiarity in the Polish context, ranging from most standard and familiar (domestic models) to most unfamiliar (idiosyncratic, the category that includes original or esoteric ideas reported by the founders). Health service organization are more likely than social service or income maintenance organizations to use familiar domestic organization models (65% vs. 50% and 41%, respectively). Healthcare providers are also more likely to experience information asymmetry problems for two reasons. First, healthcare requires highly specialized knowledge that normally is not available to the lay public; social services, by contrast, usually do not require such knowledge. Second, the healthcare field is more likely to contain a significant amount of professional innovation than the two other service fields. As the interview data demonstrated, healthcare professionals in Poland have frequent contacts with their Western colleagues and are quite eager to implement new Western technologies in the Polish context. These organizations have an additional incentive for innovating and importing foreign technologies. Because these groups often deal with serious problems, such as severe disability,

Idiosyncratic (24%) Foreign ( 19%) Domestic (57%)

ORGANIZATION AND EXPERT COMMODITY

Model:

Service Field Figure 5.l. Effect of Service Field on Selection of Organizational Model.

111

Statistical significance: Pearson Chi2 p < 0.001 SOURCE: KLON, 1993

112

CHAPTER 5

AIDS, cancer, or terminal illness, this puts a pressure on the practitioners to implement the most effective treatment available. The service area that is least likely to rely on novel technologies and experience substantial information asymmetry is income maintenance. In Poland, the most prevalent form of this assistance is food and clothing distribution, or sometimes small cash grants or loans, by churches and local charities. This form of charity has become widespread since the emergence of the Solidarnosc movement in 1980, when the country was literally flooded with in-kind donations from Western countries, and continued throughout the 1980s. Not only does this form of service not require any special knowledge or expert skills, but it is often perceived as a form of paternalistic charity peculiar to less developed societies2 Finally, the category “social services” represents the intermediate level of information asymmetry and innovation as well. This category includes mostly familiar, well established forms of services, such as self-help or support groups, counseling, crisis intervention hot-lines (introduced to Poland in early 1970s), and shelters. However, some organizations in this field introduce innovative services, especially in the areas of substance abuse treatment or assistance to people with disabilities.3 For example, the nationwide network “MONAR” serving drug addicts (not included in the interviews because it was originally established in 1979) introduced behavioral forms of therapy developed in the United States, as an alternative to hospitalization. One of the reasons for establishing “Theater, Education, Rehabilitation” (Case #6 in Table 4.2) was to provide an alternative form of assistance to the disabled. According to the founder, the existing forms of assistance focused mainly on meeting the economic needs of the recipients rather than improving their quality of life. With that in mind, let us closely examine the data in Figure 5.1. First, domestic designs were used much more frequently than any other type of organizational models—over 57% of founders in all three fields reported modeling on some other domestic organization. This overall high popularity of the domestic model can be explained by the resource dependency hypothesis. That hypothesis follows from the resource mobilization theory of social movements (Zald and McCarthy, 1987; in the Polish context, see Kennedy, 1991), organizational ecology (e.g., Abzug and Turnheim, 1998; Wholey, Christianson, and Sanchez, 1993), and more recently path dependency (Hausner, Jessop, and Nielsen, 1995). It claims that founders tend to use locally available organizational resources as “ready-made building blocks” of the new agencies they establish.4 However, there is also considerable variability in the usage of the domestic models among different service fields, and that variability cannot be explained by the resource dependency hypothesis alone. This hypo thesis would lead us to expect equally high popularity of the domestic models, because all

ORGANlZATlONS AND EXPERT COMMODlTY

113

three areas of service were represented, in this form or another, among the pre1989 organizations. The observed variability in the usage of the domestic forms among different service fields can be explained, however, by the organizational uses and gratifications model introduced in previous chapters. This model holds that organizational forms serve specific needs and goals of human actors in addition to fulfilling their formal missions. In this context, such a specific need is overcoming information asymmetry—that is, bridging the familiar, everyday life problems, and the esoteric, abstract expert knowledge or novel technologies. The more familiar the organizational form, the greater its use in bridging the familiar and the esoteric. Hence, the greater the likelihood a service field includes agencies introducing innovative technologies and the greater the likelihood of finding more familiar, domestic organizational forms in that field. As Figure 5.1 shows, health service agencies (high on technological innovation and social apprehension) are most likely to rely on familiar, domestic organizational forms (65% of the agencies in this service area compared to 57% of all agencies in the sample), and least likely to rely on the original or esoteric organizational forms (16%, compared to 24% for the whole sample). Moreover, the usage of foreign organizational models, representing intermediate level or organizational innovation, falls between that of domestic—and that of the original—forms for this service category. By contrast, the usage of domestic organizational models among social service and income maintenance agencies (low technological innovation and social apprehension) is considerably below the sample average (50% and 4 1%, respectively). These agencies are more likely than either health service organizations or the entire sample to turn into original, esoteric organizational forms (3 1% and 42%, respectively). Moreover, the incidence of “original” organizational models is much higher in the income maintenance than in two other fields. Thus, the data in Figure 5.1 are consistent with the expectations informed by the organizational uses and gratifications model. Furthermore, the usage of foreign models in all three service areas only minimally varies from the sample average (19%). This relative invariability among service areas that vary in the likelihood to employ foreign service technologies further suggests that rather than being an act of mimicry automatically resulting from technology transfer, the adoption of an organizational form for service production tends to be a conscious choice aimed at bridging esoteric expert knowledge and the treating everyday life problems. To summarize, our data suggest that one important function of social proximity organizations (shared with other organizational forms) for the professional project is its capability to transform esoteric expert knowledge into professional service that can solve everyday life problems. Therefore, there is an

114

CHAPTER 5

elective affinity between organizational form and professional interests that include overcoming information asymmetry affecting professional commodity. That affinity explains, in turn, one motive why professionals may choose a formal organization to structure their work. To be sure, that function bridging information asymmetry is not unique to social proximity organizations, but nonetheless reveals an important aspect of this organizational form that the conventional economic theories altogether missed. It answers the question which the conventional theories even failed to ask: Why there are organized ensembles rather than solo practitioners in the area that has been traditionally perceived as the domain of individualistic virtues—eleemosynary, altruistic action, and voluntaristic response that defies public intervention and “big government” solutions to social problems.

PUBLIC BENEFIT STATUS As the “rat ointment” story tells us, letting the buyer decide the cost-benefit balance of a novel commodity can spell a marketing failure. Moreover, using a wrong cultural reference, such as “modern technology” that has no or even negative appeal to some Polish peasants can have a similar effect. If, as we have argued, the selection of the organizational form as the venue of commodity production and delivery is to serve as an effective mechanism for reducing information asymmetry, it need to create a favorable public perception of that commodity. How can the SPORG organizational form create such a perception? To answer that question, let us consider that this particular organizational form enjoys a special status in most European and American countries—social proximity organizations are believed to perform a public service or serve public benefit. Definitions of what exactly is “public benefit” varies considerably not only from country to country, but also among different interest groups within the same nation. For example, in Brazil, animal rescue organizations are denied public benefit status on the grounds they do not serve humans. In the United States the same pertains to labor unions; they are considered “wage cartels,” presumably detrimental to the “proper” functioning of economy and society. Others portray foundations as a creation that serves the narrowly defined interests of the rich. Despite these differences, the concept of “public interest” or “public benefit” denotes certain features common to most modern cultures and nations. First is a belief that certain goods or services benefit not only the individuals who directly consume them, but society or community as a whole. Second, public benefit is of equal if not greater value than benefits that accrue by indi-

ORGANIZATIONS AND EXPERT COMMODITY

115

viduals. Third, because of that great value, organizations that serve public benefit enjoy a special status. They receive special treatment by public authorities, by law that grants them certain privileges (e.g., tax relief) but also limits potential rewards its personnel can gain (e.g., restrictions on distributing surplus generated by organization’s activities), and by ordinary citizens who are willing to contribute their time and property to their mission. They also exhibit special features in their organizational behavior, such as offering their services to all who need them, including those who cannot afford to pay their full value. Organizations believed to serve public benefit enjoy a special treatment and engage in special behavior that recognizes and indicates their public benefit status. This special public benefit status does not tell us what public benefits the organization produces, for such benefits may take different, often contested, forms. Instead, it merely sends a message that whatever these organizations are doing, it is recognized as public benefit and marked by special treatment and special behavioral features. From a sociological point of view, status is a form of culturally defined marker that signals the possession of a certain set of socially relevant characteristics by the status bearer. Status markers, also called status cues, are usually clearly visible physical features that in a particular culture form the basis of perceiving a person as a member of a distinct social group imbued with a social value. In most societies such a marker is sex that automatically assigns a person into a gender group. In American society, skin color is also a status cue that “assigns” people to different ethnic groups of clearly unequal social status. These are examples of the diffuse status cues, called so because they evoke a wide spectrum of general expectations and social roles a person is believed to possess. The specific status cues, by contrast, are socially constructed5 indicators of specific behavioral characteristics that are deemed socially valuable or relevant. For example, a dress code or assertiveness in demeanor and the tone of voice, using the “standard” or “high” dialect rather than a vernacular can demonstrate competence, authority, and power commonly associated with membership in a high social class (for a review and discussion on different types of status cues, see Berger, Webster, Ridgeway and Rosenholtz, 1986). An important property of social status is that it is generalized; observers or participants in social interaction construe it as an indicator of personal characteristics, skills, and abilities that are not directly related to the status itself. For example, a male who speaks loudly and assertively is often perceived as more competent in specific areas of expertise than, say, a female who speaks softly, hesitates, and asks questions. Status generalization is thus the process of developing culturally defined expectations that affect the perception of empirical reality, e.g., the status bearer’s specific skills and abilities. Those expectations are a priori considered valid and accurate, and gener-

116

CHAPTER 5

ally remain unchanged unless the person’s actual performance provides abundant and glaringly obvious evidence to the contrary (Webster and Driskell, 1978; Lee and Ofshe, 1981; Martin and Greenstein, 1983; Sell and Freese, 1984; Ridgeway, Berger, and Smith, 1985; Martin and Sell, 1985; Berger, Webster, Ridgeway, and Rosenholtz, 1986; Mohr, 1986; Ridgeway and Diekema, 1989). In other words, a person’s performance is often perceived and judged by others according to his or her social status rather than on the merits of the act. Such a perception is held a priori and changed only in cases of blatant disparity between the expected and actual performance. Therefore, status expectations are often self-fulfilling prophecies that affect not only people’s expectations about their own abilities and qualifications, but also their actual performance. For example, people whose status and thus qualifications are consistently degraded tend to undervalue their own skills and seek employment that is relatively undemanding and unremunerative but consistent with their social status (Reskin and Roos, 1990). In the case of business organizations, the status marker can take a variety of forms, from the architectural design of buildings to the display of the merchandise and to the design of stationery. For example, a store’s location and its interior design create an expectation about the quality of the merchandise. Thus, a store with a “high class” appearance is expected to sell high quality merchandise, even though that quality may not differ markedly from commodities sold in “factory outlets” and discount outfits. A certain industrial designer once revealed to me his firm created both cheap-looking and expensive-looking designs of their products. Even though the same quality of materials and the technologies was used in both types of products, the expensive-looking merchandise was sold as “high quality” at a considerably inflated price. Hansmann (1987) argues that the nonprofit legal status of social proximity organizations acts as a marker signaling the trustworthiness of a service provider to the potential benefactors. Specifically, the fact that the entity is legally prohibited from distributing a profit to its personnel tells the potential buyers that the service providers have no incentive in profiteering by “cutting corners” and delivering a product of inferior quality. Consequently, the organizational form alone serves as a status marker telling the buyers they can expect the same quality as if information asymmetry were absent, that is, the buyers could directly ascertain the quality of the service themselves. This argument hints at an important role of organizational form in developing public trust, but it is not free of problems. First, as we have already noted in Chapter 2, it cannot sufficiently explain the motives of a rational vendor to use this legal form. If legally prohibited from making a profit, then what is the vendor’s motivation to produce the service in the first place? Second, and more important, the condition Hansmann identifies as the status indicator, the non-

ORGANIZATIONS AND EXPERT COMMODITY

117

profit distribution constraint, cannot be considered sufficient to generate trust. This becomes apparent when we closely examine social organization or production and delivery on a for-profit basis and compare it to the social proximity (i.e., nonprofit) form. Many products and services that are encumbered with considerable information asymmetry are produced and delivered on a for-profit basis. A good example can be financial services offered by investment specialists, or various insurance products. In most situations, the buyer has no way of knowing whether the financial advisor is maximizing his clients’ profit, or merely performing at the market average, or worse yet, using his client’s funds to offset his own market losses.6 In case of insurance products, most clients without access to detailed actuarial data have no way of knowing whether the premiums they are charged reflect only the reasonable risk or also include excessive profits of the insurance firm. Consequently, if Hansmann’s assumption that any business transaction requires trust is true, then both types of products should be delivered on a nonprofit basis to signal to the buyers that they will not be ripped off. Yet, most financial and insurance products are offered by for-profit firms, at least in the United States. This is not a coincidence. Commercial institutions can also generate trust without a recourse to a nonprofit status. To understand why, consider a hypothetical case of a financial advisor who invests her clients’ money in business ventures. This is an essentially threeparty transaction (the broker acting as an intermediary between two parties trading stock) with a high level of information asymmetry, because most clients, lacking sufficient knowledge of financial markets, cannot ascertain the quality of the service. That is, they usually do not know whether the stock the broker bought for them will perform above, at, or below the market average. Because of this information asymmetry, the broker has ample opportunity to profiteer, either by not working hard enough to find the most profitable investment opportunities, by taking kickbacks for investing the clients’ money in questionable ventures, or by passing the broker’s own losses on the stock market on to the clients. Would the nonprofit status of this operation signal greater trustworthiness? Not necessarily. Assuming that profit is the sole motive of her operation, the advisor has vested interests in attracting as many clients as possible, for that would increase her income from the fees she charges for her services. Because the number of potential clients is finite, she invariably competes with other providers of similar services who strive to achieve the same goal. Therefore, we can legitimately claim that free market competition can signal trustworthiness. If the advisor breaches trust and delivers substandard services, her clients might not be in the position to know that, but her competitors, who have the sufficient

118

CHAPTER 5

knowledge of financial markets, certainly are. They also have an incentive to inform her clients, perhaps through advertising or direct contacts, that they are being cheated. This information would prompt her clients to take their business elsewhere, thus increasing her competitor’s chances for increasing their own clientele. Our hypothetical broker knows that and does everything to maintain her trustworthiness for fear of losing clients, and thus profits. We can further argue that if financial advisors were not motivated by profit, the competitive market mechanism could not prevent them from breaching the trust. Since the nonprofit providers, by definition, do not seek profits, they presumably would not mind losing customers either. Since it is precisely the expectation of profit and market competition that reduce information asymmetry and prevent the provider from breaching the trust, why then should we trust a nonprofit provider? It is therefore clear that if the nonprofit organizational form is a signal of trustworthiness as Hansmann claims, the mechanism of that signaling cannot be mere profit distribution constraint, or at least not that constraint alone. It is so, because not only competitive markets are capable of generating trust, but the nonprofit status can potentially prevent them from so doing. Thus, the nonprofit distribution constraint is at best insufficient to explain what it is exactly in the nonprofit organizational form that signals trust. Consider a solution to this difficulty that is based on the organizational uses and gratifications model introduced earlier in this book. The nonprofit, or rather social proximity organizational form, signals trustworthiness because it reduces information asymmetry by embedding the product or service in question in socially recognized knowledge structures. In other words, the organizational form whose status is socially recognized as serving a public benefit signals trust, because that public benefit status is generalized or transferred to the service or the product itself. Consequently, the service appears trustworthy by virtue of being delivered by a trustworthy provider. While the proposed solution is consistent with both Hansmann’s argument portraying nonprofit organizational form as a signal of trustworthiness and the status generalization theory discussed earlier in this chapter, it puts the argument advanced by the conventional economic theories on its head or, more accurately, back on its feet. As Chapter 2 showed, these theories present the property of the product itself, namely its nonexclusive and nonrival nature as the cause of the social organization of its production and delivery, namely via the nonprofit organizational from. To answer the question “what determines the institutional venue of product delivery?” the conventional economic approach assumes that market is the “natural” institutional venue, unless there is something in the character of the product that hinders the operations of the market. Since the nature of certain products is such that their vendors find it

ORGANIZATIONS AND EXPERT COMMODITY

119

difficult to exclude those who cannot pay from benefiting from the product, those products must be distributed by an alternative to the market venue. To be certain, this argument is somewhat simplified to highlight the causal model implicit in it, and all theories of nonprofit discussed in Chapter 2 recognize to a limited degree the role of social factors in that process. For example, the public good theory posits the existence of political constraints that prevent public authorities from producing certain types of public goods, whereas the contract failure model implicitly rests on the assumption that it is social factors that determine the number of parties to a transaction. Nonetheless, the role of social factors in the organization of economy is at best neglected by this theoretical tradition. What I’m proposing here is to bring such social factors to the forefront and claim them as the main explanatory variable. That, in effect, reverses the direction of the causal argument implicit in the conventional theories of nonprofit organizations, because it posits that it is the social organization of production and delivery that causes, at least in some instances, the nature (“public” or “private”) of the goods themselves. Specifically, it is the providers’ choice of the organizational venue for their services that determines the “public” (i.e., nonexcludable) or “private” (i.e., excludable) nature of that service. It is easy to see that such a reversal of the causal direction does not answer the question addressed by the conventional theories of nonprofit organizations. Because it is the institutional venue of service delivery that determines the “public” or “private” nature of that service rather than the other way around, we still need to explain what determines the choice of that institutional venue. The answer, informed by the organizational uses and gratifications approach, is “the interest of the organizational form’s users, that is, service providers and their clients.” Specifically, the information asymmetry problem faced by certain type of practitioners may jeopardize successful marketing of their professional services. It is, therefore, in these providers’ best interest to reduce that asymmetry. Thus, the elective affinity between that occupational interest and the organizational form’s capacity to meet those interests is the factor that explains the choice of organizational venue, assuming of course such a choice is available. It needs to be emphasized that information asymmetry is not a property of some abstract “goods” or “transactions,” but a relationship between real people occupying different places in the social organization of production. It is the product of the division of expert labor that separates experts from laymen, and implies a system of property rights protecting interests of occupational groups. It is also a function of social-geographicaldistribution of knowledge, technology, and organizational forms together with institutional factors (such as political or military power, or the control of the means of production and wealth)

120

CHAPTER 5

that affected such distribution as well as international transfers of these resources. The key element of the proposed explanation of the choice of organizational form is the existence of elective affinity between that form and occupational interests of service providers. The social status of that organizational form that includes serving public benefits can be generalized to specific products, which the organization delivers. Calling these products “public goods” creates the bond of trust between the practitioner and her clientele and increases the perceived value of that product. That, in turn, serves the interests of the practitioner because it helps her to reduce the information asymmetry problem. To empirically demonstrate the existence of such and affinity that affects the providers’ choice of organizational venues, I take a two-pronged strategy that is linked to the available data sources. First, I examine the KLON data to find out if the need for legitimating certain types of services can be statistically linked to the choice of organizational venues signaling different levels of trust. Next, I closely examine the contents of the interviews I conducted for this project to find examples of differential usage of the nonprofit organizational forms by service providers facing different types of obstacles in implementing their services in the Polish context. Both strategies hinge on an important assumption that practitioners can actually choose different organizational form for their service. Such an assumption seems plausible in the Polish context. The providers I interviewed could choose between at least two venues. Most of them could choose between establishing a social proximity organizations and a for-profit business firm, especially that in many instances similar services were already provided on a commercial basis (e.g., hippo-therapy, herbal remedies, assistance to Alzheimer’s patients). In a few instances the choice was also between a social proximity form and the inclusion of the service into the program of a relevant public agency. For example, the post-mastectomy therapy could have been a part of the treatment offered by the Oncology Center, especially because its founder occupied a high-ranking position at the center. The same holds for group therapy-it could have been a part of the program of the Psychiatric Clinic at the Medical Academy Hospital. Since the analysis of qualitative data is a fairly complex task, I devoted a separate chapter to it (Chapter 7). Here, we will focus on the choice of organizational forms as it is revealed by the KLON data. Let us recall our previous discussion, in connection with the results in Figure 5.1, about levels of information asymmetry in different types of service fields and levels of legitimacy of certain organizational models. To reiterate, healthcare agencies represent, on average, a higher level of information asym-

ORGANIZATIONS AND EXPERT COMMODITY

121

metry due to specialized knowledge and technological innovation than either social service or income maintenance organizations. Consequently, the former have a greater need for using the organizational forms perceived as more legitimate to bridge the information gap. Since domestic organizational forms are perceived as more familiar (and thus legitimate) than either foreign or idiosyncratic organizational models, we can expect these forms to be used more frequently in the health services field. With that in mind, let us examine a connection between the service field, representing a proxy for varying degree of information asymmetry and thus need for legitimation, and the presence of organizational characteristics that denote the public benefit status of the organization. As previously covered in this chapter, the public benefit status is conveyed by certain “status cues” or organizational features that are commonly associated with that status. Hansmann (1987) suggested the legal status implying constraint on profit distribution is one such status cue, and I added voluntary contributions of time and money, serving broad segments of the population, and special relations with public authorities to that list. The presence or absence of these status indicators in the behavior of organizations listed in the KLON database can be determined from the responses to the following: whether the organization encourages volunteer participation in its activities, whether the organization is interested in popularizing and expanding its services, and whether the organization is cooperating with public authorities. The connection between the public benefit status and efforts to expand the service is apparent. If the providers wanted to serve only a narrow, special interest or elite group, as the heterogeneity theory suggests (see Chapter 2), then they would avoid expanding the availability of that service, because expansion would decrease the value of benefits for the target group. The analysis of the qualitative data will show that those providers who targeted their service for the selected few (e.g. “HomoHomini Frater,” Case # 9) explicitly denied they served any public purpose. The requirement to volunteer is another indicator of the public benefit status mainly because volunteering is widely perceived in Poland and elsewhere as a form of public service. Let us recall from Chapter 3 that selfless work to benefit the community was a traditional value of the progressive intelligentsia, not only expressed in popular literature, but also emphasized in school curricula, as students were routinely required to volunteer at various community projects. Finally, cooperation with public authorities can be an unmistakable signal that an organization serves a legitimate public purpose. In the Polish context, such cooperation can take several forms. One such form is receiving public assistance, either small cash grants or more frequently, support such as permis-

122

CHAPTER 5

sion to use office facilities. Service contracts are a new form of cooperation. Prior to 1989, the law generally prohibited private service providers from entering into contracts with public agencies. This changed in 1992 when the Council of Ministers passed a resolution that allowed public agencies to purchase certain kinds of services, among other health and social assistance, from nonprofit organizations (Les, 1994). Consequently, many nonprofit service providers sought public contracts (see the next chapter). Another important form of cooperation is advocacy on behalf of the social groups whose needs the organization serves. In fact, several organizations I studied for this project (including the “Patronage,” Case #7, and the Private Healthcare Foundation, Case #13) have established regular venues of communication with government agencies to provide input in public policy decisions, while others sought to establish such venues (Alzheimer’s Association, Case #3, the theater, Case #6). Again, this issue will be explored in greater depth later in this book. For now, suffice it to say that SPORGs in Poland often see their cooperation with public authorities as a vehicle for legitimizing their operations. I did not use the fee requirement as a marker of the nonprofit status for two reasons. First, only a relatively small number of agencies (18%) reported levying some sort of fees for their services. But more important, a fee requirement is not necessarily contradictory with the public benefit status. These fees are usually below the actual cost of the service, and they are often reduced or waived in cases of financial hardship. Moreover, some organizations institute nominal fees (also waived in cases of financial hardship) to secure the clients’ commitment to keep the scheduled appointments. Instituting nominal fees reduces the problem of broken appointments, thus allowing better utilization of scarce organizational resources (author’s interviews, source #2). In that light, the fee requirement would be antithetical to the public benefit status only if it effectively excluded those who are unable to pay from receiving a service, and that generally is not the case of Polish SPORGs. Since the information whether an agency excludes the unable to pay client was not available from the KLON data, fee requirement alone is an insufficient indicator of the public benefit status for the purpose of this inquiry. As we have argued, health service agencies generally have a greater need for legitimizing their services than other service providers. Healthcare services require a higher level of expertise, which in turn creates information asymmetry between the provider and the recipient. We can thus expect that agencies in this service field will be more likely to signal their public benefit status to create trust and bridge the information gap. Figure 5.2 below shows the effects of the service field on the requirement of voluntary participation in exchange for a service, the cooperation with public authorities, and the efforts to serve broad segments of the public. The latter

ORGANlZATIONSAND EXPERT COMMODITY

Attribute

SOURCE: KLON, 1993

123

Figure 5.2. Effects of service Field on usage of Public Benefits Attributes. *Statistical, significance, Pearson Chi 2, p < 0.01 **Statistical, significance, Pearson Chi2, p < 0.005

124

CHAPTER 5

was measured as the percent of agencies that reported efforts to attract new clients and to disseminate information about the service to general public. As expected, health service agencies are more likely to require volunteer participation, attract new clients, and disseminate information to general public than organizations in other service fields. They also are more likely to cooperate with public authorities than agencies whose services are less dependent on specialized expert knowledge. These findings are consistent with the organizational uses and gratifications hypothesis that the public benefit status of SPORGs is used by practitioners as a “marketing device” to reduce information asymmetry problem that affects their services. To summarize, this chapter introduced a model of professional behavior that explains why professional service producers in Poland established and actively participated in social proximity organizations. The key element of that explanation is the elective affinity between professional interests and the capability of the SPORG organizational form to overcome information asymmetry associated with their professional commodity Public trust is an important element of the marketing of a professional service. The potential recipients must be convinced that the expert treatment can be trusted as a sound and an effective solution of a practical problem. They must also have an incentive to choose that treatment over other alternatives— that is, they must believe it is a better value than either competing forms of treatment or receiving no treatment at all. Without those trust and value, a professional commodity is likely to fail on the market because mistrust will lead to insufficient demand, as the anecdote of rat-ointment clearly illustrates. Social proximity organizations can be a useful tool in the marketing of a professional commodity through the process known as status generalization. It is a process whereby the perceived properties of the agent are transferred or attributed to his or her actions. Following Hansmann’s insights I argued that the same process applies when the agent is a social proximity organization. Social proximity organizations have two analytically separable properties that are essential for a successful marketing of a professional service. First it is because they are organizations—that is, social entities having a greater degree of permanence, quality control, and official recognition of its activities than solo practitioners. Since potential recipients do not have knowledge necessary to judge the effectiveness of an expert remedy, especially a novel one, they need some form of assurance that the proposed treatment is sound and trustworthy. The choice of formal organization over a solo practice creates such assurance through status generalization, that is, attributing the properties of the organization to the service it delivers. Second, SPORGs are commonly perceived as agents serving the public’s benefit. Consequently, the SPORG status acts as an indicator that the service

ORGANIZATIONS AND EXPERT COMMODITY

125

itself is a form of public benefit, that is, it is trustworthy and provides value. Again the process at work here is status generalization that transfers the perceived properties of the agents on the perceived properties of their actions. This causal connection between the commodity and the mode of its production is directly opposite to that implicit in conventional economic theories of nonprofit organization. Rather than viewing the supposedly natural properties of the commodity (i.e., its nonexcludable and nonrival nature) as the principal determinant of the mode of its production, I argue that it is the other way around, at least in the cases I studied. It is the social form of production and delivery that determines whether the good is considered “public” or “private” in a particular social context. The implications of these findings go beyond the rather narrow scope of the nonprofit or voluntary sector research. They suggest a far greater impact of institutionalized social norms and expectations on economic activities that many policy makers in that part of the world believed. The implementation of the central planning system by a government fiat in 1945, and the “shock therapy” pushed in a similar fashion by neoliberal politicians who aim to replace central planning with markets share the same implicit assumption that the organization of the economy is like industrial machinery. The replacement of the old and inefficient inventory with the more modern and presumably more efficient equipment is all that is needed to reform a society. Since people will immediately recognize the benefits of the new system, they will quickly embrace it and change their old ways and rules of behavior accordingly. Innovation does not come that easily. Information asymmetry runs on many levels in society and affects not just doctors, but other public figures as well. Doctors and healthcare workers are one of the most trusted groups. Public mistrust they experience is thus just a tip of an iceberg of the public mistrust of politicians, administrators, and self-proclaimed reformers. Because of this information asymmetry problem, people often view technological or organizational innovation with skepticism and suspicion. To overcome that suspicion, the proponents of the novel form must convince the public about the sincerity of their intentions and the merits of their innovation. As we have just learned, one way of accomplishing that is “wrapping,” so to speak, the innovation into an old and familiar organizational form. To paraphrase this book’s opening passage, this is the process of “conjuring up the spirits of the past to the service and borrowing from them names, battle cries and costumes in order to present the new scene of world history in this time-honoured disguise and this borrowed language” (Marx, [1852], 1987, p 15). Indeed, social proximity organizations can be a valuable policy tool that facilitates the implementation of reforms. They can serve as “demonstration projects” that introduce novel political, social, and economic institutions in a way that is more trusted than either government fiat or market “rationality.”

CHAPTER 5

126

NOTES 1 2

3

4

5

6

For example, in Polish, high school graduation is called the “maturity exam” [egzamin dojrzalosci or matura], which clearly defines this event as a rite of passage to adulthood. The problem of in-kind assistance became the subject of a public debate in 1986, when the Polish government’s spokesperson, in a gesture designed to embarrass the Reagan administration, offered a shipment of blankets to New York City homeless. According to a public opinion poll (CBOS, 1994), this incident stirred much controversy in Poland. Yet, the respondents generally agreed that offering such assistance to a developed country (most Poles also view their own country as such, contrasting it to the “Third World”) was degrading or insulting to the recipient, regardless of whether they approved or disapproved of the political motives behind the incident itself. The demarcation line between healthcare and social services is blurred in Poland, especially because both fall under the single jurisdiction of the Ministry of Health and Social Services. For this study, organizations working to correct problems related mainly to involuntary bodily dysfunction (such as permanent or temporary disability, illness, or mental disorder) were classified under healthcare. Agencies aiming largely at behavior modification (e.g., substance abuse counseling) or providing economic or emotional support for people in difficult life situations (poverty, unemployment, abuse, truancy, unwanted pregnancy, or emotional stress) were classified as social services. This is supported by the regression model of the organizational births in each of Poland’s 49 prefectures (Table 3.3). As discussed in Chapter 3, 1989 was the turning point in Poland’s reform, marked by sweeping legal and political changes that officially ended the central planning era. Nearly 60% of all organizations in the KLON database were established in 1989 or later, and most of the entities existing before that date were substantially restructured or dissolved. Therefore, these older organizations can be considered the preexisting resource base, providing “building blocks” for the newly formed agencies. The introduction of the size of urban population to the regression equation was designed to account for other types of resources, mostly human and cultural, available in the prefecture. This regression model of post-1989 organizational birth rate accounted for nearly 93% of variance (adjusted R 2 = 0.929; N = 49). The net effect of preexisting organizational resources was 2.1 newly created agencies per one preexisting agency (unstandardized coefficient, p < 0.01). The net effect of urban population was 0.008 newly created agency per 1,000 urban population (unstandardized coefficient, p < 0.05). These results support the resource dependency hypothesis in the Polish context. In substantive terms, the organizations from the central planning era frequently served as “building blocks” of newly created entities, and this explains the overall high incidence (but not the variations among service areas!) of domestic models reported in Table 3.2. In sociological literature, “socially constructed” denotes a set of arbitrary (i.e., not determined solely by material characteristics) beliefs that most members of a given society a priori consider valid and true without the need for further proof. For example, certain gender behavior patterns, such as affection by females toward children or aggressiveness among males, are socially constructed, because a member of a particular gender group is a priori expected to behave that way, regardless of his or her willingness or ability to do so. By contrast, the ability to bear or conceive a child is not socially constructed, because it is determined by human physiology, which is independent] of any social norms or beliefs. For a critical evaluation of financial market transactions, see Henwood (1997).

Chapter

6

Organizations and Social Processing of Information SOCIAL SCHEMATA AND THE “INFORMATION GLUT” We have hitherto established there is an elective affinity between professional interests and the social organization of the production and distribution of professional commodity. In other words, some organizational forms serve the professional interests better than other forms. The difference lies in that these organizational forms can signal to the “outsiders,” the clients, the authorities, and other occupational groups certain characteristics of the professional service itself, such as its trustworthiness, soundness, and effectiveness. These signals reduce information asymmetry in instances when the “outsiders” have no other means of ascertaining the quality of that service. It follows that the providers of services who encounter the information asymmetry problem prefer an organizational form that can most effectively alleviate this problem. In the preceding chapter we provided empirical evidence that formally organized entities enjoying a public benefit status signal trustworthiness that can be generalized on the services they provide. In presenting this evidence, I made an assumption that different organizational models and different forms or organizational behavior can be interpreted as more trustworthy. Now we need to establish that the assumed connection between the organizational form and the capacity to establish trust that reduces information asymmetry indeed exists in the minds of the service providers, not only in the mind of this researcher (and it is hoped, his readers). The evidence that such a connection exists is buried in information I gathered from interviewing selected service providers. After all, they are the definitive authority on what is really in their minds. To show this connection, we must show levels of information asymmetry are associated with different uses 127

128

CHAPTER 6

of the SPORG form, as the organizational uses and gratification model holds. As previously argued, the level of information asymmetry depends on three factors: nature of professional commodity, the challenges it encounters, and the occupational status of those who introduce the innovation vis a vis the statuses of other stakeholders, especially competitors and adversaries. It follows that we need to link these three factors to different uses of the SPORG organizational form. The question is, however, what should we be looking for in the informants’ narratives? The different challenges the providers face can be defined with relative ease. In Chapter 4, I showed that the sources, who represented different organizations, reported varying kinds and levels of opposition their services encountered in the Polish context. I also identified the differences professional status of these providers as well as their relative position vis a vis other occupational groups. But how can we define various uses of the organizational form, as they appear in the source’s descriptions of their actual work and planned courses of action? Before we can consider the interview data, we need to develop analytical tools that will help us identify different uses of organizational forms, especially SPORGs. The proposition that organizational forms can be used by people to suit their specific interests and needs (the organizational uses and gratifications hypothesis) is centrally important to the argument proposed here. For this reason, identifying those potential uses and gratifications requires more than a cursory mention, and this entire chapter is dedicated to that task. Many students of organizational behavior agree that organizations are the means of altering the costs of transactions, or exchanges of goods and services between people. Our discussion of the debate of the role of organizations in economic behavior (Chapter 1) revealed two mechanisms through which organizations can alter transaction costs. One is formal organizational structure, it can reduce uncertainty, information asymmetry, need for monitoring costs and other transaction-related costs by subjecting transactions to standard rules, procedures and formal administrative supervision. However, formal organizational structure can also impose costs of its own, such as incompetence and self-serving behavior of the supervisory staff, or rigidity in adapting to changing environments to name a few. The other mechanism of transaction cost reduction is social proximity, or shared values and expectations about the proper rules of conduct and social networks that spread such expectations and facilitate contacts among individuals, and informally sanction misbehavior. Social proximity reduces transaction costs in two ways. First, it reduces information asymmetry by providing socially recognized knowledge structures or the conventional means of informing the stakeholder what they can expect from a particular relationship, ex-

SOCIAL PROCESSING OF INFORMATION

129

change, or situation. The existence of such informal yet conventionally recognized knowledge structures reduces the need for formal monitoring that is indispensable for large bureaucracies. Second, it mobilizes social resources, such as dedication or voluntarism, that would not be available under different circumstances (i.e., bureaucracies and market transactions). Systematic reliance on social proximity, social networks, connections, and shared values is the distinctive characteristic of the organizational form that distinguishes itself from two formal institutional sectors of modern society: government and profit-seeking corporations. For that reason, I called that form social proximity organization (SPORG). I accept as a given that social proximity can effectively reduce, under most circumstances, the objective costs that plague transactions between strangers. People who do business together and form close-knit social circles are also more likely to cooperate, volunteer, or exchange favors, and are less likely to cheat or litigate. This translates into measurable savings in their business endeavors. In other words, social proximity mobilizes resources without paying the market price for their usage and without the need for formal contracts and their enforcement. This translates into real savings or objective cost reduction. But it is also true that people who are in close proximity often develop more positive attitudes toward each other, tend to view each other’s actions in a more favorable light, be more forgiving and less judgmental to each other than they are toward strangers. Everyday life provides innumerable examples of that. We praise the cake our coworker shares with us, even though this same cake may taste like wax when served in the cafeteria. We applaud the song our musician friend plays in a local pub, but we might quickly change the station if the same song were played on the radio. The opposite may be true as well, and we may see the actions of close friends and relations as being more harmful than those of strangers. A minor public argument between spouses or close friends may trigger the perception of betrayal, while a similar encounter between people who barely know each other might be considered insignificant. Layoffs in a company that enjoyed close ties with a local community (cf. General Motors in Flint, Michigan) can trigger more bitter feelings than a similar action by a company without such ties (cf. the highly volatile market of the computer industry). The examples illustrate how our perception of events or actions can be substantially affected by our relationship to people involved in them, even though the objective qualities of those events or actions remain more or less unchanged. Stated differently, social proximity affects not only objective transaction costs but also human perception of those costs. We tend to perceive the actions of people who are close to us as having a different value from those of people who are distant. What changes here is not the objective qualities of the

130

CHAPTER 6

action itself, but our expectations toward it that social proximity evokes. Those expectations may lead us to accept something we would otherwise reject, or to reject something we may have accepted after a detached examination. Expectations, therefore, triggered by culturally defined signals or cues, can play a decisive role in the economic behavior. Let us briefly return to the rat ointment anecdote in Chapter 4. The story tells us that although the unusual commodity was selling quite well among urban customers, the peasants perceived it as worthless. This difference can be attributed to the effects of social proximity on which the vendor relies while peddling his merchandise. Being a part of the urban culture, he knows urbanites often want to solve a dirty problem while keeping their hands clean. They would like to get rid of the rat problem, but not at the price of killing the pesky rodents with their bare hands. The vendor offers them a solution that solves both problems simultaneously. He sells not just rat poison, but “clean hands” as well. However, this marketing strategy was unsuccessful with a person outside the vendor’s social proximity circles. First, the peasant saw no value in having “clean hands,” because the essence of farming is to get one’s hands dirty, and slaughtering animals is an ordinary part of everyday rural life. So the benefit of having “clean hands” was absent from the peasant‘s perception of the ointment’s value. Furthermore, the vendor’s effort to imbue his merchandise with another culturally defined benefit—the charm of modern technology—also failed, because that cultural reference had quite a different connotation in the peasant’s subculture. Consequently, the peasant could only get a fraction of the benefits the urban buyers were receiving, but he had to pay the same price. No wonder he refused to buy. This anecdote focuses our attention on the role of subjective perceptions in economic behavior. The traditional rational-choice model, postulating that social actors select the means that best suit their interests and goals, implies the “omniscient spectator” who takes into account all known factors that may affect the value of the means in question. The critics (March and Simon, 1958; Simon, 1972) pointed out the “omniscient spectator” assumption is unrealistic, because in most real life situations, social actors face time and resource constraints that prevent them from obtaining all information necessary to make a fully informed decision. Consequently, people are forced to improvise using only those pieces of information that are readily available to them. Making decisions based on incomplete information is known in literature as the “bounded rationality” condition. Let us bring this argument one step further and consider a situation when the limited-information or “bounded rationality” condition applies to evaluat-

SOCIAL PROCESSING OF INFORMATION

131

ing information itself, rather than to choosing a course of action based on that information. This is the case of a rational actor who needs to decide which information is relevant for choosing the most beneficial course of action. In other words, the choice she faces is not between alternative courses of action, but between alternative bits of information on which her choice of those courses of action is to be made. The question that immediately follows is: Why would a rational actor want to consciously limit the information available to her by a priori deeming some bits of it as relevant while other as not? Is more information always better than less information? This question was addressed by the renowned Argentinean fiction writer Jorge Luis Borges (1964), who envisioned such a full information model as the Library of Babel filled with books containing all possible combinations of the 24 letters of the alphabet. Since the number of books in that hypothetical library was infinite, the Library contained all texts that could be possibly written. Thus, hidden in the Library were volumes containing information about all possible events that each human being experienced in the past, or were to experience in the future. Those prophetic volumes, or Vindications, could predict the future of every person on Earth and thus were of invaluable importance in making life decisions. The only problem was to locate them. Thus, [w]hen it was proclaimed that the Library contained all books, the first impression was one of extravagant happiness. All men felt themselves to be masters of an intact and secret treasure. There was no personal or world problem whose eloquent solution did not exist in some [section of the Library] . . . Thousands of the greedy abandoned their sweet native [dwellings] and rushed up the stairways, urged on by the vain intention of finding their Vindication. These pilgrims disputed in the narrow corridors, proffered dark curses, strangled each other on the divine stairways, flung the deceptive books into the air shafts, met their death cast down in a similar fashion . . . Others went mad . . . The Vindications exist . . . but the searchers did not remember that the possibility of man’s finding his Vindication . . . can be computed as zero. (Borges, 1964, pp. 54–55)

The story tells us that consequences of a “full information model” for human behavior can be stark, indeed. The cost of filtering out all noise to find only what is relevant could be infinitely high and thus preclude the possibility of any rational action at all. An alternative to the “omniscient rationality” approach is rooted in Immanuel Kant’s ([1783], 1950) philosophy of a priori forms that govern human perception and reasoning. It emphasizes the role of a priori cognitive structures that help select and organize the empirical “material” coming to human

132

CHAPTER 6

consciousness through sensual perceptions. Those mechanisms are known in social–psychological literature as cognitive schemata or social representations (for a literature review and discussion see Markus and Zajonc, 1985; Augoustinos and Innes, 1990). Schemata act as “ready-made” forms that filter out information considered irrelevant. They focus on bits of information considered crucial and helps to reconstruct information that “ought to be there” but for some reason is missing. A simple illustration of that process is the act of reading someone else’s handwriting. The empirical material at hand is a piece of paper that contains ink markings. Some of those markings could be simply doodles or blotches while others are letters and words. The reader will automatically filter out all irrelevant doodles and blotches focusing exclusively on the markings that represent letters. These are the most salient, or relevant, bits of information that carry a meaningful message. Suppose, furthermore, our reader, who already figured out the text he is deciphering describes the love affair of a woman named Mary, encounters the following sequence of signs “Ma@y i@ wr@@@@g a le@@er @@ her bo@f@@@nd,” where @ represents scribbles that cannot be deciphered. He automatically assumes the scribbles are letters from a meaningful English sentence. Consequently, they must fall into a certain preordained sequence of words: subject (a noun), verb (including an auxiliary verb), direct object (a noun, preceded by an article), and indirect object (that could be a preposition and a noun). Based on this knowledge and the clues provided by the signs he is able to decipher, he can easily reconstruct the sentence: “Mary is writing a letter to her boyfriend.” The importance of schemata in human perception can become even more apparent when we contrast the process of human reading with the computer technology known as optic character recognition (OCR). OCR translates printed text into ASCII codes, which are used in electronic text editors. In the situation just described, OCR would fail twice. First, it would be unable to separate doodles from letters. Second, it would not be able to interpret the undecipherable characters. Clearly, the machine’s failure to read a simple English sentence is rooted in its limited ability to selectively filter out the irrelevant information, and to reconstruct the missing empirical clues. Following this discussion, the proposition that limited information can be more valuable in decisionmaking than full information is more plausible than it initially appeared. Selecting relevant information is an integral part of rational decision making. The question is, however, how can we decide what constitutes relevant information without considering all available options? The answer to this was hinted by the sociologist Emile Durkheim ([1915], 1965) who addressed the problem implicit in Kant’s notion of a priori forms

SOCIAL PROCESSING INFORMATION

133

that organize our information processing: What is the origin of such forms? How are they themselves formed in the human mind? Durkheim argued these forms (or schemata) are shaped by the organization of society or social institutions that direct human behavior and thinking from birth to death. Following this lead, I propose a model to help describe schemata people may use to identify information they deem relevant for evaluating goods and services. It is hoped this model will help in analyzing the material I gathered in the interviews conducted for this study. The key element of the proposed model is the claim that rather than attempting to get the maximum volume of information possible, a rational actor uses information selectively, by focusing on some meaningful chunks of it, while systematically ignoring other information. Moreover, she may perceive some elements she expects to be there as already there, but she would probably miss them in the absence of that expectation. As a result of this a priori selection process, not only a rather limited range of information is presumed relevant, but also information that is “not quite there” (either missing altogether or ambiguous) enters the decisionmaking process. In contrast to the traditional rational choice model, which focuses on choosing the courses of action, the model I propose here adds a new element: the choice of information on which the choice of action is made. This choice of information, in turn, is guided by social schemata, or socially defined expectations of what information is relevant and what is not. The relevance of information is decided by social factors that involve the decisionmaker’s values, beliefs, and social connections. These affect the considerations of whose interests ought to be taken into account, what are those interests, and what as the time duration for making these considerations. To illustrate this, here is a simple example: an American who decides to buy an expensive car may take into account the impact the purchase will have on the his spouse and children, but not necessarily his siblings or parents. Moreover, he may consider the effect that decision will have on his bank account’s current balance, but not necessarily on his, or his family’s, financial situation one year after the purchase. However, in societies that put a greater value on extended family ties and long range planning, the long term effect of a purchase like this and its impact on distant relatives or even community members is more likely to be counted. That perspective may totally change the perceived value of the purchased item and thus lead to a different decision. The inclusion or exclusion of information is a process that can be described by two dimensions. The first dimension represents the time span considered to be a legitimate framework for taking into account different factors and outcomes of a decision or action. It may range from short, such as expectations of immediate gratification, to long that may include years or even generations.

134

CHAPTER 6

The second dimension defines whose interests are to be considered when making a decision or evaluation a possible course of action. This dimension defines a scope of legitimate stakeholders in a decision and its outcomes. Again, it may vary from narrow, including only a single individual (such as the decisionmaker himself) to broad, including a family, a group of people, a community, a nation, or even all of humanity. These two dimensions are represented in Figure 5.1 as the horizontal and vertical axes that intersect each other. The horizontal axis in Figure 6.1 represents the social time span while the vertical axis represents the social scope of the information deemed relevant in a particular decision. I used the qualifier “social” to emphasize that each of these dimensions reflects the culturally defined and subjectively perceived life events and relations among individuals, rather than objective physical quantities measured by the clock, the calendar, or the yardstick. Social time and social space do not have to be continuous. They may involve discrete, socially meaningful “chunks” of vastly different duration, such as “now,” “immediate future,” “life course,” “generations,” as well as socially meaningful groupings, such as “family,” “neighborhood,” “circle of friends,” “nation,” “us,” them,” and so forth (for a discussion of social organization of time and space see Zerubavel, 1981, and 1991). In Figure 6.1, social time ranges from short, which I define as a “moment” to long, defined as a “lifespan.” In the same vein, social scope ranges from narrow or “individual” to broad or “community.” For a reason that will soon become apparent, the diagram presents these two dimensions separately for costs and for benefits. The intersection of these two dimensions identifies four different social schemata that define the range of a decision’s consequences on various individuals that can be considered socially relevant deciding the value of a course of action. The situational schema (quadrant 1 on the diagram) represents a range that is limited in time to the immediate “present” and in scope to a single individual. This means that only the immediate costs or the immediate benefits concerning a single individual “here and now” are considered as relevant. An example that uses that schema is a “one-night stand” relationship. A person engaging in this behavior typically considers only the immediate gratification he or she expects to get at the moment, while disregarding long term consequences and feelings of family and friends, or even the feelings of his or her partner. In other words, the only information deemed relevant for a decision whether to enter such a relationship is “here and now,” while broader consequences are simply disregarded as unimportant. The subsequent schemata represent broadening, along these two dimensions, the extent of information deemed relevant in decisionmaking. Thus, schema #2 (which I call cumulative experience) involves considering the long-

SOCIAL PROCESSING OF INFORMATION

135

SOCIAL SCOPE: COMMUNITY

INDIVIDUAL SOCIAL TIME: LIFE-SPAN

MOMENT

LIFE-SPAN

Figure 6.1. Cost – Benefit Schemata. Quadrants: (1) Situational schema: scope- and time-bounded; (2) Cumulative experience schema: scope-bounded; time-omniscient; (3) Cumulative records schema: scope-omniscient; time-bounded; (4) Communal schema: scope- and time-omniscient. Arcs: Broken line: costs and benefits of a commercial, for-profit, service. Solid line: costs and benefits of a nonprofit service. Areas under the curve represent the “weights” of costs and benefits of services.

term effect a decision may have on the actor’s life, but ignores its social consequences. For example, a young man may decide to join the army, because his own career is the dominant factor he considers in his decision. He perceives the military only as an opportunity to earn a scholarship or to climb a career ladder, but he ignores how his decision will affect his relationship with people around him. Consequently, he fails to account for the “social cost” of his military service, such as being ordered to kill another human being or taking part in an imperialist adventure that undermines the sovereignty of other nations. Schema #3 (cumulative records) is a “snapshot view” of a large group of people, a community, an organization, or the entire society that does not consider the time dimension. Such view is typically represented by cross-sectional surveys that weigh multiple “records” (e.g., opinions of many individuals) against each other, while ignoring their history. Thus, the president of a large organization or a country may use a survey to find the solution to a problem that would satisfy the wishes of all, or perhaps the majority, of employees or constituents, without considering how these wishes developed, or how they

136

CHAPTER 6

will change in the future. The opinions recorded in a survey might be convictions held over a lifespan, or ephemeral impressions affected by current events or media reports, but the cumulative-records schema does not take the time dimension into account. Finally, schema #4 (community) comes closest to the omniscient, fullinformation perspective, because it accounts for both spatial and temporal dimensions. An example of this frame is Aristotle’s concept of ideal polity that allows every citizen to develop his or her full “human potential” over the lifespan. A similar perspective can also be found in the human relations approach to organization management (Perrow, 1986, p. 98) that is based on Abraham Maslow’s concept of the hierarchy of needs. From that perspective, an organization can be viewed as a structured arrangement of people (the social dimension) such that it reflects each person’s stage in the development of his or her hierarchically arranged psychological needs, but also allows further development of needs of a higher order (the time dimension). Thus, personnel decisions in such a hypothetical organization take into account both, the maximum possible number of people, and the maximum possible (lifespan) duration. It is easy to see that broadening the span or the scope of the schema results in expanding the range of information deemed relevant in considering the costs or benefits of a particular decision or actions. In the same vein, narrowing the span or the scope limits the relevant information. This process is similar to the use of photographic lenses in a camera. The wider the lens, the broader the scope, and the more elements are included in the frame of the picture. A narrow telephoto lens, by contrast, crops most background details out of the picture but includes only a few details. Moreover, the schema used to count the benefits does not have to have the same range as that used to count the costs of a venture. The diagram in Figure 6.1 conveys that property by two separate areas: one representing costs (the left-hand side) and the other one representing benefits (the right-hand side). This distinction is absolutely essential for the entire discussion that follows, because it implies that using one schema to count costs and a different schema to count benefits may result in vastly different perceptions of the same action’s value. For example, using a broad schema to count the relevant benefits and a narrow schema to count the relevant costs will likely result in a favorable perception of a given alternative. When that is reversed and the narrow schema governs counting the benefits and a broad schema guides counting the benefits, the same alternative will appear quite unattractive. It is therefore obvious that people will have different elective affinities to various sets of schemata to portray an action in which they have their stakes. The supporters will use the “1-, 4+” set (the numbers refer to the quadrants

SOCIAL PROCESSING OF INFORMATION

137

that in Figure 6.1 represent the scope and the span of the information used to count costs and benefits indicated, respectively, by the “–” and the “+” signs) to “maximize” its perceived benefits. The opponents, on the other hand, will use the “4 –, 1+” set to “maximize” the perceived costs.

ORGANIZATIONAL FORM AND COST–BENEFIT PERCEPTION The observation that people exaggerate or downplay the value of commodities or activities by selectively focusing on their beneficial or adverse consequences is common sense. Everyday life provides countless examples of such selective processes. A corporate merger resulting in considerable layoffs can be portrayed as either good or bad, depending whose interests are included and whose interests are excluded from consideration. By focusing on immediate payoffs to the stockholders and ignoring long term consequences of unemployment that affect predominantly the working class, that decision can appear as paragon of economic rationality. When we factor in the interests of the workers and dismiss the payoff to the stockholders on the grounds that their marginal value vis avis their accumulated wealth is relatively small, the same decision will appear as a paragon of shortsightedness and irrational greed. However, the value of the proposed model is that it offers a heuristic device that facilitates a systematic description and analysis of information processing patterns employed by human actors. Such a heuristic device will be useful in identifying different uses of the SPORG organizational form to alleviate the information asymmetry problem. Moreover, this model can help augment the conventional rational choice model by including in it social factors that affect the decisionmaking process (discussed in more detail in the concluding chapter). This organizational form can signal to the public the absence of certain costs was suggested by the transaction cost theory of nonprofit organizations (Hansmann, 1987; Ben-Ner and Van Hoomissen, 1993) reviewed in Chapter 2. Specifically, the legal form prohibiting the distribution of profit to owner–operator signals to the buyers of a certain type service a less costly alternative to the for-profit producers. But this theory failed to explore the interpretation of that signal may vary, depending on the needs and objectives of different stakeholders. Taking occupational interests and goals into consideration can bridge that gap and explain the attractiveness of the nonprofit, or rather social proximity, organizational form to various kinds of service producers, not just demand-side stakeholders. As implied by their name, social proximity organizations (SPORGs) conspicuously rely on shared norms, values and social connections among people

138

CHAPTER 6

involved in their work. These are not merely public relations images spelled out in formal mission statements, but properties embodied in the organizational behavior, that other organizational forms lack. Generally speaking, the production and distribution of a commercial service involves costs and benefits that, at least in principle, are shared more or less equally by all involved parties. This is so because, assuming the absence of coercion, all parties participating in a transaction must derive some benefit that warrants their participation, but they must also offer something in return to the other parties as a compensation for their participation in the exchange. On average, therefore, the sum of costs and the sum of benefits obtained in such a commercial exchange balance each other out. This is represented by the dotted semicircles in Figure 6.1, which indicates the costs and benefits are spread more or less equally among all parties directly involved in the transaction. Of course, in reality those costs and benefits do not have to be limited to the direct participants, as our example of buying a car (p. 133) suggests. The important thing is that costs and benefits of the parties that are not directly involved in a transaction are deemed irrelevant in the institution of the market. Consequently, they simply are not counted in market transactions. Social proximity organizations, in contrast, imply a quite different cost– benefit balance. First, they rely on volunteers—that is, people who contribute to the production process without their time being compensated at market value. The absence of remuneration visibly lowers the production cost, and this allows the transfer of the product to the buyer at a below-market price or no cost at all. Thus, the cost side is being reduced without the proportional reduction of the benefits, as compared to a commercial production of the same good (represented by the solid semicircle on the left-hand side of Figure 6.1). The absence of monetary rewards may create a cost–benefit imbalance for the producers, but that imbalance is offset by social rewards stemming from working for a public cause. The symbolic compensation involved here is quite similar to the symbolic compensation of the vendors we discussed earlier in this book: the “clean house” offered by the vacuum cleaner peddler (pp. 72–73), and “clean hands” sold by the rat ointment merchant. The difference lies in the process whereby these benefits are created. The “clean house” and “clean hands” are products of a sales pitch, whereas the “public benefit” originates in the recognized social status of the organization. Since SPORGs enjoy a public benefit status, this means that the benefits of their work are not limited, as in a commercial transaction, to people who are directly involved as buyers or sellers. Those benefits are extended in the following two dimensions. First, they include in a direct way those people who need the service but are unable to pay its full cost. Second, the benefits are extended, even if only in an indirect or a symbolic way, to an entire community

SOCIAL PROCESSING OF INFORMATION

139

or society (the so-called neighborhood effect). Just to give a simple example, job training or homeless shelters benefit not only those who need the assistance but cannot afford to pay for it, but in the long run the entire community by reducing unemployment, poverty, delinquency, and all the associated social ills. The availability of these services for few makes a community a more pleasant place for everyone. The framework for counting benefits of a SPORG is thus much wider than that of a commercial enterprise. It includes more people (a wider scope) and a long-term impact (a longer time span), which is represented by the solid semicircle on the right-hand side of Figure 6.1. For this reason, the perceived value of these services is greater than that of a similar service offered by a commercial vendor. In short, SPORGs not only embody the ideal of public service by relying on volunteer input and distributing their services to the entire community, but they also convey that ideal by their own organizational form. This ideal is the added value of the services they produce. The relationship between the tangible organizational behavior (such as the use of volunteers, or serving people in need) and its public benefit status is dialectical in nature. On the one hand, SPORGs owe their status to their humanitarian work: They serve tangible needs of the population, use volunteers, make their services available on the need rather than the means basis. They engage in the forms of organizational behavior that earns them their public benefit status. On the other hand, the public benefit status this organizational form enjoys is generalized or transferred on the specific activities, which by that virtue become public benefits. In that respect, SPORGS are modern “hierophanies” with magic-like properties of endowing the goods or services they produce with the power of public benefit. In cultural anthropology, hierophanies are physical manifestations of the sacred (Eliade, 1958). They are physical objects, landmarks or artifacts that enjoy a special status of incarnating spiritual forces because their natural properties, such as shapes, colors or behavior, show some resemblance to the spiritual force in question. Thus, here we come back to the earliest intuitions of the sacred values of plants— it is in virtue of its power, in virtue of what it expresses (which is something beyond itself), that the tree becomes a religious object. But this power is in fact validated by an ontology: if the tree is charged with sacred forces, it is because it is vertical, it grows, it loses its leaves and regains them and is thus regenerated (it “dies” and “rises”’ again) times without number, because it gives out latex, and so on. By simply being there (“’power”) and by its natural laws of development (“regeneration”), the tree re-enacts what, to the primitive understanding, is the whole cosmos. The tree can, of course, become a symbol of the universe, and in that form we find it in

140

CHAPTER 6 more developed civilizations; but to a primitive religious mind, the tree is the universe, and it is so because it reproduces it and as it were sums it up as well as “symbolizing” it. This [is the] notion of the “symbol,” by which symbols owe their validity to the fact that the reality they symbolize is embodied in them . . . (Eliade, 1958, p. 268–269, italics original)

The most important part of this description for our discussion is the dialectical relationship between visible object and abstract ideas. The abstract idea of spiritual power conceived by a “religious expert”—a shaman or a priest— may be difficult to grasp by the layman. This creates information asymmetry. To alleviate this problem, the expert must use forms of communication that can effectively appeal to the lay mind. The visual forms that can ostensibly demonstrate such spiritual power because their physical properties have some affinity or resemblance of that power becomes a natural candidate for such means of communication. A plant dying in the fall and coming back to life in the spring, a smoke-belching mountain, fire from the sky, or an act seemingly defying the laws of physics are more convincing manifestations of the sacred power than, say, theological speculations. In that process, not only do material objects become the representations of a spiritual power, but they become endowed with that power as well. Such is the essence of magic that involves manipulation of objects incarnating various spiritual powers. If the object incarnates a power of a beneficial or a harmful nature, using that object in a particular way is believed to bestow the beneficial or harmful effects of that power on the user. In his studies of the contemporary culture, Roland Barthes (1987) makes a similar argument, claiming that material objects often become manifestations of ideologies and embodiments of powers vested in them. Among numerous examples he cites advertising that uses the forms or shapes of commodities as manifestations of mental and psychic powers, and professional wrestling in which the bodies of the wrestlers become manifestations of conventional moral virtues or vices. In the same vein, students of modern organizations characterize them as “social symbols” or rituals that predetermine certain solutions to practical problems, sanctioned by the organizational culture (Meyer and Rowan, 1977). Organizations’ officers often lack sufficient information when making decisions, and consequently several alternatives may appear equally appealing to them, and a decision based on rational criteria requires additional information that may be expensive or difficult to obtain. In these situations, the actors base their decisions on such “nonrational,” considerations as adherence to the prescribed procedures, or following the example of others. However, after the decision has been made, it is ex-post-facto rationalized by the actors as the “best possible” alternative.

SOCIAL PROCESSING OF INFORMATION

141

For example, so-called risk management often includes the implementation of essentially ineffective contingency plans than cannot avert the negative consequences of the contingency they are supposed to avert. Such plans are a “hierophany” designed to convey the idea that the management takes its responsibilities seriously; it controls the situation; and the entire operation is thus safe and sound (Clarke, 1993a, 1993b). A well-known example includes emergency “preparedness” manuals and procedures on commercial flights. The effectiveness of those manuals and procedure in saving lives in real emergencies is close to nil. Their main function is to convey to passengers the idea that the aircraft is safe and the crew is in full control of the situation. Another example of hierophany-like organizational features involves stereotypical gender roles that both affect and are affected by the division of labor and power within the organization (Ferguson, 1984). The traditional stereotypes characterizing women as subservient, emotional caretakers enter the organizational culture in the form of preconceived notions about women’s job qualifications and their expected performance. As a result, not only are women assigned to less responsible, secretarial or clerical positions, but the concentration of women in such low ranking positions may further reinforce the existing gender stereo types. These examples illustrate that organizational forms, structures, and behavior play a much greater role in defining social perception of the nature and value of the products than meets the eye of the conventional economic wisdom. One way of exerting that influence is status generalization. An organization acquires a certain status by displaying conventional status cues, or salient properties or behavior that are conventionally interpreted as indicators of a particular social status. Such status indicators can range from ritualistic behavior, such as bogus safety precautions or token measures intended to show fairness in hiring and promotions, to displaying characteristics that are essential to its organizational form (e.g., using volunteers, or providing services to all who need them). This status, in turn, is generalized or transferred on virtually all actions and products of that organization. The logic of that process can be summarized as follows. We are implementing safety or fairness procedures, therefore we are a safe and fair organization. Since we are a safe and fair organization, all our actions and products are safe and fair. In the same vein, we are an organizational form that has the status of serving public benefit, therefore all we do serves public benefit. It thus follows that the “public good” status of a service is at least in part socially constructed by the public service status of the organizational venue of its production. Defining a service as a public benefit invokes a set of preconceived expectations or schemata that substantially increase its perceived value. We described

142

CHAPTER 6

this process as the expansion of social scope and social time that define the boundaries of interests that can be legitimately considered as beneficiaries of the service in question. In other words, SPORG organizational form is a signal that triggers a set of cognitive schemata that “maximize” the scope of perceived benefits while “minimizing” the scope of perceived costs. The dialectic embedded in the SPORG status can be instrumental in overcoming the problem of information asymmetry, because it communicates the message that the service has a value to society and thus can be accepted with confidence. For that reason, service providers have an interest in using this organizational form if they face information asymmetry problems. We can thus expect that the practitioners who use this organizational form to that end will use it to “minimize” the extent of perceived cost and “maximize” the extent of the perceived benefits of their service, as contrasted with other alternatives. Moreover, that use of the SPORG organizational form will vary with the level of information asymmetry and the type of challenges faced by the practitioners. With that in mind, let us return to the analysis of the interview data to examine the relationship between different needs for legitimation to overcome information asymmetry, and different usage of the SPORG form. As shown, the need for legitimation varies by the nature of the service, (i.e., how wide information asymmetry it involves) and the social milieu of its producers (i.e., their occupational status and opposition they face from other stakeholders). The task we now face is to identify different usage of interpretative schemata and see how they are linked to the SPORG organizational forms by the providers facing those different needs.

Chapter

7

Professional Service and Public Benefit Status If the organizational form can be used to legitimate an organization’s service by casting it as a public benefit, then we can expect different uses of that organizational form in that role, depending on the provider’s need for legitimacy. The need for legitimacy arises from the information asymmetry problem that affect professional services, the quality of which is unknown to potential clients, especially when the service is just being introduced to the market. In Chapter 4, we identified three factors that determine the extent of need to legitimize a novel expert service: nature of the service itself; kind of challenges it faces; and the professional status of the providers. To demonstrate the connection, or elective affinity between the need for legitimacy and the use of the organizational form to meet that need, we need to show that the greater the need for legitimacy, the heavier the use of the organizational form and the public benefit status affiliated with it. Because of the qualitative nature of the data we will be analyzing in this chapter, we must first construct a method of translating narrative information gathered in my interviews into measures indicating various levels of need for legitimacy and various levels of use of organizational form. We have already established (Chapters 4 and 5) that the need for legitimacy arises from information asymmetry characterizing professional services and the inadequacy of conventional measures of bridging that information gap. Such conventional measures typically include establishing a recognized professional status, embedding the service in the system of professions, or satisfying public expectations about the nature and outcomes of a professional treatment. To the degree to which any of those conventional measures cannot be applied in a particular situation, we can expect the persistence of information asymmetry and thus the need for alternative means of legitimation. Thus, the 143

144

CHAPTER 7

farther the service deviates from typical conditions of professional practice, the greater the information asymmetry, and the greater the need for alternative means of legitimation. To measure the use of organizational form as a means of legitimation, we employ the findings of Chapter 6 that different attributes of the organizational form act as different cognitive schemata for portraying costs and benefits of the organization’s activities. Specifically, the attributes associated with the public benefit status suggest a frame that takes into account a broad range of benefits while minimizing the costs (Figure 6.1). This typically involves portraying the organization’s activity as serving the general public rather than just the individuals who directly receive the service, or at least as serving the long-term interests of these individuals. It also involves minimizing the cost, mainly by emphasizing the use of volunteers and eschewing the profit motive. Thus, the heavier the use of the public benefit form, the greater the salience of cost minimizing and benefits maximizing schemata in the interview material. Our measurement of the need for legitimation derives from the practitioners’ reports of information asymmetry problems they experienced, which in turn were linked to the conditions affecting their occupational status or their position vis-à-vis other occupational groups. There are three broadly defined types of such problems. The first type takes the form of mistrust in the practitioners’ intent rather than their competence or skills. Patients often have preconceived ideas about treatment or its outcome that differ from what the standards professional practice call for. When the treatment they receive does not match their expectations, they may suspect the practitioner is deceiving them or is not committed to helping them. This problem affects recognized and respected professionals (physicians), who found their standard professional practice often may not fully meet the patient’s needs or expectations and for that reason is mistrusted. The second type of information asymmetry problem arises when some practitioners offer services that are outside their conventional boundaries of expertise. What is being questioned here is not the practitioner’s competence in general, but the application of that competence to a particular service area. This problem may be faced by “organic intellectuals”1 who use their skills and knowledge to solve some broad social problems in an innovative and unconventional way. Their efforts may encounter skepticism or mistrust, but generally do not face any strong opposition. The third type of information asymmetry is the perception that the practitioners who offer their services lack the necessary skills or knowledge to make that service effective. This group consists of paraprofessionals who lack a recognized occupational status and strive to accomplish two distinct but closely related goals. On the one hand, they aim to legitimize their innovative treat-

PROFESSIONAL SERVICE AND PUBLIC BENEFIT STATUS

145

ment, the nature of which is viewed as questionable by others. On the other hand, they want to establish themselves as recognized experts in that service area. Because of the unrecognized status of their occupation and the controversy surrounding their service, their endeavors face considerable opposition, especially from the providers of alternative services. It is clear the need for legitimacy varies among these three categories. At the least, we can expect that need to be the greatest in the third group of providers because of their lack of recognition, “underdog” status, and the controversial nature of their services. But the struggle for legitimation also depends on the nature of work done by these professionals or paraprofessionals. The need for a treatment of an incurable disease appeals to a different set of values than, say, an attempt to improve quality of individual life, or the attempt to modify the behavior of a “problem” group. In each case, elective affinities between the nature of professional work and the existing social norms and expectations require different types of claims to legitimacy, if those claims are to be believable and socially acceptable. With that in mind, we can hypothesize various uses of the SPORG organizational form and its attributes, especially the public benefit status, by these three groups of practitioners. Specifically, we should be able to discern similarities in using cost–benefit schemata (as illustrated in Figure 6.1) by service providers classified into the same information asymmetry problem category and differences in those uses among the three groups with problems. The following outline of these expected similarities and differences should give the reader a “roadmap” that highlights the analysis of the interview data in this chapter. The first group of practitioners (physicians working to improve the quality of their standard professional practice by making it more responsive to patients’ needs and expectations) used the SPORG form to reduce the perceived costs from to excessive professionalization. This cost did not necessarily involve professional salaries, but included factors such as the routinization of work, lack of personal relationship with patients, and insufficient concern for patient’s quality of life and emotional needs. All these factors contributed to the breach of trust that added to the perception of high personal costs of professional care. The SPORG form was used to lower that perceived cost, or disadvantage, by delegating some of the professional tasks to volunteers. No other group of practitioners in this study used a similar strategy, even though they also relied on volunteer input. Paraprofessionals striving for public recognition of their skills and occupational status (the third group of service providers) deliberately kept volunteers out of the service production and limited their input to support activities that were clearly separated from the service functions.

I46

CHAPTER 7

Although the perceived high cost of professionalization was a problem peculiar to conventional medicine, the challenge faced by practitioners working in other service fields was of a different variety, namely the perception of low benefit ensuing from the services being offered. Accordingly, these service providers used the SPORG form to alter that perception and make their innovations appear more beneficial. The professional innovators in the second group (“organic intellectuals” who crossed the conventional boundaries of their expertise to solve social problems) needed to demonstrate the benefits of their solutions. Such benefits could be doubted, because if these services were to be evaluated through the lenses of the conventional competencies of the providers, they would appear to be beneficial only to a narrow group of clients or to their narrowly defined needs. In response to this type of information asymmetry problem, this group of professionals used the SPORG form to expand the scope of potential beneficiaries. This strategy aimed to distinguish their innovation from their conventional occupational functions that served more limited constituencies or needs. The third group of entrepreneurs consisted of amateurs or paraprofessionals, who competed with other nonprofessionals and various interest groups for recognition of their particular brands of service. Similarly to “organic intellectuals,” they also faced the challenge of demonstrating the beneficial effects of their work, which was in doubt because they lacked public recognition of their skills and knowledge. In addition, their goal was professional recognition and the protection of their occupational interests against competitors. To attain it, they had to distinguish themselves from the competitors by making their brand of remedies appear less valuable than their own. The SPORG form proved instrumental to solve both problems. One the one hand, it expanded the scope of potential beneficiaries in a similar manner as it did for the “organic intellectuals.” On the other hand, the absence of that form could be evoked to degrade the perceived value of competing services by narrowing the scope of their beneficiaries and expanding the scope of their potential costs. Finally, the analysis of the interview data identified another group of providers who managed to avoid the information asymmetry problem altogether. They legitimized their service by means of ideology and defused potential challenges to its claimed value by limiting the scope of their clients to those who shared that ideology and availed themselves of that form of service. In the absence of the need for legitimation by the means of claiming to serve public interest, these moral entrepreneurs had little use for the SPORG’s capacity to bestow public benefit status on their work. These cases serve as counterexamples that further demonstrate the relationship between occupational interests of the providers and their use of the SPORG form claimed by the organizational uses and gratifications model. In inductive logic, counterexamples provide instances

PROFESSIONAL SERVICE AND PUBLIC BENEFIT STATUS

147

that the absence of the hypothesized cause (the need for legitimation arising from occupational interests) ensues the absence of the effect (using the SPORG form as the means of that legitimation). Let us now examine the specific details of different uses and gratifications of the SPORG form by the groups of practitioners identified above, as they appear in their own accounts of their motives and their work. Those details are summarized in Table 7.1, which outlines the relationship between occupational interests and the needs for legitimizing the claimed value of professional work and various uses of the social proximity form and its key attributes.

PHYSICIANS IMPROVING THE QUALITY OF CONVENTIONAL HEALTHCARE This group consists of three cases of organizations providing specialized health care services: the “Amazons” (Case #1), the club “Ami” (Case #2), and the Alzheimer’s Association (Case #3). These service providers enjoy a well-established professional status as licensed physicians and face relatively few obstacles in the implementation of their professional projects. The professional innovations they seek to introduce unequivocally lie within their conventional scope of expertise. The only challenge they face comes from apprehension and mistrust from potential patients. The problems these specialists try to rectify involve illnesses, which are surrounded by popular myths and misconceptions, affecting trust between the patient and the practitioner. As a result, patients often develop adverse attitudes which affect the effectiveness of their treatment. This specific need for creating the necessary trust between the patients and their doctors prompted some providers to seek alternative organizational venues for their services. Such was the case of the director of the rehabilitation ward at the Oncology Center, who founded the “Amazons,” a social proximity organization providing post-mastectomy rehabiliatitve therapy (Figure 7.1). One main problem she encountered in her work was her patients’ fear of cancer. Cancer is frequently viewed in Poland as the harbinger of death. People affected by it often experience social isolation or even ostracism, so they try to hide or deny having the condition. That, in turn, leads to fatalistic attitudes toward their chances of recovery, or even prevents them from seeking professional treatment altogether. Therefore, [one of our main goals in the treatment of cancer patients is] breaking the barrier of anonymity and the fear of cancer in Poland. Right now it is a little bit better, but when we first established our club, we maintained total anonymity—especially when [volunteers] talked about people with cancer [ . . . ] We once tried to organize a New Year party. When our la-

148

Table 7.1. Occupational Interests of Service Providers and Use of Organizational Form Occupational Status Of Founders

Information Asymmetry/Legitimation Problem Use of SPORG form**

1, 2, 3

Recognized and high; working in conventional area of competence.

Professionalization of conventional care raises Reduce perceived cost of doubts about practitioner’s intent for professionalization by using recommending treatment. volunteers. (cost: 3 > 1)

4, 6, 7

Recognized but working outside conventional area of competence.

Application of practitioners’ conventional competencies in unconventional way raises doubts about social value of service.

Expand perceived value by enlarging social scope of beneficiaries. (benefits: 1 > 3/4)

5,8

Not recognized amateurs; trying to attain professional recognition.

Lack of recognized status and competence raises doubts about social value of service and its comparative advantage vis a vis competing alternatives.

Expand perceived value by enlarging social scope of beneficiaries (benefits: 1 > 3/4); limit perceived value of alternatives by enlarging costs and narrowing scope of beneficiaries (cost: 1 > 3/4; benefits: 2 > 1); formal membership separates professionals from nonprofessionals.

9, 11 (counterexamples)

Conventional occupation irrelevant; service legitimized by external to occupational interests ideology.

None. Potential challenges disqualified by narrowing scope of beneficiaries to already convinced adherents of legimating ideology.

None. Organization used for purely administrative tasks.

* Case ID numbers are from Appendix Table Al. ** Numbers in parentheses refer to quadrants in Figure 6.1, representing cost–benefit schemata.

CHAPTER 7

Case*

PROFESSIONAL SERVICE AND PUBLIC BENEFIT STATUS

149

Figure 7.1. “The Amazons” are an off-shoot of the post-surgical rehabilitation program at the Oncology Center (a public hospital) in Warsaw. Although an organizational autonomous entity, it operates within the structures of the center, and takes advantage of the center’s resources and facilities. Pictured is an exercise sessions for patients in the center’s gym. (Photo: author)

dies had to bring their partners, someone from outside, the whole thing fell apart. But this was many years ago. Now it is a bit better, but still most of them hide their illness. I am not talking about the members [of our clubs], we try to overcome those attitudes, so they can feel more selfconfident, more important, know that they found other goals in their lives. (source 5)

Neither professional status of the service providers, nor the reputation of the hospital, which is one of the most prestigious oncology institutions in Poland, proved effective in overcoming those fears. The main obstacle was the perception that practitioners have occupational interests in creating false hopes for a recovery. In the words of my source “if doctors say something, people think they say so because they are getting paid, but the volunteers say what they experienced themselves.” The recourse to the SPORG form instead of a public hospital staffed by paid specialists offered an effective solution to the mistrust problem. That organizational form, which allows the employment of volunteers, ostensibly removed the “occupational interest” motive that adversely affected the patient– doctor relationship. Moreover, volunteers were recruited from former patients who thus served as a living example that recovery is possible.

150

CHAPTER 7

The club “Ami” (Case #2) provides outpatient group therapy to former patients of a mental health clinic. This club was established in response to a somewhat different situation. In this instance, the problem was created not by too little trust, but too much dependency of the patients on the professional staff (see the discussion of this case in Chapter 4). While group therapy could be, and had been, provided as a part of the outpatient services offered by the clinic itself, the choice of the SPORG venue ostensibly minimized the staff’s involvement and signaled to the patients the voluntary and autonomous character of the treatment. Our policy is that the club must be the patients’ initiative, so they could implement their own ideas, so we do not have to intervene, that is, the patients could help each other, so we do not have to restrain or force them. We adopted the policy of benevolent partnership, encouraging patients’ self-governance.” (source 15)

In other words, the organizational form was a key factor that redefined the service itself. It becomes apparent when we contrast the current organizational form of the club with its predecessor, formed in the late 1970s. The source cited the lack of autonomous organizational structure as one of the chief causes why their first initiative failed: Our patients felt too dependent on what the professional staff would say, so they often met informally, outside the [first] club. Of course, that [first] club was not formally registered because, as I recall, there was no such need. Besides, there was no funding sources that could support it, so [the club] did not have a raison d’être, so to speak. It operated for a few years with intermissions, until those who participated in it found their own ways, so it outgrew its usefulness in a natural way (source 15)

Again, the main advantage of using the SPORG form in this case was to reduce the actual and the perceived cost associated with the professionalization of psychiatric care. The psychologist (source #10) who specialized in the treatment of Alzheimer’s patients reported a still different problem. As she repeatedly underscored, Polish medical establishment viewed Alzheimer’s disease as a “natural” process of aging and saw little need for treating this condition. Consequently, that specialist faced a major task of convincing the public health authorities and the medical profession about the need for such a treatment. But despite their superficial differences, these three cases above show important similarities. First, they involve efforts of service providers with a wellestablished professional status to overcome certain preexisting limitations in creating optimal therapeutic environment. In all cases, these limitations arose from unfavorable public perception of the role of the professional providers

PROFESSIONAL SERVICE AND PUBLIC BENEFIT STATUS

151

and their stake in the treatment. Second, they all involve professional service providers who relied on the social proximity organizational form to signal the limited involvement of paid specialists in the treatment itself. That particular usage of the SPORG form can be characterized as a marketing strategy of a sort that aims at increasing the perceived value of the services being offered. To understand the logic of that strategy, let us refer to the heuristic device proposed in Figure 5.1 that identifies different ranges of information considered in counting costs and benefits. Those ranges or schemata are defined by two dimensions: social scope (vertical axis in Figure 6. 1), and time span (horizontal axis in Figure 6.1). From that point of view, the strategy employed by the professionals under investigation aims at reducing the perceived cost of the respective services along the scope axis while increasing the benefits along the span axis. In the conventional form of treatment, the specialist is paid for her services. It matters little that in the Polish case the payment is for the most part made by the public health insurance, because the very fact that payment is involved invokes the perception of the conventional role the specialist is supposed to play in exchange for her salary. This conventional role stipulates the specialist will try to deliver the service regardless of its effectiveness, for that is what her job requires her to do. Because these patients believe no treatment is effective for their illness, the specialist’s stake in providing it can be seen as a “cost” to the patients themselves. Public authorities may share a similar view, if they perceive the professional stake as a burden to state budget and, by implication, to society. Choosing the SPORG form for service delivery contrasts with the conventional practice precisely because that organizational form itself implies the limited involvement of paid specialists in the treatment. Using volunteers in conventional medical treatment is rare for obvious reasons. Such treatment requires specialized skills and knowledge that volunteers generally lack, so their direct involvement can lead to a greater harm than good. This is why volunteering in health organizations in the developed countries is rather low, only about 6% of all volunteering time Western Europe and about 14% in the United States (Salamon et al., 1999). In Poland, this figure is much lower, about 1% of all volunteering data (Salamon et al., 1999), because healthcare is perceived as public entitlement. In that context, recourse to an organizational form whose essential attribute includes volunteering is a radical departure from the conventional practices in the field. The SPORG status stipulates that the work is performed mainly by volunteers. The role of paid specialists is ostensibly reduced to providing expertise and support for the voluntary staff. These reasons for using the SPORG form were reported by the founder of the “Amazons.”

152

CHAPTER 7 “In our clubs, there are usually two specialists, a rehabilitation therapist and a psychologist, that is all. They are paid, that is, we try to pay them if we can [ . . . ] but these are generally token amounts that do not even cover the value of their time. These are the people who would probably do it even without being paid [. . .] But volunteers work without any compensation. They play an important role, serving as a living example that recovery is possible. Because if specialists say [ that], people think ‘they say so, because they are paid,’ but volunteers experienced that [recovery] in their own lives [. . .] Surely, the therapist has more expertise than the volunteer, but the volunteer knows more because she experienced it. Volunteers are more trustworthy, because the patients trust more those people who lived through the same experience.” Q: “What is the function of the psychologist in your organization?” A: “Psychologists train volunteers, not only what they are supposed to tell [the patients], but also how they should tell that, and what they cannot tell, because [the volunteers] are not supposed lie [about the treatment]. In addition to that, psychologists provide emotional support to volunteers. The work of volunteers is very exhausting, not only do they have their own problems, but they also deal with the problems of others. Sometimes it is too much for them, and that is why we need a specialist to help them coping with the situation.” (source 5)

The limited involvement of paid specialist thus reduces the perceived “cost” or discomfort and mistrust created by excessive professionalization by redefining the role of the specialist in the treatment (Figure 7.2). The role the specialist plays is no longer imposed on her, so to speak, by virtue of her being a member of professional establishment (a collective frame of reference), but stems from her individual commitment to the patient’s well being. This signals to patients that they can enter the program with confidence, without fear, but with hope for a recovery. This hope cannot be given by a specialist performing her conventionally expected professional role. In the same vein, the SPORG form ostensibly eliminated the pecuniary motive from the activities of the physician promoting new forms of assistance to the Alzheimer patients (Case #3). An important aspect of her mission involved lobbying for the inclusion such an assistance into the public health care system. “If the state gives us only symbolic sums of money, as it has done in the past, they will consider themselves relieved of any further responsibility. However, when they do not give us such token sums, we can put pressure on them, so the situation of the patients may improve.” Q: “Do you mean that the state has an obligation to do more than giving symbolic donations?”

PROFESSIONAL SERVICE AND PUBLIC BENEFIT STATUS

Figure 7.2. The key innovation the

“Amazons”

153

introduced to post-surgical rehabilita-

tion in Poland was a reliance on volunteers instead of paid professionals. The volunteers, recruited from former cancer patients, are “living proof” that cancer can be cured.

Their

involvement in the treatment solves the problems of insufficient trust that rehabilitation specialists faced. The photo shows a training session for the “Amazon’s’’ volunteers. (Photo:

author)

A: “Of course! People with Alzheimer’s disease are a part of a much larger problem of the care for the elderly, which in Poland not only is insufficient, but often does not exist at all. And the state, so to speak, does not discern the problems of this group of people, they don’t see that those people get sick, and that these are very specific kinds of ailments, such as Alzheimer’s disease, that require much different treatment than ailments of the young people—because this illness is incurable.” (source 10)

Since specialized treatment can be very costly to the state budget, it comes as no surprise that this specialist attempted to reduce the perception of that cost. Moreover, her reported professional fee-for-service practice in the same area suggested pecuniary motives behind her activism. Consequently, I extensively questioned whether she could reconcile that apparent conflict of interests. In response she insisted that her occupational interests and her work for the benefit of the society remain separate because of different organizational forms through which they were channeled: private practice versus the social proximity organization she helped to establish (case #3). Professional help must be [source’s emphasis] remunerated, if the professional wants to make money in her contacts with the patient. If I enter

154

CHAPTER 7 such a relationship with the patient whom 1 guide and attend, then he must pay me for that. But the goal of this association—this is a social association [stowarzyszenie spoleczne source’s emphasis]—absolutely precludes making money, and that opinion is shared by all members. This, however, does not preclude my private practice and taking care of those patients privately, outside the association, and outside my work at the public health care institution. (source 10)

This specialist clearly chose the SPORG form as strategy to reduce the perceived cost of the treatment she advocated. As in the case of the “Amazons,” her professional role in the organization was largely limited to training volunteers, generally families of Alzheimer’s patients, how to take care of their ill relatives. In this case, however, her target audience was not the patients, but government officials. The reliance on the essential attribute of the SPORG form, using volunteers in the treatment, signaled to healthcare bureaucrats that her proposed solution is not as burdensome to public finances, and thus society, as they may think. Moreover, she used the nonprofit organizational form as the means to distinguish the public nature of her mission from her occupational interests as a paid provider of a similar type of care. This further supports the conclusion reached earlier in this book that it is not the “public” nature of the service itself, but the status of its organizational form that defines that service as “public,” at least in the eyes of this source. Another strategy reported by the informants in this group can be characterized as maximizing the perceived benefits along the time-span axis (the horizontal axis in Figure 5.1). This strategy involved repeated claims that, unlike the conventional forms of treatment, the services they offered enhance the longterm quality of life of the patients. Such strategy is particularly apparent in the following contrast the founder of the “Amazons” drew between the work of her organization and the conventional forms of treatment offered by the public health care system in Poland. Our mission involves the improvement of quality of life for people with cancer. Because to date, a person with cancer was happy that she could stay alive, the doctors were happy that they could save that patient’s life. So in saving lives, Polish medicine has been relatively successful, but as far as the [patients’] quality of life is concerned, we are far behind. Quality of life is very important, saving lives is not enough. The side effects of cancer treatment can be very unpleasant, the amputation of limbs, surgical removal of intestines, parts of the face, radiation, chemotherapy – this is not neutral, it is not just the tumor being destroyed, but the tissue around it as well. Those people should return to normal life, to work, they must be rehabilitated both physically and emotionally. Even if about 50% of our

PROFESSlONAL SERVICE AND PUBLIC BENEFIT STATUS

155

patients eventually die, it is important to provide them decent conditions to the end. And that can be a problem [in this country]. (source 5).

To be sure, that strategy is consistent with the conventional occupational role of physicians: They cure individuals rather than social ills. In that respect, any attempt to expand the perceived benefit of the treatment along the social scope (vertical) line, as the agencies discussed in the next section of this chapter do, cannot be very plausible. This observation suggests that the nature of the service itself can impose limits on the choice of cost–benefit schemata that can be plausibly used to define the value of that service. Given that limitation, the cost reduction we just analyzed appears to be a more effective strategy of social promotion of professional projects by physicians. Doctors cure individuals, but the cost of that treatment is rarely borne by the beneficiaries of that treatment alone. That is especially true in countries that implemented some form of public health insurance, which transfers the cost of the treatment on society at large. Hence the reduction of that cost, either perceived or actual, along the social scope axis appears to be the most natural, and thus convincing, marketing strategy2

“ORGANIC INTELLECTUALS” SOLVING SOCIAL PROBLEMS The three organizations in this group are “Theater, Education, Rehabilitation,” (Case #6), “Hospicjum” (Case #4), and the “Patronage” (Case #7). This category includes service providers who have a conventionally recognized professional status, but whose projects, while rooted in their occupational knowledge and skills, nonetheless extend beyond the conventional boundaries of their professional competence. The problems these specialists address lie within the broadly defined area of social work, but may also include elements of medical treatment. The challenge they face, however, lies in the discrepancy between their new role as service providers and their conventional competencies. This discrepancy may raise doubts about the claimed value of their projects to solve the problems in question. The first case in this group (Case #6) is an organization established by a professional actor. Its mission originally centered on performing arts project for visually impaired children, but my source had a vision that went far beyond his work as an entertainer. I saw that theater offers much greater opportunity than what we professionally do as a spectacle. Take the simplest things—we have to develop team work, punctuality, loyalty. Not only actors work in the theater, but also technicians, shoemakers, tailors. So we can combine all that into one, this is socialization par excellence, even therapeutic effects, theater as a

156

CHAPTER 7 way of life, theater as work—all that was the effect of my team work with blind children. For if they really accomplished that they could dance or jump on a table, that was a lot of work, but it was also a great thing for me. It gave me a lot, but above all, this was a way of life, a life through the theater, and work through the theater. (source 18).

The vision of performing arts solving social problems might have been appealing in the artistic circles, but it was viewed with indifference and even suspicions by public authorities. Since the organization served mainly people with disabilities and limited means, public support was essential for the project’s success. Yet, the organization receives virtually no such support, despite the founder’s efforts to get the local authorities interested in his project.” I hope that [the government] will finally show some interest, so I won’t have to be a supplicant anymore. They have money, and if we have good initiatives, they should support us, the people should know that, after all, they must spend that money on something [...] I saw it in France. There was a small theater company there, eight people ... whatever they did, they asked the local government [for support] because they did something for France, or the Ministry of Foreign Affairs, because they had contacts with Poland. (source 18).

It is worth noting the source’s reference to a Western European country as a model that is worth replicating in Poland. This is yet another example of proWestern attitudes of Polish intelligentsia that created a social environment that is conducive importing foreign institutions (see the discussion in Chapter 4, p. 75). However, the most important aspect of that phenomenon for this inquiry is the selective character of such organizational modeling behavior, which is tailored to fit particular occupational interests. This is the essence of the organizational uses and gratifications model proposed in this book. The second essential element in this passage is the source’s attempt to elevate the project to public benefit status. This is evident in his account of the French theater company that “did something for France” by virtue of cooperating with a Polish theater. A theatrical spectacle may provide amusement to those who attend it, but the proposition that its benefits extend beyond that audience is a moot point. However, organized cooperation with a foreign group elevated that theater to the status of a representative of the entire French culture, eligible for public support. My source used a similar strategy to increase the perceived value of his own project. By choosing the organizational form whose attributes included public service gave him the means to expend the potential beneficiaries to the entire community. He could then legitimately claim that he “does something for Poland” and become eligible for public funding. He no longer saw himself

PROFESSIONAL SERVICE AND PUBLIC BENEFIT STATUS

157

as a traditional actor, an entertainer working for the amusement of a few, but as an active producer of a service that deserves public support because of its public benefit nature. He reported his plans to expand his project to workshops designed to improve parent–child relations through acting out conflict situations, sessions for “problem youth,” and programs for public schools aiming at enhancing creativity and strengthening problem-solving skills. Again the key element of this strategy is the organizational uses and gratifications, or the conscious use of an organizational form to further occupational interests of the founding members. His usage of the SPORG form and its attributes fits the pattern of expanding the perceived (if not actual) benefits of his work along the social scope axis. As a conventional actor, he worked predominantly to serve artistic tastes of a select group of individuals who attended theatrical performances. Even his voluntary work with the blind children was defined mainly in terms of improving their quality of life (the 2+ schema in Figure 6.1). However, establishing an organization that included social workers radically departs from the conventional justification of his work by adding a broad social dimension. His work would no longer benefit a narrow circle of theater buffs and handicapped children, but would help all parents and children who avail themselves of his assistance.

Figure 7.3. The association “Theater, Education, Rehabilitation” grew out of experimental theater work with visually impaired children. It now offers performing arts education for youth. Shown is a session organized for a high school in the Gdansk prefecture. (Photo: Ryszard Jasniewicz)

158

CHAPTER 7

Figure 7.4. Another program developed by “Theater, Education, Rehabilitation” offers conflict resolution and classes in improving communication between parents and children. Pictured is a session involving a family play organized in a private residence. (Photo: Ryszard Jasniewicz)

The second case in this category, the Hospice “movement,” grew out of the experience of a Roman Catholic priest who worked as chaplain at the Medical Academy Hospital in Gdansk. In that capacity, he often met terminally ill patients who spent their final days in what he saw as undignified conditions created by a medical institution. These people were essentially dying alone, receiving only palliative treatment, and were often abandoned by their families and friends. Even the church, which was supposed to provide spiritual guidance to people facing their destiny, failed to fulfill its responsibilities toward terminally ill patients. The [Roman Catholic] church as an institution, does not understand the process of dying. [ . . .] So even though I am a priest, 1 am far away from the church as an institution, because it does not understand dying. The institutionalized Roman Catholic Church is interested in anyone but the dying people. (source 14)

This experience prompted my source to seek alternative forms of treating the dying patients. With a group of physicians, he organized a team of case workers to attend patients in their homes (Figure 7.5) which, in his eyes, offered more dignifying conditions than impersonal medical institutions. The “good Samaritan” work of the hospice team encountered little opposition, even under the central planning regime. After all, it relieved the public healthcare system of a problem that could not be effectively treated and that

PROFESSIONAL SERVlCE AND PUBLIC BENEFIT STATUS

159

Figure 7.5. “The Hospice” is a unique in the Polish context alternative to hospitalizing terminally ill patients. Its services are administered by a team of physicians and spiritual counselors working together. The picture shows one of the “Hospice’s’’ team preparing to visit a patient. For privacy reasons, work with actual patients could not be photographed. (Photo: Eugeniusz Dutkiewicz)

bogged down scarce hospital resources. However, the philosophy underlying the hospice approach, which featured the spiritual aspect and preparation for death, was at odds with the philosophy of medical practice which emphasized cure and saving lives while reportedly neglecting patients’ emotional and spiritual comfort (see the passage quoted in Chapter 4, p. 95). From a medical point of view, it is the treatment of symptoms, but you have to remember the specificity of this patient’s condition—it is his spiritual and religious pain. A patient dying of cancer experiences his life spiritually [ . . .] When a person knows that he will be leaving this world, he experiences a tremendous spiritual stress, his body is dying, but his spiritual life intensifies, when the emotional attachments start to crumble, but the spiritual life is so intense, believe me. (source 14)

My source was clearly aware that his approach to death and an approach based on purely medical, palliative treatment were based on opposing philosophical foundations, even though he downplayed those differences for the tactical purposes of popularizing hospice care. His organization had already secured a contract with the public health authorities in the Gdansk prefecture for providing homecare to dying patients (Figure 7.6). Any open criticism of conventional healthcare practices could jeopardize that arrangement. Yet, he

160

CHAPTER 7

Figure 7.6. The “Hospice” can be considered one of the few “financial success” stories among post-1989 service providing SPORGs. The organization was awarded a long term contract with public health authorities to provide service to terminally ill patients in the Gdansk prefecture. Shown is the organization’s offices (the services are delivered at patients’ homes) in Gdansk. (Photo: author)

passionately denounced secular views that allowed freedom to terminate one’s own life, and saw it as an upcoming threat of Western influences in Poland. Aware of the challenges his “movement” faces from interest groups representing a more secular orientation, he made an elaborate effort to distinguish his treatment from both purely religious services and purely palliative medical care. The spiritual and religious pain are not the same. Regardless of [patient’s] religious preferences, he can be a Marxist or an agnostic, but his nature is metaphysical, he does not end with his death, he has a soul, a transcendental space of his thoughts, his emotions, his values regardless of his religion, because it is not the essence of religion. Believe me, I did not see it in the hospital as a priest, because in the hospital I only provided religious services. Only after my work in the hospice, when I sojourned with the patient to his end, I had the time when I came to his home and spent hours with him accompanying him in his death. Only then ] saw that spiritual dimension. However, the church as an institution, especially the [Roman] Catholic Church does not understand that dimension. But in hospice care there is, above all, spiritual care.”

PROFESSIONAL SERVICE AND PUBLIC BENEFIT STATUS

161

Q: “Regardless of the religious denomination?” A: “Absolutely.” Q: “So, if the patient were, say, a Jew, would you too—” A: “Absolutely. This is the essence of hospice care, this is why it is a team care, because the patient chooses a person spiritually close to him. It does not have to be a priest, a priest is not a [religious] professional for him but a therapist [lekarz3] with spiritual depth. That is one of the difficulties working in a hospice—to be there one has to have it in him. (source 14)

This passage provides an excellent illustration of using the social proximity organizational status, which is separate from both the institution of the church and conventional hospital, to redefine the frame of reference in which the benefits are counted. The hospital serves only individuals, or rather their bodies. It is essentially incapable of providing personalized care. Patients are served by whichever practitioner happens to be scheduled to work at a particular ward at a particular time. The church, on the other hand, attends only the religious needs of the believers. The organized hospice care overcomes the limitations of these two institutions by providing personalized and spiritual care that is not limited to either pain relief or religious services. Although the source saw a clear distinction between the spiritual dimension of the hospice care and the religious services he provides as a priest, this distinction may not be apparent to the patient, who may instead see this form of service as a means to proselytize a “captive audience.” To successfully overcome this information asymmetry problem, the service provider must create an image of its service as a universal benefit to the whole community, not just to Roman Catholics. To that end, my informant used the SPORG form to evoke the image of a public benefit. Such usage of the organizational form becomes even more apparent when we contrast the hospice movement with another organization grounded in religious philosophy, “Gaudium Vitae” (Case #11), which provides alternatives to abortion. These two cases show a substantial level of similarity. Both were formed by Catholic clergy in cooperation with lay activists. Both are formally independent of the church, but maintain close ties with this institution, and both define their mission as serving material and spiritual needs determined, for a large part, by the Catholic moral philosophy stressing the value of human life. What sets them apart, however, is the definition of the audience for which their services are intended. As the quoted passage clearly demonstrates, the hospice defines the benefits of its service in broad humanistic terms, regardless of any religious preferences. “Gaudium Vitae,” by contrast, provides counseling and material assistance to single women who share the Catholic beliefs and who choose not to

162

CHAPTER 7

terminate their pregnancy. The representative of that organization confirmed they do not seek to extend their service to the population at large, and limit themselves to serve only those who share their rather radical views on procreation. Q: “How do you find persons who need your assistance?” A: “Generally, those persons contact us, that is, they call our hot line; for the most part, these are women in a difficult life situation, pregnant and abandoned by their husbands or boyfriends [. . .]” Q: “But do those persons know that your organization is run by the church? ” A: Well, I would not say it is run by the church, that is, the fact that priests helped to found this organization does not yet determine its sacramental character, and we never were a formal part of the ecclesiastic structures; but of course most of our members are practicing Catholics, even though we occasionally have nonpracticing believers.” (source 11)

This source repeatedly underscored the importance of religious worship to the organization’s mission. Furthermore, he admitted that most of the service recipients were women of low socioeconomic status, whereas “women with secondary or higher education generally refused any help; they did not want any contact with us.” Consequently, he made little effort to describe the beneficial effect of the service at all. He even admitted that the majority of the professional establishment and the public do not see the need for this service at all. He justified his work solely by referencing the moral philosophy of the Roman Catholic church, which he espoused. In his interpretation, that philosophy proscribed abortion under any circumstances, and called for multichild families. More important, he saw little use of any organized form of his activity, let alone one having a social benefit status. Instead, he stressed the personal, informal character of his program, which relied almost exclusively on private resources, such as homes, phone lines or in-kind donations, of its supporters. “We are not a very formal organization. There were eight founding members, including three priests. Initially, those priests made their phones available, that is, we announced that such phone number were available to women who are pregnant and need help.” Q: “Where did you make those announcements?” A: “We put signs in churches, sometimes in public clinics, but initially we did not have many callers, perhaps because these phone lines belonged to priests. So later we established a hot line in the private home of a lay person. That hot line operates to this day [. . .] We meet informally, with-

PROFESSIONAL SERVICE AND PUBLIC BENEFIT STATUS

163

out making any decisions about the organizational form of our activity. Such a situation persisted for a very long time, we were an informal group. Only in 1992 we established a foundation. But nobody got really involved in this, the hotline is our leading form of activity.” Q: “How many cases do you usually have?” A: “It really depends. On average, one per week, sometimes more, sometimes less.” Q: “What form of help do you offer?” A: “When a person calls, we set an appointment to determine what we can do. We offer material support, such as clothing or food, sometimes legal assistance, or helping [the client] to find an apartment. We also assign a mentor who stays in touch with that person, or the family, because most of out clients are families. These are the basic forms of our activity.” (source 11)

The juxtaposition of these two cases clearly demonstrates the essential role the SPORG form’s public benefit attribute in overcoming information asymmetry problem faced by service providers. These cases are similar in all but two respects: (1) type of information asymmetry problem they face; (2) and how they use the SPORG form for their project. The hospice faced considerable information asymmetry problems resulting from a discrepancy between the conventional role of a priest, and the nature of the service he provides. The essence of that service is to address all needs, physical, emotional, social and spiritual, of a dying person who may not necessarily share the religious faith of the service provider. The hospice also used the attributes of its organizational status to lessen that information asymmetry problem. The autonomous organizational status as an independent, selfgoverning entity helped to separate hospice care from both palliative care and religious services. Its public service attribute helped to expand the range of the potential beneficiaries of its service along the social time and social scope axes (Figure 5. l), from immediate and temporary relief of pain or religious consolation of a single person, to serving the entire families of the dying people and, in an indirect way, affirming the universal human values. “Gaudium Vitae,” by contrast, “solved” the information asymmetry problem by excluding all the potential clients who did not share the providers’ views on their service’s benefits. Although their service grew out of the same moral philosophy as hospice care, it never attempted to serve the public at large. Since the service was provided only to those clients who had already been convinced of its value, grounded in shared religious beliefs, there was no information asymmetry problem anymore. In essence, the clients knew the same thing about the service as the providers did, and there was no further

164

CHAPTER 7

need to market that service as valuable ands trustworthy. Consequently, its providers saw little use for the SPORG form and its attributes, organizational autonomy and public benefit status. They operated as an informal group, closely linked to the church. The third case in this category, the “Patronage,” was formed, or rather reactivated after being dissolved by the authorities in 1945, by a group of lawyers and probation officers. Its main goal, humanitarian and legal assistance to inmates and their families, as well as persons leaving correctional institutions, lies within the conventionally defined roles of this occupational group. It is the group’s emphasis of human rights and humanistic re-socialization based on the Western models that sets it apart from the established conventions in Poland. Offering such services to people convicted of committing crimes is not popular in Polish society, which became weary of crime rampant throughout 1980s. This poses a nontrivial problem to the organization which, after the public support form the prison tax4 dwindled, depends mostly on private donations. Polish society would like to see stiff punishments, no furloughs. Unfortunately it has been raised in the spirit of repression [w duchu represjonizmu], so when they break into someone’s car, [the victim] is furious, he says “I’d kill, shoot that thief.” Not long ago, a woman shot someone who was doing something behind her fence, 100 meters away. The press reported that with sympathy rather than disapproval. Unfortunately, that is the situation.” (source 7)

According to my sources, the organization was able to cope with the difficult financial situation, thanks to the entrepreneurship and dedication of its volunteers. However, it faced an obvious image problem because the nature of its services did not fit the conventional expectations of the potential donors. Another problem stems from the lack of trust among the organization’s potential clients. This may sound paradoxical, until we realize that the professionals who work for the organization have occupational affiliation with the criminal justice system, e.g. as probation officers or judges. The prison subculture in Poland makes a sharp distinction between the group of “respectable” and “trustworthy” inmates, who in the prison slang are called “the people” (ludzie), and other forms of human life that are either despised, hated, or simply not trusted. Strictly enforced informal rules prohibit “the people” from having certain types of relationships with members of those other groups. A czl’wiek (vernacular term for “man,” the singular of ludzie) is not supposed to shake hands with a cwel (slang term for a homosexual or a weak, gentle male in general), or voluntarily initiate any contacts with a klawisz (a prison guard) or any other law enforcement officer. Because of those informal rules of prison

PROFESSIONAL SERVICE AND PUBLIC BENEFIT STATUS

165

subculture, the inmates often mistrusted the “Patronage” staff and refused to cooperate with them. To solve these problems, the founders of the “Patronage” employed various strategies in which the organizational form played a key role. First, the autonomous organizational status helped to separate the work of the “Patronage” to help the inmates from the conventional occupational roles of caseworkers as members of the law enforcement apparatus. This reduced the perceived “cost” of that work to the clients in a similar manner the clubs “Amazons” and “Ami” did. We do not represent the judge, the policeman, or the warden. We are outsiders. Our greatest success is that [the inmates] trust us. They know that what they tell us will stay between us, that we will not use that against them, that we want to simply help them as human beings. (source 8)

Another advantage of this organization form was the possibility to increase the perceived value of the service by broadening the scope of potential beneficiaries. This strategy, similar to that used by the founder of the “Theater, Education, Rehabilitation,’’ was using the organization as a vehicle for working for larger social cause. In case of the “Patronage,” that cause involved lobbying for prison reform and working toward the reduction of crime rates. First, the organization acts as a consulting group to the Parliament on public policy issues. We closely cooperate with the Public Ombudsman Office at the Polish Parliament, because we have common goals. The Ombudsman reports [our suggestions] to the Parliament, and our input is valued there. It is a form of lobbying. (source 9)

Cooperation with public authorities was a clear signal that the organization served bona fide public interests—that is, it has a public benefit status. Such a status expands the frame of reference for counting the benefits of the organization’s work along the social scope axis (Figure 6.l), from individuals to society at large. Influencing public policy is no longer helping individuals who are often seen as unworthy and undeserving any form of assistance. It is an effort to improve the criminal justice system and help the society to more effectively cope with the problem of crime. Second, the sources described the beneficiaries of their organization’s work as not just the inmates, but the entire society. They believed their social assistance and re-socialization programs are more effective in crime prevention than the conventional law enforcement methods. To illustrate their point, one of my sources, a probation officer, told me about experience of being accosted by a group of young hoodlums on a tram. I looked around and there were no guards, no police, no soldiers. I’m an old man. I did not have a chance, and I saw myself under [the hoodlums’]

166

CHAPTER 7 boots. Then I heard someone behind me whispering “Mr. Probation Officer5 you are not alone.” I looked around and saw two young men. I did not recognize them, but from the fact that they addressed me as “Mr. Probation Officer” I gathered that I must have met them [as clients in my work]. One of them approached [those hoodlums], and told them one or two sentences. I did not hear what he said, but they left at the first stop. So, who says that our work did not pay off? This was my reward. (source 9)

Clearly, the “reward” was not only the avoidance of personal injury but, above all, that former criminals, whom this source once helped, became responsible citizens, not afraid to stop a criminal activity in progress and-assist a potential victim. Thinking otherwise would miss the moral of this story. All three sources representing this organization repeatedly cited reduced recidivism as an important social benefit of their work with inmates.

PARAPROFESSIONALS STRIVING FOR RECOGNITION The last category under consideration is represented by two organizations: “Coastal Environmental Society” (Case #8) and “Hippo- therapy Foundation” (Case #5), both founded by service providers who lack a recognized professional status. They aim not only to legitimize their innovative treatment, whose nature is viewed by others as questionable, but to establish themselves as recognized experts in that service area. The lack of recognition and the questionable nature of their services make them particularly vulnerable to competition and challenges by those who for various reasons oppose their innovations. The “flag case” in this group is the “Coastal Environmental Society,” a SPORG established by traditional herbalists. This organization is one of many similar entities established in Poland as a part of a social movement to promote herbal and non-conventional medicine. According to my source, the problems faced by his organization are typical of those faced by the entire movement. His narrative included facts from the experiences of his own as well as other organizations of a similar kind. While the organization promotes alternative medicine, natural life style and ecological concerns, its main form of activity is distribution of herbal remedies for various body ailments. The remedies consist of various herbal mixtures, most of which are organically grown and prepared by the herbalists themselves. Although traditional herbal medicine existed in Poland for centuries, it was largely confined to backward rural areas. Because of its inconspicuous informal character, both public health authorities and the medical establishment

PROFESSIONAL SERVICE AND PUBLIC BENEFIT STATUS

167

turned a blind eye to this practice. This, however, started to change when nontraditional medicine started gaining popularity among the urban population. The main reason behind that trend was the erosion of trust in public institutions in the aftermath of the government crackdown on the Solidarnosc movement in 1981. This trust was further undermined by the Chernobyl nuclear accident in 1986. Many people feared public health authorities were trying to cover up the actual impact of the disaster and sought alternative forms of treating their ailments, which they blamed on nuclear pollution. The second factor that had considerable repercussions on nonconventional medicine in Poland was linked to social–political changes in the former USSR, known as perestroika. As the Soviet travel restrictions were lifted, Poland experienced an influx of Russian visitors engaging in various forms of trade. Among them were charlatans and healers, who introduced an element hitherto unknown by the Polish traditional herbalists: foreign competition. For service providers with well-established professional reputation, competition with the providers working outside the system of professions, or the so-called quacks, usually does not pose any serious problems. Such practitioners often enjoy a near-monopoly status, legitimized by their formally recognized expert knowledge, and protected by laws and licensing regulations (Larson, 1977). Moreover, practicing professions usually establish a more or less formalized system of professions (Abbott, 1988). The system of professions dampens potential conflicts of interests by defining the boundaries of professional competence in different types of cases or problems, and establishes a referral system that guides delegating different problem cases to appropria te specialists. However, traditional herbal medicine in Poland lacked those three elements that regulate professional practice. First and foremost, the herbalists did not possess formally recognized expert knowledge (Figure 7.7) on which they could rely to support their claims to superior (vis a vis conventional medications) efficiency of their treatment. By my informant’s own admission: [Our master-herbalist]6 is a man of great knowledge, that is, he does not have any formal education, he completed only three grades, but he has something inside of him that helps him recognize plants. He has a lot of knowledge about nature, practical not theoretical knowledge, he is 67 and observed nature. I lived with him three years, we collected herbs, and mixed them.” (source 17).

Second, they practiced their trade on an informal basis, without having formal regulations or licensing requirements. In my source’s words: Q: “Would you say that herbalist is an occupation?” A: “It is difficult to say, perhaps not exactly an occupation, but rather a

168

CHAPTER 7

Figure 7.7. Back cover of a brochure produced by the Coastal Environmental Society. Modern herbal treatment grew out of the traditional folk medicine in Poland. The diagram shows the connection, which is traditionally believed to exist between the palms and the symptoms of bodily ailments.

Captions on the palms identify different parts of the body and their ailments.

hobby stemming from the fact that somebody simply does it. Our masterherbalist has about 1,200 acres of land, of which about 400 acres are in the natural state, wild, not cultivated, and we harvest wild plants.” (source 17)

Finally, the herbalists lack professional recognition and therefore are not integrated into the system of professions. In turn, they are deprived of the benefits of the referral system, which establishes the rules of cooperation and resolves the potential conflicts of interests among different groups of experts. Q: “Do you see physicians as your competitors?” A: “We see physicians as cooperators not competitors. It is them who see us as competitors.” Q: “Does this mean that you want to work with them?” A: “Of course, we do. People often come to us, and I tell them, ‘go to see a doctor, that is a serious matter, you need a medical examination,’ but I can’t tell them that I won’t help them. Many people come to us as the last resort, after hospitalization, with cancer, and I cannot simply turn them down.”

PROFESSIONAL SERVlCE AND PUBLIC BENEFIT STATUS

169

Q: “Have you taken any efforts to establish systematic contacts with medical practitioners?” A: “They are not very eager to cooperate.” Q: “But have you tried?” A: “Of course we have, but they do not want to work with us.” (source 17)

In that situation, the practitioners of herbal medicine have virtually no means to convince the skeptics that their treatment has merits.7 This creates a serious information asymmetry problem that severely jeopardizes the perceived value of the herbal remedies and exposes the herbalists to serious challenges by competing interest groups. In the absence of socially established criteria of evaluation, anyone’s claim is as good as everyone else’s. The situation was certainly not helped when recognized authorities condemned nonconventional medicine as being harmful. Responding to the reports of charlatanry, publicized by the media, public health officials launched a campaign to regulate herbal medicine, or even ban it altogether. “There is a pressure form pharmacists and physicians to eliminate Polish herbal medicine, because we compete with them. People turn away from the chemical industry, because they see it does not help them much in a long run, and has side effects. So they come to us poisoned with medications and seek alternatives to improve their health. They put a strong pressure on us, especially in Olsztyn [a city and a prefecture in Eastern Poland where the herbalists own organic farms], they brought a lawsuit against us, called the police [ . . . ] The police came, took pictures how we manufacture our herbs. The doctor who came with the police said it was a crime, but the police said they did not see anything wrong, so they started to instigate the authorities against us.” Q: “Who is ‘they’?” A: “The Pharmaceutical Inspection Authority [ Nadzor Farmaceutyczny] . It is the apothecaries’ police. They have the central branch and prefectural branches. They vowed to finish us off. But we took our case to the Supreme Administrative Court [Naczelny Sad Administracyjny] and obtained an injunction on a technicality. It is guerrilla warfare.” (source 17)

The herbalists were thus forced to fight a “guerilla war” on two fronts. On the one hand, they tried to distance themselves from charlatans whose reportedly unconscionable practices undermined public trust in this form of treatment in general. On the other hand, they attempted to gain recognition to thwart the legal challenges against their trade. Lacking the means available to established professional groups, they turned to a strategy that was totally novel in their hitherto practice—a social proximity organization.

170

CHAPTER 7 There are many herbalists in our [country] who have been practicing herbal therapy for years, informally. But we established this organization, because the situation forced us to do so. We have a long tradition, but we had to defend ourselves from the pressures to kill Polish herbal medicine. (source 17)

The SPORG organizational form allowed them to define their practice as a form of public benefit. First, as an organized entity whose attributes include public service, they established regular practices of charitable donations of their products to people who could afford to pay for them. Normally, we collect fees for our products, but many people come to us, retirees, disabled, and we do not charge them. We give a lot of herbs for free, about 200 packages a month. Also, every Wednesday I give advice for free; I do not ask any money. (source 17)

That charitable activity, which they could hardly afford as individual practitioners, expanded the scope of beneficiaries of their services, as compared to commercial practices of their competitors who reportedly worked on a fee-forservice basis. My source contrasted the public service of their organization with that of his Eastern competitors, whom he portrayed as unconscionable quacks, motivated mainly by greed. Many healers [who came here from the East] prey on people. Not long ago, a woman came to me with breast cancer. “For three years I was treated by a healer from Tibet” she says, “he promised to cure me, but forbade me to see a doctor.” I told her to see a doctor immediately, but then she came back crying, because the doctor told her it was too late. She should have not trusted that man. Those people do not know what they are doing, they are preying on people’s misfortunes. All they want is money. It is a big problem in Poland and I understand that the authorities want to fight that. But we cannot throw out the baby with the bath water. Our herbal medicine has a long tradition, and if you select the right herbs, they can really help. (source 17)

In actuality, that statement is not accurate. Based on the information I obtained from other sources who used this form of treatment, many foreign healers work on a sliding-scale basis, charging their clients only what they can afford to pay, or even providing services without any compensation. I positively identified one case of a severely disabled man who was regularly treated by a healer from Russia, who did not charge him. I was told that his case was not an exception. However, such healers often worked in Poland as undocumented aliens and thus had no means of establishing a legally recognized organization that would engage in charitable activities. So it is not the presence or absence of

PROFESSIONAL SERVICE AND PUBLIC BENEFIT STATUS

171

charitable motives or behavior, but the presence or absence of the SPORG organizational from that really distinguishes between Polish herbalists and their foreign competitors. It is not the actual practice, but its organizational form, that defines one as charity and the other one as self-serving greed. The motive of using the absence of the SPORG form to depreciate the value of competing services is peculiar to this group of providers. I found no evidence of such a practice in the narratives of informants classified in other categories shown in Table 7.1. For example, the priest who provided hospice care (Case #4) made a clear distinction between his form of assisting dying patients and the alternative variety which emphasized palliative treatment. Nonetheless, he downplayed the difference between these two approaches to hospice care and refrained from calling the other alternative clearly inferior (see the discussion on p. 95). The Alzheimer disease specialist (Case #3) also distinguished her public service from her private practice by referring to the organizational venue of that work (see the passage quoted on pp. 153–154), but she did not characterize the private for-profit practice as inferior in value to the public service. Claiming purported pecuniary motives of the competitors could add to the perceived cost of their treatment and thus make the alternatives organized on nonprofit basis, stipulated by the SPORG form more attractive. Yet that strategy was not very effective in dismissing another challenge faced by this group of service providers, the hostility of public authorities. That hostility can be construed as a clear sign that nonconventional medicine is not a public benefit, and hence has no value for solving society’s problems. Relying on the public service attribute of the SPORG form to alter that perception is of little use, because public authorities are conventionally recognized representatives of public interests. Their status carries significantly greater weight than the status of an obscure social proximity organization. My source dealt with this problem by evoking a schema that redefined the government’s action to justify his own position. He claimed that instead of expressing collective interests (schema #4 in Figure 6. l), the executive branch of the government represents individual concerns of special interest groups (schema #1). Specifically, he portrayed the government’s campaign to regulate the production and distribution of herbal remedies as an arbitrary decision of individual members of the executive branch responding to pressures from special interest groups (pharmacists). He then contrasted these efforts with the position of the parliament whose authority is superior to that of the executive in Poland. It is only the government of the Prime Minister Suchocka [that does all that], because there is no act of the Parliament [ustawa sejmowa]. Look,

172

CHAPTER 7 sir, isn’t that strange that the ordinance [rozporzadzenie] of a lower branch of the government contradicts the ordinance of the higher branch—that is, the ordinance of the Council of Ministers [Rada Ministrow] contradicted the act of the Parliament, because the act of the Parliament does not require permits for the sale of herbs. But the Council of Ministers, responding to the pressure from the [pharmacists’] lobby issued, or rather proposed, a bill that all herbs are pharmacological substances. (source 17)

It is clear that portraying the opposing interests as serving mainly private interests reduces their perceived legitimacy and makes the herbalists’ position more legitimate by comparison. Yet, undermining the legitimacy of the competing or hostile interests is not enough to define nonconventional medicine as public benefit. At the very best, this form of therapy may appear to be not as bad as its enemies claim, and that is a far cry from treating it as a legitimate alternative to conventional medicine, which the herbalists clearly intended to accomplish. We would like the doctors to send us people with chronic conditions. Some of them cannot take medications, they are allergic. But [right now] not too many doctors would refer patients to us, but some would. [ . . . ] In Radom [a city and prefecture in Central Poland], a gynecologist sent us a number of women. 1 talked to one of those women and asked what the doctor said. “He was surprised” she replied, “he had three cases of tumor—that is, lumps in the uterus8—and they were cured [by herbs] without a surgery. And that doctor said ‘If 1 did not see it, I would not believe herbs could cure that, I’d laugh if somebody told me that, but I had one case, and another, and another.”’ The same pertains to stomach and duodenum ulcers [wrzody zoladka i dwunastnicy] — herbs remove them beautifully. (source 17)

As the passage illustrates, the problem is the only benefit the herbalist can legitimately claim is improving the long-term well-being of individual patients, provided, of course, that such improvement is real (Figure 7.8). Yet, that benefit has been already established as the domain of conventional medicine. Medical establishment has a clear advantage over herbalists in this respect, because doctors have not only a far superior occupational status, but also conventionally recognized knowledge of the human body, which the herbalists apparently lack. Therefore, the recognition of herbal therapy as a legitimate form of treatment ultimately depends on the willingness of the medical professionals to recognize it as such, and that willingness was in a rather short supply, even by the source’s own admission. From the perspective adopted for this analysis, improving the long-term well-being of individual patients represents expanding the perceived benefits

PROFESSZONAL SERVICE AND PUBLIC BENEFIT STATUS

173

Figure 7.8. Front cover of a brochure produced by the Coastal Environmental Society. Although the organization advocates protection of the natural environment, its main form of activity is distribution of herbal remedy. The front cover shows the organization’s logo and address, while the text reads “This book does not offer miracle cure, but shows the great potency of herbs and how they can help to overcome even most serious illness.”

along the time-span axis (Figure 6.1), and that strategy did not seem very effective under the circumstances. Consequently, the herbalists adopted a different approach to increase the perceived value of their service, namely expanding the scope of potential beneficiaries (vertical axis in Figure 6.1). Their strategy followed a familiar approach found in the narratives of the “organic intellectuals” discussed in the preceding section. They used their social proximity organization as a platform to espouse a broader public issue that

174

CHAPTER 7

is linked to their own work. In this particular case, they included broader ecological concerns in their organization’s mission. The connection between ecology and herbal medicine appears as natural; a clean environment makes not only organic farming of herbs possible, but improves public health and well being of the entire population. The clean environment is also a legitimate public concern, espoused by social movements and public agencies alike. Thus, an organization that includes that concern in its mission serves the public interest. That concern was salient in the organization’s name, “the Coastal Environmental Society” (see Figure 7.8), as well as numerous initiatives it sponsored. One such initiative involved efforts to form an ecological guard to prevent poaching. First we must change the people’s attitudes toward the environment, the nature. Right now, their attitude is to destroy everything around them. Not long ago we went to the lakes, state fisheries, and we could not stand what we saw there [a long, emotionally charged description of poaching practices of killing fish with explosives and electric current follows]. . . So that gave me the idea of establishing ecological guard, certified ecological inspectors having the authority to bring charges against those poachers. I want to go in this direction, to work with the government, but as you know, that requires money, nobody will take such risks for free, because those poaching gangs are dangerous. (source 17)

Other initiatives included efforts to popularize environmentalist values, such as public lectures or tours to organic farms for high school students. But it was also clear from the interview that while the source was genuinely concerned about protecting the environment, he also treated those concerns instrumentally, to send a message that his organization served public interests. By the logic of status generalization that projects attributes of an agent on the perceived qualities of his actions, that organizational status also defined the sale of herbal remedies as a public benefit. In that capacity the SPORG form provided a platform to attain occupational goals and public recognition of herbal healers. The second case in this group of providers, the “Hippo-therapy Foundation” (Case #5) promotes a specific form of physical therapy for children with psychomotor disorders. The hallmark of this form of therapy is a horse. According to its proponents, horseback riding has beneficial psychological and therapeutic effects on children who suffered from cerebral palsy, autism, as well as substance-induced brain damage. The movement of the animal stimulates blood circulation, the respiratory system, muscles, and joints. The interaction with the horse also creates a favorable environment that improves the patient’s emotional balance, self-reliance, self-esteem, and contacts with the social environment.

PROFESSIONAL SERVlCE AND PUBLIC BENEFIT STATUS

175

The treatment was introduced to Poland in late 1980s by a group of horseback riding afficionados who became aware that it was effectively used in many Western European countries and the United States. Some of these innovators were motivated by personal reasons: to find a treatment for their own disabled children, or to help someone they knew. They did not have any formal training or experience in physical therapy. Their “professional” skills were limited to horseback riding instruction. The group [of founding members] was directly engaged in this form of activity, feeling it by heart and very committed. Horses were their way of life, and the contacts with the patients, with children and their parents just stimulated them to do a bit more in that direction. They initially worked with individual parents who heard from their friends that such treatment is available. (source 3)

Lack of conventionally recognized professional status put the hippo-therapists in a situation similar to that faced by the herbalists, as far as information asymmetry problem is concerned. Both groups offered services that shared several important characteristics. There are no evidently visible results of the treatment that would demonstrate to an untrained eye that the patient has been cured. There are even no well-defined criteria of what constitutes a successful outcome of the treatment, and what kind of results the patient can expect from the therapy. The treatment itself is poorly defined, as it is difficult to distinguish it from nontherapeutic activities of a similar kind. Just like nonconventional medicine, hippo-therapy is a form of treatment whose effectiveness is not immediately apparent, and oftentimes questionable. The therapeutic regimen requires multiple sessions that could pose a substantial burden and cost to the patient. Each session lasts about 30–40 minutes during which every patient requires the assistance of at least one, sometimes two, specialists, not to mention the horse. Sessions are repeated once or twice a week for the period of four to six months, oftentimes even longer. The results, if any, cannot be expected until the treatment is completed. Moreover, the criteria of what constitutes a cure are poorly defined. The patients often suffer from severe disorders or birth defects which simply cannot be cured by this or any other form of therapy. The best one can hope for is mild alleviation of symptoms or, simply, emotional comfort to the patient. That situation creates a gap between clients’ expectations and what the practitioners can actually deliver. An essential element of hippo-therapy is horseback riding, and that poses yet another information asymmetry problem. In the eyes of an average lay person, therapeutic horseback riding is virtually indistinguishable from recreational horseback riding (Figure 7.9). Since recreational horseback riding is often per-

176

CHAPTER 7

Figure 7.9. “Hippo-therapy” is new to the Polish context, treatment of severe emotional, mental and psychomotor disorders in children that utilizes horseback riding as the main therapeutic technique. Although the treatment is labor-intensive, it requires one or two specialists and a horse per each patient; it is virtually indistinguishable from recreational activities. The picture shows a typical therapy session: two hippo-therapists assisting a young patient. (Photo: author)

ceived as a pastime of the rich, the poor definition of the therapeutic use of the horse created problems to obtain funding necessary for the organization’s operations. No public authorities or private donors would like to sponsor what appears like recreational activities of the wealthy. Hippo-therapy is not yet an officially recognized form of rehabilitation. Many [officials] see it as a very exclusive form of treatment, and some even consider it a mere whim. I often hear from them “we have more important things to do, we save lives, but all you have to offer is horseback riding for children.” (source 2)

Although the poor definition of the service posed some problems in obtaining public funding’ (Figure 7. 10), the overall attitude of public authorities toward the organization’s activity could be characterized as indifference rather than hostility. In that respect, the situation of hippo-therapists differs from that experienced by herbal healers. However, both groups of service providers experienced another challenge—competition with “quacks.” Poland is a country where the horse is still a quite common farm animal, even though it is seldom used for farm work. The horse is also a cultural icon

PROFESSIONAL SERVICE AND PUBLIC BENEFIT STATUS

177

Figure 7.10. The “Hippo-therapy Foundation” can function thanks to the in-kind public support. The organization utilizes the facilities of the Institute of Agriculture, a picturesque old country manor in Warsaw’s suburbs, for its therapy sessions. (Photo: author)

that symbolizes the country’s “glorious past” (especially the cavalry of which many Poles are quite proud), the virtues of agricultural work, as well as aristocratic tradition and a high social status. Consequently, horses are often kept for their sentimental rather than utilitarian value. However, as the economic situation of the country worsened throughout 1980s, maintaining horses for their sentimental value alone posed an increased financial burden. Many owners started using their animals for recreational purposes, by offering riding sessions to well-off urbanites. After hippo-therapy was introduced to Poland, many horse owners saw it as an emerging economic opportunity. To attract new customers, they often marketed their recreational services as a form of “therapy.” Hippo-therapists saw that practice as a serious threat to their occupational interests and the reputation of the treatment itself that was still to gain recognition by the mainstream medical professionals and public health authorities. The problem has become widely spread, and we received many signals about people who provided this form of treatment without even elemen-

1 78

CHAPTER 7 tary qualifications. There were instances of serious accidents. Therefore we took the initiative to legitimate both the method itself and the profession of hippo-therapist. (source 3)

But in that pursuit, hippo-therapists faced a problem similar to that experienced by herbal healers. Despite their claims to the contrary, they were essentially amateurs who competed with other amateurs. It mattered little that hippotherapists had some rudimentary knowledge of rehabilitation and physical therapy, which their competitors lacked. Without proper recognition, their knowledge was anything but competitive disadvantage. Legitimate rehabilitation requires a strict regimen that many patients may perceive as too burdensome and costly. However the quacks, unencumbered by knowledge of any therapeutic regimens, can tailor their services to the liking of their clients, and thus make it appear more commercially attractive. Special skills and knowledge alone are insufficient to turn them into a professional service, unless the skills and knowledge are embedded in socially recognized knowledge structures. The hippo-therapists were quite aware that without proper recognition their chances of winning competition with quacks were rather slim. It has been and still is the case that practically anyone who has the capacity to open individual commercial operations can advertise that he provides hippo-therapeutic treatment, and nobody can prohibit that. Until a favorable legal environment for this profession is created, there is no possibility of imposing any legal sanctions against such individuals [ . . . ]. [Since] nobody has any certificates, anyone who does it nonprofessionally can say “you don’t have a certificate either, so why are you calling yourself a specialist, but not me?” (source 2)

To summarize, the hippo-therapists faced a rather serious information asymmetry problem, which they had to overcome before they could believably claim to provide services of professional quality. To solve that problem they needed to accomplish two objectives. First, they had to define their service as a bona fide therapeutic treatment that is clearly distinguishable from nontherapeutic activities of the similar kind. Second, they had to define themselves as professionals or experts—that is, exclusive owners of recognized special skills and knowledge necessary for the therapeutic treatment they offered. The recourse to the social proximity form proved instrumental to accomplishing both objectives. First, the formal organizational structure, the feature discussed at length in Chapter 5, proved to be quite useful in drawing the boundary between professionals and nonprofessionals. We established that organization because otherwise we won’t have any sanctions against those who do it unprofessionally. But when we establish

PROFESSlONAL SERVlCE AND PUBLIC BENEFIT STATUS

179

centers approved by us “here we do it professionally, people are trained, there is a physician, a rehabilitation specialist, a psychologist,” the patients will have a choice. (source 2)

Formal organizations are socially constructed entities that can be more or less distinguished from their environment. That is to say they are governed by a set of rules or principles that separate members from nonmembers, specify the conditions that must be met to achieve and maintain membership status, as well as define special competencies, benefits, and privileges given only to a member. That attribute of formal organization can be quite useful in separating professionals from quacks in an environment where no legal requirement to practice a particular profession exist. Organization membership, with its all necessary requirements and entitlements, acts as a marker of a professional status of a sort. Of course, such a status is not tantamount to recognition by the public and other professional groups, or to government regulation of a profession. Public authorities can impose sanctions for noncompliance with licensing requirements, the power that nongovernmental bodies generally lack. The hippotherapists hoped their occupation would eventually be recognized by public authorities, but for the moment, they concentrated their efforts on a more urgent task—gaining recognition of other professional groups, especially physicians. Being recognized by other professional groups is virtually indispensable for a newly emerging profession. As the case of herbalists clearly demonstrated, the opposition from that corner could have dire consequences for their occupation. If the medical establishment publicly proclaimed hippo-therapy is yet another form of quackery, its practitioners would have no means to prove that opinion wrong. Since they lack a recognized professional status, their arguments carry little weight against the pronouncements of a recognized professional authority. Nor could they muster sufficient evidence that their treatment really works. Hippo-therapy does not cure psychomotor disorders; it cannot “produce” healthy individuals in the same way as surgery or antibiotics can. Although the patients’ condition may somewhat improve as a result of the treatment, they still remain handicapped. Consequently, the absence of a visible “cure” will look to untrained eyes as the lack of effectiveness of the treatment. Not being recognized by already established professional groups has another, even more detrimental, disadvantage: exclusion from the referral system. Let us recall that the system of professions (see the discussion on p. 85) is an important vehicle for solving information asymmetry. Since patients often do not know what kind of specialists can offer the best treatment for their particular ailments, they may turn for help to a “wrong” practitioner. Thus, practitioners must cooperate among themselves to refer the patients to the proper

180

CHAPTER 7

expert. The lack of recognition among the already established professions effectively excludes a practitioner from the referral system; no self-respecting professional would send her patients to someone she perceives is a quack. The exclusion from the referral system can have negative consequences on professional practice in general, but such consequences are especially dire when a group of specialists lack status and recognition. The excluded practitioner may find it difficult to find clients, especially when her treatment is not popularized and few people know of its existence. Moreover, the patients who eventually turn to such a practitioner for help will be those who have exhausted all other alternatives, those suffering from chronic or incurable ailments that have a little chance for cure. Such was the case of the herbalists whose patients came to them as the last resort, after all other forms of treatment had failed. That negative selection of cases can also have an adverse impact on the perceived quality of the treatment. The treatment may be effective, but those who can benefit from it are unlikely to seek it, because they are referred to other specialists. The patients who eventually seek it are mostly those who unsuccessfully tried other forms of cure. Such patients are often too sick to benefit from any treatment at all. As a result, few patients who receive that treatment actually benefit from it, reinforcing the negative perception of its effectiveness. Recognition by the other professions is thus a very important aspect of professional practice, especially when the practitioners are also unrecognized by the population at large. The hippo-therapists were well aware of that and sought to establish working relations with the medical profession. We strive to convince a broad group of experts, but mainly medical professionals, that this method is good and effective, and also engage them in our work. (source 3)

While establishing a formal organization could help distinguish legitimate hippo-therapists from quacks, mere membership in an organization that calls itself professional is insufficient to gain recognition of other professional groups. Here the hippo-therapists took advantage of another key attribute of their organization: its social proximity form and public service status. Their choice of this organizational form was a conscious decision to send a signal about the bona fide nature of their activities, and the SPORG organizational form was the message. Q: “Why did you chose this organization form? A: “That was the only viable option. Since hippo-therapy is not an officially recognized form of treatment, we would have problems. So the fact that we are this kind or organizations, that we do not have any commercial activity allows me to stand up and openly say ‘look, that is all we are

PROFESSlONAL SERVICE AND PUBLIC BENEFlT STATUS

181

doing, we are not making any money here, our intentions are clean.’ ” (source 2)

In addition to providing treatment, the organization served as a platform for popularizing that form of treatment among other professionals, physicians, rehabilitation specialists, and psychologists. It organized lectures, discussion forums, meetings, and professional conferences. It also published an information bulletin that featured articles on the subject of hippo-therapy written by various specialists. The social proximity, nonprofit, public benefit status of the organization played an important function in attracting specialists to these events. The SPORG organizational form makes the participation in such events more attractive to other specialists and professionals. In essence, it tells them their participation and input is a form of public service that benefits a larger community, rather than an advertisement gimmick for commercial interests. This is a nontrivial incentive, because as we have shown in it in Chapter 3, public service is an important aspect of professional ethos in Poland. Of course, the participation in lectures, conferences, etc. had the added benefits for these experts in the form of publicity, networking, and publishing forums, which are always valuable opportunities in professional circles. The networking opportunities created by these events worked to the advantage of hippo-therapists as well, because they created social proximity ties that fostered a better understanding of the participant’s work, positive attitudes, and eventually working relations. A physician may not necessarily be convinced by the claims of the treatment’s effectiveness that are published in the organization’s promotional literature. Even if its proponents can demonstrate some successes, that does not yet mean that other, more conventional and tried form therapy would not achieve the same or better results. Moreover, hippo-therapy has clear disadvantages, among them its considerable cost and a low patient turnover rate, that pose serious barriers to employing it on a larger scale. In making her recommendation, a physician would normally consider not only any potential benefit, but also the cost her patients may incur while receiving the treatment, especially if only a modest improvement in the patient’s condition can be reasonably expected. Such cost considerations are not limited to obvious considerations of side effects, but also include the likelihood of completing the regimen prescribed by the treatment, as well as the financial burden. If viewed from that perspective alone, the cost of hippo-therapy is considerably higher than that of the conventional physical therapy. However, social proximity and direct participation in the work of hippotherapists may subjectively alter that perception of cost–benefit balance. The

182

CHAPTER 7

enthusiasm and dedication of the staff, which I had an opportunity to witness, and a direct contact with severely disabled children who benefited, even if modestly, from the therapy carries a much different weight than cases reported in professional journals. Strangely enough, even the direct contact with horses has a positive impact on human attitudes, as emphasized time and again in the organization’s literature and my informants’ reports (Figures 7.11 and 7.12).

Figure 7.11. It is claimed that physical contact with horses has a beneficial emotional effect on patients. Contacts that include taking care of the animals, as shown in the photo, are encouraged during therapy.

(Photo:

author)

PROFESSlONAL SERVICE AND PUBLIC BENEFIT STATUS

183

Figure 7.12. Hippo-therapy often cannot offer anything more than emotional comfort and improvement in quality of life. horses. (Photo: author)

As the result, young patients often become quite attached to “their”

Ideally, we would put a referring physician on a horse back, to let her directly experience the situation, what physical forces are involved. Because each horse is different, not only moves differently, but also has a different personality, more or less dynamic, and that may cause some children to feel bad, to be left behind. So we have to match them individually, we have to find a method. Paper knowledge is not enough. (source 2)

That direct experience may convince physicians to recommend hippotherapy to their patients. In other words, this is the hippo-therapists’ chance of being included in the referral system whose importance for a professional practice we just discussed. Last but not least, the public service status of the SPORG form can also influence potential donors, both public and private, to donate much needed funds to the organization. Private donations constitute a major source of funds,10 about 40% from individual donors and additional 47% from institutional donors according to the organization’s financial statement. Without the public benefit status, such high level of support would not be attainable. The third group targeted by the hippo-therapists’ publicity campaign can be described as general public, including the local authorities. Here the

184

CHAPTER 7

organization’s leadership followed a strategy similar to that we identified among the “organic intellectuals” discussed in the preceding section—a demonstration that in addition to serving individual patients, the organization “does something for Poland,” or rather local communities in which it operates. One of the main means used to that end was another key attribute of the SPORG form— volunteer work. As we noted earlier (p. 151), volunteering for health organizations is not very popular in general, and is particularly infrequent in Poland, since healthcare is perceived there as a form of public entitlement. Consequently, volunteers are called upon only when the nature of treatment itself requires their participation. Such, for example, was the case of the organizations in the first category discussed in this chapter (the “Amazons,” “Ami,” and the “Alzheimer’s Association”) that routinely used volunteers in lieu of professional staff. The substitution of paid specialists with volunteers was a strategy to overcome the distrust barrier in the patients. However, the “Hippo-therapy Foundation” seldom allowed volunteers to directly participate in the treatment. Although the parents of the young patients often volunteered, for obvious reasons, to assist the therapist, the organization adopted a strict policy of not substituting paid professionals with volunteers. We use only paid specialists in our sessions [ . . . ] This is a very specific form of treatment and we cannot afford any improvisation [ . . . ] Sometimes the parents help us [during the therapy session], but we never allow their full participation. It is us who are responsible, so we cannot afford taking any risks. (source 2)

That volunteer involvement in the treatment itself was seen as undesirable and even harmful is understandable. The organization was conceived mainly as a professional project, that is, an effort to gain professional recognition. Recognition was based on the claim of possessing unique qualifications: knowing how to handle the horse, and knowing the basics of physical therapy. Such qualifications distinguished hippo-therapists from both horseback riding instructors and conventional rehabilitation specialists. So if volunteers could replace the aspiring professionals in performing the treatment, their efforts to attain a professional status would be jeopardized. After all, if volunteers can do the job, who needs a paid professional? On the other hand, volunteer participation signals the social proximity character of the organization. If the choice of that organizational form is the strategy to win recognition and support of public health care authorities, volunteer participation will aid those efforts, even if it is unnecessary or even slightly disadvantageous to use volunteers. It comes therefore as no surprise

PROFESSIONAL SERVICE AND PUBLIC BENEFIT STATUS

185

that specialists who, by their own admission, see little use of volunteers in their professional practice, nonetheless make efforts to encourage volunteer participation in their organization. We are trying to encourage as many people as possible to participate in support activities, like special events, making promotional T-shirts, painting, we want them to get involved in our activities. [We do that] because the concept of volunteering is not well developed in our [country], some people just do not grasp it. It is difficult to get them interested. It is not that they have bad intentions, they just don’t believe their participation matters. They developed this attitude ‘we are entitled to it’ because health care has always been free in our [country]. (source 2)

To reiterate, volunteer participation is visible trait of organizational behavior that defines the social proximity character of that organizational form. That participation may not be essential for the professional service itself, but it is essential for maintaining the social proximity character of the organizational form of that service. It is a visible sign that, like religious hierophanies, incarnates an ideational value, namely the ideal of public or societal benefit. If the organization embodies the ideal of public service, then by the logic of status generalization, the services its offers are public in nature. So even if volunteer participation is neither necessary nor culturally expected, it turns the organizational form into a medium that is the message that the service providers want to send to the “outside world.” That message simply tells “what we are doing here has a social value by virtue of its organizational form.” To summarize, the case of hippo-therapists demonstrates once again that the SPORG organizational form can and have been used to establish legitimacy of a professional service that faces information asymmetry problems. The recourse to this organizational form was instrumental in defining hippo-therapy as public service, which set it apart from recreational horseback riding offered by commercial providers. Formal organizations also furnished a procedure that defined the competencies of professional hippo-therapists and differentiated them from non-professionals. In that capacity, the SPORG form was used to accomplish two separate but closely related ends. First, it increased the perceived social value of the treatment itself by expanding the scope of potential beneficiaries to the clients who could afford paying its commercial cost as well as the community at large. Second, it decreased the perceived value of competing services by contrasting the venues of their delivery (see the dotted and solid semi-circles in Figure 6.1, which represent the cost-benefitbalance of the commercial and SPORG venues, respectively). This is an example of using organizations as sets of cognitive frames for the social cost–benefit balance, as outlined in Chapter 6.

186

CHAPTER 7

The nine cases of service providers facing different types of information asymmetry problems, analyzed in this chapter, have demonstrated a relationship between occupational interests of the providers (the need to overcome such problems) and different uses of the SPORG organizational form. That relationship was stipulated by the organizational uses and gratifications model proposed in this book. The providers with a well-established professional status who introduced services within their conventional areas of expertise, and thus faced little competition, used the SPORP organizational form to lower the perceived cost of professionalization that jeopardized trust between patients and practitioners. To accomplish that task they de-emphasized the involvement of paid professional staff and instead relied on volunteers. Another group of professionals introduced services that cross the boundaries of their conventional competencies, and thus may have faced skepticism about the social value of their innovation. These so-called “organic intellectuals” used the SPORG form to define their services as a form of public benefit to entire society. They accomplished that by employing the organizational form in question as a cognitive schema that expanded the scope of potential beneficiaries from individuals who actually received their services to a larger community. Finally, paraprofessionals who lacked a recognized status and provided services of a questionable11 nature also faced substantial competition and opposition, mainly from other professional groups or public authorities. These providers used the SPORG organizational form in two distinctive ways. First, the formal organization gave them the means of defining their service and their own occupational status and differentiating them from competing non-professional services and providers. Second, the key attributes of this organizational form defining it as public service created a convenient platform to link the services to broader public cause (such as protection of the environment). These cases demonstrate that the level of need for professional recognition and legitimacy corresponds to specific patterns of using the SPORG organizational form. It furthermore demonstrates the relationship of elective affinity between occupational interests of service providers and the organizational venues of service delivery. Such elective affinity was the key factor explaining professional involvement in establishing social proximity organizations, which was the key research problem investigated in this book. That relationship can be further evidenced by the counterexamples, that is, cases of providers who did not face information asymmetry problems and, consequently, did not use the SPORG form and its attributes to legitimate their work. One such counterexample, “Gaudium Vitae,” was discussed earlier in

PROFESSIONAL SERVICE AND PUBLIC BENEFIT STATUS

187

this chapter. The second counterexample is the “Homo Homini Frater” (Case #13). The entity in question provides counseling and meditation sessions designed to improve the quality of spiritual life. They resolved the potential information asymmetry problem in manner similar to that used by “Gaudium Vitae,” by grounding their service in ideology and limiting the social scope of potential beneficiaries to those who share that ideology. The effect of that strategy was a priori dismissal of any criticisms and doubts regarding benefits of their treatment. Q: “What do the participants expect from their participation in your courses ? ” A: “Perhaps some sort of spiritual guidance in everyday life. Q: “And how do you expect them to follow your guidance?” A: “It is difficult to tell. Some will follow the path, while other will find another path, as they attain some basic insight [rozeznanie]. That is exactly what we say in those courses, that everybody should seek his own path. And if he follows out path or finds another master—that is his private business.” (source 13)

In essence, that approach was antithetical to that used by other providers discussed in this chapter. The latter expanded the potential beneficiaries to legitimize their work by claiming its beneficiary-to-society character. Homo Homini Frater, by contrast, legitimized its work by narrowing the scope of beneficiaries to the followers of its ideology. Therefore, claiming public benefit of that work was not only unnecessary, but also potentially harmful, as it could bring unwanted doubts and criticism of services that the followers a priori assumed to be beneficial. Consequently, these practitioners had little need for the public benefit status of the SPORG form. No public authority would recognize us or give us any support. It was that people got together because they felt a need of organizing. We didn’t even think that the prefect [wojewoda] or somebody like that might be possibly involved. He would say “if they seek spiritual development, what do I have to do with that?” (source 13)

This lack of concern with casting the service as a form of public benefit explains that informant’s refusal to placing the agency’s work in a social context. The only use of the SPORG form she claimed was limited to purely administrative tasks required to conduct meditation sessions, such as leasing suitable facilities, property management (the agency owns real estate) and accounting.

188

CHAPTER 7

This case demonstrates that the absence of information asymmetry problems, which were solved by alternative means (recourse to ideology), results in a little need for legitimizing occupational interests by marketing a service as public benefit. Accordingly, the organizational uses and gratifications model predicts the use of the SPORG form that is commensurate to those needs. This is precisely what the cases of “Gaudium Vitae” and “Homo Homini Frater” demonstrated. Their staff explicitly refrained from using that form as a platform to expand the social scope potential beneficiaries. The only use they could find for that form was facilitation of administrative tasks. A corollary to these findings is a proposition regarding the causal direction between the nature of the good and the choice of the organizational venue, hinted earlier in this essay. The provider’s choice of “public” organizational venue determines the “public’’ nature of the good in question, rather than the “public” nature of the said good determining the choice of the venue, as the conventional theories of nonprofit organizations seem to suggest. By virtue of providing a professional service via SPORGs, the service becomes a public service, whereas outside that organizational context it is viewed as a mere commercial activity. The mechanism that accomplishes that transformation is the cognitive framework that influences the perception of costs and benefits of the service. Within the SPORG, the perceived cost of providing the service is limited to individual, voluntary effort. The social scope of beneficiaries, by contrast, is expanded to include broader segments of public (vis a vis the scope implied by commercial transactions), and even entire communities. Outside the SPORG, the service delivery tends to be perceived as a transaction between individual parties, so both costs and benefits accrue to individual parties (providers and recipients) rather than the public at large. This is not to say that the choice of venue is arbitrary, or a sole determinant of the public benefit status, and any service can be constructed as public benefit if the provider so chooses. On the contrary, only certain types of services can be believably claimed to benefit public interests in a particular culture. For example, there are no nonprofit money lending institutions in Poland, even though credit unions and associations are widespread in many developed and developing countries. The lack of necessary resources, while probably a factor, cannot fully explain that absence, because under the central planning regime, many different types of services were provided by public agencies or publicly supported organizations. That also included no-interest credit available through labor unions or state-owned employers. However, only health care and social service entities were transformed into independent SPORGs. While commercial nonstate owned banks did emerge, the nonprofit credit agencies did not. That development can be explained, at least in part, by the still

PROFESSIONAL SERVICE AND PUBLIC BENEFIT STATUS

189

common perception of moneylending as self-serving usury unbecoming of a “God-fearing Pole.” This suggests that cultural–normative elements and perceptions of collective identities and interests play a greater role in defining what is and what is not public good than the economic theories of nonprofit organizations want to acknowledge. While the provider’s choice of organizational venue may be a direct causal factor that transforms a service, especially a novel one, into a public service, that choice is not made in a social vacuum. It must take into account social norms and values that facilitate certain types of services to become public benefits, and restrain others from attaining such a status.

NOTES 1

2

3

4

5 6 7

Following Gramsci (1971), I used that term to denote members of the intelligentsia who use their knowledge and skills to represent the interests and improve the lot of an underprivileged or underrepresented social group. Contrast that with early 20th century strategies used in some developing countries to expand the perceived benefits of public health care along the social scope axis (Larson, 1977). For example, in Great Britain the need for public health care was justified as the effort to improve national defense, as the poor health of recruits jeopardized the combat readiness of the British Army. The Polish term lekarz can be literally translated into “one who cures.” In ordinary usage it denotes a physician, but its connotation does not have any reference to the physical aspect of human life as the English equivalent does. Therefore, rendering it as “physician” would be inappropriate in this context, which clearly refers to “curing spiritual pain.” Prison tax is a 5% tax on incomes of the inmates gainfully employed while serving their sentences. However, when the unemployment rate reached two digits in the aftermath of the 1989 transformation, prison jobs became scarce, adversely affecting the organization’s revenue from this source. According to my sources, when prison employment was at 80% level, the organization’s revenue from prison tax was equivalent to about $10,000 in U.S. funds, a substantial amount in the Polish situation. At the time of the interview, however, the inmate employment level fell to 17%. In Polish, it is customary to address people by their formal titles, e.g., Mr. Doctor, Mr. Director, Mr. Engineer, and so on. My source was referring to a known Polish herbalist, Mr. Eligiusz Kozlowski, who died in 1998. Again, I have neither intent nor expertise to judge the treatments offered by my sources on their merits. This study is limited to the exploring how such merits are constructed by the providers. In this particular case, however, the source went to great lengths to convince me that his treatment really works. Here is an example: After prolonged illness, herbs are certainly more effective than pharmacological substances. For example, we have hundreds of legs saved from amputation. We keep written records. Look, we have a whole stack of them [the informant points at a stack of documents on a shelf], when patients were referred for amputation, but still have their leg to this day, because their blood circulation returned. They

190

CHAPTER 7 drank herbs, it is a long treatment, half a year or a year long. [The patients must] quit smoking. Strict discipline and herbs, that is all. (source 17)

8

9

10

The source used two terms to describe this condition: miesniak which translates as myoma, and then he elaborated it as guz na macicy, a colloquial term that can mean “uterine tumor” or any swelling or lump on the uterus. The main form of public support the organization receives is the permission to use the grounds and facilities owned by the Academy of Agriculture (a public institution of higher learning) for housing, feeding, and maintaining the horses. The total reported cash revenues are equivalent to about $37,000 (U.S.) per annum. Program fees constitute only about 13% of the cash flow. The fee system was reportedly introduced to prevent breaking the appointments, which reportedly posed a serious problem to the most efficient utilization of the organization’s staff and resources. At the beginning, we tried to maintain [the rule of providing our services] at no cost to the parents. But it did not work, and right now the parents cover one fourth of the costs, and we try to match the remainder [with donations] from our sponsors. I think it improved the relations with the parents, because they started treating our services differently. When we did not charge them anything, they would not show up for weeks without even calling us. (source #2)

11

I use this term simply to convey that these services can be and have been questioned by others. It is not my intention to pass judgment on the claimed merits of these forms of treatments.

Chapter

8

Toward a Partial Theory of the Origins of Social Proximity Organizations USES AND GRATIFICATIONS OF SOCIAL PROXIMITY ORGANIZATIONS This book uses the case of newly created social proximity organizations in Poland to examine the relationship between collective interests of occupational groups, institutional resources and opportunities and constraints arising from a large-scale social change in Eastern Europe. The central research question that emerged from empirical data was: “What are the motives behind professional involvement in creating social proximity organizations?” To explain this involvement, I proposed the uses and gratifications model of organizational behavior. This model holds that an organization’s functions in society are defined not only by its formal rules and official mission statements, but also by the interests of human actors who work in it. The elective affinity between such interests and the organization’s capacity to meet them explains the actors’ preferences for using that organization form in their work, when the opportunity arises. Following the implementation of the central planning system in Poland, many Polish professionals developed an interest in reforming the social–political institutions of their country, and redefining the standards and practices of their professional work. To pursue those interests and aspirations, they often proposed innovative solutions and forms of treatment of social problems that exist in Polish society. Such solutions frequently involved adaptating service forms found in developed countries to the Polish service market. 191

192

CHAPTER 8

Because of the innovative character of these solutions, they were often inconsistent with the conventional expectations about the provider’s competencies and occupational roles. These inconsistencies produced information asymmetry or knowledge gap between the practitioner and his potential clients, and this impeded a successful implementation of that solution in the new service markets. In turn this created a need to overcome the information asymmetry problem and the obstacles it produced. The process of overcoming information asymmetry problem involves embedding the innovation in socially recognized knowledge structures—that is, dressing it in such forms that are familiar and recognized as being sound and valid. To paraphrase the passage quoted in the opening of this book, this is the process of borrowing the spirits, battle cries, and costumes of the past to present the “new scene of world history in a time honored disguise and a borrowed language.” This book has demonstrated that social proximity organizations, the organizational form whose key attributes stipulate noncommercial, nongovernmentcontrolled work for public benefit, can offer a solution to the information asymmetry problem. Following the logic of status generalization, a process whereby a salient attribute of the actor is projected on the quality of his actions, the SPORG form defines the professional work carried out through that organizational venue as a form of public service. Defining professional work as public service changes its perceived value by expanding the scope of its potential beneficiaries while shrinking the scope of its social costs. Such capacity of this organizational form explains its elective affinity to the occupational interests of service providers and their motivation to use that form in their professional practice. The proposed model also solves three conceptual difficulties that are implicit in the conventional theories of nonprofit organizations. First, these theories assume a rational actor, which by definition refers to someone who chooses a course of action that has the best potential for maximizing personal gain. Since the nonprofit distribution constraint precludes the appropriation of financial gains produced by the organization’s economic activities, a rational actor cannot reasonably expect that recourse to this organizational form will directly maximize personal gain. Consequently, the motives of such actors are either unexplainable, or require a departure from the rationality assumption, which in turn, may introduce internal inconsistencies to this theoretical paradigm. The model I propose solves that difficulty by introducing the concept of cognitive schemata or socially constructed expectations that define the legitimate scope of information that can be used to determine the perceived value of a course of action. A rational actor who has already invested resources in ac-

TOWARD A PARTlAL THEORY

193

quiring the necessary skills and knowledge to develop a professional treatment or a service has an obvious incentive to adopt a schema that maximizes the perceived social value of that service. This book has demonstrated that the SPORG form is such a schema. Therefore, adopting this form as a venue of service delivery is a rational decision, even though it does not entail immediate payoffs. These payoffs are expected to come later, in the form of favorable perception and acceptance of the service by society as a legitimate, trusted and valuable solution of a social problem. Since trust is necessary for developing and maintaining a demand for professional services, professionals have vested interests in adopting a strategy that establishes trust in their services. Thus, the proposed model of nonprofit organizational behavior explains the motives of the actor, while preserving the rational actor assumption. The second conceptual difficulty implicit in conventional theories of nonprofit organization takes the form of a question that these theories often fail to ask “Why is nonprofit action the domain of organizations and not individuals?” To be certain, this is a “sin of omission” rather than commission, because this question can be answered by the standard explanation offered by the transaction cost model, which holds that organizations are more efficient than transactions between solo actors, since they reduce the cost of such transactions. Yet, such an explanation simply shifts the problem back to the question of motives, because when no profit distribution is involved, it fails to explain who has the incentive to economize on the transaction costs and why. The organizational uses and gratifications model solves that difficulty by explaining such motives. In addition to information asymmetry, professional practice often involves challenges to occupational interests of the providers. Solo practitioners may find it difficult to meet those challenges, especially when their challengers have a competitive advantage, such as a superior status, expert knowledge, access to organizational resources, or are in the position to lower quality standards to make their product appear less costly. The SPORG form can be a valuable tool for practitioners, who strive to protect their occupational interests against such challenges. It provides an institu tional platform for developing channels of communication and coordinating a common strategy. Organized and coordinated strategy is usually more effective than efforts of individuals acting in isolation from each other. In that respect, the SPORG form simply reduces transaction costs of solo actors, as the conventional transaction cost model holds. Moreover, the SPORG form enjoys a public service status, which can be instrumental in redefining the perceived motives of people who act through that form. Rather than merely pursuing their individual self-interests, these social actors can legitimately claim to act for public benefit. By the logic of

194

CHAPTER 8

status generalization, changing the venue of service delivery from self-serving individuals to a public organization can define the service itself as public benefit, thus enhancing its perceived value. The third difficulty of the conventional paradigm lies in the fact that similar kinds of goods are provided by different institutional sectors. Since the shared qualities of such goods, such as nonexcludability or high a cost of ascertaining their quality, are claimed to be the reason that explains the nonprofit institutional venue of their delivery, that raises an obvious question why some of these are delivered by for-profit institutions? Examples include healthcare, education, day care for children, residential care for the elderly or generally speaking, services paid for by a “third party,” such as insurance firms or public agencies. The explanation developed in this book solves this problem by reversing that causal direction and holding that “public” or “private” properties of a commodity depends on the organizational venue of its delivery, rather than the other way around. If a good is delivered by a “public” agent (i.e., a provider who does not limit the availability of that good to customers who pay the market price), such good becomes socially defined as “public.” If, by contrast, it is provided by an agent that does impose these limits, the good in question becomes “private.” It is, therefore, the provider’s choice of institutional venue of delivery that defines the “public” or “private” character of the good in question. The provider’s choice of venue, in turn, is explained by her occupational interests as well as cultural norms and expectations of what constitutes a proper delivery venue for that kind of service in a particular society. This explanation hinges on the assumption that the choice of venue is indeed available—that is, the provider can realistically choose between alternative delivery venues. “Realistically” in this context means the provider has the capacity to make such a choice, rather than having different, equally attractive alternatives. This assumption proved plausible in the context of specific cases investigated in this study. The practitioners in question could indeed choose between the social proximity and commercial venues and in some cases between the public sector venue as well. However, a broader issue implicit in the direction of the causal relationship between the costs associated with an organizational form and the adoption of that form for service delivery pertains to the method of determining such costs. The conventional transaction cost argument stipulates that economic efficiency of service delivery is the sole consideration for choosing its organizational form. Without that assumption, the argument is a non sequitur, because allowing the possibility of other than economic efficiency considerations implies that efficiency is neither a sufficient nor a necessary condition for choosing the organizational form. At the least, the conventional model needs

TOWARD A PARTIAL THEORY

195

additional hypotheses to explain under what conditions economic efficiency considerations prevail over other possible reasons in making that choice. The introduction of cost–benefit schemata to that decision making process, implies that economic efficiency considerations are not the sole determinant of the choice of the organizational venue. Other factors include social norms and special interests of social groups that hold stakes in social organization of economic activities, or in channeling a specific service through a particular organizational form. It is therefore a combination of various, often competing, interests that leads to the selection of one organizational venue over its alternatives. The heuristic device introduced in Chapter 6 allows a systematic examination of such various considerations by introducing the concept of costbenefit schemata that delimit the scope of information used in determining the overall social value (not just economic efficiency) of choosing any particular organizational venue. It thus may be the case that under one set of social–historical conditions transaction costs alone are the main factor that affects the choice of the organizational venue, but under a different set of conditions other collective interests and social values come to the fore. As a result, the same type of service may be channeled through various organizational venues, not just in different societies but in the same society that experiences social or political changes. An explanation of the choice of the organizational venue cannot thus rely solely on the advantages of that venue, as they appear from an omniscient point of view that abstracts away their social–historical context. It must also take into consideration the combination of specific social forces, interests and values that comes to the fore at the time when the choice of the organizational venue is made. The remaining part of this section is devoted to the formulation of a theory that incorporates the considerations of the social–historical context into the explanation of the choice of the SPORG form. The empirical findings of this study expand the existing explanations of the origins of service providing SPORGs discussed in Chapter 2, especially the value–rational entrepreneur model proposed by James (1987), and the contract failure model introduced by Hansmann (1987). They thus allow the formulation of a partial theory of the origins of the service-providing social proximity organizations, which following the terminological convention adopted in this book, I call the organizational uses and gratifications theory. The qualification “partial” comes from the recognition that there are types of social proximity organizations which, as any other organizational form or social institution, may have many different origins, depending on specific historical and social circumstances. It is impossible to account for all these circumstances and social forces in a single theoretical model, so we have to settle for the modest task of building a middle range theory that explains only some of them.

196

CHAPTER 8

The principal question the uses and gratifications theory seeks to answer is “Why do new service-providing social proximity organizations come to existence?” In other words, this model explains the reasons behind the establishment of new entities, rather than the survival of the already established ones or the roles and functions they may perform in society. This question reflects a legitimate research problem posed because there are many different organizational forms possible in a modern society. Assuming a purpose-rational actor, the choice of an organizational form must serve some rational purpose or goal pursed by such an actor. Unlike commercial enterprises, the SPORG form limits the immediate payoff, and therefore the reasons behind recourse to this form require an explanation. Thus, the “why” question the organizational uses and gratification theory addresses entails an explanation that must accomplish three objectives. The first objective is to identify the goals and interests of social actors who create new social proximity organizations. Such goals and interests must be identified independently of the action we seek to explain to avoid the vicious circle fallacy. We cannot rely on the actor’s decision to establish a social proximity organization as sole evidence of his interest that we conjure to explain his involvement in this type of organization. The second objective is to identify the attributes of the organizations form under investigation that render it useful for the attainment of the goals or the pursuit of the interests we ascertained in the previous step. That is to say, we need to demonstrate the SPORG form has such properties that a purpose-rational actor can reasonably expect to suit his interests and goals we have identified. Finally, the third objective is to describe the conditions under which these social actors are likely to use the SPORG form to attain their goals and interests. This is a very important task, because mere usefulness of a means to an end is insufficient to conclude that this means will be put to use. There might be circumstances that prevent a social actor from taking advantage of it. For example, embezzling someone else’s property may offer a quick and decisive solution to one’s financial problems, but one will likely eschew that solution if it jeopardizes his bonds with community (Hirschi, 1969). With those three objectives in mind, I present nine propositions that outline the uses and gratification theory of social proximity organizations. To reiterate, this theory summarizes empirical results of this study and links them to the existing theories of nonprofit organizations. Social Actors and Their Interests. The first element of the explanation proposed by the uses and gratifications theory takes as the point of departure James’ (1987) model of a value-rational entrepreneur. As discussed in Chapter 2, this

TOWARD A PARTlAL THEORY

197

model holds that clergymen who want to attract new members to their religious group but can’t do so by conventional proselytizing may achieve their goal by using services delivered via social proximity organization as an alternative strategy. This book has established that healthcare and social service practitioners who face obstacles in delivering their services through conventional venues of their occupation also used SPORGs to make those services more attractive to the potential clients. These two observations can be generalized as the first three propositions of the organizational uses and gratification theory: (i) Social actors use organizational forms in accordance with their own interests, goals and social expectations in addition to thatform’sformal rules and mission. (ii) The greater the level of modernization, the greater the number of service practitioners who depend on selling their skills and knowledge in theform of services to the public. (iii) The more obstacles practitioners encounter in performing their occupational roles due to the paucity of public trust, the greater their interest in legitimizing these roles.

The first proposition is the key axiom of the organizational uses and gratifications model that posits the existence of value-rational influences (social norms and expectations, interests and goals of human actors) on the behavior of formal organizations. It stipulates that different people get involved in social proximity organizations for a variety of reasons that are not limited to the legal norms, policies, formal rules, or conventional expectations that define the roles and behavior of this type of entity. The reasons for such involvement must be discovered rather than deduced from the conventional definitions and characterizations of the social proximity form. Proposition (ii) identifies the well documented, and thus taken here as given, trend in modern societies toward complex division of labor and professionalization. The function of this proposition in the organizational uses and gratifications theory is to posit the existence and important social role of people who have occupational stakes in the production and delivery of services to the public. These stakeholders constitute a social force that is directly responsible for the emergence of service delivery organizations. Proposition (iii), in turn, identifies occupational interests of service producers that are relevant to the subject of inquiry. The practitioners who have invested their time and resources in the development of their skills and competencies have an obvious interest in applying those skills and competencies in practice, to reap the benefits of their investment. However, successful professional practice requires public trust. Since the lay public generally lacks the knowledge and resources to ascertain the quality of a professional service be-

198

CHAPTER 8

fore the treatment is completed, public trust is their only means of knowing that such a service is a legitimate solution for their problems. Without public trust, professional practice is difficult, if at all possible, because potential clients have no incentive to avail themselves of a service of unknown quality. Usefulness of the Social Proximity Organizational Form. The second step of our explanation takes the advantage of Hansmann’s (1987) observation that the nonprofit organizational form can create trust between the supplier and the buyer of a service, because it signals the absence of the profit motive in the supplier’s actions. However, the discussion in Chapter 2 concluded that the absence of the profit motive alone is insufficient to explain why this organizational form should be trusted more than its commercial alternatives. In this essay we have established that the SPORG form is trusted because of its social proximity character and its essential attribute: public service. Hence: (iv) The social proximity organizational form and its public service status may create trust by signaling social bonds between practitioners and cornmunity and a greater social value of their services. (v) The greater the SPORG form’s capacity to create trust, the greater the incentive to use that form by practitioners whose occupational roles need legitimation due to the paucity of public trust.

Proposition (iv) simply summarizes the findings of this investigation. Social proximity indicates the existence of social bonds between organization’s personnel and the community they serve, because it stipulates their commitment to the wellbeing of that community. The process whereby trust relationship is created is known in sociological literature as status generalization, or the attribution of a salient characteristic or competencies of a social actor on the perceived quality of his actions. Such attribution may, but does not have to, have factual justification in the actor’s characteristic or competence. It is merely a conventional expectation, or a socially constructed stereotype, that a person will act in accordance with his or her perceived social status. Thus the salient attribute of the SPORG form, its public service status, is generalized or projected on that organization’s activities, which defines them as public services in the eyes of the lay observers. Such definition, in turn, increases the perceived social value of these activities by expanding the scope of their potential beneficiaries or by reducing the scope of their potential social costs. Proposition (v) logically follows from propositions (iii) and (iv). Proposition (iii) recognizes occupational interests of a group of social actors, while proposition (iv) claims the existence of elective affinity between those interests and the SPORG form. Elective affinity is Max Weber’s term that denotes a rea-

TOWARD A PARTIAL THEORY

199

sonable expectation that a given object or cultural artifact can be useful, or perhaps more useful than other objects or artifacts, for attaining the goal or interests pursued by a social actor. Assuming a purpose-rational actor, it follows that such an actor has an incentive to use that object or artifact in the pursuit of her interests (proposition v). If an organization can be useful to promote occupational interests of service practitioners, then we can reasonably expect these practitioners will try to choose that organization as a service delivery venue, if they have a chance. Conditions Affecting the Use of the SPORG Form. In this final step of formulating the uses and gratifications theory of the origins of social proximity organizations our task is to describe social circumstances that make the recourse to this organizational form likely. Mere elective affinity is insufficient to predict that a social actor will use a particular means to accomplish his goals, because using that means may also involve unintended social consequences that are potentially harmful to that actor’s interests. If the risk of such harmful “side effects” is too great, it may outweigh the benefits of employing this particular means. In most general terms, practitioners will use the SPORG form in their professional legitimation project, if there are no reasonably expected social disadvantages resulting from recourse to that form. Practitioners will use the SPORG form as a platform to deliver their services if that choice of venue does not pose more legitimacy-related problems than it can potentially solve. To move that statement beyond mere tautology, we need to identify specific conditions known to be detrimental to that professional strategy. First, practitioners who have alternate and more effective means of legitimating their occupational practice will have little incentive to use SPORGs. Likewise, if there are conventionally established alternative institutional venues of delivering the same service that are widely regarded as superior or more appropriate than SPORGs, a recourse to the SPORG form will be simply counterproductive. That is to say, a radical and seemingly arbitrary departure from a well established delivery venue will most likely create even more suspicion instead of establishing the needed trust. Moreover, if starting new social proximity organizations involves considerable difficulties, such as severe legal constraints or high costs of obtaining necessary resources, the potential benefits offered by this form may simply be not worth the efforts. Finally, if a society puts a low value on public service and has little confidence in public institutions, there will be little to gain from defining professional work as public service, and thus little incentive to employ the means to do just that. This enumeration of the disadvantages of using the SPORG form in professional legitimation projects allows us to describe the environment that is

200

CHAPTER 8

free of obvious disincentives to the use of SPORGs in such projects. Assuming purpose-rational actors, the absence of environmental obstacles together with the advantages offered by the SPORG form sufficiently describes the conditions under which that form is likely to be used. (vi) The fewer alternative means the practitioners have to legitimate their occupational practice, the more likely they are to use the SPORG form for their occupational legitimation project. (vii) The less established the precedents of delivering a service through alternative venues, the greater the likelihood the providers of that service will use the SPORG form for their occupational legitimation project. (viii) The fewer the legal or resource-related constraints, the greater the likelihood service practitioners will use the SPORG form for their occupational legitimation project. (ix) The higher the value society or community attaches to public service and public institutions, the greater the likelihood service practitioners will use the SPORG form for their occupational legitimation project.

Propositions (vi) and (vii) describe scope conditions that are specific to particular occupational groups and their services. They specify a relationship between organizational environment (field) and the involvement of a particular group of service providers, including the providers of spiritual services such as clergy, in social proximity organizations. They may also be useful for predicting the relative share of that service field in the social proximity sector, especially if the number of providers of these services in a community or society is also known. The greater the number of practitioners and the fewer the environmental constraints on using the SPORG form, the greater the SPORG’s share of that service field. However, that implication must be qualified, because service professionals are not the only social actors who may establish social proximity organizations. Other types of actors include public or semipublic agencies, corporations, foreign institutions, social movements, or even private individuals who have sufficient means at their disposal. If the input of these institutional actors is much greater than that of occupational groups, propositions (ii), (vi) and (vii) may be insufficient to explain the structure of the social proximity sector. By contrast, propositions (viii) and (ix) describe the scope conditions that pertain to the entire social milieu. These propositions may be useful for predicting the overall size of the social proximity service sector, with the caveat that these are not the necessary conditions for the large size of that sector. There may be other social forces that influence the creation or survival of social proximity organizations. For example, the virtual government monopoly on

TOWARD A PARTIAL THEORY

201

the control of civic activism under the central planning regime had a much greater influence on the size, structure and resources of the “social organization” sector of the pre-1989 era than any other factor, including occupational interests of service practitioners. While propositions (i) through (v) pertain to occupational interests and institutional resources that are abstracted from any specific social–historical context, propositions (vi) through (ix) place the proposed model in such a context. Since the proposed uses and gratifications model is intended as an “ideal type,” its application must involve a test to what extent any particular social–political environment, be it a nation–state or a geographical region that meets the conditions set forth by the last four propositions. The adherence to, or departure from these conditions can thus explain the observed use, or its absence, of the SPORG form in professional projects in that region. The intent of developing that ideal type was to provide a research guidance in studying Eastern European development. Ideally, the test of that model should thus involve its application to other countries in the region. However, this would require sufficient qualitative data providing detailed information comparable to that obtained for this study. Unfortunately, such data are not yet available.1 Consequently, we must settle for a less stringent procedure that involves the assessment of the “goodness of fit” of these four conditions in Poland supplemented by a rudimentary and sketchy comparison of Poland to other Eastern and Western European countries, given the limitations of the available data. These four scope conditions fit the Polish situation rather well. All practitioners scrutinized in this project had few other alternatives that would effectively legitimate their professional projects (proposition vi). Because of state monopoly on healthcare and social service provision during the past half of the century, private practice in that field is not only underdeveloped, but also lacks legitimacy in Poland. As the discussion in Chapter 3 demonstrated, private medicine often took the form of semi-legal “gray economy.” Taking advantage of resource shortages in the public sector, physicians frequently directed patients who were eligible for public health insurance to private providers, or accepted bribes for treating them in public facilities. While such shadowy practices were quite common and not limited to physicians, they were also commonly perceived as abnormalities created by deficiencies of central planning. That can be evidenced by the general attitudes towards accepting bribes during the course of duty. Despite of the widely spread incidence of bribery and kickbacks in Poland, their perceived justification was significantly lower than either Western European or Eastern European averages (Figure 8.1). Private medical practice was also viewed with considerable distrust by both practitioners and patients. “Gray economy” created lucrative opportuni-

202

CHAPTER 8

Figure 8.1. Attitudes toward Bribery Participants were asked how justified is “someone accepting a bribe in the course of their duties?” Statistical significance of differences: Poland—W. Europe (p < 0.05); Poland—E. Europe (p < 0.01); W. Europe (p < 0.01) (Bonferroni test). (SOURCE: World Values Survey, 1991).

ties for less scrupulous physicians and windfall benefits for those practitioners whose professional skills and competence were not high. Because public healthcare was organized by local districts, patients had to see the doctor assigned to their district. Privatization of healthcare would enable patients to choose their doctors, and thus introduce competition which would require upgrading their skills on the pain of losing their patients and thus earnings. Of course, not all doctors were taking advantage of the “gray economy” that developed under the central planning regime. There were many practitioners who internalized the ideal of public healthcare and feared privatization

TOWARD A PARTIAL THEORY

203

would pose a risk to public health by making service less accessible to the poor. Similar attitudes were also common among the population at large who viewed healthcare as public entitlement. Moreover, private healthcare often evoked negative connotations of the separate clinics exclusively serving members of the nomenklatura, high ranking members of the state and party apparatus. The existence of this separate, semiprivate healthcare system for the privileged under the central planning regime was strongly resented by the population. Demands to end that practice prominently featured in the postulates formulated by the Solidarnosc movement. The public system was thus not only the norm but also the most legitimate form of healthcare organization in Poland. However, that venue was simply not available to some innovators, such as herbal healers or hippo-therapists, because public officials did not recognize their services as legitimate forms of treatment. Moreover, despite the perceived legitimacy of the public venue, it was inadequate to create trust in those situations, when the intentions of the professional providers were being questioned. Examples included postsurgical rehabilitation, postclinical psychiatric therapy, and, to some extent, protection of prisoners’ rights (prisoners tended to distrust the criminal justice system). In those situations, neither public institutions nor private practice could be of much use for a professional legitimation project. Consistently with proposition (vi), social proximity organizations were the best, if not only, available alternatives. It is also clear there were few established precedents of delivering the services under investigation by alternative institutional venues (proposition vii). These services were not only new in the sense that they were not previously available in Poland, but they were also new in their approach to patient care. The hitherto prevailing paradigm emphasized specialized professional treatment of life-threatening conditions, while neglecting patient’s emotional needs and quality of life. Providing emotional comfort and nurturing environment was essentially left to the patient’s relatives and friends. Many members of the medical profession even derided as unscientific or outright quackery the “softer” forms of therapy that emphasized alternative approaches, such as enhancement of the natural healing power of the body and mind, nonconventional remedies, or modification of the patients’ environment instead of more intrusive procedures. The new forms of healthcare, by contrast, emphasized an institutional approach that combined professional care with self-help and social proximity support networks. The only precedent of that treatment philosophy was espoused by the antidrug movement “MONAR” that operated as a “social organization” since its inception in the late 1970s. Therefore, recourse to the SPORG form did not violate any established or preconceived notions about the proper institutional venue of delivering these services (proposition vii).

204

CHAPTER 8

The condition set forth by proposition (viii) was met by lifting procedural restrictions that created the state monopoly in civic activism. Legislation introduced in 1984 re-established the foundation as a legal form that could be established by both private individuals and institutional actors. The 1989 Law of Associations abolished the requirement to obtain a permit from the appropriate administrative authority in order to register an association. Under the new legislation, the only legal requirement to register is the minimum number of members, articles of incorporation, and bylaws. The new legal environment was so permissive that anyone could set up and register a social proximity organization with only minimum effort and resources. According to the estimations of the KLON research team (see the Appendix), about 45% of the newly created entities targeted for the survey turned out to be defunct—that is, existing on paper only. Such a high “dead-wood” rate strongly suggests many entities were formed “just in case,” solely because it was easy to do so, but without any serious commitment to further operations. The hitherto discussed scope conditions dealt primarily with the lack of environmental disadvantages in using the SPORG form for a legitimation project but, the final proposition (ix) highlights an advantage of recourse to this organizational form in a particular social milieu. Propositions (iv) and (v) recognize the benefit of the SPORG form for a professional project. This benefit consists mainly in defining professional work as a form of public service to increase its perceived legitimacy. Yet, that benefit would not be worth much, if the value that society or community attaches to public service and public institutions were rather low. In other words, if the public service status is the prize that service providers expect to win, the value of that prize must justify their efforts. And the value of public service status is reflected in favorable attitudes toward public institutions, shared by society whose trust these providers want to win. Many observers of Polish society, both domestic and foreign, believe that a half century of central planning left the legacy of general apathy and cynicism toward anything that smacks of the public sector. True, Poles had a generally negative attitude toward the entire political system, which they perceived as a foreign graft brought to their country on Soviet tanks. But despite that negative perception of the system as a whole, they had a much different disposition toward specific public institutions. Chapter 3 demonstrated the existence of a strong demand for citizen participation in public affairs of that country. Many people took every available opportunity to achieve that end, even if in a limited scope. Some joined the existing “social organizations.” Others risked their personal safety or even life to create alternatives to the state-controlled organizational forms of public participation. Those actions would be unexplainable without assuming a high value placed in this society on the public sphere.

TOWARD A PARTIAL THEORY

205

Indeed that conclusion can be directly supported by public opinion polls. When asked how much confidence they have in various public institutions, Polish respondents reported much higher confidence levels than either Western and Eastern European averages. The confidence in the parliament and the civil service is nearly twice as high in Poland as in Western or Eastern European countries combined. Figure 8.2 shows the confidence level in selected public institutions in Poland vis a vis pooled confidence levels in the same institutions in Western and Eastern Europe. In this figure the columns represent the percentages of respondents who said they had a “great deal” or “quite a lot” of confidence in the six public institutions: “the church,” “the educational system,” “the press” (or the media), “the parliament,” “civil service,” and “major companies.” The percent of respondents who had “not very much” or “none at all” confidence can be easily calculated by subtracting the shown values from 100%. “Major companies” qualify as public institutions in the Polish context, because their public ownership was constitutionally guaranteed under central planning, and many major firms still remain in public hands. The Roman Catholic church can also be considered a public institution in Poland. The Catholic doctrine treats religion as public rather than private affair, and the church played a significant role as the only institutional “counterbalance” to the power of the state under the central planning regime. The church was perhaps the only institution that preserved Polish national identity during the nearly 200-yearperiod when the country was under foreign occupation. Such high levels of confidence in public institutions can be explained by a combination of two factors. First is the combined effect of education and national culture. Instilling the ideals of public service and confidence in public institutions was among the highest priorities of the public education system. These ideals were reinforced by nationalism and national pride that runs rather high in Polish society. The second factor is what, for lack of better terminology, I call the moderate deprivation of political autonomy, especially the freedom to self-organization and self-governance. For the past two centuries, these freedoms were curtailed either by foreign occupation or by domestic autocracies. Until 1918, Poland did not exist as a sovereign country, it was partitioned by the neighboring powers, Prussia, Austro–Hungary and Russia. After World War I, the country gained national sovereignty, but maintained quite an autocratic political regime, especially repressive toward the left. After World War II the “tables turned around,” bringing a new autocratic regime repressive toward the right. During the entire time period the deprivation of political autonomy ranged from moderate to mild (except for the periods of wars or uprisings, when it was severe)—too weak to eradicate the will to self-governance altogether, but

206

Confidence* in Public Institutions

*Percent of respondents who had “a great deal” or “quite of lot” of confidence. (SOURCE: World Values Survey, 1991)

CHAPTER 8

Figure 8.2.

TOWARD A PARTIAL THEORY

207

too strong to allow that will to fulfill itself. During the period of partition throughout the entire 19th century, every political upheaval, such as national uprisings or Napoleonic wars, awakened new hopes for national sovereignty. The Austro–Hungarian rule was relatively lenient, leaving space for Polish cultural and religious institutions to prosper. The Russian and German regimes were more restrictive, but still allowed many Polish associations to exist. The hopes for Polish statehood were thus almost within the reach, tantalizing, yet unattainable. After gaining independence in 1918, the Polish state became a semi-partisan institution and remained so until the 1989 transition. In the inter-war period the regime shifted to the Right, and became increasingly hostile toward many ethnic and religious minorities, especially the Jews, and political factions on the left, while remaining largely indifferent toward the plight of the poor. The nation was divided along ethnic, political, and social class lines, as well as by the legacy of three different foreign rules that split the country for nearly two centuries. The end of World War II in1945 saw a deep split between those who remained loyal to the government in exile in London, and the supporters of the Soviet-backed government in Warsaw. Political repression that intensified after 1947 forced many Poles to exile. In 1968, anti-Semitic hysteria instigated by the nationalistic faction of the government again divided the nation and forced another group of Poles accused of “Zionism” to exile. So throughout the entire 20th century the regimes changed, but they never fully represented the whole nation. Again, the ideal of a truly “public” state of all Poles regardless of their political colors was tantalizingly close, yet outside the reach. This almost permanent condition of “truly public” (i.e., nonpartisan) institutions being tantalizingly close yet outside the reach put the ideal of the public sphere and public policy in the focal point of Polish collective consciousness. Virtually every Pole had a recipe for reforming the country. Public policies and national politics were the favorite subjects of most conversations and debates in pubs, trains, barbershops, at social gatherings, or in the workplace. Political satire was the most favorite form of entertainment, and many mediocre performers and writers made careers of telling political jokes. This form of rather extreme politicization was mostly “talk” that rarely brought a concrete political action, but it substantially raised the salience of public issues, politics, and institutions in the everyday life of citizens. Moderate deprivation of political autonomy in Poland directed people’s attention toward common goals and mobilized them to pursue those goals— while such directing and mobilizing potential seems to be diffused, if not lost, in consumer-oriented bourgeois democracies. Jorge Louis Borges, whose metaphor of infinite library was mentioned in the discussion of full- and selective-

208

CHAPTER 8

information models in Chapter 6, wrote another fiction story about the land of immortal people. Immortality guaranteed the inhabitants the fulfillment of all their possible wants during their infinitely long life span, but it took away their sense of community. Community arises from motivation to avoid shared risks and to attain shared goals. However, that motivation vanishes, if everything is bound to eventually happen to everyone during their infinitely long life span that cannot be threatened by the risk of death or injury. Limitations and constraints mobilize people for collective action and focus their attention on their shared interests. Thus, the moderate deprivation of political autonomy explains the rather surprising difference in the attitudes toward public institutions between Poles and their European neighbors. It also seems to suggest that, contrary to the views of writers like Fukuyama or Putnam who see the autocratic state as the mortal enemy of civil society, moderately autocratic regimes can have a quite invigorating effect on citizens’ interest in civil society. It is, therefore, quite clear that the service practitioners under investigation had a lot to gain from defining their professional commodities as public services, as proposition (ix) holds. Even though the political system as a whole lost its legitimacy in Poland, public institutions were viewed with considerable confidence. That was particularly true about the public healthcare system which, as we have argued, was seen by many providers and patients as the most appropriate and legitimate form of healthcare delivery, its shortcomings and problems notwithstanding. Given the movement toward privatization and offloading some of welfare state responsibilities during the 1989 social transformation, social proximity organizations became the next best alternative to the public sector, a proxy for public benefit status of services that the state apparatus was no longer able and willing to provide. Such a high value attributed to public institutions constitutes a clear incentive for professional innovators to use an organizational form that can define their innovation as a form of public service. While the retreat of the welfare state could be seen as the “push” factor that forced many service providers to look for alternative organizational venues, the value of defining professional work as public service represents the “pull” factor that attracted these practitioners to the SPORG form. That value, I may add, was not limited to favorable attitudes alone. It also represented the possibility of public service contracts that most of my informants hoped to eventually obtain. Their social proximity organization performed the role of demonstration projects, showing that new services are available, they are effective and beneficial to the public, and thus should be eligible for reimbursement by the soon to be reformed public healthcare system.

TOWARD A PARTlAL THEORY

209

The healthcare reform for which these providers were hoping was implemented in January 1999. It created public health insurance that reimburses both private and public providers of eligible healthcare services. Of all cases included in this study, only the “Hospice” qualified for such reimbursement. It now serves nearly all terminally ill patients outside the hospital system in Gdansk prefecture. The “Amazons” moved toward the public sector, becoming almost an extension of the Oncology Center, relying on center’s facilities and resources. They are clearly distinguished from the center’s departments by their prominently displayed logo of a female archer and their colorful bulletin boards. The “Coastal Environmental Society” went in the opposite direction, toward commercialization. It now functions mainly as a retail outlet for herbal and natural products. The only reminder of its founders’ broader public ambitions is its telephone listing under “Civic Associations.” The “Theater, Education, Rehabilitation” also moved, or rather retreated back to the planning board. Polish public officials were not yet ready for solving social problems through artistic expression, so the founder now works on a new concept of family-oriented services. Finally, the “hippo-therapy” remains pretty much in the same position as when it was created—still in the same location, still striving for recognition, and still hoping to get public support in the future. Proposition (ix) allows us using confidence in public institutions as a very rough indicator of the likelihood of SPORGs being used as a “substitute” of public sector services in other Eastern European countries. Figure 8.3 provides a more detailed picture of such attitudes, based on a single indicator, Confidence in Civil Service, in 11 countries in the region. Poland has clearly the largest confidence level, Byelorus2 the lowest, and other countries filling the continuum between these polar extremes. That ranking order suggests that if the providers in these countries are pushed to seek alternative to the public sector venues of service delivery, they are less likely to use the SPORG form for that purpose, because the public benefit status associated with that form offers them lesser benefit than it does in Poland. That expectation seems to be consistent with the recently reported findings of the Johns Hopkins Comparative Nonprofit Sector Project (Salamon et al., 1999) that map the nonprofit sector in four Eastern European countries, the Czech Republic, Hungary, Romania, and Slovakia. The health service share of the nonprofit sector, which as I have argued in this essay has the greatest need for public benefit status because of the information asymmetry problem, is much smaller in those countries than in other European countries (about 5% of the nonprofit employment in all four countries combined versus 17% in nine Western European countries included in the Johns Hopkins project) or than it appears form the KLON data.3

210

CHAPTER 8

Figure 8.3. Confidence in Civil Service.* * Percent of respondents who had “a great deal” or “quite a lot” of confidence. (SOURCE: World Values Survey, 1991)

VALUE–RATIONAL ENTREPRENEURS AND SOCIAL CHANGE In the opening chapter I described my disappointment with the conventional views on the Eastern European development, which focus mainly on what Touraine (1988) calls abstract “aggregates” or “social systems” while ignoring the role of social actors. I also suggested that studying the behavior and collective interests of such actors can shed some new light on social changes, known as systemic transition, in Eastern Europe. I thus owe to the reader an explana-

TOWARD A PARTIAL THEORY

211

tion what we can learn about social change from the handful of cases we hitherto examined. One of the most problematic aspects of explaining social facts is the conceptualization of the relationship between abstract structures and largescale social institutions, such as organizational forms, nation–states, or markets, and the concrete behavior of human actors. This problem reemerges in the accounts of political-economic changes taking place in Eastern Europe after World War II. Most of the conventional accounts of social changes in that part of the world take the “top-down” approach to the explanation of social behavior. They tend to focus on the political–economic environments, such as nation–states, political regimes, national cultures, or organization of the economy, and treat them as scripts defining the roles played by social actors. This approach implies a deterministic vision of society and history as a gigantic assembly line set in motion by a master plan, be it “historical necessity” of the “vulgar” Marxist narratives, or the “invisible hand” of economic efficiency preferred by the neo-classical genre. Human actors are reduced to receptors of external stimuli, reenactors of scripts and roles that are preprogrammed and predefined by the functional requirements of the production regime. There is little room for subjective interpretation, innovation and improvisation in this Kafkaesque social machinery. Those who are unable or unwilling to play their part are swept away or crushed by the iron steamroller of history. Indeed the metaphor of the steamroller, aptly invoked by the sociologist Ralph Dahrendorf to describe the process of German unification,4 summarizes not just conventional explanations of Eastern European development, but also the “official” approach to social changes in that part of the world. This is a “designer approach” to social change (Stark, 1995) that aims to quickly and decisively overhaul poli tical-economic insti tu tions to solve the problems faced by their countries. A half a century ago, the creators of the central planning regime transferred, by an administrative fiat, foreign organizational forms considered at that time an efficient way to lift their countries from economic backwardness (Gerschekron, [1952] 1992). Today’s reformers of the institutional legacy left by central planning often take a similar “designer approach,” calling for a rapid transfer of Western political and economic institutions, known as the “shock therapy,” to improve the lagging economic performance of their countries (Hausner, Jessop, and Nielsen, 1995). The common theme that underlies both the central planning and the “shock therapy” approaches to modernization is a view of complex organizations that emphasizes the importance of formal rules and economic efficiency while ignoring their institutional aspects.5 Organizational forms are viewed as preset

212

CHAPTER 8

clockwork mechanism that operates independently of the social environment and its conventional norms, expectations, and rules of behavior. Just as machinery is expected to work in the same predictable fashion when transferred from one location to another, so are the organizations. The policy direction. informed by such a view calls for the transfer of organizational forms proved elsewhere as successful, and takes it as given that social norms, expectations, and rules of behavior will automatically adjust to the requirements of these organizational imports. An alternative position, adopted in this book in the form of the organizational uses and gratifications theory, is grounded in the notion that social institu tions substantially shape organizations’ behavior. Human actors selectively adopt organizational forms and rules to suit their own needs and goals. By the same logic, they selectively reject those forms and rules that they perceive as detrimental to their interests. Thus, a technological innovation perfected elsewhere may fail to bring the expected results when mechanically transferred to a new social environment. It may create an undesirable social reaction in the form of mistrust, withdrawal or entrenchment in the old habits as a mechanism of coping with uncertainty created by the new environment (Hausner, Jessop, and Nielsen, 1995). The proliferation of “shadow economy,” or informal social ties and norms of behavior, proved highly detrimental to the efficient functioning of centrally planned economies of Eastern Europe, despite the intentions of their designers (Kaminski, 1991; Wedel, 1992). Studies of informal relations among workers and managers of state enterprises in Poland (Feiwel, 1965; Firlit and Chlopecki, 1992; Kawalec, 1992; Marody, 1993; Nowak, 1993; Pawlik, 1992; Sarapata, 1992) found widely spread informal solidarity networks controlling the pace of work, encouraging and regulating mutual exchange of favors, diverting public resources to private use, circumventing formal authority relations, and generally disrupting work discipline and substantially lowering productivity. Although the conventional wisdom attributes the causes of such “shadow economy” to the inefficiencies of bureaucratic organization of central planning, the “path-dependency’’ hypothesis recently proposed by Hausner, Jessop, and Nielsen, (1995) suggests a different explanation. This hypothesis stipulates that the retrenchment to old institutional habits is a natural reaction to uncertainty, or information asymmetry, created by the “top-down” implementation of technological or organizational innovations. It also finds support in the classical study of Polish peasant migration to industrial countries conducted by Thomas and Znaniecki, ([1918–20],1984). Modernization, which forced peasants to migrate to urban centers, caused gradual disintegration of the traditional social structures. Thomas and Znaniecki ([1918–20], 1984) identify two outcomes of that disintegration. If the adapta-

TOWARD A PARTIAL THEORY

213

tion to the new environment was successful, as measured by the immigrant’s standards of living and social status, the peasant tended to develop individualistic set of values characteristic of industrialized societies (Weber, [1904], 1958). That outcome was quite common among Polish immigrants to the US and Germany, where economic opportunities were greater than elsewhere. If, on the other hand, “this process [was] difficult or unsuccessful, the isolated individual or marriage group [had] a strong tendency to return to the old milieu and [ . . . ] particularly appreciate[d] the familial solidarity through which, in spite of its imperfections, the struggle for existence [was] facilitated, though in a limited way” (Thomas and Znaniecki ( [1918–20], p. 75). As this book’s opening quotation acknowledges, history tends to repeat itself, the first time as tragedy, the second time as farce. The large scale peasant migration to the United States and Germany that occurred at the beginning of this century, repeated itself after World War II, forced by the industrialization policies of the central planning regime. Facing the urgent demand for industrial labor, the postwar government adopted the policy of drafting what it termed “surplus agricultural labor” to meet the needs of its industrialization project (Alton, 1955; Feiwel, 1971). As a result, urban population in Poland grew threefold, from 8 million to nearly 24 million between 1946–1990. The net population influx from the countryside, that is, including only the people who permanently settled in towns, accounted for over 40% of that growth (author’s calculations based on GUS data). These figures underestimate the actual country-to-town migration because they do not include those people who, due to stringent regulations, could not obtain a permanent residence permit required to gain the right to housing in cities.6 In that light, the proliferation of “premodern,” informal institutions characteristic of a peasant society was likely to be a response, at least in part, to uncertainty and information asymmetry created by forced industrialization under the central planning regime, as the “path-dependency’’ hypo thesis stipulates. Although politicians, government economists, and technocrats forcing the “shock therapy” during the 1989 transition seemed to learn little from that experience, this study demonstrated the opposite is true of many Polish service professionals. The sweeping character and rapid pace of the social changes taking place in the late 1980s created two opposite reactions in Polish society. On the one hand, they brought the long awaited reforms and the downfall of the thoroughly compromised political regime. On the other hand, however, they created a sense of uncertainty and apprehension which led to widespread conservatism, xenophobia, and blind following of traditional institutions, especially the Roman Catholic church, to counterbalance the influx of Western values and influences brought by the reform.

214

CHAPTER 8

The prevalence of uncertainty and apprehension is reflected by popular attitudes toward the reform captured by opinion polls. Over 60% of the respondents expressed the view that political reforms in their country were moving too fast (Figure 8.4). The prevalence of such negative attitudes toward the speed of reform in Poland was overwhelmingly greater than in other Eastern European countries, and almost twice the rate found in Western Europe. This ambivalent reaction toward social change is also reflected in the responses to another set of questions. When asked whether one should be cautious about making changes in life or act boldly to achieve their goals, Polish

W. Europe (N=16,541)

E. Europe (N=l2,665)

Poland (N=878)

Figure 8.4. Negative Attitude toward Speed of Political Reform* * Percent of respondents who agreed or strongly agreed with the statement “Political reform in this country is moving too rapidly” Statistical significance, Pearson Ch2 P < 0.01. (SOURCE World Values Survey, 1991)

TOWARD A PARTIAL THEORY

215

respondents showed a more favorable disposition toward a bold action than the respondents in other Western and Eastern European countries. These preferences were measured on a ten-point scale, higher scores representing a more favorable attitude toward entrepreneurship. The average scores calculated for each group of respondents are shown in Figure 8.5. The average score for Poland (7.08) is visibly higher than scores for Western Europe (5.68) and Eastern Europe (5.36). This favorable disposition toward entrepreneurship is not matched, however, by the acceptance of novelty, which was considerably lower (5.5 points). As in the previous question, higher scores represent favorable disposition toward new ideas over old ones. The average score for Poland was not significantly different from that for Western European respondents (5.5 and 5.32, respectively), even though they were significantly higher than the Eastern European average (4.94). In other words, while Polish respondents showed somewhat greater acceptance of “new ideas” when compared to the polled responses in other Eastern European countries, their level of acceptance was not different from that found in the pooled responses from Western Europe. But unlike the Western and Eastern Europeans, Poles tended to favor bold action over caution. The picture of Polish society that emerges from these figures reveals the existence of an attitudinal gap or inconsistency that is much wider than in other European countries. Poles seem to welcome innovators, but not as much their innovations. In other countries, by contrast, these two attitudes seem to be more in line with each other, resulting in a moderate level of the acceptance of both. The social changes initiated by the political reform in Poland unleashed the entrepreneurial energy that was previously restricted by the institutional constraints of central planning. But these entrepreneurs faced a challenge, they knew that their innovations would create considerable mistrust and apprehension, further exacerbated by the rapid pace of social changes taking place in the country. Having experienced the downfalls of central planning, forced on the society in a top-down fashion, the professional innovators were smart enough to avoid repeating the same mistakes. Instead of jumping on the “shock therapy” bandwagon and uncritically aping Western institutions, they presented the “new scene of history” they helped to create in the “time-honored disguise and the borrowed language” of public institutions, or rather their close equivalent— social proximity organizations. The picture of social transformation in Eastern Europe that emerges from this book avoids the Scylla of “systemic determinism” often found in the conventional accounts, without falling into the Charybdis of voluntaristic explanation of social events. Social change is brought about by concrete actions of

216

CHAPTER 8

W. Europe (N=21,227)

E. Europe (N=I 3,398)

Poland (N=903)

All countries (N=35,528)

Figure 8.5. Attitudes Toward Changes in Life. *All group averages significantly different from each other at p < 0.01 (Bonferroni test). **Poland and W. Europe not significantly different. E. Europe different from W. Europe and Poland at p < 0.01 (Bonferroni test). (SOURCE: World Value Survey, 1991)

human actors rather than the logic of development, systemic properties, invisible hands and kindred metaphysical abstractions. To be sure, these human actors do not act in a social vacuum; they are highly “path-dependent” on the available institutional resources and subjected to institutional constraints, but they also have a considerable freedom to improvise and use these resources and constraints in a selective manner that suits their interests and goals. The social proximity organizations that emerged in the process of political changes in Eastern Europe are the joint product of global economic and political forces that swept the world and the social institutions of the central plan-

TOWARD A PARTIAL THEORY

217

ning system. The global changes that produced “glasnost” and “perestroika” forced the Soviet leaders to retreat from their bunker mentality and release the iron grip they held on Central Europe. This political upheaval released creative social energy and opened unprecedented opportunities for social innovations. The institutional forms developed under the central plan provided resources that served as the building blocks of the new social order. First, “social organizations” of the central planning era provided a civic lesson for many activists, and the resource base for many newly established entities. Second, the struggles for political and economic reforms, self-governance and greater voice in public affairs led to the development of the attitude that I call organic-self interest, a desire to better individual living standards through changing and improving the society and its institutions. Service providing social proximity organizations that started to emerge in the late 1980s were a small but very important part of these sweeping social changes. They served as a vehicle that allowed one of the most influential social groups in that part of the world, college-educated professionals, to make their contributions to the reform process. These organizations were instrumental in transforming expert skill and knowledge into a technology that could solve practical problems, thus providing an opportunity for the advancement of occupational interests of service producers. Moreover, they tapped professional initiative and expertise and directed it toward socially beneficial ends. In that capacity, social proximity organizations transform service producers into demiurges of civil society and social institutions. The concept of ”demiurge” borrowed from ancient Greek philosophy denotes an artisan or a craftsman, but also the creator of order in the universe. Unlike the Christian god that created the world ex nihilo, the Greek demiurge works with the pre-existing material initially in the state of chaos, arranging it into objects having distinct forms and socially useful functions. That metaphor aptly describes the nature of professional work in social proximity organizations in Poland. The inadequacies and disintegration of the central planning system created a need for new institutions. Using the building material left over from the previous era, or sometimes imported from abroad, service professionals rearranged them into new organizational forms that allowed them introducing novel, presumably better, solutions to practical problems faced by the society. Their innovations served as demonstration projects or models for others to follow. In that capacity, these service professionals, acting in their organic self interests, became demiurges or producers of a new social order. Will those new organizational forms prove an effective solution of the social problems they seek to alleviate? Probably not. Given their limited scope and resource base, these organizations are too small to meet the vast needs of Polish society. Some of them will be eventually integrated in this form or an-

218

CHAPTER 8

other into the public service sector, as their creators wish. Others may venture into commercial pursuits. Still others will continue their marginal existence, or simply cease operations. However, their main impact is not their often inadequate service, but their trend-setting function. Even with limited resources, and facing seemingly insurmountable obstacles, a group of people determined to assert their role as producers of a better society, rather than the consumers of readymade solu tions handed down by some governmental or corporate authority, can change the system and have a lasting impact on their society. Their story tells us that in the end, it is not government or corporate hierarchies but self-governing people that matter.

LESSONS AND CAVEATS I recently attended an international conference on the role of civil society in Europe dedicated, in part, to the discussion of the share of the nonprofit sector in Central European countries. Having learned this share is barely over 1% of the total economy as compared to over 10% in the West (Salamon et al., 1999), one of the participants, a representative of a major German foundation providing assistance to Central European countries, proclaimed: “That is disappointing! Explanations, please.” The results presented in this book could evoke a similar reaction. After all, the number of organizations investigated in this study is quite small, about 1,800 entities in the KLON database and 15 cases selected for indepth interviews. This looks like the proverbial drop in a bucket when compared to the sweeping changes that affect the global economy in 1990s. What can we learn from such a small fraction of the phenomenon that barely registers on the statistical radar screens? Such reactions are indicative of what for the lack of better terminology I call the “tyranny of statistical majority,” to paraphrase Alexis de Tocqueville’s famous words. The proliferation of statistical data, gathered by governments and research institutions led to the widely spread perception that statistical salience is the only legitimate indicator of a social phenomenon’s importance. “The bigger, the better.” The greater the sample and the stronger the statistical effect, the more we can “explain” about the society conceived as an aggregate of great numbers. The pitfalls of such an approach to social and cultural phenomena were addressed by the renowned student of comparative religion, Mircea Eliade. Having set up a hypothetical case of a Buddhist investigator studying Christian religious life in an European village, he observed:

TOWARD A PARTlAL THEORY

219

No doubt, the first thing our Buddhist observer would note would be a distinct difference between the religious life of the peasants and the theological, moral and mystical ideas of the village priest. But, while he would be quite right to note the distinction, he would be wrong if he refused to judge Christianity according to the traditions preserved by the priest on the grounds that he was merely a single individual—if he only held to be genuine the experience represented by the village as a community. (Eliade, 1958, p. 6, italics added)

This observation aptly indicates that statistical significance does not necessarily imply social or cultural significance, and vice versa. The “tyranny of statistical majority” approach misses an important characteristic: the strategic position of the cases it tries to explain. A strategically situated group of people, or even a single individual, can at a critical junction have a greater “effect” on a society as a whole than hundreds of cases representing a statistically salient share of the population. That can be further illustrated by an example from Poland’s modern history. In the early 1970s, the Polish diet (Sejm) voted on changes to the constitution proposed by the executive branch of the government. The motion was expected to pass unanimously, since the Sejm generally rubber-stamped all decisions made by the executive. To everyone’s surprise, a single delegate, representing a tiny minority faction known as the Catholic Parliamentary Club, refused to support the measures. While his lone dissent had no impact on the Sejm’s vote, its effect on popular attitudes was enormous. Like the proverbial child shouting “the emperor has no clothes,” this single voice of dissent unmasked the myth of unanimous support, disseminated by government propaganda to legitimate unpopular policy decisions. In the same vein, the importance of the handful of cases investigated in this study lies not in its statistical salience, but its strategic trend-setting position at a critical historical juncture. The unique historical junction between peculiarities of Poland’s social environment, occupational interests of service professionals, and the creation of a relatively large number of new social proximity organizations within a short period of time makes the professional involvement in this organizational form an interesting case to study. Such convergence of social processes and forces that under ordinary circumstances remain much more dispersed in time and geographical scope creates a natural “laboratory condition” that highlights the importance of two institutional actors in modern society, professions and social proximity organizations. An analogy can be made to Darwin’s study of the Galapagos Islands’ fauna. Although the size of the animal population inhabiting this tiny and desolate scrap of land was minuscule, it was the peculiarity of this environment that

220

CHAPTER 8

turned it into a fruitful case study that profoundly changed the way we think about life on Earth. Like Darwin’s voyage, this inquiry took us across the ocean to the place where the institutional environment posed unique challenges to professional and organizational life: a Central European nation undergoing the process of modernization. Like the lizards and finches of the Galapagos Islands, the exotic and not so exotic organizational life forms existing there can shed some light on the organizational life elsewhere. Professionals occupy a peculiar position among occupational groups. On the one hand, they enjoy considerable occupational autonomy that gives them substantial freedom in designing the important aspects of their own work. On the other hand, their professional commodity must be socially constructed, that is, they must persuade the oft-skeptical public that the service they offer is of greater benefit than other alternatives—the absence of such services, or comparable services provided by nonprofessionals. In this process of social construction of their expert commodity, professionals must rely on the existing institutions and social value systems, such as formal knowledge or beliefs what constitutes a good life and who is primarily responsible for securing it. Social proximity organizations occupy an equally unique position in the institutional landscape. Their reliance on voluntary work and the nature of their goals—serving a public purpose—gives their activists and leaders a considerable autonomy in defining their mission and the means of its implementation. Since their services are often offered as a gesture of good will, either free or below market cost, these providers can call for an exemption from the oversight, regulations and constraints that normally apply to the comparable commercial or public sector operations. At the same time, their dependence on the goodwill of others to defray the actual cost of their operations requires their compliance with the prevailing social norms and expectations regarding the proper organizational behavior. The peculiar convergence of autonomy in defining their own work conditions by professions and social proximity organizations, as well as the vital links between that work and social values, conventional expectations, perceived legitimacy and public trust creates multiple unique elective affinities between professional interests and this organizational form. As we discovered in this study, one form of that affinity involves the professional legitimation project to overcome the paucity of public trust. The SPORG form is a “low budget” solution that has a substantial potential for creating a trust bond between producers of expert services and their clients. Another aspect of that affinity is linked to the growing incidence of threeparty transactions in service delivery that include public (i.e., governmental) or a semipublic (i.e., nongovernmental but serving collective needs, for example insurance agencies) institutions as payers. To secure contracts with such

TOWARD A PARTIAL THEORY

221

payers, professional service providers must demonstrate that their services genuinely benefit the populations whose needs these payers are obliged to satisfy. The SPORG form is a budget project that can demonstrate the utility of a professional service, especially a novel one, and has the added value of defining is as a from of public benefit. Third, professionals often act as agents of social change. That role is linked to the nature of their work that often involves solving problems that require changes in social environment. Another contributing factor is formal education that instills a value system that encourages civic virtues, participation in public affairs, and the improvement of society. Moreover, the ability to shape social institutions to the standards and values shared by a social group, which Touraine (1988) calls the struggle for historicity, often serves as an expression of social status and power. Social proximity organizations, frequently affiliated with social movements or community activism, are an effective vehicle for citizen participation in public affairs. They establish channels of communication, coordinate the efforts of many different interest groups and individuals, and represent them as a united social force in their contacts with other interest groups and organizations, public agencies or the media. Finally, there is an issue of occupational autonomy or self-management, that is, the ability of an occupational group to decide what the scope of their own work is, who performs what tasks, who evaluates their performance and by what criteria, and what level of discretion the practitioners have in deciding what treatment should be applied in a particular situation. Occupational autonomy received considerable attention in the literature on professions in general (cf. Larson, 1977, Abbott, 1988), as well as in the context of centrally planned economies of Eastern Europe (Kennedy, 1991). It is generally recognized that the attainment and preservation of occupational autonomy has been a key objective of “professional projects,” or collective efforts of an occupational group to attain a socially recognized professional status. Occupational autonomy became a contested terrain in the era of industrialization. Industrialization created an elaborate division of labor into narrowly specialized jobs that fall into two broadly defined categories: conception and execution. On the “conception side” are the jobs that involve planning and oversight of what is to be done and how, whereas the “execution side” includes the workers who implement the plans and the directives how to accomplish them that were developed by the “conception” personnel (Bravermann, 1974; Edwards, 1979). In that respect, the organization of industrial labor did not substantially differ between the “market economies” and centrally planned systems, except that under the central planning regime the “conception jobs” were shifted higher up the organizational hierarchy above the firm’s management to the level of ministries and central planning authorities.

222

CHAPTER 8

Such separation of conception and execution or mental and manual aspects of work into discrete tasks performed by different people having different skill levels and competencies, known as “taylorism,7” is highly detrimental to professional practice. The essence of professional work that warrants its high social status is the unique convergence of many different skills, both mental and manual, in the physical person—the practitioner. Breaking up those skills into specialized tasks performed by different individuals destroyed the essence of professionalism. To illustrate that, let us consider the work of a surgeon. The surgeon is responsible for all stages of the treatment from diagnosis to the selection of the proper procedure to the planning of all details of that procedure to the manual execution of those details. While she usually relies on support personnel at every stage of the treatment, it is she and no one else who makes and implements all the key decisions required for a successful completion of that treatment. This convergence of different skills in a single person is, no doubt, dictated by the nature of the procedure itself, which requires precise coordination that would be difficult to attain had the work been divided among different individuals. But an equally important function of that convergence is projecting the image of skill and competence that forms the basis of trust between the patient and the practitioner. It is not difficult to imagine that the trust bond would all but disappear, had the doctor’s work been “taylorized” in the fashion of assembly line production. That is, one person would diagnose the condition, someone else would prescribe the treatment, and still another person would supervise the team of paramedics manually executing different stages of that treatment. A clear economic advantage of such a hypothetical division of medical labor is the reduction of skills, and thus compensation, of each worker involved in the process. While that may not necessarily increase the actual risk, it will certainly increase the risk perception from the patient’s point of view. The only thing that matters for the patient is a successful outcome of the treatment, which is guaranteed by the high skill and competence of the practitioner. When the procedure is divided among several less skilled individuals, no one of them being responsible for the overall outcome, such guarantee no longer exist. Consequently, the patient has no reason to trust that he will not be mistreated. The integrity of the practitioner’s skills and competence is thus the key feature of a professional practice. Since integrity is difficult to maintain without considerable level of occupational autonomy, that explains why maintaining a work environment that guarantees a high level of professional autonomy is in the best interests of both, the practitioners and their clients. Consequently, the practitioners will opt for such organizational venue of their service that

TOWARD A PARTIAL THEORY

223

guarantees them the highest possible level of occupational autonomy and integrity of their unique combination of skills. This conclusion is supported by studies of professional behavior. For example, Wholey, Christianson, and Sanchez (1993) found that U.S. physicians generally prefer solo practice because it allows them the greatest level of occupa tional autonomy. However, increased pressure from insurance companies to cut costs often forces them to join health maintenance organizations (HMOs). In such situations, physicians opt for the HMO organizational form known as the independent practice association, because it offers them the level of autonomy that is comparable to that of solo practice. It thus comes as no surprise that practitioners choose SPORGs as the venue of delivering their services. This organizational form offers them considerable occupational autonomy, because it insulates the practitioners from external pressures that often constrain the range of her available choices. While SPORGs must remain financially solvent, that is, procure sufficient resources to cover their costs, their public service status frees them from the dependence on fee income alone. Claiming that they perform a public service makes them eligible, at least in principle, for receiving public support, either financial or in kind. It also legitimates their requests for private contributions, both in the form of cash donations and voluntary labor. Moreover, their organizational autonomy frees them from direct oversight by administrative authorities of the state. To be certain, the state administration can still enforce their compliance with the law and regulations of professional practice, but beyond that rudimentary level, its authority is rather limited. The relative freedom from fee income and direct administrative oversight removes some of the constraints that pose a potential threat to the integrity of professional skills and practice. Dependence on the fee income often creates the pressure to make the service commercially attractive to the paying clients. Such pressure may restrict the practitioner’s choice of available treatments, even though the more expensive or burdensome option offers a better chance for a recovery. Direct administrative oversight frequently creates pressures to meet general standards or deliver outcomes that the authorities expect of professional practice. While such standards are not inherently detrimental, they may nonetheless force the practitioner to nominally comply with these expectations and prescribe treatments that pose excessive burden to the patient that is not warranted by his specific conditions. Both kinds of external pressure restrict the practitioner’s choice and may compromise the quality of the service. Since the perception of the high quality of service is vital for maintaining public trust, choosing the organizational form that reduces these pressures is in the best long-term occupational interest of a profession.

224

CHAPTER 8

Of course, the existence of these multiple elective affinities between professional interests and the SPORG form is not an exclusive domain of the cases investigated in this essay. However, the rapid pace and sweeping nature of social changes in Poland, their concentration within a very short time span, and the unique opportunities and challenges they created for professional service providers made those affinities more salient than elsewhere, and thus easier to identify, describe and study. But before we draw more general lessons from this case study, an important caveat is in order. We should exercise extreme caution in generalizing this case study on other countries, be it developed, Central European, or even Poland as a whole. One of the most deceptive myths that prevail among many Western observers is the perception of Eastern Europe as a single monolithic bloc by virtue of their ideological commitment to the Soviet-style central planning. That perception is far from the truth. Most countries in that region are latecomers to the European development. They emerged as sovereign national entities from the breakdown of the 19th century imperial powers, especially Austro–Hungary, Russia, and the Ottoman Empire. They combined many diverse ethnic and cultural traditions, religions, social institutions, and flagrantly uneven level of economic development included, with a stroke of a pen, into arbitrarily drawn national boundaries. Before this odd mixture of cultures, traditions and institutions had a chance to solidify it was again smashed into pieces by the steamroller of the Nazi invasion, and once more shuffled and rearranged by the Yalta agreement. The postwar order hardly eliminated these vast differences, it merely swept them from public sight under the rug of ideological proclamations and bureaucratic institutions implemented by an administrative fiat. But they simmered under the veil of Pax Sovietica, only to resurface again after the breakdown of the Soviet empire. Bloody conflicts erupted, national boundaries were redrawn, political institutions disintegrated, old states vanished from the map, new states emerged, new institutional forms were created, new interest groups ascended to power, and new alliances were forged. Indeed, if there is a single general statement truthfully characterizing these countries, it is the ancient Greek philosopher Heraclitus’ famous dictum panta rei, all things are in flux, reiterated in Karl Marx’s characterization of the industrial revolution as “all that is solid melts into the air.” Consequently, even the national boundaries in that part of the world do not warrant a level of internal uniformity allowing confident generalizations, and much less so the cognitive boundaries of the entire region as a single “bloc.” A more prudent way to proceed is to generalize the findings of this case study to applicable theories instead of populations. Indeed, such generalizations are usually the aim of case based research, as opposed to surveys based on

TOWARD A PARTIAL THEORY

225

statistical probability samples. There are two theories that can benefit from these findings: the theory of professional projects, and the embeddedness theory of economic action. Lesson for Theorizing Professional Projects. Professions and social construction of professional status received considerable attention in sociological literature. Perhaps the most complete and comprehensive work in this field to date is Abbott’s (1988) study of professional projects in Western Europe and the United States. Building upon earlier studies, especially the seminal work by Larson (1977) that focused primarily on the projects of individual professional groups, Abbot substantially enriches the theory of professions by considering the larger social context in which professional groups operate. He introduces the concept of the system of professions that delineates external boundaries and environmental influences that affect professional practice. The system of professions is a semiformal network of practitioners working in different fields. It performs two functions that are of vital importance to professional interests, self-regulation and information asymmetry reduction. Self-regulation consists in defining the boundaries of professional competence, or “jurisdiction,” over specific problem areas, or service fields. Well-defined boundaries of professional jurisdiction prevent the encroachments on the “professional turf” by the providers of services that are related to each other, and thus reduce competition among different groups of professionals. Excessive competition is harmful to professional interests because it undermines professional authority, lowers the price of professional commodity, compromises the quality to make the services more commercially attractive, and threatens occupational autonomy by inviting the intervention of outside regulatory agencies. Information asymmetry reduction, in turn, is achieved by developing a referral system. People seeking professional help often do not know what kind of specialist can offer the most appropriate solution to their problems. Consequently, they may turn to a “wrong” specialist, or even become discouraged to seek professional assistance altogether. The referral system solves that problem by turning the choice of the “proper” provider to the specialists themselves, and establishing the rules of cooperation among different types of service providers. The added value of such a solution is the development of conventional expectations regarding specific competencies, or “jurisdictions,” of different groups of experts. This study contributes to the theory of professional projects in two ways. First, it expands the geographical scope of this theory, hitherto limited mostly to Western Europe and the United States, by mustering supporting evidence that comes from an Eastern European country. This evidence takes the form of a link between the occupational interests of different provider groups and their

226

CHAPTER 8

strategies to gain professional recognition and develop working relations with other professions. It substantiates Abbot’s claim about the importance of the system of professions for professional practice by providing counterfactual evidence that demonstrates what happens if the system of professions does not work as hypothesized. To avoid being a mere tautology true by definition, an empirical hypothesis must include the possibility of being refuted by counterfactual evidence. Stated differently, such evidence demonstrates that if the condition specified by the hypothesis does not obtain, neither does the hypothesized effect. The counterfactual evidence gathered in this project consists in identifying professional groups that for various reasons cannot rely on the system of professions to legitimate their practice. In one group of cases, the system of professions could not work because of the perceived high costs of overprofessionalization. In other cases, practitioners were excluded from the system, because their services were seen as lacking merits. In such situations, the practitioners turned to alternative means, the SPORG organizational form, to both gain recognition and acceptance to the system. This finding further suggests that the system of professions is one of many possible strategies of professional self-regulation and information asymmetry reduction. An alternative strategy is recourse to the SPORG form, or perhaps even other organizational forms (e.g., public agency) capable of defining professional practice as public service. The system of professions seems to be poorly suited to solve the problem of over-professionalization, and social costs associated with it. The SPORG form appears to be a more effective means to address that problem, e.g. by delegating some of the professional tasks to volunteers. That allows us to predict that the SPORG form may become an increasingly common means of legitimating professional practice, assuming of course that the problems associated with over-professionalization will increase, or that the number of providers of esoteric and thus questionable services will grow. Lesson for Theorizing Economic Action. Why did complex organizations emerge in modern society? Are large bureaucracies more efficient form of the organization of economy than markets? How do members of these organizations make their decisions? What is the role, if any, of social institutions, routines, and value judgments is that decisionmaking process? These and related questions occupy a central place in theories of the organizations of economic activities developed by social scientists representing various schools of though and political persuasions, from Marx and Weber, to Keynes, to von Hayek, to Polanyi, to Bendix, and most recently, Chandler, Williamson, Perrow, or Granovetter. The most recent debate in this field takes place between two schools of thought that, while not mutually exclusive, offer two different views on the

TOWARD A PARTIAL THEORY

227

origins of formal organizations. The first school, prominently represented by Williamson (1975), links the emergence of complex organizations to considerations of economic efficiency. Its argument is quite simple and built on the assumption of rationality of economic actors manifested in their efficiency maximizing behavior. Large organizations exist, Williamson argues, because they are more efficient than free markets. Their efficiency comes from the fact that a complex economy requires an exponentially growing number of transactions. If these transactions were to be carried through contracts between independent parties in a free market environment, the overall transaction costs, that is, the costs of constant monitoring of the markets, drafting contracts, monitoring their execution, and enforcing violations and noncompliance with their terms, would be very high indeed. If, on the other hand, the suppliers of various raw materials, sub-components, logistics and so on are integrated into a single corporate entity under a centralized management, the argument goes, most of those elaborate monitoring and legal procedures necessitated by the complexity of market transactions are replaced with administrative supervision, and that substantially cuts the cost of doing business. This approach provoked an immediate criticism by economic sociologists who proposed two closely related counterarguments. First, the transaction cost approach misses the role of social ties and cultural norms and values in economic action. Officers and personnel of large organizations do not live in vacuum, they are embedded in their social environment, national cultures, local communities, or circles of friends that that influence their beliefs, value system, and behavior (Grannovetter; 1985). Those informal influences of the social embeddedness do not stop at the doors or formal organization, people bring them to their work where they act as informal social control mechanisms reducing the need for formal monitoring. The second counterargument holds that even if large organizations did eliminate some of the costs associated with market transactions, they would also add new costs of their own. It is well-known that officers in large organizations use their positions to advance their own goals or personal careers, often at the expense of achieving the organization’s stated mission. Moreover, organizational hierarchies do not really reduce transaction costs resulting from shifts in the supply–demand structure of the market, they merely distribute them differently. Under the market condition, these costs are usually absorbed by those agents, whose commodity is directly affected by market fluctuations and uncertainty thus created. In the complex organizational environment, however, they are absorbed by the organizations themselves that integrated the supply of the interim products needed for the final product (Perrow, 1986).8 Taking into account informal rules and networks that reduce the cost of transaction monitoring, the cost resulting from opportunistic behavior of the

228

CHAPTER 8

organization’s officers, and the limited ability of reducing transaction costs between the firm and its environment, the supposed economic efficiency of large organizations is a non sequitur. If large organizations offer any advantages at all, argue the critics, these advantages stem not from their purported economic efficiency, but from their power to shape their environment to their advantage, undercut competition, and monopolize the markets. While this debate significantly contributed to our understanding of the relationship between economic actors (firms), and their social-economic environment, it left two unsolved problems. The first problem is represented by the question we posited in the beginning of Chapter 4, “if there is a cost that nobody counts, does it still count as a cost?” If, as Perrow (1986) argues, formal organizations merely redistribute certain transaction costs instead of saving them, it raises the possibility that such differently distributed costs become hidden, and thus vanish from the radar screen of economic decision makers. Such decisionmakers would act under the impression that the organizational hierarchy can save them some of the transaction costs, and choose the organizational form of their economic activity accordingly. Consequently, Williamson’s (1975) argument would hold albeit for a slightly different reason, it is the perceived rather than actual transaction cost reduction that explains recourse to complex organizational forms. The second problem relates to the fact that, as economic sociologists recognized themselves, social embeddedness can have two different effects on economic efficiency. It can either save some transaction costs by reducing the need for formal monitoring, or it can increase those costs by opportunistic behavior of the organization’s officers. That raises the question how do those different effects balance each other and the consideration of economic efficiency under different conditions? This study contributes solutions to both problems. The solution to the problem of perceived versus actual costs can be find in the concept of cognitive schemata of cost-benefit calculation. These schemata affect the scope of information that is used in cost-benefit calculations by defining the scope of interests that are legitimately considered in such calculations. Organizations act as such cognitive schemata, because they come with all sorts of rules and expectations, both formal and informal, explicit and tacit, that define who are legitimate stakeholders, what are their stakes, and within what time period. Since different organizational forms come with different cultural expectations in different social-historical contexts, they not only redistribute costs differently, but their overall cost-benefit balance is perceived differently as well. Social proximity organizations we studied came with the expectation of providing public services. That expectation expanded the scope of their poten-

TOWARD A PARTIAL THEORY

229

tial beneficiaries as compared to the commercial practice, and consequently, their perceived value. It could be argued that such perception is illusory, especially when we add their transaction costs, such as fundraising, outreach, or relative absence of supervision, to the equation. It could be also argued that the scope of potential beneficiaries would be the same, or even greater, had the same services been provided by commercial firms with adequate public support that covers the cost of serving those people who cannot afford the full payment. However, these two organizational forms invoke two different cognitive schemata or expectations about their cost-benefit balance, hence the differences in their perceived values. An important aspect that comes to play in the perceived value of the organizational form is its affinity to different interest groups. Different cost distribu tion hurts some groups more than others. Moreover, different organizational forms may offer additional noneconomic advantages to some of these groups. So even if the social proximity form does not offer any substantial cost savings, it offers other advantages to professional service providers, such as occupational autonomy or the ability to influence public opinion or policy. Consequently, these groups are promoting the SPORG form, calling attention to their perceived advantages. The greater skill in public discourse they have, and the greater their access to channels of public communication, the more likely they are to sway the public perception in the desired direction. It is possible to expand this argument to other organizational forms as well. For example, central planning was once considered the solution to vast problems faced by most Eastern European societies. Large centralized bureaucracy seem to reduce transaction costs of the market and coordinate the entire economy, thus promoting its rapid growth. Of course, it had its costs, such as the curtailment of political freedom, inflexibility, or promotion of mediocrity and opportunism among the managerial staff, but such costs seemed a small price to pay when the entire institutional structure was in ruins and people could not meet their basic needs. Large centralized bureaucracy also served the political interests of the newly emerging power groups, who wanted to consolidate their control of the state. It also offered a promise to professionals to implement their professional projects. That aspect of central planning was aptly underscored by the renowned Czech writer Milan Kundera in his novel, The Joke, which featured fictitious characters while making keen observations about postwar Eastern European society. Therefore, the convergence of the real and perceived economic benefits as well as the political advantages offered by centralized economy can explain its implementation by Eastern European governments, and the initial concurrence with that decision by large segments of the population. When the most pressing

230

CHAPTER 8

problems had been solved, however, the hitherto swept under the “cognitive rug” costs of centralized hierarchy came to the fore, changing its perceived cost-benefit balance. We can pursue this line of reasoning even further and apply it to explain the recent trend toward privatization in many developed countries, such as the United States. Public bureaucracy is not inherently more costly than the private one, and there is indeed plenty of wastefulness, opportunism and lack of accountability in private corporations. However, the transaction costs of government agencies are more salient in public perception, and that salience is further amplified by various interest groups that have access to the media. It comes, therefore, as no surprise that private insurance agencies that have much to lose from the introduction of public healthcare, or private investment firms that see opportunities in privatizing social security promote their positions by claiming the purported high transaction costs imbedded in government operations. The bottom line is that different organizational forms not only affect the actual cost-benefit balance of economic operations, but also imply different cognitive frameworks that affect the perception of that balance. Therefore, the social perception of an organizational form and the scope of its legitimate stakeholders is an important factor to be considered in explanations of the emergence of that form under specific social–historical conditions. The second unresolved problem in the debate between economists and economic sociologists is the effect of social embeddedness on organizational behavior. That effect can be either beneficial or detrimental for the economic performance of the firm under different circumstances. Therefore, we need to specify circumstances that lead to one or the other. This study offers a partial solution to that problem by identifying some of such conditions. One of the main findings of this inquiry is the reliance on social proximity networks, specifically volunteering, in an attempt to build trust between practitioners and patients. We learned that the bond of trust was weakened by a negative public perception of over-professionalization of certain aspects of healthcare. Such overprofessionalization, or reliance on standard rules and procedures of professional practice was clearly a transaction cost of than encumbered conventional hospital-based care. That transaction cost was reduced by introducing social proximity networks to the standard professional practice by the means of the organizational form that was conventionally expected to rely on such networks. By contrast, public healthcare establishments that relied on formal rules and regulations developed under central planning experienced negative effects of social proximity networks, such as nepotism or bribery known as “gray economy” among the practitioners. The “gray economy” networks were not limited to healthcare, they proliferated in most publicly owned firms, adversely affecting their productivity.

TOWARD A PARTIAL THEORY

231

These observations suggest that in situations characterized by high levels information asymmetry, people need some form of assurance or guidance that allows them to cope with uncertainty. In modern societies such assurance is usually provided by institutionalized rules, norms of behavior, expectations or social solidarity networks that embed the unknown into familiar conventionally recognized forms. If the organizational form implemented to cope with such situations, perhaps by an administrative fiat or kindred external force, is not sufficiently familiar or conventionally recognized—it may fail to reduce information asymmetry or perhaps even produce greater uncertainty. Under such circumstances, people will seek alternative venues of dealing with uncertainty and rely on social institutions that are available to them. Such institutions usually involve conventional stereotypes, beliefs, and social proximity networks. This, in turn, is likely to result in frequent conflicts between formal rules and procedures and informal norms and social networks. It is the informal institutions that that will prevail in conflicting situations, because they are more effective in coping with uncertainty. On the other hand, if the organizational solution is embedded in familiar social institutions and relies on social proximity relations in a controlled and predictable fashion, programmatically integrating them with the formal rules and procedures, that convergence of the formal and the informal elements is likely to offer a superior means of coping with uncertainty than either one of them alone. Under such circumstances, social proximity relations are likely to supplement formal procedures, reduce the need for formal monitoring and enforcement, and improve the organization’s performance and effectiveness. These propositions identify the conditions under which social embeddedness either reduces or increases the actual as well as perceived transaction costs associated with formal organizations. It thus contributes to the embeddedness theory of complex organizations by allowing us to predict when such organizations can help saving the costs of formal monitoring, and when the expectation of such savings is illusory. The added value of the proposed solution is its clear implication for policy directions. In situations characterized by a wide knowledge gap between different groups of people involved in the process and by high level of uncertainty, do not rely on organizational forms that write off social norms and solidarity networks. Instead, use the forms that integrate those norms and networks into the problem solving process. As this study has demonstrated, the organizational form that is ideally suited for that end is social proximity organization.

232

CHAPTER 8

NOTES 1

2

3

4 5

6

7

8

The Johns Hopkins Comparative Nonprofit Sector project, of which this writer is a member, has undertaken a case study of nonprofit sector in several countries, including four Eastern European nations (the Czech Republic, Hungary, Slovakia, and Romania) to assess the impact of social proximity organizations, including innovation dissemination. However, at the time of publication, data collection had not yet been completed. The former East Germany may have scored even lower in the confidence than Belorus, but because this country was incorporated into the institutional structures of West Germany this strongly suggests the influence of these structures outweighs the effects hypothesized by proposition (ix). The reader is strongly advised to view this comparison with the KLON data with extreme caution, because different methodologies were used to compile these two data sets. I use this comparison for illustrative purpose only, since the data for Poland assembled using the Johns Hopkins Comparative Nonprofit Sector Project methodology are not yet available. Nonetheless, the KLON data set is a major part of the Johns Hopkins data collection strategy in Poland. Der Spiegel 47 (3): 21–23 (January, 18, 1993). For a review of the institutional school in political economy and sociology see Selznick (1948, 1957), Grannovetter (19851, Meyer and Rowan (1977), Hausner,Jessop, and Nielson (1995), and Perrow (1986, pp. 157–177). Due to shortages of urban dwellings, people without a permanent residence permit were not eligible for public or cooperative apartments, which were the prevalent forms of housing in Poland. They could still enter private rental agreements, but these agreements did not guarantee residency rights. This situation created a vast “shadow market,” especially in large urban centers. The number of undocumented tenants was difficult to estimate, because landlords often refused to register them, fearing this could jeopardize their own residency rights. Named after Frederick Winslow Taylor (1911) who introduced the so-called “scientific management,” or the practice of dividing production process into a series of elementary and precisely timed movements, such as grabbing, lifting, moving, dropping, etc. The job was defined as a “bundle” of such elementary tasks that can be performed by a single person who had minimum qualifications. Perrow (1986) gives the following example to illustrate that point. Under the market condition, the production of air conditioners involves two firms: the supplier of radiators and the supplier of engines. The engine supplier must enter into a contract with the radiator supplier to acquire a radiator, and that incurs certain transaction costs. That cost is reduced by a vertical integration of radiator manufacturing into the engine producing firm. However, when market conditions change and the demand for air conditioners drops, the radiator supplier is left with a surplus and must incur additional costs to find another buyer. Vertical integration does not offer any savings in these situations, because the integrated firms are still left with the surplus which must find other buyers. Conversely, if the demand for air conditioners goes up, the integrated firm must increase its component production capacity to meet the growing demand. This development’s cost is the same as it would be for the case of two separate firms under the market condition, but there is an added disadvantage if the demand drops in the future. The integrated firm would find itself in an awkward position of having to sell the surplus radiators to its competitors.

Epilogue “History occurs, as it were, twice—first time as tragedy, the second time as farce.” Perhaps nowhere in the world this statement is more true and, at the same time, more ironic than in Central and Eastern Europe. The people who a half century ago ascended to power by purveying a new social order built on the ideas of Karl Marx were themselves consumed by the very social forces that, as Marx believed, would conquer the old order they seek to replace. As one American commentator aptly observed, many Eastern European “Marxists” should have reread Marx—or perhaps read him for the first time—before embarking on the task of reengineering society. It is still too early to provide a definitive assessment of the central planning period in Central and Eastern Europe. One thing seems to be certain, however. The central planning regimes miserably failed in the task of engaging civil society in their economic development project. The task they were facing was trailblazing, the outcomes largely unknown, yet their solution to uncertainty of that task was bureaucratic hierarchy imposed from above by an administrative fiat. That was tragedy. Consequently, the social forces the central planning bureaucracy had unleashed and then dismissed so lightly eventually brought down the institutional integument that created them. Today, this tragedy repeats itself as farce. The technocrats who came to power on the wave of social dissent against ossified structures of central planning repeat the same mistake of “designer” approach to solving social problems, by forcing “shock therapy” and institutional models concocted in British and American think-tanks that are largely alien to their society. That attitude is best reflected by a nationally televised statement made by a Christian-nationalist member of the Polish parliament: “We cannot allow a fortuitous society make important policy decisions.” They should have known better. That “fortuitous society” already brought down one seemingly invincible bureaucratic juggernaut in that part of the world. 233

234

EPILOGUE

It is, therefore, no accident that I chose Marx’s view on history as the leitmotif of this essay. The process of reforming Eastern European societies, inspired by his ideas, is far from being over. Moreover, those ideas not only provide an ironic metaphor aptly summarizing what has happened, but also an insight into what is to be done to avoid repeating the same mistakes. Revolutions, even peaceful ones, bring social changes that create uncertainty. The revolutionaries must thus provide adequate social mechanisms of coping with that uncertainty, if they want the people to follow their path. They must conjure up the spirits of the past to present a new scene in world history in a timehonored form that people will recognize and accept. The professional men and women working in the social proximity organizations that I studied learned that lesson well, even though they are probably not aware of its Marxist provenience. That is yet another reason of awakening the seemingly dead spirit of Marx’s ideas – “for the purpose of glorifying their new struggles, not parodying the old, for magnifying the given task in imagination, not for fleeing from its solution in reality.” This handful of dedicated individuals who embarked on a difficult task of reforming their society at a historically climacteric moment adopted an organizational venue that bridges the gap between their visions and the concerns of people whom they want to serve. Instead of jumping on the bandwagon of privatization, “shock therapy,” and uncritical aping of foreign institutions, they opted for “organic work” through social proximity organizations – the time honored venue of channeling private interests toward a public good. That not only brings hope for a positive social change in that troubled part of the world. It also sets an example for others to follow.

Appendix

Primary Data Sources and Methodological Notes KLON DATABASE In 1993, the research team KLON in Warsaw conducted a nationwide survey of Polish nongovernmental organizations. The survey targeted approximately 10,000 organizations mentioned in written records, such as court records, government records, and the media as well as in informal contacts. Over 4,500 organizations completed questionnaires and returned them. The investigators estimated nearly a thousand agencies refused to participate in the survey, and they presumed remaining 4,500 organizations were defunct at the time of the survey. From the responses received, the research team selected 1,796 organizations that reported providing some form of services. The principal investigators believe, this number represents all social assistance organizations operating in Poland in 1993. The questionnaire contained 150 questions, most of them open-ended, about various aspects of the organization’s activity. The research project asked about the organization’s activities, year of establishment, geographic location, founders’ socioeconomic background, organizational models used by the founders, reasons for the organization’s formulation, services provided, conditions (if any) for receiving assistance, and interest (if any) in receiving new clients and disseminating information about services to general public. The principal investigators, Jakub Wygnanski and Filip Rosciszewski, gave me an electronic data file containing the recorded responses. I then coded the narrative information (in Polish) for the purpose of quantitative analysis. The fields of activity were classified according to the International Classification of Nonprofit Organizations (ICNPO) proposed by Salamon and Anheier ( 1992b), 235

236

APPENDIX

based on the provided descriptions of organizations’ activities and the organizations’ names which, in most cases provided useful hints about the agencies’ missions. All agencies having the legal status of foundation were classified into the respective service fields. I did this because these agencies were operating foundations whose primary goal was to provide services rather than distribute funds. The classification of founding members was developed a posteriori to fit the data. In some cases, the occupational status or title of the founder was mentioned in the narrative. These cases were classified as “Founded by Professionals.” In other cases, the organizational affiliation of the founding members was mentioned. If the agency was a civic association or a labor union, then it was classified as “Civic Association Affiliates.” If, on the other hand, the agency was a public agency or a state-owned enterprise, it was classified as “Public Officials or Employees.” Any mention of the participation clergy or church in founding the organization was classified as “Clergy.” In cases where multiple founders were mentioned, the status of the first mentioned founder was generally used as the basis of classification. Any mention of spontaneous citizen initiative or the involvement of people who benefited (either directly or through relatives) from the organization’s service that did not list professionals, clergy, or public officials or employees as co-founders was classified as “Activists.” Cases were classified as “Other” (e.g., foreign nationals, students) when the information about the founding member did not fit the listed categories. Cases were classified as “Missing” when only names of the founding members were listed, but no status information was provided, or when they did not provide any information at all about the founders. The classification of organizational models is straightforward and self-explanatory. Cases were classified as “Other” when they provided information that did not fit the “Domestic” or “Foreign” category; listed inspiration rather than models (e.g., “the ideas of . . . ”); explicitly stated the organization was an original idea of the founder(s); or mentioned pre-1945 organizations. I used the original coding in the questionnaire for items pertaining to the agency’s age, location, and interest in new clients and information dissemination. New client and information dissemination interest was measured on a 6point Likert scale: “decidedly yes,” “probably yes,” “probably not,” decidedly not,” “other,” and “don’t know.” The agency’s requirements for services eligibility was measured by asking the respondents to check the following: “no requirements,” “financial requirements,” participation of the recipients or their families in the organization’s activities,” “adherence to specific rules, as spelledout by the organization,” and “don’t know.” Geographic location was assigned a two-letter code identifying the prefecture where the establishment filling out the questionnaire was located. Year of founding also pertains to the establishment filling out the questionnaire.

PRIMARY DATA SOURCES AND METHODOLOGICAL NOTES

237

INTERVIEWS The second data source is face-to-face interviews with founding members or leaders of selected organizations providing novel social and healthcare services. I selected these organizations from those listed in the KLON database. Selection was based on three criteria: 1) established after 1985 (i.e., the year when a new foundation law was passed in Poland); 2) founded by professionals; and 3) providing services to individuals. Geographic areas covered by this phase of the study included three major urban centers: Warsaw (the nation’s capital); Krakow (a major cultural center); and Gdansk (a major port, and an industrial center). Poland is a relatively small, culturally and ethnically homogenous country, and these three metropolitan areas do not substantially differ from other major urban centers. There were 97 organizations listed in the KLON database that met the first two selection criteria; 57 of these were located in Warsaw, 24 in Krakow, and 16 in Gdansk. From that list, I attempted (not always successfully) to exclude entities that did not appear to provide bona fide services to individuals—that is advocacy or research agencies, chapters of foreign organizations, or newly established chapters of domestic organizations existing prior to 1985. This narrowed the list down to 39 organizations in all three prefectures. I attempted to phone these organizations, using the contacts specified in the KLON database. Twenty-four agencies either did not provide any contact information, could not be reached, or declined to be interviewed. Representatives from 15 organizations agreed to participate in the study. It turned out, however, that two organizations did not provide any services to individuals. Table A1 lists sources, their organizational affiliation, and their statuses in their organizations. Although no source requested anonymity, I identify each by number rather than by name for the sake of brevity. Nineteen representatives (founders or leaders) were interviewed for this study. All interviews were audiotaped and later transcribed. I also collected printed handouts or witnessed demonstrations pertaining to the most important aspects of the agencies’ operations. This yielded detailed information about the organization’s operations, its mission, reasons for establishment, types of services provided and clients served, major problems faced, strategies for obtaining funding and promoting serviced, and future plans. The representatives also provided their insights about the functioning of similar organizations in the country. In addition to these representatives, I consulted the following Polish scholars and researchers familiar with the subject: Krzysztof Frysztacki, Ph.D. (Jagiellonian University, Krakow), Malgorzata Fuszara, Ph.D. (Warsaw University), Ewa Les, Ph.D. (Warsaw University), Dorota Ilczuk, Ph.D. (Institute

238

APPENDIX Table Al. List of Informants and Their Organizational Affiliation

Informants ID Organization 1 2

3

4 5

6 7 8 9 10

11

12 13 14

Case ID

Children’s Foundation, Warsaw The Foundation* for the Assistance to Disabled Children “Hippoterapia,” Warsaw The Foundation* for the Assistance to Disabled Children “Hippoterapia,” Krakow The Foundation* for the Free Market and Medical Services, Warsaw** The Club for Women after Mastectomy (The Amazons), Warsaw The Club for Women after Mastectomy (The Amazons), Warsaw The Alliance for Penitentiary Protection (Patronage), Warsaw The Alliance for Penitentiary Protection (Patronage), Warsaw The Alliance for Penitentiary Protection (Patronage), Warsaw The Polish Association for the Assistance to People with Alzheimer’s Disease, Warsaw The Movement in the Defense of the Life of Unborn Children (Gaudium Vitae), Warsaw The Society for Aid to Youth, Warsaw The Foundation* (Homo Homini Frater), Gdansk The Hospice, Gdansk

10 5

5

1

Founder, chairperson, director of the rehabilitation ward at a major hospital*** Professional staff person

1 7 7 7 3

11

12 9 4 2

16

The Association of People with Disabilities (Ami), Gdansk The Coastal Environmental Society, Gdansk

2

19

Founding member, board member Founding director

The Association of People with Disabilities (Ami), Gdansk

18

Founder, chairman of the board Founding member, board member

14

15

17

Role in organization

8

The Cultural Association (Theater, Education 6 Rehabilitation), Gdansk The Foundation* for the Development of 13 Private Health Care in Poland, Krakow**

Founding Member, board member Founding Member, board member Founding Member, board member Founding member, board member, physician at a mental health clinic*** Founding member, director

Managing director Founding member, contact person Founder, director, chaplain at the medical academy hospital* * * Founding member, professional advisor, physician at a medical academy hospital*** Founding member, chairperson Founding member, chairperson Founder, chairperson Founding member, board member government advisor and expert on health care systems***

“Legal form only; does not indicate grant-giving activity. **Organization does not provide services to individuals. “““Position in the public sector entity to which the organization is linked.

PRIMARY DATA SOURCES AND METHODOLOGICAL NOTES

239

of Culture, Warsaw), Filip Rosciszewski (KLON research team, Warsaw), and Jakub Wygnanski (KLON research team, Warsaw).

OTHER DATA SOURCES For a comparative analysis of attitudes toward public policy issues and public institutions, I used World Values Survey (1994). It is a study of public opinion in 43 countries, based on representative samples. For the purpose of comparative analysis, I selected only the European countries, which I then grouped into three areas: Western Europe, Eastern Europe, and Poland. The Western European countries are: France, Great Britain, West Germany, Italy, the Netherlands, Denmark, Belgium, Spain, Ireland, North Ireland (a separate sample), Norway, Sweden, Portugal, and Austria. The Eastern European countries are: Hungary, Belorus, the Czech Republic, East Germany, Slovenia, Bulgaria, Romania, Lithuania, Latvia, Estonia, Russia, and Moscow (a separate sample). Civic aspirations shown in Table 3.1 were measured by response to the question: If you had to choose, which one of the things on this card would you say is most important?” Choices included: “maintaining order in the nation,” “giving people more say in important government decisions,” “fighting rising prices,” and “protecting” the freedom of speech.

Civic aspirations of nations or pools of nations were measured as the percent of respondents who chose the second option. The major occupational groups in that table were constructed from the reported occupations as follows. “Intelligentsia” includes managers, supervisors, professionals, and midlevel office employees. “Other” includes manual workers, junior office employees, farmers, agricultural workers, military personnel, and never employed. Attitudes toward bribery (Figure 8.1) are represented by responses to the question: Please tell me for each of the following statements whether you think it can always be justifies, never be justified, or something in between [ . . . ] Someone accepting a bribe in the course of their duties.

Responses were measured on a 10-point scale, where 1 meant “never justified,” and 10 means “always justified.” The comparative procedure used for an analysis was one-way analysis of variance that compared the means calculated for each group of countries, supplemented by the post hoc Bonferroni test indicating statistically significant differences between individual groups.

240

APPENDlX

Confidence in selected public institutions (Figure 8.2) was derived from the responses to the question: Please look at this card and tell me, for each item listed, how much confidence you have in them, is it a great deal, quite a lot, not very much, or none at all?

The categories “a great deal” and “quite a lot” as well as “not very much” and “none at all” were collapsed into two groups, respectively. Attitudes toward the pace of social changes were reflected by the answers to this item: I am going to read out some statements about the government and the economy. For each one, could you tell me how much you agree or disagree? [ . . . ] Political reform in this country is moving too rapidly.

Attitudes were measured on a 5-point Likert scale where 1 is “agree completely,” 2 is “agree somewhat,” 3 is “neither agree nor disagree,” 4 is “disagree somewha,t” and 5 is “disagree completely.” Values 1 and 2 were collapsed into category “yes,” and values 3–5 into category “no.” Finally, attitudes toward changes came from two items: Now I want to ask you some questions about your outlook on life. Each card I show you has two contrasting statements on it. Using the scale listed, could you tell me where you would place your own view? 1 means you agree completely with the statement on the left, 10 means you agree completely with the statement on the right, or you can choose any number in between. [left] “One should be cautious about making major changes in life.” [right] “You will never achieve much unless you act boldly.” [left] “Ideas that have stood the test of time are generally better.” [right] “New ideas are generally better than old ones.

Averages for each group of countries were compared by a one-way analysis of variance, supplemented by the post hoc Bonferroni test indicating statistically significant differences between individual groups. Additional sources included data compiled by the Central Statistical Office (GUS) in Poland and the results of various opinion polls conducted by the Center for Public Opinion Research (CBOS). CBOS is a research agency established in 1982 by the military government to survey public opinion during the time of acute political crisis. Between 1983–1989, the center provided confidential reports to the government about public attitudes toward current political, economic, and social problems. After 1989, these reports were declassified and published. Information from each of these sources is identified by respective notes.

References Abbott, Andrew, 1988, The System of Professions: An Essay of the Division of Expert Labor, Chicago: The University of Chicago Press. Abzug, Rikki, and Joy K. Turnheim, 1998, Bandwagon or band-aid? A model of nonprofit incorporation by state, Nonprofit and Voluntary Sector Quarterly, 27(3):300–322. Alton, Thad Paul, 1955, Polish Postwar Economy, New York: Columbia University Press. Anheier, Helmut, and Wolfgang Seibel, 1992, The nonprofit sector and the transformation of societies: Comparative perspective from Europe, Paper presented at the Annual Meeting of the American Sociological Association, Pittsburgh, August 20. Augoustinos, Martha, and John Innes, 1990, Towards an integration of social representations and social schema theory, British Journal of Social Psychology, 29:213–31. Barthes, Roland, 1987, Mythologies, New York: Hill and Wang. Ben-Ner, Avner, and Theresa Van Hoomissen, 1993, Independent organizations in the mixed economy: A demand and supply analysis, in: Avner Ben-Ner and Benedetto Gui (eds.), The Independent Sector in the Mixed Economy, Ann Arbor: The University of Michigan Press. Berger, Joseph, Murray Webster, Jr., Ridgeway, Cecilia, and Susan J. Rosenholtz, 1986, Status cues, expectations, and behavior, Advances in Group Processes 3: 1–22. Borges, Jorge Louis, 1964, Labyrinths, Selected Stories and Other Writings, New York: New Directions Publishing Corporation. Bourdieu, Pierre, 1984, Homo Academicus, Stanford: Stanford University Press. Braverman, Harry, 1974, Labor and Monopoly Capital: The Degradation of Work in the Twentieth Century, New York: Monthly Review Press. CBOS (Center for the Public Opinion Research), 1994, Spoleczenstwo i wladza lat osiemdziesiatych w badaniach CBOS (The Nation and the Government during 1980s in Public Opinion Research), Warszawa: CBOS. Chandler, Alfred D., 1977, The Visible Hand, The Managerial Revolution in American Business, Cambridge: The Belknap Press of Harvard University Press. Clarke, Lee, and Carroll L. Estes, 1992, Sociological and economic theories of markets and nonprofits: Evidence from home health organizations, American Journal of Sociology, 97(4):945–969. Clarke, Lee, 1993a, The disqualification heuristic: When do organizations misperceive risk?, Research in Social Problems and Public Policy, 5:289–312. Clarke, Lee, 1993b, Social organization and risk: Some current controversies, Annual Review of Sociology, 19:375–399.

241

242

REFERENCES

Cohen, Michael D., March, James G., and Johan P. Olsen, 1972, A garbage can model of organizational choice, Administrative Science Quarterly, 7( 1):l–25. Commons, John, [1950] 1970, The Economics of Collective Action , Madison: University of Wisconsin Press. Connor, Walter D., Ploszajski, Piotr, Inkeles, Alex, and Wlodzimierz Wesolowski (eds.), 1992, The Polish Road from Socialism, Armonk: M.E. Sharpe. Cyert, Richard M., and James G. March, 1963, A Behavioral Theory of the Firm, Englewood Cliffs: Prentice Hall. DiMaggio, Paul, and Walter Powell, 1983, The iron cage revisited: Institutional isomorphism and collective rationality in organization fields, American Sociological Review, 48(2):147–160. Durkheim, Emile, [1915], 1965, The Elementary Forms of the Religious Life, New York: The Free Press. Durkheim, Emile, 1958, Professional Ethics and Civic Morals, Glencoe: The Free Press. Edwards, Richard, 1979, Contested Terrain: The Transformation of the Workplace in the Twentieth Century, New York: Basic Books. Eliade, Mircea, 1958, Patterns in Comparative Religion, New York: New American Library. Feiwel, George R., 1971, Industrialization and Planning Under Polish Socialism, vol.1, New York: Praeger Publishers. Feiwel, George R., 1965, The Economic of a Socialist Enterprise: A Case Study of the Polish Firm, New York: Frederick A. Praeger. Ferguson, Kathy E., 1984, The Feminist Case against Bureaucracy, Philadelphia: Temple University Press. Firlit, Elzbieta, and Jerzy Chlopecki, 1992, When theft is not theft, in: Janine R. Wedel (ed.), The Unplanned Society: Poland during and after Communism, pp. 95–109, New York: Columbia University Press. Fiszman, Joseph R., 1972, Revolution and Tradition in People’s Poland: Education and Socialization, Princeton: Princeton University Press. Foucault, Michel, 1979, Discipline and Punish: The Birth of the Prison, New York: Vintage Books. Fukuyama, Francis, 1995, Trust: The Social Virtues and the Creation of Prosperity, New York: The Free Press. Gerschenkron, Alexander, [ 19521 1992, Economic backwardness in a historical perspective, in: Mark Grannovetter and Richard Swedberg (eds.), The Sociology of Economic Life, Boulder: Westview Press, pp. 111–130. Gramsci, Antonio, 1971, Prison Notebooks, New York: International Publishers. Grannovetter, Mark, 1985, Economic action and social structure: The problem of embeddedness, American Journal of Sociology, 91, 481–510. GUS (Central Statistical Office), Concise Statistical Yearbook of Poland, 1968-1991, Warsaw. Halecki, Oscar, (ed.), 1957, Poland, New York: Mid European Studies Center of the Free Europe Committee and Frederick A. Praeger. Hansmann, Henry, 1987, Economic theories of nonprofit organizations, in: Walter Powell (ed.), The Nonprofit Sector: A Research Handbook, New Haven: Yale University Press, pp. 27–42. Hausner, Jerzy, Jessop, Bob, and Klaus Nielsen (eds.) 1995, Strategic Choice and Path Dependency in Post Socialism in the Transformation Process, Aldershot (UK) and Brookfield (US): Edward Elgar. Henwood, Doug, 1997, Wall Street, London: Verso. Hirschi, Travis, 1969, Causes of Delinquency, Berkeley: University of California Press. Ilczuk, Dorota, 1995, Sektor Nonprofit w Kulturze: Analiza instytucjonalno-finansowa fundacji and stowarzyszen, (The Nonprofit Sector in Culture: An Institutional and Financial Analysis), Warszawa: Instytut Kultury.

REFERENCES

243

James, Estelle, 1987, The independent sector in comparative perspective, in: Walter Powell (ed.), The Independent Sector: A Research Handbook, New Haven: Yale University Press, pp. 27–42. Kaminski, Bartlomiej, 1991, The Collapse of state Socialism: The Case of Poland, Princeton: Princeton University Press. Kant, Immanuel, [1783], 1950, Prolegomena to Any Future Metaphysics, Indianapolis: Bobbs-Merrill. Katz, Elihu, Blumler, Jay G., and Michael Gurevitch, 1973–1974, Uses and gratifications research, Public Opinion Quarterly, 37:509–523. Kawalec, Stefan, 1992, The dictatorial supplier, in: Janine R. Wedel (ed.), The Unplanned Society: Poland during and after Communism, pp. 129–143, New York: Columbia University Press. Kennedy, Michael D., 1991, Professionals, Power and Solidarity in Poland, Cambridge: Cambridge University Press. Kennedy, Michael, 1992, Transformations of normative foundations and empirical sociologies: Class, stratification, and democracy in Poland, in: Walter D. Connor, Piotr Ploszajski, Alex Inkeles, and Wlodzimierz Wesolowski (eds.), The Polish Road from Socialism, pp. 283–312, Armonk: M.E. Sharpe. KLON, 1993, lnformator o organizacjach pozarzadowych dzialajacych na polu pomocy spolecznej (The Directory of Social Service Non-Governmental Organizations), [computer file and directory], Warszawa: KLON. Konrad, George, and Ivan Szelenyi, 1979, The lntellectuals on the Road to Class Power, New York: Harcourt Brace Jovanovich. Kramer, Ralph M., 1981, Voluntary Agencies in the Welfare State, Berkeley: University of California Press. Kurczewski, Jacek, 1992, Shared privacy, in: Janine R. Wedel (ed.), The Unplanned Society: Poland during and after Communism, pp. 158–172, New York: Columbia University Press. Larson, Magali Sarfatti, 1977, The Rise of Professionalism: A Sociological Analysis, Berkeley: University of California Press. Lee, Margaret T., and Richard Ofshe, 1981, The impact of behavioral style and status characteristics on social influence: A test of two competing theories, Social Psychology Quarterly, 44(2):73–82. Les, Ewa, and Andrzej Piekara, 1988, Wybrane formy podmiotowosci spolecznej a rozwoj, (Selected forms of institutional entities and development), Warszawa: Warsaw University. Les, Ewa, 1992, Poland, in: John Dixon and David Macarow (eds.), Social Welfare in Socialist Countries, London and New York: Routledge, pp. 156–183. Les, Ewa, 1994, The Voluntary Sector in Post-Communist East CentralEurope, Washington: Civicus. Lewenstein, Barbara, and Malgorzata Melchior, 1992, Escape to the community, in: Janine R. Wedel (ed.), The Unplanned Society: Poland during and after Communism, pp. 173–179, New York: Columbia University Press. Majone, G., 1984, Professionalism and nonprofit organizations, Journal of Health Policy, Politics and Law 8:639–659. Malinowski, Bronislaw, 1948, Magic, Science and Religion, Garden City: Doubleday Anchor Books. March, James G., and Herbert A. Simon, 1958, Organizations, New York: John Wiley & Sons. Marcus, Hazel, and R.B. Zajonc, 1985, The cognitive perspective in social psychology in: Gardner Lindzey and Elliot Aronson, Handbook of Social PsychoIogy, Volume I: Theory and Method, New York: Random House, pp. 137–230. Marody, Miroslawa, 1992, The political attitudes of Polish society in the period of systemic transition, in: Walter D. Connor, Piotr Ploszajski, Alex Inkeles, and Wlodzimierz Wesolowski (eds.), The Polish Roadfrom Socialism, pp. 255–268, Armonk: M.E. Sharpe. Martin, Harry J., and Theodore N. Greenstein, 1983, Individual differences in status generaliza-

244

REFERENCES

tion: Effects of need for social approval, anticipated interpersonal contact, and instrumental task abilities, Journal of Personality and Social Psychology, 45(3):641–662. Martin, Michael, and Jane Sell, 1985, The effect of equating status characteristics on the generalization process, Social Psychology Quarterly, 48(2):178–182. Marx, Karl, [ 1852] 1987, The 18th Brumaire of Louis Bonaparte, New York: International Publishers. Marx, Karl, [1867] 1977, Capital, vol. 1, New York: Vintage Books. Meyer, John D., and Brian Rowan, 1977, Institutionalized organizations: Formal structure as myth and ceremony, American Journal of Sociology, 83:340–363. Misztal, Maria, 1986, Value systems among occupational groups, in: Kazimierz M. Slomczynski and Tadeusz K. Krauze (eds.), Social Stratification in Poland: Eight Empirical Studies, pp. 160–173, Armonk: M.E. Sharpe. Mohr, Philip, 1986, Demeanor, status cue or performance? Social Psychology Quarterly, 49(3):228– 236. Moore, Barrington, 1966, Social Origins of Dictatorship and Democracy: Lord and Peasant in the Making of the Modern World, Boston: Beacon Press. Morrison, James E, 1968, The Polish People’s Republic, Baltimore: The Johns Hopkins Press. Nowak, Krzysztof, 1992, Public opinion, values and economic transformation, in: Walter D. Connor, Piotr Ploszajski, Alex Inkeles, and Wlodzimierz Wesolowski (eds.), The Polish Road from Socialism, pp. 127–145, Armonk: M.E. Sharpe. Orwell, George, 1946, Politics and the English language, in: George Orwell, A Collection of Essays, San Diego: Harcourt Brace Jovanovich, pp. 156–170. Paige, Jeffery, 1975, Agrarian Revolutions: Social Movements and Export Agriculture in the Underdeveloped World, New York: The Free Press. Parsons, Talcott, 1951, The Social System, New York: The Free Press. Pawlik, Wojciech, 1992, Intimate commerce, in: Janine R. Wedel (ed.), The Unplanned Society: Poland during and after Communism, pp. 78-94, New York: Columbia University Press. Perrow, Charles, 1986, Complex Organizations: A Critical Essay, New York: McGraw-Hill. Pirages, Dennis C., 1972, Modernization and Political–Tension Management: A Socialist Society in Perspective; Case Study of Poland, New York: Praeger Publishers. Polanyi, Karl, 1944, The Great Transformation, Boston: Beacon Press. Putnam, Robert D., 1993, Making Democracy Work: Civic Traditions in Modern Italy, Princeton: Princeton University Press. Ragin, Charles, 1987, The Comparative Method: Moving Beyond Qualitative and Quantitative Strategies, Chicago: University of Chicago Press. Ragin, Charles, and Howard S. Becker (eds.), 1992, What is a Case? Exploring the Foundations of Social Inquiry, Cambridge: Cambridge University Press. Reskin, Barbara, and Patricia Roos, 1990, Job Queues, Gender Queues, Explaining Women’s Inroads into Male Occupations, Philadelphia: Temple University Press. Reykowski, Janusz, 1992, Psychological dimensions of a sociopolitical change: The Polish case, in: Walter D. Connor, Piotr Ploszajski, Alex Inkeles, and Wlodzimierz Wesolowski (eds.), The Polish Road from Socialism, pp. 217–230, Armonk: M.E. Sharpe. Reynolds, Jamie, 1978, Communists, socialists and workers: Poland 1944–48, Soviet Studies 30(4) : 5 1 6–530. Ridgeway, Cecilia, and David Diekema, 1989, Dominance and collective hierarchy formation in male and female task groups, American Sociological Review, 54(February):79–93. Ridgeway, Cecilia L., Berger, Joseph, and LeRoy Smith, 1985, Nonverbal cues and status: An expectation states approach, American Journal of Sociology, 90(5):955–978.

REFERENCES

245

Rueschemeyer, Dietrich, Evelyne Huber, Stephens, and John D. Stephens, 1992, Capitalist Development and Democracy, Chicago: University of Chicago Press. Salamon, Lester M., 1995, America’s Nonprofit Sector: A Primer, The Foundation Center. Salamon, Lester M., and Helmut K. Anheier, 1992a, In Search of the Independent Sector I: The Question of Definitions, The Johns Hopkins Comparative Independent Sector Project, Working Paper #2. Salamon, Lester M., and Helmut K. Anheier, 1992b, In Search of the Independent Sector II The Problem of Classification, The Johns Hopkins Comparative Independent Sector Project, Working Paper #3. Salamon, Lester M., and Helmut K. Anheier, 1994, The Emerging Sector: The Nonprofit Sector in Comparative Perspective: An Overview, Baltimore: The Johns Hopkins University. Salamon, Lester M., and Helmut K. Anheier, 1998, Social origins of civil society: Explaining the nonprofit sector cross-nationally, Voluntas, 9:2 13–248. Salamon, Lester M., Anheier, Helmut K., List, Regina, Toepler, Stefan, Sokolowski, S. Wojciech, et al., 1999, Global Civil Society, Baltimore: The Johns Hopkins Institute for Policy Studies. Sarapata, Adam, 1992, Society and bureaucracy, in: Walter D. Connor, Piotr Ploszajski, Alex Inkeles, and Wlodzimierz Wesolowski (eds.), The Polish Road from Socialism, pp. 97–1 14, Armonk: M.E. Sharpe. Scott, W. Richard, 1995, Institutions and Organizations, Thousand Oaks: Sage. Sell, Jane, and Lee Freese, 1984, The process of eliminating status generalization, Social Forces 63 (2) : 538–5 54. Selznick, Philip, 1948, Foundation of the theory of organization, American Sociological Review, 13:25–35. Selznick, Philip, 1957, Leadership in Administration, New York: Harper and Row. Simon, Brian, 1955, Education in New Poland, London: Lawrence and Wishart, Ltd. Simon, H.A., 1972, Theories of bounded rationality, in: C. McGuire and R. Radner, eds., Decision and Organization, Amsterdam: North Holland Publishing Company, pp. 161–176. Skocpol, Theda, 1984, Emerging agendas and recurrent strategies in historical sociology, in: Theda Skocpol (ed.), Vision and Method in Historical Sociology, pp. 356–391, Cambridge: Cambridge University Press. Slomczynski, Kazimierz M., and Tadeusz K. Krauze (eds.), 1986, Social Stratification in Poland: Eight Empirical Studies, Armonk: M.E. Sharpe. Sokolowska, Magdalena, and Bozena Moskalewicz, 1987, Health sector structures: The case of Poland, Social Science and Medicine, 24(9):763–775. Sokolowski, S. Wojciech, 1994, Making friends in the market: The independent sector and the market reform in Poland, Paper presented at the 1994 Inaugural Conference of the International Society for Third Sector Research, July 4–7, Pecs, Hungary. Sokolowski, S. Wojciech, 1996, Show me the way to the next worthy deed: Towards a microstructural theory of volunteering and giving, International Journal of Voluntary and Non-Profit Organizations (Voluntas), 7(3):259–278. Stark, David, 1995, Not by design: The myth of designer capitalism in Eastern Europe, in: Jerzy Hausner, Bob Jessop, and Klaus Nielsen (eds.), Strategic Choice and Path Dependency in Post Socialism in the Transformation Process, Aldershot (UK) and Brookfield (US): Edward Elgar. Strauss, Anselm, and Juliet Korbin, 1990, Basics of Qualitative Research: Grounded Theory, Procedures and Techniques, Sage: Newbury Park. Swedberg, Richard, Himmelstrand, Ulf, and Goeran Brulin, 1990, The paradigm of economic sociology, in: Sharon Zukin and Paul DiMaggio (eds.), Structures of Capital: The Social Organization of the Economy, pp. 57–86, Cambridge, England: Cambridge University Press.

246

REFERENCES

Taylor, Frederick W., 191 1, Principles of Scientific Management, New York: Harper and Brothers. Thomas, William I., and Florian Znaniecki, [1918–1920] 1984, The Polish Peasant in Europe and America (edited and abridged by Eli Zaretsky), Urbana and Chicago: University of Illinois Press. Touraine, Alain, 1988, Return of the Actor: Social Theory in Postindustrial Society, Minneapolis: University of Minnesota Press. Touraine, Alain, Dubet, Francois, Wieviorka, Michel, and Jan Strzelecki, 1983, Solidarity. The Analysis of a Social Movement: Poland 1980–1 981, Cambridge: Cambridge University Press. Weber, Max, [1904] 1958, The Protestant Ethic and the Spirit of Capitalism, New York: Charles Scribner’s Sons. Weber, Max, 1978, Economy and Society, Berkeley: University of California Press. Webster, Murray, and James E. Driskell, 1978, Status generalization: A review and some new data, American Sociological Review, 43(April):220–236. Wedel, Janine R. (ed.), 1992, The Unplanned Society: Poland during and after Communism, New York: Columbia University Press. Wedel, Janine R. 1998, Collision and Collusion: The Strange Case of Western Aid to Eastern Europe 1989–1998, New York: St. Martin’s Press. Weisbrod, Burton, 1978, The Voluntary Independent Sector, Lexington: Lexington Books. Wholey, Douglas R., Christianson, Jon B., and Susan M. Sanchez, 1993, The effect of physician and corporate interests on the formation of health maintenance organizations, American Journal of Sociology, 9( 1 ) : 164–200. Williamson, Oliver, 1975, Markets and Hierarchies, New York: The Free Press. Wittgenstein, Ludwig, [ 19221 1961, Tractatus Logico-Philosophicus, New York: Humanities Press. World Values Study Group, 1994, World Values Survey, 1981 –1 984 and 1990–1 993 [computer file], Ann Arbor: Inter-university Consortium for Political and Social Research. Wunker, Stephen M., 1991, The promise of non-profits in Poland and Hungary: An analysis of the third sector renaissance, Voluntas 2(2):89–107. Zald, Mayer N., and John D. McCarthy, 1987, Social Movements in an Organizational Society, New Brunswick: Transaction Books. Zerubavel, Eviatar, 1981, Hidden Rhythms: Schedules and Calendars in Social Life, Berkeley: University of California Press. Zerubavel, Eviatar, 1991, The Fine Line, New York: The Free Press. Zukin, Sharon, and Paul DiMaggio (eds.), 1990, Structures of Capital: The Social Organization of the Economy , Cambridge: Cambridge University Press.

Index The reader is advised that the letter n following a page number refers to an entry in the notes section. Abortion. See also Movement in the Defense of the Life of Unborn Children (Gaudium Vitae) Roman Catholic Church’s opposition to, 42, 46n Abortion laws, demonstrations against, 52, 53 Actors, as social proximity organization founders, 79, 89 AIDS (acquired immunodeficiency syndrome) patients, services for, 76 Alcoholics, associations for assistance to, 56, 57 Alliance for Penitentiary Protection (Patronage), 91 dissolution of, 81, 164 donation-dependent status of, 93 founders of, 75–76, 97 information asymmetry problem of, 107–108 opposition to, 93 public’s negative attitudes toward, 93 reactivation of, 81, 164 relationship with government agencies, 122 Alternative medicine, 166–174. See also Herbal medicine; Coastal Environmental Society medical profession’s opposition to, 203 Altruism, of professional classes, 50 Alzheimer’s disease, attitudes toward, 94 Alzheimer’s Disease Association. See Polish Association for Assistance to People with Alzheimer’s Disease

Amazons. See Club for Women after Mastectomy Ami. See Association of People with Disabilities Animal rescue organizations, 114 Antidrug Youth Movement (MONAR), 27, 56, 76, 112, 203 Anti-Semitism, 207 Arts, state budget allocations for, 37 Association(s) during central planning era, 55–57 freedom of, 26, 53–54 Law of, 204 legal sanction of, 204 Association of Combatants for Liberty and Democracy, 27 Association of People with Disabilities (Ami), 79, 147, 150, 165, 184 formal organizational structure of, 108-109 founder of, 79, 82, 87, 89, 90 lack of opposition to, 92 Association of Polish Bookkeepers, 27 Association of Polish Lawyers, 27, 55 Associations of Combatants for Liberty and Democracy, 55 Austro-Hungary, 1–2, 75, 205, 207, 224 Autocratic regimes, civic activism under, 208 Autonomy occupational, 220, 221–223 organizational, 14–15 political, moderate deprivation of, 205, 207-208

24 7

248 Banks, nonprofit, 188–189 Beggars (Mickiewicz), 76 Behavioral therapy, 112 “Black Commies,” 46n Boell Foundation, 81 Borges, Jorge Luis, 131, 207–208 Bounded rationality condition, 130-131 Bourdieu, Pierre, 15–16 Bribery, of healthcare personnel, 66, 201, 202, 230. See also Gray market, in healthcare Bulgaria, 2 Business organizations, status markers of, 116 Butler, George Lee, 1 Byelorus, civil service of, public confidence in, 209, 210 Cancer patients. See also Club for Women after Mastectomy; Hospice fatalistic attitudes of, 83–84, 147, 149 negative attitudes toward, 93 Caritas, 54 Case study analysis, of Eastern European economic development, 3 Catholic Intelligentsia Club, 55 Catholic Parliamentary Club, 69n, 219 Causal models, 31–34, 45–46n positive, 32, 33, 34, 38 teleological, 32–34 contract failure variant of, 34–37, 38, 119, 195 Central Council of Trade Unions, 55, 56 Central planning regime, 3 bureaucratic-corporate organization of, 52-53 civic associations under, 53–54, 200–201,217 higher public utility status of, 54 termination of, 204 cost-benefit analysis of, 229–230 decision-making authority of, 51–52 East-West contacts under, 76 foreign organizational structure use by, 211–212 influence on professional classes, 21 paternalism of, 54, 55 social organizations under, 26–27, 51–63 social proximity organizations under, 91 transaction costs of, 229 Charitable institutions, elimination during central planning era, 54 Charity, income maintenance as, 112 Chernobyl nuclear accident, 167

INDEX Chetniks, 2 Children’s Foundation, 80, 82–83 founder of, 80, 88, 97 lack of opposition to, 92 Christian-Nationalist Party, 46n Civic activism under autocratic regimes, 208 duringcentralplanningera, 200–201, 204, 217 intelligentsia’s attitudes toward, 49–50, 51 post-World War II, 48 Civic associations during central planning era, 54–55 governmental policy toward, 26 higher public utility status of, 54 as social change agents, 8 as social resource, 30–31 Civil service, public’s confidence in, 205, 206, 209, 210 Club for Women after Mastectomy (Amazons), 79, 147, 149, 153, 165, 184 formal organizational structure of, 104– 105, 109, 151-152 founder of, 83, 89–90, 93, 94–95, 97 opposition to, 93 participants’ expectations of, 93 post-1999 healthcare reform, 209 volunteers in, 152, 153 Coastal Environmental Society, 79, 82 formal organizational structure of, 104–105 founder of, 79, 97 physicians’ and pharmacists’ opposition to, 95–96 post-1999 health care reform, 209 Cognitive schemata, 131–133 of cost-benefit calculations, 228–230 definition of, 131–132 in information processing, 131–142 Cognitive structure, a priori, 131–133 Collective action, by social proximity organizations, 19 Collective bargaining, prohibition of, during central planning era, 54, 56 College graduates, post–World War II increase in, 48 Commodities, social organization of production of, 8–9 Communism, “collapse” of, 1. See also Poland, 1989 reforms Community organizations, prior to 1989 reforms, 55–56

INDEX Companies, public’s confidence in, 205, 206 Competence, professional, 225 Competition, experienced by professional innovative services, 85–86, 92, 95–96 Conflict resolution training, 157, 158 Constitution (Polish) freedom of association provision of, 26, 53–54 vote on proposed changes in, 219 Contract failure theory, 34–37, 38, 119, 195 “Conveyor belt” (pas transmisyjny), of government policies, 53, 56 Cost-benefit analysis, 71–73 cognitive schemata of, 228–230 cultural references in, 72–73 of organizational structure, 128, 137–142 in organizational structure selection process, 194–195 of public organizations’ status, 144 of social processing of information, 133– 137 of social proximity organizations, 138–142 in specialized healthcare, 151–155, 157 Craft centers (Domy Kultury), community– based, 56 Crime rate, in Poland, 107 Criminals. See also Alliance for Penitentiary Protection (Patronage) public’s negative attitudes toward, 93 Crisis intervention hot-lines, 112 Cultural activities, state budget allocations for, 37 Cultural Association (Theater, Education, Rehabilitation), 79, 112, 155–158, 165 formal organizational structure of, 105 founder of, 81, 89, 97 lack of opposition to, 92 post-1999 healthcare reform, 209 relationship with government agencies, 122 Czechoslovakia civil service of, public confidence in, 210 number of physicians per 10,000 population, 66 post-World War I emergence of, 2 Dahrendorf, Ralph, 211 Darwin, Charles, 219–220 Delinquent youth social proximity organization, 80, 105–106 Demand heterogeneity goods theory, 33–34

249 Demand-side stakeholder model, of nonprofit organizations, 38–43, 44 Demiurge, 217 Democratic Party (Polish), 14, 69n 1960–1983 membership, 27 Division of labor, 221 in medical practice, 222–223 Domy Kultury (craft centers), community– based, 56 Donations to social proximity organizations, 93, 183 from Western countries, 112 Drug addicts, organizations for assistance of during central planning era, 56, 57 therapeutic community (MONAR), 27, 76, 112, 203 Durkheim, Emile, 132-133 Dziady (Mickiewicz), 76 Eastern Europe Americans’ attitudes toward, 1 national diversity of, 224 political and economic development of, 1– 13, 211 Western foreign aid to, 76 East Germany, civil service of, public confidence in, 210 Economic action. embeddedness theory of, 225, 226–231 Economic efficiency of complex organizations, 227 social embeddedness theory of, 226–231 Economic policies, 1956 liberalization of, 48– 49 Economics, neoclassical, 31, 102 Education, state budget allocations for, 37 Educational institutions operating expenditures of, 19 organizational Structure of, 110 public’s confidence in, 205, 206 role in 1989 reform, 49 Educational policy, post–World War II, 48 Educational services, of religious groups, 38 Educational system, public post-World War II, 47–48 priorities of, 205 as purveyor of civic activism, 205, 221 eFKa. See Women’s Foundation Elective affinity, 198–199 Eliade, Mircea, 218–219

250 Embeddedness theory, of economic action, 225, 226–231 Emergency preparedness manuals, 141 Engineers as social proximity organization founders, 79, 80 World War II-related deaths among, 47 England, Poland’s alliance with, 75 Entrepreneurship, public attitudes toward, 215 Environmental movement, 174. See also Coastal Environmental Society Estonia, civil service of, public confidence in, 210 Euthanasia, 95 Evidence, falsificationism rule of, 107 Expert commodity, social construction of, 101–126, 220 Factory committees, 48 Falsificationism rule, 107 Family doctors, 81, 94, 99n Fees, charged by social proximity organizations, 122 Financial advisors, 11 7–1 18 Folk medicine. See Herbal medicine Foreign aid programs, 76 For-profit organizations, public’s trust in, 117–1 18 Foundation(s) elimination during central planning era, 54 legal sanction of, 204 Foundation for the Assistance of Disabled Children (Hipoterapia), 166, 174–185 competition experienced by, 96 donations to, 183 formal organizational structure of, 104, 109 founder of, 81, 88–89, 97 post-1999 healthcare reform, 209 referral system and, 179–183 volunteers in, 184–185 Foundation for the Development of Private Healthcare in Poland, 80, 81, 94 Foundation for the Free Market and Medical Services, 80 France, Polands alliance with, 75 Freedom of association, 26, 53–54

INDEX Friends of Children Society, 27, 56 Friends of the USSR Society, 55 Gardens, community, 55–57 Gaudium Vitae. See Movement in the Defense of the Life of Unborn Children Gdansk, Poland healthcare reform movement in, 67 hospice movement in, 158, 159–160, 209 Gdansk Medical Academy Hospital, 80–81, 82, 158 Gender roles, stereotypical, 141 German Industrial Norms (DIN), 5 Germany. See also East Germany; West Germany Polish peasants’ migration to, 212–213 reunification of, 6–7 Glasnost, 21 7 Gray market, in healthcare, 66, 69, 94, 201– 203, 230 Grounded theory analysis, of Eastern European economic development, 3 Handicapped services organizations. See also Children’s Foundation; Cultural Association; Foundation for the Assistance of Disabled Children during central planning era, 56, 57 Healthcare in Czechoslovakia, 209 formalized professional system of, 167 in Hungary, 209 informational asymmetry level of, 110, 111, 112–113, 120–121 organizational structure of domestic model of, 110, 111, 112–113, 121 foreign model of, 111, 113 idiosyncratic model of, 11 1, 113 overprofessionalization of, 230 private during central planning era, 64, 66 decline in, 29–30 gray market in, 66, 69, 94, 201-203, 230 negative connotations of, 203 privatization of, medical professions’ opposition to, 30, 69, 94, 202–203 1999 reform of, 99n, 209 in Romania, 209

INDEX Healthcare (cont.) in Slovakia, 209 social proximity organizations in. See also specific organizations cooperation with government authorities, 123 information dissemination to general public, 123, 124 number of, 67–68 volunteers’ participation in, 123, 124 state budget allocations for, 37, 83 universal (socialized), 29, 30, 63–67 comparison with private healthcare system, 64, 66 deterioration of, 64, 66–67 public confidence in, 208 wages in, 66, 70n Healthcare institutions, operating expenditures of, 19 Healthcare professionals. See also Nurses; Physicians bribery of, 66, 201, 202, 230 implementation of Western technology by, 110, 112 salaries of, 30 as social proximity organization founders, 28–29, 79, 80 Health insurance, public, 209 Health maintenance organizations (HMOs), 223 Heraclitus, 224 Herbalists during central planning era, 203 foreign competition with, 82, 96, 170–171 Herbal medicine, 166–174 informational asymmetry in, 169 social proximity organizations in, 166, 169–174 formal organizational structure of, 105 time-span axis of, 171–172 Hierophanies, 139–141 Higher education, state budget allocations for, 37 Hippo-therapy. See also Foundation for the Assistance of Disabled Children (Hipoterapia) during central planning era, 203 HMOs (health maintenance organizations), 223

251 Homo Homini Frater, 187–188 founder of, 81, 97 lack of formal organizational structure of, 106 lack of opposition to, 92–93 Horseback riding, therapeutic. See Foundation for the Assistance of Disabled Children (Hipoterapia) Hospice (Hospicjum), 155, 158–161, 163, 171 formal organizational structure of, 104 founder of, 80, 95, 97 lack of opposition to, 158–159 physicians’ attitudes toward, 94–95 spiritual aspect of, 94, 95, 158, 159–161, 163 Hospice care, 105 health insurance reimbursement for, 209 versus medical approach, 94–95 Hospital beds, increase in number of (1946– 1990), 64, 65 Hospitals, organizational structure of, 109 Hot-lines, crisis intervention, 112 Human relations approach, to organizational management, 136 Human rights organizations, elimination during central planning era, 54 Human services professionals, public trust in, 12 Hungary civil service of, public confidence in, 210 health service sector of, 209 number of physicians per 10,000 population, 66 post-World War I emergence of, 2 Ideal-type model of Eastern European economic development, 3 uses and gratifications model as, 201 Income maintenance organizations cooperation with government authorities, 123 domestic organizational structure model of, 111, 113 informational asymmetry level of, 110, 111, 112, 113, 120–121 information dissemination to general public by, 123 volunteers’ participation in, 123

252 Independent practice associations, 223 Independent sector organizations, 16 Independent Self-Governed Labor Union (Niezalezny Samorzadny Zwiazek Zawodowy), 14 Independent workers’ councils, 48–49, 56 Industrialization, 221 “Infinite library,” 131, 207–208 Information, social processing of, 127–143 bounded rationality assumption of, 130–131 cognitive schemata in, 131–142 cost-benefit schemata in, 133–137 full information model of, 131 Information asymmetry, 22 in abortion prevention services, 163–164 definition of, 34–35, 85, 119–120 in herbal medicine, 169 in hospice movement, 163 implication for public benefit status, 90–91 innovative approaches as cause of, 192 legitimation problems in, 143–147 of paraprofessionals seeking professional recognition, 143–145, 148, 166–1 85, 186 of practitioners seeking to improve clients’ trust, 145, 148, 149–155, 186 of practitioners working in unconventional areas, 144, 148, 155– 166, 186 levels of, 128 in nonprofit organizations’ transactions, 73–74 relationship with organizational structure, 106, 118 counterexamples, 106-107 domestic models of, 110, 11 1, 112–113 foreign models of, 110, 11 1, 113 idiosyncratic models of, 110, 111 strategies for reduction of, 86. See also Social proximity organizations professional projects theory of, 225 supply–side control and, 43, 44 uncertainty associated with, 23 1 Information exchange networks, 74 Inmates, assistance organization for. See Alliance for Penitentiary Protection (Patronage) Innovative approaches, 78–98 dissemination by professionals, 74

INDEX Innovative approaches (cont.) factors affecting introduction of, 86 as information asymmetry cause, 192 levels of, 197 motivations for, 74–75 opposition to, 87, 92-97 professional jurisdiction over, 85–86, 225 public trust/mistrust of, 75, 83–84, 102103, 104, 144, 215, 216 relationship with formal organizational structure, 102–114 relationship with providers’ professional status, 87, 96–97 Insurance, 117 Intelligentsia altruism of, 50 attitudes toward civic activism, 49–50, 51 exile of, 75 “organic work” by, 11–12 pro-Western attitudes of, 156 as social change agents, 11–12 traditional role of, 11 Western European influences on, 75–76 World War II-related deaths among, 47 International Classification of Nonprofit Organizations, 29 Johns Hopkins Comparative Nonprofit Sector Project, 7–8, 9, 209 Jurisdiction, professional, 85–86, 225 Kant, Immanuel, 131–133 KLON/JAWOR Study, 9–10, 22, 61–62, 77– 78, 209, 218 Kotanski, Marek, 76 Labor unions during central planning era, 48–49, 54, 56 government control of, 49, 56 lack of public benefit status of, 114 as social proximity organization founders, 28, 29 Latvia, civil service of, public confidence in, 210 Law of Associations, 204 League for the Preservation of Nature, 27 Legal system, 75–76 state budget allocations for, 37 Lekarz, 161, 189n Les, Ewa, 9

INDEX Lithuania, civil service of, public confidence in, 210 Lobbying, by social organizations, 52, 53 Ludzie Bezdomni (Zeromski), 11 Market, relationship with product delivery, 118-119 Marketing, by social proximity organizations, 73 public benefit status and, 124–125 Marx, Karl, 49, 224 Maslow, Abraham, 136 Mastectomy patients, rehabilitative therapy for. See Club for Women after Mastectomy Media, public’s confidence in, 205, 206 Mediation and spiritual guidance organization. See Homo Homini Frater Medical Academy Hospital, Gdansk, 80–81, 82, 158 Medical technology, foreign, implementation by Polish healthcare professionals, 110, 112 Medicine. See also Healthcare formal organizational structural basis of, 102 Mickiewicz, Adam, 76 Migration, of Polish peasants, 212–213 MONAR, 27, 56, 76, 112, 203. See also Antidrug Youth Movement Moneylending, 188–189 Moral entrepreneurship model, of nonprofit organizations, 38–43, 44 Moscow, civil service of, public confidence in, 210 Movement in the Defense of the Life of Unborn Children (Gaudium Vitae), 80, 161–164, 186–187, 188 National Defense League, 14, 27 National identity, of Poland, 205 Nationalism, Polish, 205 Nature Preservation League, 55–56 Nazis, 75, 224 Needs, hierarchy of, 136 Neighborhood effect, 138–1 39 Networks, information exchange, 74 Nomenklatura, 203 Nongovernmental organizations (NGOs) autonomy of, 14–15 KLON/JAWOR database of, 9–10,22, 25–30 post-1989 development of, 9–11 social proximity of, 18 terminology of, 13–23

253 Nonprofit organizations (NPOs) transaction costs of, 17–20 economic advantages of, 31 economic theories of, 33–38 contract failure, 34–37, 38, 119, 195 conventional, 192–195 demand-side stakeholder, 38, 43–44 moral entrepreneurship, 38–43, 44 public good, 34, 35–36, 37, 40, 45, 119 governmental regulation of, 14 International Classification of, 29 organizational uses and gratifications model of, 12–13 as social change agents, 8 stages of, 40–41 Nonprofit sector as percentage of total Central European economy, 218 state budget allocations for, 37, 38 Nudist movement, 49 Nurses, increase in number of (1946–1990), 64, 65 Ombudsman Office, 165 Omniscient spectator assumption, 130 Gncology Center, Warsaw, 82, 90, 147, 209 “Organic intellectuals,” 144, 146 as social problem solvers, 144, 148, 155–166 “Organic work,” 11–12 Organizacje pozarzadowe. See Nongovernmental organizations Organizacje spoleczne. See Social organizations Organizational isomorphism theory, 78 Organizational management, human relations approach to, 136 Organizational structure, of social proximity organizations, 98, 101, 102–114 cost-benefit schemata of, 128, 137–142 counterexamples to, 106–107 domestic models of, 110, 111, 112–113 relationship with organizations’ founders’ professional status, 78 effect on information asymmetry, 128 effect on uncertainty, 128 foreign models of, 110, 111, 113 relationship with organizations’ founders’ professional status, 78 of social proximity organizations, 77–78 use by central planning regimes, 2 11–2 12

254 Organizational structure (cont.) idiosyncratic models of, 110, 111 relationship with organizations’ founders’ professional status, 78 providers’ choice of, 120-125 relationship with public benefit status, 114–125 service providers’ choice of, 194–195 theories of origin of, 226–231 transaction costs of, 128 Organizational uses and gratifications model, 118, 212 application to professional service providers, 21–22 of domestic organizational structure, 113 of nonprofit organizations, 12–13 of performing arts social proximity organization, 156, 157 of social organizations, 60–63 Orwell, George, 15 Ottoman Empire, 224 Output group therapy, for psychiatric patients. See Association of People with Disabilities Palliative care, for terminally ill patients, 94, 158–161, 163, 164, 171 Paraprofessionals, efforts for professional legitimation by, 143–145, 148, 166– 185, 186 Parliament, public’s confidence in, 205, 206 Pas transmisyjny. See “Conveyor belt” Paternalism of central planning regimes, 54, 55 of income maintenance charity, 112 Path-dependency hypothesis, 212, 213, 216 Patronage. See Alliance for Penitentiary Protection PAX Association, 55 Peasants, migration to industrial countries, 2 12-213 People’s Party, 69n Perestroika, 6, 167, 217 Performing arts social proximity association. See Cultural Association (Theater, Education, Rehabilitation) Permits for registration of associations, 204 for social organization formation, 26 Pharmaceutical Inspection Authority, 169

lNDEX Physicians increase in number of (1946–1990), 64, 65 patients’ mistrust of, 144 per 10,000 population, international comparison of, 66 preference for solo practice, 223 professional autonomy of, 222–223 World War II-related deaths among, 47 Poaching, 174 Poland economic development of, 2–3, 4–6. See also Central planning regime foreign occupation of, 75, 205, 224 history of, 2, 205, 207 labor unrest in, 48–49 national identity of, 205 national sovereignty of, 47, 205, 207 1989 reforms, 7, 25, 204, 207 East-West contacts following, 76 nongovernmental organizations’ development after, 9–11 privatization during, 208 public attitudes toward, 214 social proximity organizations’ development after, 9 1 number of physicians per 10,000 population, 66 political autonomy in, 205, 207–208 post-World War I emergence of, 2 pre-1918 partitioning of, 75 social change in, public attitudes toward, 214–215, 216 state budget, 37–38 urban and rural populations of, 47 during World War II, 2 Polish Anglers Association, 55-56 Polish Association for Assistance to People with Alzheimer’s Disease, 79, 94, 147, 150, 152–154, 171 founder of, 80, 97 lack of formal organizational structure of, 106–1 07 relationship with government agencies, 122 Polish Committee for Social Aid, 27, 56 Polish Economic Society, 27, 55 Polish Medical Society, 27, 55 “Polish October,” 48–49, 54–55 Polish peasants, migration to industrial countries, 2 12–213 Polish Red Cross, 27

INDEX Polish Scouting Association, 55 Polish Tourist and Country-Hiking Society, 27, 56 Polish United Workers Party, 14, 23n Central Trade Union Council and, 56 desirability of membership in, 56 Eight Plenum of, 48 1960–1983 membership, 27 political defeat of, 59 political status of, 69n Political organizations during central planning era, 56 membership, 14 1960–1983, 27 Political system, negative attitudes towards, 204 Popper, Karl, 107 Positive causation models, 32, 33, 34, 38 demand heterogeneity goods variant of, 33–34 moral entrepreneurship variant of, 38-43, 44 Post-mastectomy rehabilitation services. See Club for Women after Mastectomy (Amazons) Postsurgical rehabilitation, public lack of trust in, 203 Pregnant women, social proximity organization for. See Movement in the Defense of the Life of Unborn Children (Gaudium Vitae) Press, public’s confidence in, 205, 206 Prisoners’ rights organizations. See also Alliance for Penitentiary Protection (Patronage) public lack of trust in, 203 Prisons organizational structure of, 109 subculture of, 164–165 Prison tax, 164, 189n Private goods, 74 Private Healthcare Foundation, 122 Privatization of healthcare sector, healthcare professionals’ opposition to, 30, 69, 94, 202–203 during Poland’s 1989 social transformation, 208 public attitudes toward, 68 transaction costs of, 230

255 Production and delivery of goods cost-benefit calculations of, 71–73 by nonprofit organizations, 31 organizational venue of, 194 public goods theory of, 8–9, 34, 35–36, 37, 40, 45, 74, 119 role of the market in, 118–119 social organization of, 8–9, 12, 13, 16–20, 74 stakeholders in, 197 Professional organizations during central planning era, 55 membership 1960–1983, 27 post-World War II, 48 requirements of, 179 Professional projects theory, 225–226 Professions self-regulation of, 225, 226 system of, 85, 97–98 Prussia, 1–2, 75, 205 Psychiatric care, professionalization of, 150 Psychiatric illness, public attitudes toward, 84 Psychiatric therapy, postclinical. See also Association of People with Disabilities (Ami) public lack of trust in, 203 Public authorities, social proximity organizations’ cooperation with, 121– 122, 123 Public benefit status, of social proximity organizations, 87–92, 114–125, 138– 142, 143–190, 192, 193–194, 204, 220–221 counterexamples to, 186–189 indicators of, 121–122, 124–125 as marketing device, 124–125 of paraprofessionals seeking professional recognition Coastal Environmental Society, 166–1 74, 180 Foundation for Assistance to Disabled Children (Hipoterapia), 166, 174–185 of practitioners’ improving quality of conventional health care Association of People with Disabilities (Ami), 79, 82, 87, 89, 90, 92, 108– 109, 147, 150, 165, 184 Club for Women after Mastectomy (Amazons), 79, 83, 89–90, 94–95, 97,

256 Public benefit status, of social proximity organizations (cont.) of practitioners’ improving quality of conventional health care (cont.) Club for Women after Mastectomy Amazons) (cont.) 104–105, 109, 147, 149, 151–152, 153, 165, 184, 209 Polish Association for Assistance to People with Alzheimer’s Disease, 106– 107, 122, 147, 150, 152–154, 171 of practitioners providing unconventional services Alliance for Penitentiary Protection (Patronage), 164–166 Cultural Association (Theater, Education, and Rehabilitation), 155–158 Hospicjum (hospice movement), 155, 158–161, 163, 164 relationship with information asymmetry, 90–9 1 status generalization effect on, 198 Public good theory, 34, 35–36, 37, 40, 45, 119 Public institutions, public’s confidence in, 205, 206, 208 Public officials, as social proximity organization founders, 28 Public service contracts, 208 Public trust, in professional services, 92, 93– 95, 193, 197–198, 220. See also Information asymmetry as marketing component, 124 “Quacks” as competitors of innovative service providers, 96, 167, 170, 176 exclusion from professions, 103, 179, 180 Rape laws, 70n Rational-choice model, of economic behavior, 130, 137 Reach to Recovery, 82, 89–90 Recreation, state budget allocations for, 37 Recreational organizations, during central planning era, 55–56 Red Cross, Polish, 27 Referral system, in healthcare, 167 in herbal medicine, 168–169 in hippo-therapy, 179–183

INDEX Religious organizations. See also Roman Catholic Church during central planning era, 55 educational services provided by, 38 prisoners’ assistive services of, 93 Research, Poland’s state budget allocations for, 37, 83 Responsibility, for solution of social or health problems, 84–85 Right-to-work policy, 54 Risk management, 141 Roman Catholic Church during central planning era, 53–54, 205 hospice movement and, 158, 160, 161 after 1989 reform, 213 negative public opinion of, 42–43, 46n nonprofit organizations of, 42–43, 44, 53– 54 public’s confidence in, 205, 206 Roman Catholic clergy as nonprofit organization founders, 38, 41–43, 44 as social proximity organization founders, 196–197 hospice, 104, 158–161, 163, 171 Movement for the Defense of the Life of Unborn Children, 161–164 Romania civil service of, public confidence in, 210 health service sector of, 209 Rosciszewski, Filip, 9, 28 Russia. See also Union of Soviet Socialist Republics civil service of, public confidence in, 210 as imperial power, 1–2, 75, 205, 224 Satire, political, 207 Schools, organizational structure of, 110 Science, Poland’s state budget allocations for, 37, 83 Self-help groups, 15, 44, 112 Self-organization, 205 Self-regulation, of professions, 225, 226 Service contracts, 122, 220–221 Shadow economy, 212 Shelters, 112 “Shock therapy,” 211, 213, 215 Sienkiewicz, Henryk, 76 Skilled labor, post-World War II, 48

INDEX Slovakia economic reform in, 7 health service sector of, 209 Slovenia, civil service of, public confidence in, 210 Social Anti-Alcohol Committee, 27, 56 Social change professionals as agents of, 221 public attitudes toward, 214–215, 216 value-rational entrepreneurs and, 210–218 Social cues, in perception of social transactions, 129–130 Social-cultural organizations, during central planning era, 55–57 membership (1960–1983), 27 Social economy, 16 Socialist Youth Association, 55 Social movement organizations, 16, 19 Social organizations, 26 during central planning era, 51–63 membership changes in, 57–58 organizational uses and gratifications model of, 60–63 paternalistic policy toward, 54, 55 role and function of, 59–63 government regulation of, 26, 27 membership (1960–1983), 27 post-1985, 27–28 Social phenomena causal model of, 31–34 statistical significance of, 218–219 types of, 31 Social policies, 1956 liberalization of, 48–49 Social proximity, effect on perception of transaction costs, 129–130 Social proximity organizations (SPORGs), 20-21.See also specific social proximity organizations as alternative to public sector, 208, 209 definition of, 19 disadvantages of, 199–200 fees charged by, 122 by field of activity, 68 founders of motivations of, 91 professional status of, 21, 28–29, 96–97, 98 as hierophanies, 139–141 as information dissemination device, 83 institutional users of, 200

257 Social proximity organizations (cont.) as marketing device, 73, 124–125 motivation for formation of, 68–69 neighborhood effect of, 138–139 nonprofit status of, as status indicator, 116– 117 non-service professional users of, 200 occupational autonomy and, 223 opposition to, 87, 92–97 partial theory of origin of, 195–210 conditions affecting the SPORG form, 199–210 social actors and their interests, 196–198 usefulness of the SPORG form, 198–199 policy reform role of, 125 post-1989 formation of, 204 professional projects theory of, 226 reliance on social proximity relations, 98 social proximity character of, 101 in specialized health care, 147–155 uses of, 22 by year of establishment, 59–60, 61–62, 68 Social representations. See Cognitive schemata Social resource, civic associations as, 30–31 Social security, state budget allocations for, 37 Social services domestic model of, 111, 113 informational asymmetry levels of, 110, 111, 112–113, 120–121 social proximity organizations in, 123 state budget allocations for, 37 Social symbols, 140 Society for Aid to the Youth, 80, 105-106 Society for the Propagation of Secular Culture, 27 Solidarnosc, 8 as alternative to social organization membership, 57, 58 emergence of, 91 healthcare professionals’ role in, 11–12 income maintenance activities during, 112 official name of, 14 private healthcare and, 203 relationship with nongovernmental organizations, 10 Soviet industrial standards (GOST), 5 Specialists, 86 social proximity organization use by, 145, 148, 149–155

258 Spirituality, of hospice care, 94, 95, 158, 159– 161, 163 Sports, state budget allocations for, 37 Sports organizations, during central planning era, 55–56 Stakeholders, in product production and delivery, 197 State-owned enterprises, state budget allocations for, 37 State socialism, rejection of, 6 Statistical significance, of social phenomenon, 2 18–2 19 Status, professional symbols of, 73 Status expectations, 115–116 Status generalization, 115–116, 118, 141, 192, 193–194, 198 Status markers/cues, 114, 115, 121 Strikes 1980, 67 prohibition of, during central planning era, 54, 56 right to, 54 Student organizations, post-World War II membership, 48 Support groups, 112 Supreme Technical Organization, 27, 55, 56 Sweden, number of physicians per 10,000 population, 66 Synanon, 27, 56, 76 Systemic transformation, 6, 21, 210 “Taylorism,” 222, 232n Teachers, World War II-related deaths among, 47 Technology, relationship with organizational structure, 102 Teleological causation models, 32–34 contract failure variant of, 34–37, 38, 119, 195 Theater, Education, Rehabilitation. See Cultural Association Tito, Josip Broz, 2 Tocqueville, Alexis de, 218 Tourism, social, 56 Toy manufacturer, as social proximity organization founder, 80, 82 Transaction costs as basis for selection of organizational structure type, 195

INDEX Transaction costs (cont.) effect on organizational economic efficiency, 17–20 effect of organizational structure on, 128 effect of social proximity on, 129–130 of central planning regimes, 229 of formal organizational structures, 128 of large organizations, 227–228 of nonprofit organizations, 34, 44, 137, 193 of privatization, 230 redistribution by formal organizations, 228 of social proximity organizations, 128– 129, 229, 230 Unemployment, effect of right–to–work policy on, 54 Union of Polish Socialist Youth, 14, 27 Union of Soviet Socialist Republics Polish attitudes toward, 75–76 post-World War II domination of Eastern Europe by, 2 United Peasants’ Party, 14 United States of America number of physicians per 10,000 population, 66 Polish peasants’ migration to, 212–213 Urban areas post-World War II population increase in, 213 social organizations in, 61–62 Uses and gratifications model, of organizational behavior, 191–210 cognitive schemata of, 192–193 versus conventional theories of nonprofit organizations, 192–915 effect on transaction costs, 193 as ideal type model, 201 of origin of social proximity organizations, 195–210 social-historical context of, 195–210 Value-rational entrepreneur model, 195, 196– 198 of social change, 210–218 Values, utilitarian, 50 Van Hoomissen, Theresa, 10 “Velvet revolution,” in Eastern Europe, 6, 49, 50

INDEX Violence, against women, legal treatment of, 54, 70n Visually-impaired children, perfoming arts social proximity organization for. See Cultural Association (Theater, Education, and Rehabilitation) Voluntary associations, 13–14, 19 Volunteers, in social proximity organizations, 138, 226 in healthcare social proximity organizations, 106, 145, 149, 151, 153, 154, 184–185, 186 international comparison of, 151 as public benefit status indicator, 121, 123, 124

Warsaw Oncology Center, 82, 90 Weber, Max, 198–199 Western Europe, influence on Poland’s intelligentsia, 75–76

259 West Germany, number of physicians per 10,000 population, 66 Wittgenstein, Ludwig, 13 Women’s Foundation, 52, 77 Women’s League, 26–27, 54–55 government regulation of, 55 membership, 27, 57 Women’s rights, during central planning era, 54, 70n World Values Survey, 50 Wygnanski, Jakub, 9 Yalta agreement, 4, 69n, 224 Youth organizations, post-World War II membership, 48 Yugoslovia, 2 Zachod, 75 Zeromski, Stefan, 11