Marketization: a widespread phenomenon that some feel goes against their values  

‘Marketization,’ i.e., the spread of market logic through the introduction of ever new market practices, is a pervasive phenomenon in capitalist societies. Education, health care, the arts, sports, religion… there is hardly a field in which market practices are not spreading.  

We may find some new market practices problematic, because they conflict with the values we hold dear and consider essential to the field. Many faculty colleagues can probably relate to what we are talking about. Indeed, in recent years, the field of higher education has seen the emergence of many new market practices that some of us fear may threaten the values we consider central to our profession: the freedom to conduct research independently of corporate interests, the provision of equitable access to higher education for students, and the teaching not only of marketable skills but also of the ability to think rationally and autonomously in the spirit of the Humboldtian educational ideal.  

Why bother? Can’t we just assume that marketization is in line with what the majority wants?  

But, on reflection, isn’t it self-righteous to criticize a market practice solely based on our own moral convictions, i.e., simply because we, as individuals, believe that it violates values that we personally hold? Isn’t the very fact that these market practices have become established in our field an indication that while we may not personally support them, the majority of other actors in the field do? Wouldn’t our faculty colleagues and students, if they were largely opposed to these market practices, express their displeasure by massively turning to schools that don’t practice them, making it unprofitable for a school to engage in these practices, and ultimately leading to the disappearance of these practices?   

Just a few days ago, one of the authors of the article we published in the Journal of Management Studies was teaching a business ethics class in which there was a debate about controversial market practices. A student spontaneously defended the existence of such practices by arguing as follows (we’re quoting the gist, not verbatim): “If there wasn’t a demand for these allegedly contestable market practices, organizations wouldn’t be able to use them successfully.” In other words, we may not personally like these practices, but the very fact that organizations are successfully using them is evidence enough that they are consistent with the preferences of many, if not most, of those organizations’ stakeholders.  

The common misconception that a stakeholder’s decision to remain with an organization is an expression of approval of the organization’s practices 

In our article, we argue that this kind of reasoning reflects a common misconception: that a stakeholder’s decision to stay with an organization is an expression of agreement with the organization’s practices. One likely reason why this misconception is so prevalent is that it has long been promoted by libertarian thinkers, who have likened stakeholders’ decisions to engage or not to engage with an organization to ‘votes’ for or against that organization’s conduct. In doing so, they have contributed to give the market a democratic aura and to depoliticize the question of what market practices organizations should or should not employ in light of their stakeholders’ values. For if it is true that customers ‘vote’ with their wallets by buying or not buying from an organization, and employees ‘vote’ with their feet by joining or leaving an organization, then there is no need to engage politically with the phenomenon of marketization. It is enough to wait and see which market practices will prevail, because organizations will only be able to successfully adopt market practices that are in line with the moral preferences of the majority of their stakeholders.  

Why stakeholders often engage with organizations despite their moral disapproval 

In our article, we argue that the ‘voting’ analogy is inadequate for making sense of a stakeholder’s decision to stay with an organization that introduces a market practice that violates values that the stakeholder holds dear. Our argument is that there may be mechanisms at work in the mind of such a stakeholder that may lead her to continue to engage with an organization that adopts a market practice that she morally disapproves of.   

To make our case, we draw on the organizational legitimacy literature, which assumes that stakeholders will only engage with organizations that they judge to be sufficiently aligned with their values and norms of appropriate behavior. While this literature usefully suggests that a stakeholder’s legitimacy judgment is based on different types of legitimacy evaluations—instrumental, relational, and moral—it takes an incomplete view of the mental processes involved in forming a legitimacy judgment. In particular, this literature does not take into account important insights from social psychology that suggest not only that our moral judgments often have limited influence on our behavior, but also that these moral judgments are themselves heavily influenced by considerations of our self-interest, our social identity, and the extent to which we perceive ourselves to be in a situation of dependency. Based on these social-psychological insights, we theorize that four mental mechanisms may operate in a stakeholder’s mind and lead her to judge an organization as sufficiently legitimate to maintain her relationship with it. We call these mechanisms compensation, buffering, dependence, and adjustment.  

We use the example of a soccer fan to demonstrate the real-world relevance of our theory. We show that it can help to explain the seemingly puzzling empirical observation that many fans who are critical of the marketization of their sport nevertheless remain loyal to a club that advances this marketization. In the light of these mechanisms, we argue that it is untenable to regard stakeholders’ decisions to maintain their relationship with an organization that introduces a new market practice as ‘votes’ in favor of that practice, and we launch a reflection on actions that stakeholders could take to more effectively curb undesired forms of marketization.