Informal economic relations and organizations

Abstract

Purpose– The purpose of this paper is to identify the role of informal economic relations (IER) in the day-to-day working of organizations, thereby opening a way to theorizing and informed practice. The authors will present and discuss about the manifestation of informality in “everyday” reality of Soviet and transformation economies. Informed by Cultural theory and in particular the work of Gerald Mars, the authors are taking account ontologically and methodologically of Labour process theory.Design/methodology/approach– Through presentation of ethnographic data of detailed accounts and case vignettes in production and retail in the Soviet period of the late 1970s and 1980s and from the construction sector in contemporary Russia, with a focus on the labour process, the authors inform and discuss key processes in the informal working of organizations.Findings– In the Soviet system the informal economy co-existed in symbiosis with the formal command economy, implicitly adopting a “live and let live” attitude. In addition, informal relations were essential to the working of work organizations, sustaining workers’ “negative control” and bargaining power. contemporary Russian capitalism, while embracing informal economic activities, a legacy of the Soviet period, advocates an “each to his own” approach which retains the flexibility but not the bargaining space for employees. That facilitates exploitation, particularly of the most vulnerable workers, with dire consequences for the work process.Research limitations/implications– The paper provides a platform for theorizing about the role and place of IER in organizations. Of importance to managerial practice, the paper informs on those aspects of the work routine that remain hidden from view and are often excluded from academic discourse. The social implications are profound, shedding light on central issues such as recruitment, income distribution, health and safety and deregulated forms of employment.Originality/value– The paper examines economic behaviour under different economic-political regimes demonstrating continuities and changes during a fundamental social-economic reorientation of an important regional economy, through close observation at the micro and meso-level of, respectively, the workplace, organizations and industry, outlining theoretical, practical and social implications.