Revisiting the Connection Between the Division of Labour and Social Exchange Theory: The Role of Standards Setting and Governance
Durkheim’s analysis of the division of labour (Durkheim 1893) contributed to the development of the anthropological literature on social exchange. Nevertheless, the discussion relating to the structure of social exchange, defined as restricted and generalized exchange, has been argued to be unrelated to processes relating to division of labour (Ekeh 1974). This paper seeks to reengage with the explanation of division of labour as related to social exchange by examining the determination of the division of labour and patterns of social exchange in the context of the setting of standards relating to governance, such as standards relating to accounting and finance.
In doing so this paper combines two arguments relating to the relationship between accountants and actuaries and investment professionals such as fund managers and consulting actuaries in the 1970s. First, it examines the determination of professional jurisdiction between accountants and actuaries as the consequence of outcomes relating to the rigor of standards relating to the governance of pension funds (Avrahampour 2015), and specifically the setting of standards relating to pension fund financial accounting and actuarial practices. Second, it argues that the introduction of commensuration (Espeland & Sauder 2007) with respect to the ranking of fund management firms in relation to performance as the consequence of a shift of practices relating to client referral by actuaries working as investment consultants from restricted to generalized exchange.
The episode examined in this paper is the introduction of performance ranking of money management firms in the UK between 1970 and 1980. The paper offers a governance based explanation of the determination of the jurisdictional boundary between accountants and actuaries, and drawing on social exchange theory argues that the introduction of commensuration of investment management firms contributed to the emergence of fund managers and investment consultants as new types of occupations that were rooted in traditional professions, but also as part of their evolution resulted in the creation ofnew types of occupation
The paper draws on a qualitative research method combining archives, interviews and analysis of technical financial and accounting texts to examine the evolving jurisdictional boundaries between accountants and actuaries and the emergence of non-traditional occupational groups such as fund managers and investment consultants. Implications are outlined for our understanding of these new occupational groups, the role of governance in their emergence and regarding the relevance of a Durkheimian approach in examining the relationship between division of labour and standards of governance.
Bibliography:
Avrahampour, Yally. 2015. “‘Cult of Equity’: Actuaries and the Transformation of Pension Investing, 1948-1960” Business History Review Vol. 89, No. 2: 281-304
Durkheim, Emile (1893) The Division of Labour in Society
Ekeh, Peter, P. (1974) Social Exchange Theory: The Two Traditions
Espeland, Wendy Nelson & Michael Sauder (2007) ‘The Reactivity of Rankings: How Public Measures Change Social Worlds.’ American Journal of Sociology, Vol. 113 No. 1:1–40.