GMAT Reading Comprehension Discussions

The general density dependence model can be applied to explain the founding of specialist firms (those attempting to serve a narrow target market). According to this model, specialist foundings hinge on the interplay between legitimation and competitive forces, both of which are functions of the density (total number) of firms in a particular specialist population. Legitimation occurs as a new type of firm moves from being viewed as unfamiliar to being viewed as a natural way to organize. At low density levels, each founding increases legitimation, reducing barriers to entry and easing subsequent foundings. Competition occurs because the resources that firms seek - customers, suppliers, and employees - are limited, but as long as density is low relative to plentiful resources, the addition of another firm has a negligible impact on the intensity of competition. At high density levels, however, competitive effects outweigh legitimation effects, discouraging foundings. The more numerous the competitors, the fiercer the competition will be and the smaller will be the incentive for new firms to enter the field. 

While several studies have found a significant correspondence between the density dependence model and actual patterns of foundings, other studies have found patterns not consistent with the model. A possible explanation for this inconsistency is that legitimation and competitive forces transcend national boundaries, while studies typically restrict their analysis to the national level. Thus a national-level analysis can understate the true legitimation and competitive forces as well as the number of foundings in an industry that is internationally integrated. Many industries are or are becoming international, and since media and information easily cross national borders, so should legitimation and its effects on overseas foundings. For example, if a type of firm becomes established in the United States, that information transcends borders, reduces uncertainties, and helps foundings of that type of firm in other countries. Even within national contexts, studies have found more support for the density dependence model when they employ broader geographic units of analysis - for example, finding that the model's operation is seen more clearly at the state and national levels than at city levels. 

The primary purpose of the passage is to 
(A) question the validity of an economic model 
(B) point out some inconsistencies within an economic model 
(C) outline an economic model and suggest revisions to it 
(D) describe an economic model and provide specific examples to illustrate its use 
(E) explain why an economic model remains valid despite inconsistent research results 

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Jon Clark’s study of the effect of the modernization of a telephone exchange on exchange maintenance work and workers is a solid contribution to a debate that encompasses two lively issues in the history and sociology of technology: technological determinism and social constructivism.

Clark makes the point that the characteristics of a technology have a decisive influence on job skills and work organization. Put more strongly, technology can be a primary determinant of social and managerial organization. Clark believes this possibility has been obscured by the recent sociological fashion, exemplified by Braverman’s analysis, that emphasizes the way machinery reflects social choices. For Braverman, the shape of a technological system is subordinate to the manager’s desire to wrest control of the labor process from the workers. Technological change is construed as the outcome of negotiations among interested parties who seek to incorporate their own interests into the design and configuration of the machinery. This position represents the new mainstream called social constructivism.

The constructivists gain acceptance by misrepresenting technological determinism: technological determinists are supposed to believe, for example, that machinery imposes appropriate forms of order on society. The alternative to constructivism, in other words, is to view technology as existing outside society, capable of directly influencing skills and work organization.

Clark refutes the extremes of the constructivists by both theoretical and empirical arguments. Theoretically he defines “technology” in terms of relationships between social and technical variables. Attempts to reduce the meaning of technology to cold, hard metal are bound to fail, for machinery is just scrap unless it is organized functionally and supported by appropriate systems of operation and maintenance. At the empirical level Clark shows how a change at the telephone exchange from maintenance-intensive electromechanical switches to semielectronic switching systems altered work tasks, skills, training opportunities, administration, and organization of workers. Some changes Clark attributes to the particular way management and labor unions negotiated the introduction of the technology, whereas others are seen as arising from (50) the capabilities and nature of the technology itself. Thus Clark helps answer the question: “When is social choice decisive and when are the concrete characteristics of technology more important?”

122. Which of the following most accurately describes Clark’s opinion of Braverman’s position?