Organizational Politics and Relational Inequality: The Generation of Wage Inequality in the Production Process

Abstract

Previous research on stratification, primarily shaped by the status attainment tradition, has analyzed inequality as a function of individuals? statuses within a whole economy as opposed to relations among social groups embedded within organizations. Surprisingly, little research has been conducted on how relations among actors within organizations generate inequality. First, I critique this previous research for not analyzing relations within organizations. I then develop a model for understanding how social relations within organizations might generate income inequality. In this model, these relations are characterized by groups of actors struggling to appropriate portions of the surplus generated in organizations. These groups are organized around both material power and status-based power within the production process, both of which generate group-based conflict and struggle for the extraction of economic rents. Such rents form the basis for income inequality. Finally, I empirically assess this model using a sample of Australian organizations, and confirm that economic rents are generated out of both material power and status-based power. I conclude that relations within organizations engender a struggle over the surplus, which creates stratification. Thus, research should begin to focus on the organization as the unit of analysis, specifically on relations therein. Moreover, analyses of wage inequality should move toward understanding how actors struggle to appropriate portions of the surplus in organizations.