Individuals, interactions and institutions: How economic inequality affects organizations

Abstract

Research in a number of disciplines has shown that high levels of economic inequality adversely affect individuals and societies. Surprisingly, research examining the business consequences of societal level economic inequality is virtually nonexistent. In this article, I present a framework to study how economic inequality affects organizational performance. I suggest that economic inequality indirectly affects organizational performance via human development in the society, and directly via its effects on individual employees and their workplace interactions, as well as via the institutions in which the organizations are embedded. Further, I present a brief research agenda that seeks to illuminate the relationship between economic inequality and management and conclude with an overview of this special issue.