Lindblom - The Market System - Afghan Journalists' Committee

78 How It WorksItalian clothing company, contracts with many small enterprisesfor some of its needs: embroidery and pressing,among others. While that reduces the size of Benneton’s internalcommand system, it does not necessarily shrink theplace of coordination by command in clothing and supportingenterprises. It has simply transferred to the contractorsthe task of managing the workforce, which is now theirproblem, not Benneton’s.In these several ways, the collective enterprise in themarket system creates islands of command coordination ina sea of market mutual adjustment. The structure of everycollective enterprise is the result of entrepreneurial decisionson the size and shape of the island. If Volkswagen buyswindshields and tires from other enterprises, then it will bea smaller enterprise from one that coordinates their productionitself. The very existence of a collective enterprise orcorporation represents an entrepreneur’s choice of commandover market system for some range of activities. Factoriesand other collective enterprises, consequently, aremarkers of—one might say monuments to—market inadequacy,paradoxical as that may seem. The more the coordinationby corporate management, the less by the marketsystem. The corporation is indeed an alternative to themarket system. We can imagine, for example, the shoemanufacturer of Chapter 3 deciding to bring under its ownmanagement the tanning operations that it now buys in internationalmarkets.That is not the whole story of why entrepreneurs createcorporate islands of command in a market sea. Entrepreneursalso seek the special privileges given by the state tocorporate investors. By law, investors are freed from responsibilityto repay debts incurred by an enterprise. Althoughthey may find their stock shares worthless if the enterprise