Firms are central to wealth creation and distribution, but their role in economic inequality in a society remains poorly studied. In this essay, we define and distinguish value distribution from value creation and value appropriation. We identify four value distribution mechanisms that firms engage in and argue that shareholder wealth maximization approach skews the value distribution toward shareholders and top executives, which in turn contributes to rising economic inequalities around the world. We call on organizational scholars to study the value (...) distribution role of firms and its consequences for society, and introduce the articles in this volume of the special issue on economic inequality, business, and society. (shrink)

We examine the extent to which host country income inequality influences multinational enterprises’ (MNE) expansion strategy for foreign production investment, depending on their specific strategic objectives. Applying a transaction cost framework, we predict that national income inequality has an inverted U-shaped relationship with foreign production investment. As inequality increases, MNEs accrue lower transaction costs arising from interactions with various local actors, leading to higher probability of investment. As income inequality increases further, its effect on location attractiveness will become negative, as (...) its attraction effect is increasingly offset by additional monitoring, bargaining, and security costs owing to the more fractious nature of high inequality societies. In addition, we suggest that the impact of income inequality is contingent on investment objectives: The inverted U-shaped relationship is stronger for efficiency-seeking investment but weaker for market-seeking and competence-enhancing investments. We find substantial support for our hypotheses through an analysis of 27 years (1986-2012) of data on Japanese MNEs’ overseas production entries. (shrink)

Entrepreneurial agency—the individual power to change environments—is central to entrepreneurship research. Yet, from a social inequality perspective, beliefs in an entrepreneurial agency might differ based on the social class environments individuals are born into. Drawing on social cognitive theories, our findings across three data sets among students from Germany and entrepreneurs from the United States indicate that social class origins are associated with entrepreneurial self-efficacy (ESE) beliefs in adulthood. Exploring the underlying mechanisms, we find that students’ early entrepreneurial experiences in (...) education and practice are indicative of reproducing the class gap in ESE. When individuals collect mastery experiences such as social mobility or entrepreneurial success, their lower social class origins turn out to be associated with enhanced entrepreneurial agency beliefs. We discuss the implications for further research on social class, inequality, and entrepreneurship. (shrink)

With increasing complexity in the evolving structure of work in organizations, employees’ preferences for working from home (WFH) relative to working on-site can lead to systematic differences in perceived career implications. An emerging tension associated with WFH versus work-at-work is whether this locational divide is associated with concerns over career progression, especially among racial minorities. Here, we seek to determine whether Black employees, relative to their White counterparts, have more concerns over career progression relating to WFH compared with their on-site (...) colleagues. From a sample of employees in the May 2021 cross-section of the Survey of Working Arrangements and Attitudes (SWAA), we find that relative to higher (lower) income White employees, higher (lower) income Black WFH employees have significantly higher (lower) concerns over career progression than their on-site counterparts. These findings speak both to the nontrivial choices employees may be forced to make as the structure of work continues to evolve and consequences for racial inequality. (shrink)