Luigi Zingales: belief

Transcript context

…I’m very struck by your early work on business firms and hierarchy. Some of this is written with Raghu Rajan. The idea of introducing or reintroducing ideas of culture and governance and hierarchy into the business firm. I wonder sometimes, is this an Italian perspective? I’m sure you know Luigi Barzini’s analysis of the multiplicity of masks in Italy. Sometimes the outsiders who think it’s so freewheeling overlook these significant elements of hierarchy. The question I want to ask you is these recent New York Times articles about Amazon and how Amazon either treated or allegedly treated its employees. The woman took off a day to give birth to a child, the next day she was expected to come back in, all kinds of demands. People supposedly left the company crying. A lot of hierarchy. Pay was pretty good. Given your analysis of the business firm and hierarchy, what’s your take on this whole Amazon story? Do you think Amazon, those people are heroes, or this is inhumane, or we have the balance wrong? What do you say? I think that probably we’re going a bit too much in a Southern direction. Take also Netflix. Apparently, Netflix has this credo that “we are a team, not a family,” and like a team, we set aside everybody who is not up to being first team. It works very well to motivate people. It’s also quite hard for many of the people to work. There is always the trade‑off between incentives and some form of insurance. If you eliminate every insurance, you have all incentives, then incentives are great but people are not particularly happy. You need to find the right trade‑off. Maybe it’s how we get these scalable firms in the US that Italy is somewhat lacking, by being harsher in some ways.…

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