available in the institutional system; yet, actions are interpreted or are effective in catalyzing change depends on processes of sense-making and response by other actors in the system. The pharmaceutical value chain is a prototypical instance of such interdependence. Fiduciary responsibility requires subordinating self interest in the service of external constituencies (e.g., pubic, society), enlarging the scope of the system and exposing it to external scrutiny. Considerable evidence exists to suggest that market actors in such systems are often blind sighted by implications of action-system interdependence and fall prey to its dynamics when they become overly focused on their internal logics. Notable instances of such blind sighting include Arthur Anderson in the auditing scandal, Student Loan Xpress in the student loan disaster, Lincoln Savings and Loan in the S&L crisis, and AIG insurance and Prudential in the insurance industry debacle. The two frameworks also differ in their premise for the equilibrium state of the market (or lack thereof). Market equilibrium is a premise of the economic framework, such that market actors are assumed to exercise agency to move markets toward a stable, steady state. An equilibrium state is thought to be more likely when the value chain is aligned with a singular institutional logic by design, default or managerial agency. By contrast, an open system is agnostic to market state and is inherently antithetical to stable, orderly and equilibrating processes of market evolution and shift. Consistent with its foundations in conflicted logics, an open systems framework is more compatible with the premise of disorderly movement where markets become arenas of contested logics that risk negative system spirals and are marked by increased conflict, aggressive retaliation, and eroding cooperation among value chain partners. It is important to note that the open systems framework is not premised on inevitable negative spirals. Just that this and happen. The fundamental point is that system could does dynamics evolve in response to interactions among market actors, often resulting in emergence of new types of actors, relations, and networks (Katz and Kahn 1966). As per systems theory, order and structure emerge in a bottom-up, self organizing way from the micro-interactions
available in the institutional system; yet, actions are interpreted or are effective in catalyzing change depends on processes of sense-making and response by other actors in the system. The pharmaceutical value chain is a prototypical instance of such interdependence. Fiduciary responsibility requires subordinating self interest in the service of external constituencies (e.g., pubic, society), enlarging the scope of the system and exposing it to external scrutiny. Considerable evidence exists to suggest that market actors in such systems are often blind sighted by implications of action-system interdependence and fall prey to its dynamics when they become overly focused on their internal logics. Notable instances of such blind sighting include Arthur Anderson in the auditing scandal, Student Loan Xpress in the student loan disaster, Lincoln Savings and Loan in the S&L crisis, and AIG insurance and Prudential in the insurance industry debacle. The two frameworks also differ in their premise for the equilibrium state of the market (or lack thereof). Market equilibrium is a premise of the economic framework, such that market actors are assumed to exercise agency to move markets toward a stable, steady state. An equilibrium state is thought to be more likely when the value chain is aligned with a singular institutional logic by design, default or managerial agency. By contrast, an open system is agnostic to market state and is inherently antithetical to stable, orderly and equilibrating processes of market evolution and shift. Consistent with its foundations in conflicted logics, an open systems framework is more compatible with the premise of disorderly movement where markets become arenas of contested logics that risk negative system spirals and are marked by increased conflict, aggressive retaliation, and eroding cooperation among value chain partners. It is important to note that the open systems framework is not premised on inevitable negative spirals. Just that this could and does happen. The fundamental point is that system dynamics evolve in response to interactions among market actors, often resulting in emergence of new types of actors, relations, and networks (Katz and Kahn 1966). As per systems theory, order and structure emerge in a bottom-up, self organizing way from the micro-interactions
HANDBOOK%20CHAPTER_2013.docx