BOOK REVIEWS 599

193). By the end of the Hutchins era, the school was in ‘terrible trouble’-its baccalaureate degree was not recognized by any graduate school and it was experiencing significant financial problems (p. 195).

The U. of C. survived, of course, in large part due to the strength of its graduate and professional pro- grams. Stagg’s University should, however, give pause to those who want to reform big-time college football nowadays by giving college presidents more control over the game. Rhetoric aside, these modern-day reform efforts are triggered by the same impulse that led Chicago’s trustees to ‘cast covetous glances at Stagg’s independent athletic fund’ in 1921 (p. 100): during a period of financial stringency for academics, the huge sums of money generated by big-time col- lege sports are awfully attractive. There is a substan- tial amount of empirical evidence, however, that academic philanthropy is highly correlated with ath- letic success. Winning intercollegiate athletic pro- grams are important sources of national publicity and help generate both more money and more-and better-applications for admission. The danger of current reform proposals is that under the guise of putting the student back into student-athlete, the critics of big-time college sports will end up killing the gander that lays the golden egg.

WILLIAM F. SHUGHART 11 Depaflrnent of Economics and Finance

University of Mississippi Uniwrsity, M S 28677, USA

GLOBAL DISASTERS: INQUIRIES INTO MAN- AGEMENT ETHICS, By Allinson, Robert E., En- glewood Cliffs, NJ: Prentice Hall, 1994, $34.95 (cloth).

This is not just a book about major technological disasters, nor about management ethics. It is about management practices, policies and philosophies, but for me it is mostly about the regard for human beings in organizations, and how this regard can prevent the types of disasters described and analyzed so vividly by Allinson.

On 6 March 1987, the Herald of Free Enterprise, a roll-on/roll-off passenger and freight ferry, capsized and sank in 5 minutes off the coast of Zeebrugge, Belgium, with a loss of 193 lives. It was caused by a combination of factors, including the actions or lack of actions of both line staff and senior management. The report of the formal investigation allocated re- sponsibilities for the disaster among the top manage- ment, including the board of directors, and the junior superintendents. The disaster’s immediate cause was its putting to sea with the bow doors open. The assistant bosun had opened the doors and ac- knowledged it was his duty to close them. He had been released from duty by the bosun, fell asleep and had not been woken by the call of ‘harbour stations’. But, although the assistant bosun was nominally in charge, he was not the only person in charge, and not the only person who ever closed the doors. There was no clear system.

The system of checking the doors was the respon-

sibility of the chief officer, but the system required him to be in two places at the same time: checking the bow doors and taking up his position on the bridge. Also, the bosun was the last person to leave the area of the bow doors and could have closed them. He said that it had never been part of his duties to close them! Also, the captain did not check with the chief officer if the ship was secure when he came onto the bridge, and the chief officer did not make a report.

The standing orders of the company were that ‘Heads of departments are to report to the Master immediately they are aware of any deficiency which is likely to cause their departments to be unready for sea in any respect at the due sailing time. In the absence of any such report the Master will assume, at the due sailing time, that the vessel is ready for sea in all respects.’ This therefore accepts that nega- tive reporting is sufficient to count for a positive information transmission. That is, no report is con- sidered to convey positive information. Therefore, if there is a failure to make a report for other reasons, the wrong communication may be transmitted. This also does not give the captain any responsibility to request the information: absence of information is regarded as sufficient to put to sea. This does not, however, preclude bottom-up responsibility. While standing orders were interpreted so that no checks were made on whether the bow doors were actually closed or not, managers (e.g. the bosun) could also be held responsible for not questioning these am- biguous orders and the interpretations of these or- ders by senior managers (captain and superintending captain).

How might this disaster be understood? Allinson suggests that it may be understood in terms of dys- functional management: as there was a total lack of safety priority for crew and passengers; because of a non-assignment of responsibilities and issuing of un- clear orders; as there was an apparent lack of ethical consciousness and lack of understanding of the re- sponsibilities of a manager; and because of a lack of proper management structure.

How might it be possible to implement a safety-first consciousness? Allinson proposes that this could be achieved by: a clear attribution of domains of re- sponsibilities for specific officers; an issuance of clear orders and instructions; safety not being seen to be an add-on but an intrinsic feature of good business management; a shared responsibility (perhaps bot- tom-up and horizontally as well as top-down); a will to communicate, including respectful listening. (A similar disaster had been averted in 1983 when the assistant bosun of the Pride of Free Enterprise had fallen asleep. Some masters had requested lights on the bridge to indicate that the doors had been closed. These requests were ignored until after its sister ship Herald went down).

Thus Allinson focuses on this, and the major disas- ters of the launch of the Challenger space shuttle, the King’s Cross Underground fire, and of that of the Air New Zealand DC10, flight TE 901, on Mount Erebus. He concludes that, above all, management

600 BOOK REVIEWS

ethics is a respect for persons, and that some of the principles of the Japanese management system should be applied to the avoidance of technological disasters: intra-departmental cooperation, for exam- ple, between the manager (who may see his or her job as cost cutting and therefore safety cutting) and the engineer (who may propose safety features); where one dissenting voice would stop disasters (the will to communicate: such as in the ringi system).

For me, the main message is in treating people as an end in themselves, and not as a means to an end. Encompassed in the term ‘human resources’ (a phrase coined at a time when companies were being encouraged to value ‘personnel’ as contributing just as much to organizational objectives as any other resources, physical or financial) is attached such an instrumental value for human beings in organization. Taking the message contained in Allinson’s excellent book, perhaps we should start to respect people in organizations (as well as customers and other stake- holders) for their ‘human’ value, and not for their ‘resource’ value. The message in this book is particu- larly important to management in the emerging or transitional economies, in such regions as South Africa, and the former Soviet bloc countries. Man- agers are grappling with often contradictory views of human beings in organizations: particularly at the interface of Western and non-Western values. Per- haps Allinson’s contribution can help them to take stock of the options and to understand the implica- tions of accepting wholeheartedly the (Western) view of people as resources.

TERENCE JACKSON Centre for Cross Ciiltiiral Management Research

EAP European School of Management I2 Merton Street Oxford OX1 4JH

COMPETITION POLICY: A GAME THEORETIC PERSPECTIVE, by Phlips, L., New York: Cam- bridge University Press, 1995, $49.95 (cloth); $17.95 (paper).

Readers, particularly American readers, may find this book somewhat disappointing. Its title over- reaches quite a bit, embracing topics not covered by the book, such as mergers and vertical restraints. The analysis of the book is also limited almost en- tirely to models of quantity-setting behavior. Finally, the policy perspective of the book is distinctly Euro- pean in areas in which the contrast between Euro- pean Union (EU) competition policy and that of the United States may be greatest, and the policy conclu- sions are not entirely convincing.

Nevertheless, the reader should find a stimulating presentation of modern game theoretic models of collusion and predation in homogeneous goods in- dustries. Phlips’ textbook style makes a great deal of literature, much of it rather obscure, readily accessi-

ble to economists concerned with competition policy issues. Phlips also sprinkles case study evidence throughout the book. Many readers will find this both refreshing and quite interesting, since the case studies are from Europe and are unfamiliar to most Americans. The bibliography is also notable for its completeness. (Although it is irritating that Phlips, or more likely Cambridge University Press, omitted au- thors’ first names. Perhaps the AEA should adopt a resolution on this.) In sum, the book is a valuable reference and a useful supplementary textbook in a graduate or advanced undergraduate industrial orga- nization course.

Chapter 1 should be skipped by American economists. It provides an introduction to very basic game theory concepts, as well as an introduction to competition policy principles of the European Union. The latter is of some interest simply because some of the propositions are extreme, to say the least. For example: ‘Unilateral information transmission about future prices is ... evidence of collusion’. The ratio- nale is apparently that there is that public announce- ments are designed to inform competitors, rather than customers, and there is no reason other than collusion for doing so. (Recall that the First Amend- ment is not a constraint in Europe.)

Phlips criticizes the EU propositions for ignoring economic learning on models of noncooperative oligopoly, and he articulates an alternative set of propositions, which adumbrate the conclusions of the balance of the book. Phlips’ propositions have more appeal that the EU propositions, but several have a distinctly odd ring to them. For example: ‘To raise or lower one’s price makes sense only if all other com- petitors do the same ...’ Phlips’ propositions make sense only if carefully read within the context of homogeneous product industry.

Chapters 2-4 consider models of explicit collusion in far greater detail than any other reference mate- rial. Chapter 2 presents Selten’s interesting, but not well-known, model of cartel participation and does so in detail sufficient to make the analysis easily understood. The setting for this model is a homoge- neous product oligopoly in which a cartel contract based on output quotas can be explicitly negotiated and perfectly enforced. While the setting is highly unrealistic, the point of the model is a very impor- tant one not appreciated by many industrial organi- zation economists. Small numbers of firms are essen- tial for firms voluntarily to join a cartel. (Note that there is no similar proposition for repeated games.) Phlips’ particular punch line is that of Selten: four firms are few and six firms are many.

This result is of great importance because i t has nothing to do with incentives to cheat, detection, or punishment; there is no cheating by assumption. Rather, the point is that firms that are sufficiently small have too little to gain from joining a cartel in terms of affecting the cartel’s success. Phlips could have done better by providing a concise, intuitive statement of the underlying economics.