NETWORK DIRECT SELLING ORGANISATIONS: DEFINITION, DESCRIPTION AND ORIENTATION

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Self-reference

Geyer (1995:15) points out that “the important concepts of second-order cybernetics all start with „self‟, if not in English, then in Greek („autopoiesis‟)”. Luhmann (1995:33) states that “The concept of self-reference designates the unity than an element, a process, or a system is for itself”. What is defined or understood as such a unity is determined by the boundary a system self-creates. Just as through evolution the human body creates its concrete boundary by the creation of its physical shape and its appearance that distinguishes it from other individuals, in the same manner individuals create their internal mental (psychic) systems, broadly referred to as personality, even if such self-creation occurs through initial conditioning and at an unconscious level during the founding years.

Operational closure

Open systems are systems that interact with their environments, or systems that receive input and produce output to their environments (which include other systems). Closed systems have been described as systems that have very little interaction with their environment. However, the terms open and closed require additional clarification. Just as a biological (living) (sub-)system, such as a digestive system, cannot digest food eaten by another person, information perceived by individuals cannot become part of the unity of the synthesis of communication and hence understanding in another person. In other words, one individual cannot think in another person‟s head – there are several operationally closed complex sub-systems within individuals‟ cognitive systems (minds).

System boundaries

System boundaries are concrete or abstract, and can be described as the differentiation between the system and its environment. Human individuals have their physical bodily structure and appearance, for example, that distinguishes them from other individuals and creates their identity. On a more abstract level, individuals have their individual personalities that determine further system boundaries, such as values, ambitions, emotions, and so forth. As such, individuals self-create these boundaries. With reference to Pask‟s conversation theory, for example, individuals also create boundaries that relate to temporal, social and factual dimensions (abstract boundaries). For example, an individual decides what is possible as determined by her self-reference.

Network Direct Selling Organisations (NDSOs)

Network direct selling is also referred to as multi-level marketing (MLM), and refers to organisations that do not sell their products through conventional distribution systems, such as retail outlets, but through individual people who become members or distributors, and who typically sell these products to their friends, family, colleagues, other acquaintances, or even strangers. The major attraction of NDSOs is that members make a profit not only from the products they sell, but also from the sales of other members they recruit to become members of the same organisation. Theoretically, the income potential is limited only by the members‟ ability to recruit other members and to create pyramid-like structures that generate what is referred to as passive income. Individuals are typically encouraged to transform personal networks into commercial networks for this purpose.

A PRELIMINARY DESCRIPTION OF NDSOs

Though direct selling has been identified as one of the oldest methods of commercial distribution known to humankind, it is still not well understood, and the “… definitions that do exist are frequently ambiguous, contradictory, or simply inaccurate” (Peterson & Wotruba 1996:1). This may be the case because of the various different sources and purposes of such definitions that are predominantly marketing- and sales-oriented. Direct selling does not however commence with interactions between sales distributors and consumers. An individual becomes a direct sales distributor after certain interactions between a particular direct selling organisation and a particular individual culminated in some kind of agreement that initiates and pre-determines the communication between sellers and buyers that follows to a certain extent.

A HISTORICAL OVERVIEW OF DIRECT SELLING

Direct selling had no network characteristics initially and as an economic activity it can be traced back across many centuries. Biggart (1989:20) states: “Direct selling is an ancient form of enterprise. For thousands of years peddlers have toted water on their backs and carts for sale to consumers; and for thousands of years peddlers were largely men, mostly itinerant, and independent of each other.” Biggart (1989) has described the key factors that played a part in the development of direct selling as it occurred in the United States of America, and she is therefore a principal source in this overview because the USA reflects events that reverberated globally.

The 1920s: entrenchment

As it is at present, direct selling organisations were an established form of enterprise which most salespeople utilised as an opportunity to generate a secondary income. Although retail store clerks were doing better than direct selling distributors both in numbers and as a proportion of the direct selling direct selling occupation, they had a firm hold on its place in the economy. Specific changes in direct selling brought about by these economic circumstances can be pinpointed as the reasons for direct selling in its present form. First, local branch offices were established that employed personal recruiters to attract distributors, rather than using advertising. The branch offices created a more formal and committed relationship between salespeople and organisations, something that was previously characterised by contact through mail and other messaging services (Biggart 1989).

TABLE OF CONTENT: :

• CHAPTER 1 INTRODUCTION: PURPOSE AND APPROACH OF THE STUDY
  • 1.1 INTRODUCTION
  • 1.2 PURPOSE OF THE STUDY
  • 1.3 APPROACH OF THE STUDY
    • 1.3.1 Philosophical orientation
      • 1.3.1.1 Epistemological orientation
      • 1.3.1.2 Ontological orientation
    • 1.3.2 Theoretical orientation
    • 1.3.3 Methodological orientation
  • 1.4 CONTRIBUTION OF THE STUDY
  • 1.5 EXPLANATION OF KEY TERMS
    • 1.5.1 Communication
    • 1.5.2 First-order cybernetics
    • 1.5.3 Second-order cybernetics
    • 1.5.4 Complexity and complex systems
    • 1.5.5 Autopoiesis
    • 1.5.6 Self-reference
    • 1.5.7 Recursivity
    • 1.5.8 Operational closure
    • 1.5.9 System boundaries
    • 1.5.10 Network Direct Selling Organisations (NDSOs)
  • 1.6 CONCLUSION
• CHAPTER 2 NETWORK DIRECT SELLING ORGANISATIONS: DEFINITION, DESCRIPTION AND ORIENTATION
  • 2.1 INTRODUCTION
  • 2.2 OVERVIEW OF THE CHAPTER
  • 2.3 A PRELIMINARY DESCRIPTION OF NDSOs
  • 2.4 A HISTORICAL OVERVIEW OF DIRECT SELLING
    • 2.4.1 Unorganised direct selling
    • 2.4.2 Organised direct selling
    • 2.4.3 The establishment of home office and branch office direct selling organisations
    • 2.4.4 The 1920s: entrenchment
    • 2.4.5 The effects of the great depression
    • 2.4.6 The independent contractor solution
    • 2.4.7 The early modern era
    • 2.4.8 The party plan
    • 2.4.9 The first NDSO
  • 2.5 EXISTING DEFINITIONS OF DIRECT SELLING
    • 2.5.1 An operational perspective on the definition of direct selling
    • 2.5.2 A tactical perspective on the definition of direct selling
      • 2.5.2.1 The type of salesperson used
      • 2.5.2.2 Part-time or full-time direct selling agents
    • 2.5.3 A strategic perspective on the definition of direct selling
      • 2.5.3.1 Direct selling as a channel or mode of distribution
      • 2.5.3.2 Direct selling as a means of gaining access to a market
      • 2.5.3.3 Direct selling as a way of doing business
• 2.6 GLOBAL STATISTICS FOR THE DIRECT SELLING INDUSTRY
• 2.7 NDSOs – A DEFINITION AND GENERIC DESCRIPTION
• 2.8 CONCLUSION
• CHAPTER
  • A CYBERNETIC PERSPECTIVE ON THE STUDY OF INDIVIDUALS
  • 3.1 INTRODUCTION
  • 3.2 OVERVIEW OF THE CHAPTER
  • 3.3 LANGUAGE: KEY CONSIDERATIONS IN THIS CHAPTER
    • 3.3.1 Natural language
    • 3.3.2 Scientific language
    • 3.3.3 The Sapir-Whorf Hypothesis: Linguist relativity
    • 3.3.4 Chomsky‟s Generative Grammar and Biolinguistics
    • 3.3.5 Languaging
  • 3.4 FIRST-ORDER CYBERNETICS:
    • 3.4.1 Closed and open systems
    • 3.4.2 Entropy
  • 3.5 INDIVIDUALS ARE COMPOSITE UNITIES OF SYSTEMS: GENERAL SYSTEMS THEORY
    • 3.5.1 An overview of General Systems Theory
    • 3.5.2 General Systems Theory concepts and their application to the study of the individual
• CHAPTER 4 THE SELF-CREATION OF PSYCHIC AND SOCIAL SYSTEMS THROUGH COMMUNICATION
• CHAPTER 5 A SECOND-ORDER CYBERNETIC EXPLANATION FOR THE EXISTENCE OF NETWORK DIRECT SELLING ORGANISATIONS
• CHAPTER 6 CONCLUSION AND RECOMMENDATIONS

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A SECOND-ORDER CYBERNETIC EXPLANATION FOR THE EXISTENCE OF NETWORK DIRECT SELLING ORGANISATIONS AS SELF-CREATING SYSTEMS