https://www.sfu.ca/~wainwrig/Econ400/jensen-meckling.pdf

Theory of the firm: Managerial behavior, agency costs and ownership structure

Firm Resources and Sustained Competitive Advantage

What makes organizations so similar? We contend that the engine of rationalization and bureaucratization has moved from the competitive marketplace to the state and the professions. Once a set of organizations emerges as a field, a paradox arises: rational actors make their organizations increasingly similar as they try to change them. We describe three isomorphic processes-coercive, mimetic, and normative—leading to this outcome. We then specify hypotheses about the impact of resource centralization and dependency, goal ambiguity and technical uncertainty, and professionalization and structuration on isomorphic change. Finally, we suggest implications for theories of organizations and social change.

/pdf/the-iron-cage-revisited-institutional-isomorphism-and-xas5qn5nhy.pdf

The iron cage revisited institutional isomorphism and collective rationality in organizational fields

In this paper, the concept of social capital is introduced and illustrated, its forms are described, the social structural conditions under which it arises are examined, and it is used in an analys...

/pdf/social-capital-in-the-creation-of-human-capital-1836wo2872.pdf

Social Capital in the Creation of Human Capital

In this paper, we argue that the ability of a firm to recognize the value of new, external information, assimilate it, and apply it to commercial ends is critical to its innovative capabilities. We label this capability a firm's absorptive capacity and suggest that it is largely a function of the firm's level of prior related knowledge. The discussion focuses first on the cognitive basis for an individual's absorptive capacity including, in particular, prior related knowledge and diversity of background. We then characterize the factors that influence absorptive capacity at the organizational level, how an organization's absorptive capacity differs from that of its individual members, and the role of diversity of expertise within an organization. We argue that the development of absorptive capacity, and, in turn, innovative performance are history- or path-dependent and argue how lack of investment in an area of expertise early on may foreclose the future development of a technical capability in that area. We formulate a model of firm investment in research and development (R&D), in which R&D contributes to a firm's absorptive capacity, and test predictions relating a firm's investment in R&D to the knowledge underlying technical change within an industry. Discussion focuses on the implications of absorptive capacity for the analysis of other related innovative activities, including basic research, the adoption and diffusion of innovations, and decisions to participate in cooperative R&D ventures. **

/pdf/absorptive-capacity-a-new-perspective-on-learning-and-1n1c9gg9x0.pdf

Absorptive capacity: a new perspective on learning and innovation

The merger of two firms is commonly viewed from an antitrust standpoint in terms of its anticompetitive effects on price. Sometimes, however, a merger will also result in real increases in efficiency which reduce the average cost of production of the combined entity below that of the two merging firms. The neglect, suppression, or even perverse interpretation of such economies was characteristic of antitrust enforcement in the early sixties and beyond. There are recent indications, however, that economies are now being valued more positively.

/pdf/economies-as-an-antitrust-defense-revisited-3xlxbhm2v3.pdf

Economies as an Antitrust Defense Revisited

The Economics of Defense Contracting: Incentives and Performance

Although an understanding of bureaucracy is vital to the evolving theories of economic organization and politics, bureaucracy is a seriously neglected topic. Terry Moe is one of the few scholars who has addressed himself to the pertinent issues in an illuminating way (see especially Moe, 1990a). I concur with Moe's view that political scientists of the "new institutionalist" genre have given disproportionate attention to legislatures as compared with bureaucracies and that a more balanced approach that "tackles the subject of bureaucracy in a serious way" (Moe, 1990b:S250) is needed. Furthermore, I concur with the eight points of inquiry that he prescribes (Moe, 1990b:S250-S251). My own sense of the best way to reorient a field is to address the neglected questions and to offer insights and answers with which "orthodoxy" must come to terms. Moe's comparison of the American separation-ofpowers system with the parliamentary systems of other Western democracies-in terms both of the differences in their politics of structural choice and differences in the bureaucracies-is in that spirit. His contrast between presidents and legislators as it relates to bureaucratic design is also illuminating. His main point is that political institutions are distinctive and need to be addressed on their own terms. Much of the recent work that he reviews fails that test.

Political Institutions: The Neglected Side of the Story—Comment

The problem of peak-load pricing has been "solved" at least four times in the postwar literature (by Marcel Boiteux [1], Hendrik Houthakker [4], Peter Steiner [7 ], and Jack Hirshleifer [3 ]), and thus an additional treatment of this subject requires some justification.' Ours is threefold. First, the welfare motivation of these analyses has been generally lacking,2 and it is therefore difficult to evaluate the results obtained. Second, the geometric techniques that have been provided are awkward and unconventional, require that costs be redefined for each change in the number of subperiods, and cannot easily be generalized to handle the case of unequal-duration-subperiod loads. We attempt to remedy each of these deficiencies and, in addition, extend the analysis of peak-load pricing by replacing the usual assumption of fully divisible plant by one in which investment opportunities are discrete. This latter may be of little practical importance,3 but it helps shed additional insights on the welfare attributes of the problem.

Peak-load pricing and optimal capacity under indivisibility constraints

That vertical integration is to be understood in large measure as a transaction-cost economising outcome has been generally conceded since Ronald Coase advanced the argument in 1937.2 The argument was forcefully restated by Kenneth Arrow as part of his assessment of the market failure literature (1969, p. 48). It was not, however, until 1971 that the underlying mechanics were described (Williamson, 1971). The argument has since been elaborated (Williamson, 1975, 1979; Klein, et al., 1978). Of equal if not greater importance, the same underlying transaction cost reasoning applies broadly — which is to say that vertical integration is a paradigm problem. Such apparently unrelated phenomena as the employment relation, aspects of regulation, vertical market restrictions, and even family organisation3 are variations on a theme.

Oliver E. Williamson

Papers

Economies as an Antitrust Defense Revisited

The Economics of Defense Contracting: Incentives and Performance

Political Institutions: The Neglected Side of the Story—Comment

Peak-load pricing and optimal capacity under indivisibility constraints

Vertical Integration and Related Variations on a Transaction-Cost Economics Theme