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

This overview of transaction cost economics is organized around the "Carnegie Triple" - be disciplined; be interdisciplinary; have an active mind. The first of these urges those who would open up the black box of economic organization to do so in a modest, slow, molecular, definitive way, with the object of deriving refutable implications and submitting these to empirical testing. The second recommends that the student of economic organization be prepared to cross disciplinary boundaries if and as this is needed to preserve veridical contact with the phenomena. The injunction have an active mind is implemented by being curious and asking the question "What is going on here?" The paper concludes with a discussion of operationalization.

Transaction Cost Economics: An Introduction

This paper attempts to formalize the transaction cost theory of the firm. Building on the formal approach of Grossman and Hart (1986), a model is developed to capture the essential elements of the transaction cost theory, particularly those that are distinct from the formal property rights theory (PRT). In contrast to the PRT model, ours focuses on specific investments in alienable assets and ex post transactional inefficiencies. We define integration of two firms to imply common ownership of alienable assets from both firms, which entails control rights over the use of the assets as well as claims on their residual value. One important advantage of the model is its ability to deal with integration between non-owner-managed firms.

Towards a Formal Model of the Transaction Cost Theory of the Firm

* J Michael Montias' book The Structure of Economic Systems is an ambitious and important contribution to the literature on comparative economic systems It also has ramifications for the study of industrial organization and, for that matter, of complex economic organizations quite generally Inasmuch as the distinctive approach which Montias takes involves a study of the "interface between organization theory and economics" (p 5), one might anticipate that this book would elicit wide interdisciplinary interest It draws, however, very selectively from the economics and organization theory literatures Unsurprisingly, the book relies extensively on Montias' earlier work (including his collaboration with Tjalling Koopmans) Other scholars upon whose work he greatly relies are Jacob Marschak and Roy Radner, Martin Weitzman, and Janos Kornai It is not accidental that these authors are all associated with mathematical modeling approaches to the study of organizations Montias observes that when "faced with a choice between a clear articulation of a simple relationship and a realistic description of a complex process, I have generally opted for the former" (p 6) This is consonant with prevailing preferences among economists for "hard analysis" over what is sometimes referred to as "story telling" This preference for mathematical modeling is traceable to what is often a justifiable sense that propositions which are derived less rigorously are inherently suspect Such a position on verbal versus mathematical argument has been expressed by Herbert Simon (1957) as follows: "The poverty of mathematics is an honest poverty that does not parade imaginary riches before the world    When we cannot solve the system, we can at least be sure which questions we can answer and which we cannot and we are protected from reaching invalid conclusions whose error is concealed by the vagueness of a verbal formulation" The statement was written in 1957, when Simon still entertained hopes that much of social science could be reworked to advantage in the language of nonlinear differential equations Simon's interests have since gone off in different directions, however, and Simon's disciples and fellow travelers have failed to deliver on these aspirations Possibly the only alternative to "honest poverty" is disreputable (inflated, pretentious, or otherwise suspect) verbal analysis But inasmuch as the twenty years which have expired since Simon's pronouncement have brought only meager progress towards a full blown mathematical social science (by which I mean one that is not preoccupied with toy problems),' and since marking time until new

https://www.jstor.org/stable/info/3003311

J. Michael Montias' The Structure of Economic Systems

This commentary addresses issues raised by Professors Areeda and Turner in Williamson on Predatory Pricing, which was published in the June 1978 issue of this Journal. 1 Areeda and Turner took exception with my earlier treatment of predatory pricing,2 in which I emphasized its strategic aspects.a They defended their previous treatment, 4 in which strategic aspects are ignored or suppressed. Although modeling strategic problems in nonstrategic terms can be illuminating, in that it sometimes helps to place strategic features in perspective, I contend that public policy with respect to strategic behavior ought to be informed by strategic analysis. Areeda and Turner evidently hold otherwise. Inasmuch as this commentary mainly deals with differences between myself and Areeda and Turner, I should like to emphasize at the outset that we agree on the following: (1) predatory pricing is not an empty concern; (2) a major hazard in allowing private predatory pricing actions to be brought is that they will be used for protectionist purposes; and (3) a principal means of safeguarding against protectionist abuses of the law is to devise predatory pricing rules that have good economic efficiency properties. But although protectionist abuses of predatory pricing actions by new entrants can be serious, strategic abuses by established firms also require attention. Indeed, a complete efficiency analysis is not possible until potential abuses of this latter kind are taken into account. Section I examines strategic versus nonstrategic approaches to predatory pricing. Section II deals with mistaken welfare arguments on which Areeda and Turner continue to rely. Potentially misleading statements in their comment are considered in section III. Section IV addresses purported operationality problems that they attribute to my output restraining rule and also discusses previously unremarked operationality difficulties endemic

/pdf/williamson-on-predatory-pricing-ii-4id3xl90ea.pdf

Oliver E. Williamson

Papers

Transaction Cost Economics: An Introduction

Towards a Formal Model of the Transaction Cost Theory of the Firm

J. Michael Montias' The Structure of Economic Systems

Williamson on Predatory Pricing II

Ronald Harry Coase: international economist/institutional builder