Book•
Comparative Economic Organization: The Analysis of Discrete Structural Alternatives
01 Nov 1994-
TL;DR: Williamson as discussed by the authors combines institutional economics with aspects of contract law and organization theory to identify and explicate the key differences that distinguish three generic forms of economic organization-market, hybrid, and hierarchy.
Abstract: Oliver E. Williamson University of California, Berkeley This paper combines institutional economics with aspects of contract law and organization theory to identify and explicate the key differences that distinguish three generic forms of economic organization-market, hybrid, and hierarchy. The analysis shows that the three generic forms are distinguished by different coordinating and control mechanisms and by different abilities to adapt to disturbances. Also, each generic form is supported and defined by a distinctive type of contract law. The costeffective choice of organization form is shown to vary systematically with the attributes of transactions. The paper unifies two hitherto disjunct areas of institutional economics-the institutional environment and the institutions of governance-by treating the institutional environment as a locus of parameters, changes in which parameters bring about shifts in the comparative costs of governance. Changes in property rights, contract law, reputation effects, and uncertainty are investigated.'
Citations
More filters
TL;DR: In this paper, the authors argue that an increasingly important unit of analysis for understanding competitive advantage is the relationship between firms and identify four potential sources of interorganizational competitive advantage: relation-specific assets, knowledge-sharing routines, complementary resources/capabilities, and effective governance.
Abstract: In this article we offer a view that suggests that a firm's critical resources may span firm boundaries and may be embedded in interfirm resources and routines. We argue that an increasingly important unit of analysis for understanding competitive advantage is the relationship between firms and identify four potential sources of interorganizational competitive advantage: (1) relation-specific assets, (2) knowledge-sharing routines, (3) complementary resources/capabilities, and (4) effective governance. We examine each of these potential sources of rent in detail, identifying key subprocesses, and also discuss the isolating mechanisms that serve to preserve relational rents. Finally, we discuss how the relational view may offer normative prescriptions for firm-level strategies that contradict the prescriptions offered by those with a resource-based view or industry structure view.
11,355 citations
TL;DR: Powell et al. as mentioned in this paper developed a network approach to organizational learning and derive firm-level, longitudinal hypotheses that link research and development alliances, experience with managing interfirm relationships, network position, rates of growth, and portfolios of collaborative activities.
Abstract: This research was supported by grants provided to the first author by the Social and Behavioral Sciences Research Institute, University of Arizona, and the Aspen Institute Nonprofit Sector Research Fund and by grants to the second author by the College of Business and Public Administration, University of Arizona. We have benefited from productive exchanges with numerous audiences to whom portions of this paper have been presented: a session at the 1994 Academy of Management meetings, the Social Organization workshop at the University of Arizona, the Work, Organizations, and Markets workshop at the Harvard Sociology Department, the 1994 SCOR Winter Conference at Stanford University, and colloquia at the business schools at the University of Alberta, UC-Berkeley, Duke, and Emory, and the JFK School at Harvard. For detailed comments on an earlier draft, we are extremely grateful to Victoria Alexander, Ashish Arora, Maryellen Kelley, Peter Marsden, Charles Kadushin, Dick Nelson, Christine Oliver, Lori Rosenkopf, Michael Sobel, Bill Starbuck, Art Stinchcombe, and anonymous reviewers at ASQ. We thank Dina Okamoto for research assistance and Linda Pike for editorial guidance. Address correspondence to Walter W. Powell, Department of Sociology, University of Arizona, Tucson, AZ 85721. We argue in this paper that when the knowledge base of an industry is both complex and expanding and the sources of expertise are widely dispersed, the locus of innovation will be found in networks of learning, rather than in individual firms. The large-scale reliance on interorganizational collaborations in the biotechnology industry reflects a fundamental and pervasive concern with access to knowledge. We develop a network approach to organizational learning and derive firm-level, longitudinal hypotheses that link research and development alliances, experience with managing interfirm relationships, network position, rates of growth, and portfolios of collaborative activities. We test these hypotheses on a sample of dedicated biotechnology firms in the years 1990-1994. Results from pooled, within-firm, time series analyses support a learning view and have broad implications for future theoretical and empirical research on organizational networks and strategic alliances.*
8,249 citations
TL;DR: In this paper, the authors examine the progressive development of the new institutional economics over the past quarter century, distinguishing four levels of social analysis, with special emphasis on the institutional environment and the institutions of governance.
Abstract: This paper examines the progressive development of the new institutional economics over the past quarter century. It begins by distinguishing four levels of social analysis, with special emphasis on the institutional environment and the institutions of governance. It then turns to some of the good ideas out of which the NIE works: the description of human actors, feasibility, firms as governance structures, and operationalization. Applications, including privatization, are briefly discussed. Its empirical successes, public policy applications, and other accomplishments notwithstanding, there is a vast amount of unfinished business.
5,184 citations
TL;DR: In this article, the authors explored the factors that explain the choice of governance structures in interfirm alliances and found that repeated alliances between two partners are less likely than other alliances to be organized using equity.
Abstract: Exploring the factors that explain the choice of governance structures in interfirm alliances, this study challenges the use of a singular emphasis on transaction costs. Such an approach erroneously treats each transaction as independent and ignores the role of interfirm trust that emerges from repeated alliances between the same partners. Comprehensive multiindustry data on alliances made between 1970 and 1989 support the importance of such trust. Although support emerged for the transaction cost claim that alliances that encompass shared research and development are likely to be equity based, there is also strong evidence that repeated alliances between two partners are less likely than other alliances to be organized using equity.
4,983 citations
Cites background from "Comparative Economic Organization: ..."
...According to transaction cost economics, in a world without transaction costs all activities would be carried out as exchanges between units, and it is due to the failure of markets, or arenas of exchange, to allow for many exchanges without prohibitively high governance costs that organizations come to exist ( Williamson, 1985, 1991 )....
[...]
...action costs. Kanter and Myers (1989) pointed out that interpersonal ties across organizations with alliances increase over time....
[...]
...…in a world without transaction costs all activities would be carried out as exchanges between units, and it is due to the failure of markets, or arenas of exchange, to allow for many exchanges without prohibitively high governance costs that organizations come to exist (Williamson, 1985, 1991)....
[...]
Journal Article•
TL;DR: In this article, the authors tried to take the term of embededness out of the framework of the common program assumption and to disclose how the embeddness and network structure influence economic action and found that firms organized as networks had better chances to survive than those who support casual market ties.
Abstract: In this paper I try to take the term of embededness out of the framework of the common program assumption and to disclose how the embededness and network structure influence economic action. Basing on the existed theory and ethnographic analysis of the 23 clothes production companies I worked out the methodological scheme which depicts the details, functions and the sources of embededness. On the basis of this scheme I formulated and tested a list of hypotheses with the help of the data on network interactions of all the companies producing qualitative female clothes in the New-York sewing industry. It was found out that the embededness is the exchange system providing unique opportunities in comparison to the market and that firms organized as networks had better chances to survive than those who support casual market ties. However there is a pick of positive effect of embededness at a particular level after which it starts going down.
4,815 citations
References
More filters
TL;DR: In this article, the authors draw on recent progress in the theory of property rights, agency, and finance to develop a theory of ownership structure for the firm, which casts new light on and has implications for a variety of issues in the professional and popular literature.
49,666 citations
TL;DR: In this article, the extent to which economic action is embedded in structures of social relations, in modern industrial society, is examined, and it is argued that reformist economists who attempt to bring social structure back in do so in the "oversocialized" way criticized by Dennis Wrong.
Abstract: How behavior and institutions are affected by social relations is one of the classic questions of social theory. This paper concerns the extent to which economic action is embedded in structures of social relations, in modern industrial society. Although the usual neoclasical accounts provide an "undersocialized" or atomized-actor explanation of such action, reformist economists who attempt to bring social structure back in do so in the "oversocialized" way criticized by Dennis Wrong. Under-and oversocialized accounts are paradoxically similar in their neglect of ongoing structures of social relations, and a sophisticated account of economic action must consider its embeddedness in such structures. The argument in illustrated by a critique of Oliver Williamson's "markets and hierarchies" research program.
25,601 citations
TL;DR: In this paper, it is shown that a definition of a firm may be obtained which is not only realistic in that it corresponds to what is meant by a firm in the real world, but is tractable by two of the most powerful instruments of economic analysis developed by Marshall, the idea of the margin and that of substitution.
Abstract: Economic theory has suffered in the past from a failure to state clearly its assumptions. Economists in building up a theory have often omitted to examine the foundations on which it was erected. This examination is, however, essential not only to prevent the misunderstanding and needless controversy which arise from a lack of knowledge of the assumptions on which a theory is based, but also because of the extreme importance for economics of good judgement in choosing between rival sets of assumptions. For instance, it is suggested that the use of the word “firm” in economics may be different from the use of the term by the “plain man.”1 Since there is apparently a trend in economic theory towards starting analysis with the individual firm and not with the industry,2 it is all the more necessary not only that a clear definition of the word “firm” should be given but that its difference from a firm in the “real world,” if it exists, should be made clear. Mrs. Robinson has said that “the two questions to be asked of a set of assumptions in economics are: Are they tractable? and: Do they correspond with the real world?”3 Though, as Mrs. Robinson points out, “more often one set will be manageable and the other realistic,” yet there may well be branches of theory where assumptions may be both manageable and realistic. It is hoped to show in the following paper that a definition of a firm may be obtained which is not only realistic in that it corresponds to what is meant by a firm in the real world, but is tractable by two of the most powerful instruments of economic analysis developed by Marshall, the idea of the margin and that of substitution, together giving the idea of substitution at the margin.
21,195 citations
TL;DR: The Economic Institutions of Capitalism as mentioned in this paper is a seminal work in the field of economic institutions of capitalism. Journal of Economic Issues: Vol. 21, No. 1, pp. 528-530.
Abstract: (1987). The Economic Institutions of Capitalism. Journal of Economic Issues: Vol. 21, No. 1, pp. 528-530.
16,767 citations
Book•
01 Jan 1990
TL;DR: In this article, a new approach to describing both stability and change in social systems by linking the behavior of individuals to organizational behavior is proposed. But the approach is not suitable for large-scale systems.
Abstract: Suggests a new approach to describing both stability and change in social systems by linking the behavior of individuals to organizational behavior.
16,017 citations