Showing papers on "Opportunism published in 1990"
TL;DR: In this paper, the invisible hand of the market mechanism deletes actors whose behaviors are habitually opportunistic, and thus the risk of opportunism will be low, even for transactions supported by specific asset investments.
Abstract: Transaction cost theorists have generally neglected to consider the implications that the invisible hand of the market mechanism can have for the risk of opportunism. In the long run, the invisible hand deletes actors whose behaviors are habitually opportunistic. Consequently, as markets move toward the state of competitive equilibrium, the risk of opportunism will be low, even for transactions supported by specific asset investments. Therefore, in many contexts the transaction cost rationale for internalization has been overstated.
1,018 citations
701 citations
TL;DR: This paper argued that the relationship between these two models has many of the attributes of an intergroup conflict and suggested that the response of some traditional management theorists to organizational economics is not based on these substantive differences.
Abstract: Donaldson's (1990) critique of organizational economics suggests four attributes of this model that make intellectual discourse and theoretical integration with traditional management theory difficult: the assumption of opportunism, different levels of analysis, the theory of motivation, and the prescriptive character of organizational economics. It is suggested that these differences are not a sufficient explanation of the response of some traditional management theorists to organizational economics. Rather than being based on these substantive differences, it is argued that the relationship between these two models has many of the attributes of an intergroup conflict. Possible responses to this intergroup conflict and the implications that these responses may have for understanding organizational phenomena are explored.
281 citations
TL;DR: In this article, the authors add an aspiration-level assumption called betterment that extends transaction cost analysis to include exchanges involving interpersonal resources and discuss the implications for the efficient design of organizational boundaries, organizational subunits, and employment relations.
Abstract: The assumptions of material self-interest, bounded rationality, and negative opportunism that underlie organizational economics are deficient for many managerial purposes because they underrepresent the importance of interpersonal and other nonmarket resources in human motivation. This paper adds an aspiration-level assumption called betterment that extends transaction cost analysis to include exchanges involving interpersonal resources. Implications are discussed for the efficient design of organizational boundaries, organizational subunits, and employment relations, and special attention is given to cooperation as an organizational asset.
167 citations
TL;DR: The authors argued that the new institutional labor economics is a promising development, but it has faults that could be remedied by an infusion of theoretical and methodological insights from the old institutional approach.
Abstract: The new institutional labor economics is a promising development, but it has faults that could be remedied by an infusion of theoretical and methodological insights from the old institutional approach. This claim is illustrated by a critical analysis of three key concepts: asset specificity, defefrred rewards, and opportunism. The essay concludes with a set of methodological precepts to guide future research.
109 citations
TL;DR: In this paper, the authors present empirical evidence concerning the value offranchise bidding competition as a means of controlling natural monopoly behavior in the cable television industry, using data collected in a survey of local government officials in cabled communities throughout the continental United States.
Abstract: This article presents empirical evidence concerning the value offranchise bidding competition as a means of controlling natural monopoly behavior. The analysis focuses on the cable television industry, using data collected in a survey of local government officials in cabled communities throughout the continental United States. One important potential problem raised by critics offranchise bidding is the ability offranchise winners to engage in ex post opportunistic behavior by reneging on the promises that they made in order to win the franchise contract. The results of my analysis suggest that although franchise competition does leadfirms to engage in some degree of opportunistic behavior, the extent of opportunism is not severe. Furthermore, reputation effects appear to play a role in constraining firm behavior, while rate regulation actually seems to exacerbate ex post behavioral problems.
75 citations
TL;DR: In this article, the authors developed a deeper transaction-cost analysis of the efficiency of law, which can be synthesized into a broader whole by incorporating transaction cost economics more fully into existing understanding of rentseeking in the political realm.
Abstract: Economists have not yet developed a comprehensive theoretical framework, incorporating transaction-cost economics within a public choice perspective, for predicting when there will be an efficiency problem with the law. Transaction-cost reasoning and the rent-seeking insight have not been applied systematically in a dynamic institutional context to evaluate when the law will be used to increase (or not minimize) problems of bounded rationality and opportunism. This paper takes a first step at identifying and remedying this deficiency. The paper first provides a critical review of relevant theoretical contributions made by Becker (1983, 1985), Posner (1977), Priest (1977), Rubin (1977, 1982), Williamson (1975, 1985), and others. We then show how analysis of the efficiency of law can be synthesized into a broader whole by incorporating transaction-cost economics more fully into existing understanding of rentseeking in the political realm. Thus, within the public choice paradigm, this paper develops a deeper transaction-cost analysis of the efficiency of law. Building on prior research by the authors (Crew and Rowley, 1988a, 1988b; Twight, 1983, 1988), the paper identifies variables that position legal rules on a spectrum that ranges from those that are predominantly transaction-cost
43 citations
TL;DR: In this paper, the authors explore workers' co-operative behavior in the workplace; pay insufficient attention to managerial behavior; and misunderstand the social organization of conflict and consent, and show how the labor contract is in fact negotiated and suggest an alternative approach might be constructed.
Abstract: Transaction cost economics claims to model the labor contract in terms of the opportunism practised by workers A recent alternative has seen custom as the main means by which workers impose their control of the contract Both fail to explore workers' co-operative behavior in the workplace; pay insufficient attention to managerial behavior; and misunderstand the social organization of conflict and consent Materials from industrial sociology and labor history are used to illustrate these limitations, to show how the labor contract is in fact negotiated and to suggest how an alternative approach might be constructed
41 citations
TL;DR: This paper challenges the proposition that large physician-owned groups will be inefficient because of failures to control opportunism, and suggests that even large partnerships will make efficient resource and monitoring decisions.
22 citations
Book•
01 Jan 1990
TL;DR: In this paper, the authors explore the division between those who see strategic management as a rational planning process and those who view it as an intuitive, adaptive, experimental, entrepreneurial process and stress the importance of finding a practical solution to this conflict.
Abstract: This book is for those required to take the lead in dealing with the impact of change in business. It explores the division between those who see strategic management as a rational planning process and those who see it as an intuitive, adaptive, experimental, entrepreneurial process. The author stresses the importance of finding a practical solution to this conflict, one where both approaches can be applied at the same time. The book's contents include the following: conflicting approaches to management and the nature of change; control by variance - management information and control systems in closed change situations; control by grand design - conventional strategic management; why control by grand design will not work in the 1990s; control by trial and error - what companies actually do in open-ended change situations; resolving control tension - recommendations on organizational structure, culture and management resources. Using many international examples, the book rejects long-term planning and makes recommendations to resolve the tension that results from trying to balance intuition and short-term planning.
16 citations
01 Apr 1990
TL;DR: The authors found that conflict between strategic planning and opportunism is a healthy process and that large corporations that tolerate contention age prematurely, while those that do not tolerate contention are more likely to die prematurely.
Abstract: Large corporations that don't tolerate contention age prematurely, the author finds. Management's conflict between strategic planning and opportunism, for example, is a healthy process.
TL;DR: The authors suggests that preferential trade agreements arise when international trade involves large and recurrent transaction-specific or non-salvageable investments that are subject to opportunism, particularly in the form of government policies.
Abstract: Traditional economic analyses implicitly assume that costs are technologically determined and thus the same regardless of the form of economic organization. In such a world, preferential trade agreements (PTAs) are a second-best policy. The theory presented here suggests that PTAs arise when international trade involves large and recurrent transaction-specific or non-salvageable investments that are subject to opportunism, particularly in the form of government policies. Or ganizational form then becomes a major determinant of costs ; and a preferential trade agreement, by providing an organizational structure that can reduce opportunistic behavior, may produce be nefits beyond those typically recognized.