Economic approaches to organizations

Preface xiAcknowledgements xvPart I Foundations 11 Markets and organizations 31.1 The economic problem 31.2 The division of labour 51.3 Specialization 71.4 Coordination 91.5 Markets and organizations 111.6 Information 141.7 The environment and institutions 161.8 Historical perspective 221.9 Summary: the conceptual framework of this book 241.10 Outline of the book 25Questions 26Note 262 Markets 272.1 Introduction 272.2 Market interaction: analysis of demand and supply 282.3 Decision-making by consumers 292.4 Decision-making by producers 312.5 Market coordination 322.6 The paradox of profits 332.7 Competitive markets 332.8 The main assumptions underlying standardmicroeconomic theory 342.9 Summary: how according to standard microeconomictheory decisions are coordinated by the market 36Questions 373 Organizations 383.1 The world of organizations 383.2 Organizational coordination 393.3 Types of organizations 443.4 Organizational markets 493.5 Organized markets 503.6 The rise of the Internet and the digitization of organizations 533.7 Digital platforms: a new coordination mechanism 563.8 The Platform Organization 593.9 Summary: how organizations achieve coordination 62Questions 64Notes 644 Information 664.1 Coordination and information 664.2 Hidden information 714.3 Hidden action 784.4 The value of information 834.5 Information as an economic good 864.6 Summary: information problems for markets and organizations 88Questions 90Notes 915 Game theory 925.1 Introduction 925.2 The prisoner's dilemma 935.3 Coordination games 975.4 The entry game 995.5 The iterated prisoner's dilemma 1035.6 Auctions 1055.7 Evolutionary game theory 1115.8 Summary: insights from game theory 116Questions 1186 Econs and Humans 1196.1 Introduction 1196.2 The social domain versus the economic domain 1206.3 Economic, social and moral man: boundson self-interest 1216.4 Bounds on rationality 1246.5 Prospect theory 1276.6 Summary: behavioural economics 130Questions 131Part II Economic Approaches 1337 Behavioural theory of the firm 1357.1 Introduction 1357.2 The firm as a coalition of participants 1357.3 Organizational goals 1397.4 Organizational expectations 1427.5 Organizational choice 1427.6 From bounded rationality to behavioural economics 1457.7 Summary: goals and decision-making withinthe firm in behavioural theory 150Questions 152Note 1548 Agency theory 1558.1 Introduction 1558.2 Separation of ownership and control 1568.3 Managerial behaviour and ownership structure 1598.4 Entrepreneurial firms and team production 1658.5 The firm as a nexus of contracts 1678.6 Theory of principal and agent 1698.7 Applying agency theory 1788.8 Summary: agency relations between owners,managers and employees 182Questions 184Note 1869 Transaction cost economics 1879.1 Introduction 1879.2 Behavioural assumptions: bounded rationalityand opportunism 1899.3 Dimensions of transactions 1959.4 Peer groups 2009.5 Simple hierarchies 2029.6 Multistage hierarchies: U-form and M-form enterprises 2049.7 Organizational markets 2059.8 Digitization and transaction costs 2089.9 Markets and organizations: are these all there is? 2119.10 Governance in a three-level schema 2239.11 Summary: effect of transaction costs on choosingbetween markets and organizations andorganizational forms 225Questions 227Notes 22810 Economic contributions to business/competitivestrategy 22910.1 Introduction 22910.2 Industry analysis 23210.3 Competitor analysis 23610.4 Competitive strategy 23910.5 Resource-based view of the firm 24010.6 Dynamic capabilities 24410.7 Move and counter move 24810.8 Summary: how economic analysis can contributeto the formulation of competitive strategies 258Questions 259Note 25911 Economic contributions to corporate strategy 26011.1 Introduction 26011.2 Unrelated diversification 26311.3 Related diversification 27011.4 Horizontal multi-nationalization 27611.5 Vertical integration 27911.6 Summary 284Questions 286Notes 28712 Evolutionary approaches to organizations 28812.1 Introduction 28812.2 Giraffes 28812.3 Organizations and giraffes 29012.4 Organizational ecology 29312.5 An evolutionary theory of economic change 30212.6 Comparison 30712.7 The evolution of dynamic capabilities 31012.8 Further developments 31712.9 Summary: the evolutionary perspective 323Questions 325Notes 32713 All in the family 32813.1 Introduction 32813.2 The basic conceptual framework 32813.3 Family resemblances 33013.4 Family differences 33313.5 Summary: all in the family? 34113.6 Organizations as complex, adaptive systems 342Questions 357Notes 358Bibliography 359Index 373