The Economics of Business Process Design in Multinational Firms

Abstract

The declared aim of this chapter is to bring together insights from the work of economists and management theorists on questions of the organisation of the firm. Each approach has much to offer the other. Economists interested in the organisation of international business have tended to focus on questions of the boundaries of the organisation; that is, of its exlemlll structure. The analysis of transaction costs has been used, for example, to explicate the decision to export, to license or to manufacture overseas, and also the participation in gv s and alliances (Buckley and Casson, 1976, 1985; Buckley and Glaister, 1994). However, a good deal of attention in the management literature is applied to the debate about internal organisation. Writers on management have promoted new structures and new approaches to organisation, using ideas from many sources. These include studies of Japanese business (Pascale and Athos, 1981), of successful American businesses (Peters and Waterman, 1982) and the analysis of quality management (Deming, 1986). This contribution is an attempt to apply insights from the transaction cost approach to questions of internal organisation of the kind addressed in this management literature.