The Efficiency of Organizational Forms
For a long time economists have been aware of the fact that certain ways of organizing firms are more efficient than others. Adam Smith, for example, knew that a firm producing pins in which employees specialized in straightening wire, cutting wire, making points, etc. would be more efficient than one in which each worker produced complete pins by himself alone.2 However, recent approaches to this problem (e.g., Beckmann , Calvo and Wellisz , Sah and Stiglitz , and Willamson , ) have tended to de-emphasize the technological aspects of production and centered instead on certain social relations among individuals in the firm. These social relations arise in that some workers are “above” other workers in the firm’s authority structure; they are significant because it is the social interactions between those above and those below which seem to be responsible for coordinating effort and seeing production through.
KeywordsOrganizational Form Administrative Cost Allocative Efficiency Profit Efficiency Market Form
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