Abstract
Organizations exist because they cost-effectively coordinate and provide incentives relative to alternative modes of transacting. The article exposes some of the main economic explanations for why organization emerges, what it does and how its scale and scope are determined, highlighting the role of a hierarchical command structure in aligning the members’ objectives with those of the organization and successfully overcoming problems of asymmetric information and collusion.
This is a preview of subscription content, log in via an institution.
References
Aghion P, Tirole J (1997) Formal and real authority in organizations. J Polit Econ 105:1–29
Alchian A, Demsetz H (1972) Production, information costs and economic organization. Am Econ Rev 62:777–795
Bac M (1996) Corruption, supervision and the structure of hierarchies. J Law Econ Organ 12:277–298
Bac M (2001) Corruption, connections and transparency: does a better screen imply a better scene? Public Choice 107:87–96
Blair M, Stout L (1999) A team production theory of corporate law. V Law Rev 85:247–328
Bolton P, Farrell J (1990) Decentralization, duplication, and delay. J Polit Econ 98:803–826
Chiappori PA, Salanié B (2003) Testing contract theory: a survey of some recent work. In: Dewatripont M, Hansen L, Turnovsky S (eds) Advances in economics and econometrics, vol 1. Cambridge University Press, New York
Coase R (1937) The nature of the firm. Economica 4:386–405
Demsetz H, Lehn K (1985) The structure of corporate ownership: causes and consequences. J Polit Econ 96:1155–1177
Freixas X, Guesnerie R, Tirole J (1985) Planning under incomplete information and the Ratchet effect. Rev Econ Stud 52:173–191
Grossman S, Hart O (1983) An analysis of the principal-agent problem. Econometrica 51:7–45
Grossman S, Hart O (1986) The costs and benefits of ownership: a theory of lateral and vertical integration. J Polit Econ 94:691–719
Holmstrom B (1999) Managerial incentive problems: a dynamic perspective. Rev Econ Stud 66:324–340
Holmstrom B, Milgrom P (1991) Multi-task principal-agent analysis: incentive contracts, asset ownership and job design. J Law Econ Organ 7:24–52
Milgrom P, Roberts J (1988) An economic approach to influence activities in organizations. Am J Sociol 94:S154–S179
Posner RA (1999) Employment discrimination: age discrimination and sexual harassment. Int Rev Law Econ 19:421–446
Qian Y, Roland G, Xu C (2006) Coordination and experimentation in M-form and U-form organizations. J Polit Econ 114:366–402
Radner R (1992) Hierarchy: the economics of managing. J Econ Lit 30:1382–1415
Sah RK, Stiglitz J (1986) The architecture of economic systems: hierarchies and polyarchies. Am Econ Rev 74:716–727
Tirole J (1986) Hierarchies and bureaucracies: on the role of collusion in organizations. J Law Econ Organ 2:181–214
Tirole J (1994) The internal organization of government. Oxf Econ Pap 46:1–29
Williamson O (1985) The economic institutions of capitalism. Free Press, New York
Wilson JQ (1989) Bureaucracy: what government agencies do and why they do it. Basic Books, New York
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2014 Springer Science+Business Media New York
About this entry
Cite this entry
Bac, M. (2014). Organization. In: Backhaus, J. (eds) Encyclopedia of Law and Economics. Springer, New York, NY. https://doi.org/10.1007/978-1-4614-7883-6_358-1
Download citation
DOI: https://doi.org/10.1007/978-1-4614-7883-6_358-1
Received:
Accepted:
Published:
Publisher Name: Springer, New York, NY
Online ISBN: 978-1-4614-7883-6
eBook Packages: Springer Reference Economics and FinanceReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences
Publish with us
Chapter history
-
Latest
Organization- Published:
- 24 October 2021
DOI: https://doi.org/10.1007/978-1-4614-7883-6_358-2
-
Original
Organization- Published:
- 20 October 2014
DOI: https://doi.org/10.1007/978-1-4614-7883-6_358-1