Firms, Organizations and Contracts: A Reader in Industrial Organization

By Peter J. Buckley; Jonathan Michie | Go to book overview

17
Markets, Bureaucracies, and Clans

William G. Ouchi


1. The Nature of Organizations

What is an organization, and why do organizations exist? Many of us would answer this question by referring to Barnard ( 1968) technological imperative, which argues that a formal organization will arise when technological conditions demand physical power, speed, endurance, mechanical adaptation, or continuity beyond the capacity of a single individual ( 1968: 27-8). Yet when the stone is too large or the production facility too complex for a single person, what is called for is cooperation, and cooperation need not take the form of a formal organization. Indeed, grain farmers who need a large grain elevator do not form corporations which take over the farms and make the farmers into employees; instead, they form a cooperative to own and operate the elevator.

Others would refer to March and Simon ( 1958) argument that an organization will exist so long as it can offer its members inducements which exceed the contributions it asks of them. While this position explains the conditions under which an organization may continue to exist, it does not explain how an organization can create a whole which is so much greater than the sum of its parts that it can give them more than they contribute.

Most of us, however, would refer to Blau and Scott ( 1962) definition of a formal organization as a purposive aggregation of individuals who exert concerted effort toward a common and explicitly recognized goal. Yet we can hardly accept this definition whole, suspecting as Simon ( 1945: 257-78)

I am indebted to many colleagues for their constructive criticisms of this paper, particularly to Chris Argyris, Peter Blau, Larry Cummings, Charles Horngren, Joanne Martin, John Meyer, Jerry Porras, Edgar Schein, W. Richard Scott, Arnold Tannenbaum, Richard Walton, and Oliver Williamson.

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Firms, Organizations and Contracts: A Reader in Industrial Organization
Table of contents

Table of contents

  • Title Page iii
  • Preface and Acknowledgements v
  • Acknowledgements vi
  • Contents viii
  • List of Contributors xi
  • Foreword xiii
  • Introduction and Overview 1
  • Notes 18
  • References 20
  • I. THEORY OF THE FIRM 21
  • 1: The Equilibrium of the Firm 23
  • 2: The Nature of the Firm 40
  • 3: The Organization of Industry 59
  • 4: Production, Information Costs, and Economic Organization 75
  • Summary 95
  • Notes 96
  • References 102
  • 5: Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure 103
  • Conclusions 151
  • Notes 151
  • References 163
  • 6: Transaction-Cost Economics: The Governance of Contractual Relations 168
  • Conclusion 192
  • 7: An Economist's Perspective on the Theory of the Firm 199
  • Conclusion 212
  • Notes 212
  • II. MARKETS AND INDUSTRIAL ORGANIZATION 219
  • 8: Corporate Culture and Economic Theory 221
  • Introduction 221
  • Conclusion 261
  • Appendix 262
  • Appendix 271
  • Appendix 273
  • References 274
  • 9: Co-operative Agreements and the Organization of Industry 276
  • References 292
  • 10: Interpenetration of Organization and Market: Japan's Firm and Market in Comparison with the US 293
  • Conclusion 317
  • References 319
  • 11: Vertical Quasi-Integration 320
  • Conclusions 336
  • Notes 337
  • 12: Non-Contractual Relations In Business: A Preliminary Study 339
  • 13: Goodwill and the Spirit of Market Capitalism 359
  • III. JOINT VENTURES, NETWORKS, AND] CLANS 383
  • III. JOINT VENTURES, NETWORKS, AND] CLANS 385
  • References 407
  • 15: Joint Ventures 410
  • Conclusion 427
  • References 428
  • 16: Organizations: New Concepts for New Forms 429
  • Conclusion 440
  • Notes 441
  • 17: Markets, Bureaucracies, and Clans 442
  • References 456
  • Notes 459
  • References 473
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