In the broader language necessary to encompass both economics and organization theory, an organization may be thought of as any stable pattern of transactions. In this definition, a market is as much an organization as is a bureaucracy
or a clan. The only requirement is that, for the purposes of this discussion, we
maintain a clear distinction between the idea of 'bureaucracy' and the idea of
'organization'. Bureaucracy as used here refers specifically to the Weberian
model, while organization refers to any stable pattern of transactions between
individuals or aggregations of individuals.
Despite these desirable properties, the bureaucratic type has continually been
under attack and revision. As Williamson points out, the move from U-form
(functional) to M-form (divisional) organization among many large firms has been
motivated by a desire to simulate a capital market within a bureaucratic framework because of its superior efficiency. By regrouping the parts of the organization, it is possible to create subentities that are sufficiently autonomous to permit
precise measurement and the determination of an effective price mechanism.
Although each division may still operate internally as a bureaucracy, the economies which accrue from this partial market solution are often large, offsetting the
diseconomies of functional redundancy which often accompany the separation of
the organization into divisions.
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