On the Economic Approach to Institutional Organization
New Horizons in Management series
Chapter 4: Taylor’s, Simon’s and Williamson’s Search of Organizational Economics: Incentive Structures, Dilemmatic Interest Conflict and Mutual Gains
A higher degree of . . . rationality can . . . be achieved, because the environment of choice can be . . . deliberately modified . . . One function that organization performs is to place the organization member in a psychological environment that will adapt their decisions to the organization objectives and will provide them with the information needed to make these decisions correctly . . . The rational individual is and must be, an organized and institutionalized individual. If the severe limits imposed by human psychology upon deliberation are to be relaxed, the individual must in his decisions be subject to the influence of the organized group in which he participates. (Simon, 1945, pp. 79, 102) Transactions, which differ in their attributes, are assigned to governance structures, which differ in their organizational costs and competencies, so as to effect a discriminating (mainly transaction cost economizing) match. (Williamson, 1985, pp. 387–8) This chapter examines whether Taylor, Simon and Williamson analyzed institutional organization structures through a non-behavioral, economic approach or whether they favored a behavioral one, which directly focused on human nature. In particular, the application of the conflict model ‘dilemma structure’ and suggestions on situational analysis and intervention with incentive structures are traced. Other conceptual elements of organizational economics, especially the ideas of ‘human capital’ and ‘economic man’, are discussed in later chapters. The chapter also examines how far an institutional economic reconstruction of Taylor’s, Simon’s and Williamson’s organization theories does not succeed. A behavioral approach to social conflict is searched for in their studies. The following suggests that, in considerable degrees,...
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.