Free to Fail

Free to Fail

Creative Destruction Revisited

Hugh van der Mandele and Arjen C. van Witteloostuijn

This challenging book tackles one of the most fundamental questions in economics: Why are commercial organizations more efficient than organizations in the public domain?

Chapter 8: Empirical evidence

Hugh van der Mandele and Arjen C. van Witteloostuijn

Subjects: business and management, organisation studies, strategic management, economics and finance, industrial organisation

Extract

This chapter reports empirical evidence that offers support for the theoretical argument that we developed in Chapter 7. In the first section of this chapter, we will present data corroborating Williamson’s ignored conjecture that ‘the cumulative effects of control loss are fundamentally responsible for limitations in firm size’ (1967, p. 134). Subsequent sections contain anecdotal evidence of control loss (government ministries and Dutch Telecom) and uncontrollability (Crédit Lyonnais). Our purpose is to demonstrate that organizational control, control loss and uncontrollability are not just figments of our imagination. Quite the contrary: they are real, with very real consequences.

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