In this chapter we analyze the characteristics and dynamics of organizations wherein members diverge in terms of the capabilities and visions they hold, and the interests which they pursue. In particular we examine how different forms of power can achieve coordination among such diverse capabilities, visions and interests while at the same time ensuring control and allowing mutual learning. By means of a simple simulation model of collective decisions by heterogeneous agents, we will examine three different forms of power, ranging from the power to design the organization, to the power to overrule by veto the decisions of others, to the power to shape the very preferences of the members of the organization. We study the efficiency of different balances between the three foregoing mechanisms, within a framework in which organizations indeed “aggregate” and make compatible different pieces of distributed knowledge, but the causation arrow also goes the other way round: organizations shape the characteristics and distribution of knowledge itself, and of the micro “visions” and judgments.
Giovanni Dosi and Luigi Marengo
Giovanni Dosi, Luigi Marengo and Alessandro Nuvolari
It is useful to distinguish two explanatory strategies in institutional economics: either institutions are derived from the choices of rational individuals with well-defined preferences, or preferences and indeed the very idea of rationality are derived from institutions. On the first view, institutions are crafted to perform coordinating and governance functions that enhance efficiency by mitigating contracting problems. On the latter, institutions reproduce path-dependently in a partly self-organizing process, irrespective of efficiency considerations. These differences translate into contrasting views of such key concepts as hierarchy, power, knowledge and learning in organizations. Given that each type of explanation contains a grain of truth, the challenge is to connect them. In line with empirical evidence regarding the influence of institutional arrangements on techno-economic change, the chapter calls for an ambitious research programme that addresses the coevolution of organizations, forms of rationality, preferences and technologies.