Handbook of Economic Organization
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Handbook of Economic Organization

Integrating Economic and Organization Theory

Edited by Anna Grandori

This comprehensive and groundbreaking Handbook integrates economic and organization theories to help elucidate the design and evolution of economic organization. Economic organization is regarded both as a subject of inquiry and as an emerging disciplinary field in its own right, integrating insights from economics, organization theory, strategy and management, economic sociology and congnitive psychology. The contributors, who share this integrated approach, are distinguished scholars at the productive peak in their fields. Each original, state-of-the art chapter not only addresses foundational issues, but also identifies key issues for future research.
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Chapter 12: Dynamics of organizational structure

Nicholas Argyres and Todd R. Zenger

Extract

Large firms’ organizational structures have undergone significant changes in the past 25–30 years. In this chapter, we examine key economic drivers of these changes that are external to the firm: shifts in technology, in product markets, and in capital markets. Our focus is on ways in which these shifts have led firms to adopt more centralized or more decentralized structures. However, we also highlight the motivation for, and efficiency of, structural change that occurs in the absence of shifts in external drivers. We emphasize the idea that because organizational structure choices are discrete, while the dimensionality of organizational performance is continuous and multidimensional, organization structures may endogenously oscillate between centralization and decentralization. This implies that scholars and managers must develop a more dynamic perspective on organizational design.

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