The Firm and the Authority Relation: Hierarchy vs. Organization

Per Bylund

Chapter Chapter 4 in Austrian Theory and Economic Organization, 2014, pp 97-120 from Palgrave Macmillan

Abstract: Abstract Research in the modern theory of economic organization predominantly addresses issues relating to one or a combination of three fundamental questions originally posed or implied by Ronald Coase (1937): Why are there firms? What are the firm’s boundaries? And how is the firm’s organizational structure determined? (Foss 1997: 175; Foss and Klein 2008: 426; cf. Garrouste and Saussier 2008: 23). A common starting point for this research, which is often referred to simply as the “theory of the firm,” is the assertion of a dichotomy between market and organization. Market transactions are coordinated in a decentralized manner through the “high-powered incentives” of the price mechanism (Williamson 1985: 131–162; 1988), while transactions “within firms” depend on the fiat power in formal, hierarchical organization to coordinate transactions under low-powered (cost plus) incentives.

Keywords: Modern Theory; Austrian Economic; Strategic Alliance; Employment Contract; Price Mechanism (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-36880-5_5

Ordering information: This item can be ordered from
http://www.palgrave.com/9781137368805

DOI: 10.1057/9781137368805_5

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().