Organizations matter: they are institutions, after all

John Linarelli

Journal of Institutional Economics, 2010, vol. 6, issue 1, 83-90

Abstract: Judge Posner (2010) offers a substantial agenda for organization economics. He advises us on how organization economics can shed substantial light on some of the most pressing social problems of the day. I comment on two of the areas he selects for discussion and offer some comments on the relationship of organization economics to new institutional economics. Judge Posner surely is right to argue that organization economics can help us understand the failures of corporate governance in regulating executive pay. Moreover, with additional and more institutionally nuanced theorizing, organizational economics should further our understanding of the work of judiciaries in the civilian and common law traditions. Judge Posner tells us that organization economics and new institutional economics are related fields. I make a plea for economic holism. Organizations are institutions. While getting clear on disciplinary boundaries and the differing kinds and concepts of institutions is important, logical differences in concepts like ‘organization’ and ‘institution’ may be less important than what to emphasize in theory construction and what to test for with those theories. The success of organization economics will be in whether the different emphases produce new insights. Judge Posner is right to tell us that new insights are coming and will continue to come from organization economics. This is true however we conceptualize the field as a school of thought.

Date: 2010
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