Trust, rules of fairness, norms of reciprocity, and conflict are nonexistent and irrelevant in RCT and economic theories of the firm. Ultimately, questions of reconciliation of differential self-interest in the absence of trust are impossible. In both Williamson's TCE (1975) and in Jensen's AT ( Jensen and Meckling, 1976), the idea of self-interest in contractual arrangements between and within organizations is problematic. This is problematic because of the major transformations of firms at the turn into the twenty-first century. Organizational change, especially transformational change, cannot be explained by economic theories of the firm (see Zey and Swenson, 1998, 1999). Both contextual and organizational changes are ignored. TCE, like AT, ignores historical changes and processes which constrain and provide opportunities for organizations. Individual utility maximization is problematic because of the obvious tendency of rational actors to act opportunistically under conditions of uncertain and asset specificity. TCE theorists analyze uncertainty and asset specificity of transactions. For example, in Markets and Hierarchies (1975), Williamson assumes that organizations more efficiently eliminate (by management fiat) opportunistic (‘self-interested with guile’) individual behavior than market mechanisms. TCE assumes that organizations are structured in the way they are because it is the most efficient method of organizing, but TCE does not assume that individuals within organizations are utility maximizers. Jensen's presidential address to the American Finance Association demonstrates that he had not until recently discovered Chandler's work ( 1962, 1977, 1990) and that organizational forms, which are most efficient, change over time with each historical context in which they develop.
Agency theorists and economic organizational theorists in general do not integrate into their analyses historical changes, which provide opportunities and constraints on individual and organizational actions as organizational theorists do. This is demonstrated, not only in the assumption that managers and workers act as opportunistic agents – that is, not in the interest of the owners – but also by the preoccupations of agency theorists with governance and methods of controlling nonowners to maximize profits (returns to shareholders) to the owners ( Jensen and Ruback, 1983). Organizational theorists question these assumptions because organizations, even firms, are never constraint-free and individuals within organizations do not operate under the same constraints.ĪT assumes that individuals are utility maximizers, but does not assume that organizations are structured in the way they are because it is the most efficient method of organizing. If the unit of analysis is the organization, and the utility being maximized is profit, then efficiency maximization is implied when income seeking is not compromised. The utility-maximizing behavior of organizations is efficiency-seeking organizational design. AT attempts to explain why organizations are more or less efficient while TCE assumes that organizations are an efficient alternative to inefficient markets ( Williamson, 1975, 1985, 1996). AT is based on the utility-maximizing individual of RCT ( Jensen, 1983, 1993 Jensen and Meckling, 1976), while TCE assumes that humans are boundedly rational at best. Thus, the aggregation, specifically nonadditive aggregation functions, of individual choices and action into organizational actions is not clear-cut, because the complexity of the aggregation process often violates RCT assumptions.įurthermore, the two economic organizational theories, AT and TCE, do not operate under the same premises. However, survey research has demonstrated that not everyone has the same (or even individually consistent) utility. TCE and AT, generally labeled economic organizational theories, have attempted to link RCT and OT and their different units of analysis and methods of theorizing through a set of assumptions that aggregate utility-maximizing individual behavior so that their behavior promotes organizational efficiency (profitability). Zey, in International Encyclopedia of the Social & Behavioral Sciences (Second Edition), 2015 Convergence and Divergence of Economic Theories of the Firm and Organizational Theory
0 kommentar(er)
