...A TRIBUTE TO OLIVER WILLIAMSON: Institutions, Politics, and Non-Market Strategy Rui J. P. de Figueiredo, Jr. liver Williamson is best known for his contributions to economics, and particularly to our understanding of how private firms are defined, operate, and change. Williamson’s primary application addressed the question of why some economic transactions were organized within a private firm, while others took place outside of a firm, in the market. Despite this focus, Williamson’s reach and impact has extended far beyond the domain of private firms and markets. Certainly suitable for a scholar who has been so vocally interdisciplinary in his approach to the study of institutions and organizations, Williamson’s work has also made critical contributions to the understanding of political institutions specifically, and politics more generally. O From Transaction Cost Economics to Transaction Cost Politics At its heart, Williamson’s deep analysis of organization through the “lens of contract” is not restricted to private firms competing for economic profits. The theory and empirical analysis outlined and developed by Williamson, and those working through the framework he provides, focus on issues of governance more broadly: how activities, exchanges, or transactions are appropriately (or at times inappropriately) organized to minimize transaction costs. Put another way, one of Williamson’s signal contributions was to note that the way in which social activity is organized...
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...Sloman et al, (2010: 35) defines firms as ‘An economic organization that coordinates the process of production and distribution’. In addition, ‘Firms are arranged frameworks relating people, things, knowledge, and technologies, in a design intended to achieve specific goals’ (Clegg et al, 2011). The main concept behind firms is to transform the input into outputs (Sloman et al, 2013). To give out a few examples of firms in different production lines for instance as clothes, cars, phones and others such as Apple and Samsung, H&M and Gucci, BMW and General Motors. According to Coase (as cited in Formaini, R and Siems, T, 2003) the firms are responsible for production and distribution of goods and services and firms are of upmost importance because they reduce the transaction costs which would usually cost a lot more if carried out by an individual compared to the firm. We will discuss transaction costs in greater details; however, it’s also important to know how firms are organized and how they operate. Firms are organized and they operate in different manners and ways for instance, goods and services they produce, the industries they are located in, the size of the operating firm, and the legal structure of the firm. The legal framework of the firm is very important and will have an impact on its performance, production and operations and thus we will be concentrating on it in order to exemplify the classification of firms in different ways. In the UK, there are several...
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...related to the economic theory existing at that time. The differences between the perception of a firm or company and its correspondence in the real world have been assessed, making an empirical analysis of possible attributes that can influence their development in close relation to its internal factors and, and the market interactions as well. Following Coase’s study “The Nature of The Firm”, many other economic papers and theories have emerged in the next decades, leading to the development of different concepts like TCE, vertical boundaries of a company, interactions between company and market and optimal decision for the “make or buy” dilemma as it is mentioned also by (Lafontaine and Slade 2007). Contributions of Coase and Williamson The basics for TCE development have been defined by Coase (1937), making an argumentation in favor of lower possible cost of assessing some activities within a company rather than acquiring them from the market by a set of more costly transaction. Also, he has argued that preferential treatments a firm can get from external environments (like governments), combined with the possibility of reducing the market exchange transaction costs (by directing some resources through a defined organization) can be seen as the main reason for a firm to exist and grow. The dilemma of efficiency versus variable size of a company was also mentioned in his studies with respect to the monopoly avoidance. Clarifying also the differences between initiative...
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...Analysis of the Case R&R Date: September 28th, 2011 Bob Reiss was an entrepreneur. He saw an opportunity in the market to make a profit and he succeeded. The following describes his market transactions and whether they were right or wrong using transaction cost economics theories. I will use Oliver Williamson’s theories and rules to decide whether the transactions were correct. At the end I will have enough information to decide if every opportunity needs a firm and if there is room for entrepreneurs who depend on the price mechanism. Reiss’s first major market transaction was designing the game. He took this to the market and found a professional inventor, whom he knew. This was the right decision. This game only needed to be designed once. The frequency was low. Therefore there was no point in wasting time and incurring the costs of creating it. Also this product was unique. He would not have been able to create it as simply as the market, which had more experience. Since Reiss knew the designer the uncertainty of him defaulting on the contract was very low. He also knew that the designer would be motivated to complete the project because he aligned their interests together through a sales motivated contract. Next was Reiss’s responsibility to set up operations to take the game to market. He didn’t have the cash flow to do this. Instead of raising the money himself he established a partnership to create the firm Trivia Inc and went to the market...
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...Analysis of the Case R&R Bob Reiss was an entrepreneur. He saw an opportunity in the market to make a profit and he succeeded. The following describes his market transactions and whether they were right or wrong using transaction cost economics theories. I will use Oliver Williamson’s theories and rules to decide whether the transactions were correct. At the end I will have enough information to decide if every opportunity needs a firm and if there is room for entrepreneurs who depend on the price mechanism. Reiss’s first major market transaction was designing the game. He took this to the market and found a professional inventor, whom he knew. This was the right decision. This game only needed to be designed once. The frequency was low. Therefore there was no point in wasting time and incurring the costs of creating it. Also this product was unique. He would not have been able to create it as simply as the market, which had more experience. Since Reiss knew the designer the uncertainty of him defaulting on the contract was very low. He also knew that the designer would be motivated to complete the project because he aligned their interests together through a sales motivated contract. Next was Reiss’s responsibility to set up operations to take the game to market. He didn’t have the cash flow to do this. Instead of raising the money himself he established a partnership to create the firm Trivia Inc and went to the market to gain the funding. His new partner...
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...Abstract This paper discussed and explained outsourcing, identified effective techniques and methods, and why outsourcing is utilized. Outsourcing can be an effective method for improving an organization’s functionality. While outsourcing advantages can reap benefits of improved productivity and lowered costs, the disadvantages must be taken in consideration to reach success. Analyzing the different aspects of: why is outsourcing necessary, what are the potential advantages and disadvantages, and is it cost effective upon a thorough review of the market and costs associated are essential. Outsourcing a Source with Strategic and Effective Techniques The ways in which business decisions take place are increasingly complex, costs are an important part of decisions, especially the make or buy decision that is important in determining if outsourcing of off shoring takes place. The majority of literature focuses on the production cost, but these are not the only costs that need to be considered, less visible, but just as important are the transaction costs, Jacobides and Winter (2005) argue that transaction costs can be just as important as production costs, and are key in the outsourcing decisions, Barney (1991) argues it is used in the way resource allocations is assessed. To consider this it is necessary to look at how transaction cost economics can be applied to business decisions and the way that outsourcing takes place. In order to examine this concept, and the way in which...
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...1. Discuss the concept of vertical relations between firms and present a case study to illustrate it. This paper will be looking at vertical relations between companies, putting an emphasis on supply relations, vertical integration and hybrids, illustrating the theory with multiple examples in order to better explain the concepts. Vertical relations refer to a logical and natural association between two or more entities as well as their relevance to one another and the linkages in between. This concept can be easily transposed into the business world, as the interdependence amongst companies is a state of fact in the vast majority of cases. As a matter of fact, it is a general truth that companies only achieve self-sufficiency after integrating all links of the supply chain. Even so, there are still operations that need to be outsourced due to a wide variety of reasons (lack of certain competences/”know-how”, geographical restraints, financial feasibility, time concerns, etc.). More precisely, vertical relations refer to the rapport between two companies in the sequence along the value chain, where there can be one (or multiple) upstream company and multiple (or one) downstream companies. Although the typical characterization of the rapport between a company and the market is a direct one (where the firm sells directly to the end consumer), it is generally not the case. In the most familiar scenarios it is considered that the producer would retain...
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...discussion Papers Discussion Paper 2007-3 March 1, 2007 Transaction Cost Economics: An Introduction Oliver E. Williamson University of California, Berkeley Abstract: This overview of transaction cost economics is organized around the “Carnegie Triple” – be disciplined; be interdisciplinary; have an active mind. The first of these urges those who would open up the black box of economic organization to do so in a modest, slow, molecular, definitive way, with the object of deriving refutable implications and submitting these to empirical testing. The second recommends that the student of economic organization be prepared to cross disciplinary boundaries if and as this is needed to preserve veridical contact with the phenomena. The injunction have an active mind is implemented by being curious and asking the question “What is going on here?” The paper concludes with a discussion of operationalization. JEL: D2, D73, D86, L2 www.economics-ejournal.org/economics/discussionpapers © Author(s) 2007. This work is licensed under a Creative Commons License - Attribution-NonCommercial 2.0 Germany Transaction Cost Economics: An Introduction Oliver E. Williamson This overview of transaction cost economics differs from prior overviews to which I have contributed in two respects: it presumes little previous knowledge of the transaction cost economics (hereafter TCE) literature; and it is organized around the “Carnegie Triple” – be disciplined; be interdisciplinary; have an active...
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...Resource Markets WP-RM-18 Recent Developments in Transaction Cost Economics Sophia Ruester January 2010 Chair for Energy Economics and Public Sector Management Electronic copy available at: http://ssrn.com/abstract=1535903 Recent Developments in Transaction Cost Economics Sophia Ruester1 Abstract This working paper provides a summary on transaction cost economics (TCE) and recent developments thereof. After an introductory discussion of TCE’s role within the field of New Institutional Economics, a critical analysis of the contribution of the existing body of empirical literature is conducted. In recent years, researchers have continued to develop and extend TCE. Williamson (1991b) introduces the shift parameter framework which investigates how the optimal choice of governance changes in response to dynamics in the institutional environment. Nickerson (1997) develops the positioning-economizing perspective arguing that decisions regarding market position, resource investments, and governance mode are interdependent and determined simultaneously. A number of authors came up with an increasing interest in relational institutional arrangements arguing that TCE may overstate the desirability of complex long-term contracts and vertical integration in exchange settings where a substantial hold-up potential is present. JEL Codes: Keywords: D23, L22 Transaction cost economics, discriminative alignment, theories of the firm, shift parameter framework, positioning-economizing...
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...WS 2013-14 MSc gEF Wirtschafts- und Unternehmensethik MSc kEF Management-Ethik MSc aZF Ethik (HMwL) Modul im SPF Management Management Ethik Prof. Dr. Michael Schramm schramm@uni-hohenheim.de Schramm Management-Ethik (WS 2013-14) zwei zentrale Begriffe vorab 1. Kontingenz in Managemententscheidungen bedeutet so viel wie „Ungewissheit“, hier: Ungewissheit der betriebswirtschaftlichen Folgen von managementethischen Vorleistungen Beispiel 01: Die Versenkung der Brent Beispiel 02: Korruption bei Siemens 2. Polydimensionalität von Managemententscheidungen Während der „Markt“ nur eine Dimension wahrnimmt (nämlich ökonomische Preissignale), sind Management-Transaktionen in Unternehmen immer polydimensional: ökonomisch + juristisch + ethisch 2 Schramm Management-Ethik (WS 2013-14) Agenda Intro 1. (Legal) Compliance & (Organizational) Integrity. Zwei managementethische Konzepte 2. Was ist eigentlich (Management-)Ethik? 3. Corporate Social Responsibility 4. Management-Ethik – Macro or Micro Approach? 5. Transaction Ethics. Polydimensionales Kontingenz-Management Outro: Markets & Morals 3 Schramm Management-Ethik (WS 2013-14) (Detail)Agenda Kapitel 5 5. Transaction Ethics. Polydimensionales Kontingenz-Management 5.1 „Transaction Ethics“. Das Grundkonzept 5.2 Die Fairness des Produktpreises 5.3 Management von Korruptions-Rhizomen 5.4 The Extended „Going Concern“: Stakeholder-Kooperationen & Nachhaltigkeitsmarketing 5.5 Verantwortungsmanagement „auf deutsch“...
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...-1:06 Click for more 330,842 Views The Weird Side Of TumblrLike Page 26 March at 06:46 · This is so adorable ;-; Like Like Love Haha Wow Sad Angry CommentShare Comments Michael Appleton Write a comment... Choose File Cristiano Ronaldo 20 hrs · Back home with my boys ✈ Cristiano Ronaldo's photo. 9.8k Comments6.5k Shares 1MHEAVYGRINDER and 1M others Like Like Love Haha Wow Sad Angry CommentShare Squawka 8 mins · Pace = Finishing = Strength = SO. MUCH. TALENT! How Shakhtar could've lined up if they hadn't sold their star players | Squawka Football SQUAWKA.COM 2 Comments 2020 Like Like Love Haha Wow Sad Angry CommentShare Match of the Day shared BBC Radio 5 live Sport's photo. 14 mins · Rooney, Kane, Vardy and Welbeck to start? BBC Radio 5 live Sport's photo. BBC Radio 5 live SportLike Page 1 hr · Who would you pick for England Football Team's first UEFA EURO 2016 game against Russia? This is Times journalist Henry Winter's team More: http://bbc.in/1VTS5BR 163 Comments 278278 Like Like Love Haha Wow Sad Angry CommentShare The Lion King 10 mins · Be prepared. 0:00 10 Comments21 Shares10k Views 268268 Like Like Love Haha Wow Sad Angry CommentShare Gary Neville · Trending Sky Sports 11 mins · Should Gary Neville have been given more time? 'Writing on the wall for Nev' SKYSPORTS.COM 68 Comments2 Shares 175175 Like Like Love Haha Wow Sad ...
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...organizational objectives of a company typically focus on its long-range intentions for operating and its overall business philosophy that can provide useful guidance for employees seeking to please their managers.( businessdictionary.com 2015) To address the topic we need to start by defining the main two business terms and their interrelation, which play a major role in understanding the theoretical part of the case. The firm, can simply define as it, is the set of transactions that is organized by supervisory authority instead of the market. In which the aim is to provide the set of services in one place in order to reduce the transactional cost, which by itself can be simply defined as the cost incurred in making commercial exchange, or according to Williamson “Transaction costs refer to the costs involved in market exchange. These include the costs of discovering market prices and the costs of writing and enforcing contracts.” The Case In this case, we will address a “Firm” which is a Market leader in Oil refining and petrochemicals industry with a range of products...
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...Economic Action and Social Structure: The Problem of Embeddedness Author(s): Mark Granovetter Source: American Journal of Sociology, Vol. 91, No. 3 (Nov., 1985), pp. 481-510 Published by: The University of Chicago Press Stable URL: http://www.jstor.org/stable/2780199 . Accessed: 18/10/2013 11:39 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. . The University of Chicago Press is collaborating with JSTOR to digitize, preserve and extend access to American Journal of Sociology. http://www.jstor.org This content downloaded from 158.143.192.135 on Fri, 18 Oct 2013 11:39:24 AM All use subject to JSTOR Terms and Conditions Economic Action and Social Structure: The Problem of Embeddedness' Mark Granovetter State University of New York at Stony Brook How behavior and institutions are affected by social relations is one of the classic questions of social theory. This paper concerns the extent to which economic action is embedded in structures of social relations, in modern industrial society. Although the usual neoclassical...
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...Transaction costs theory and the imperfect markets. Williamson’s successful complementation of the Coases approach of the firm as an alternative to reduce the cost of using the price mechanism, with Herbert Simon’s organizational theory, gave birth to the Transaction Costs Theory (TCT)1. This meant a big step, which evolved the theory of the firm, from its obsolete neoclassical toots and assumptions -of a perfect competitive market and a perfect rationality-, by adding the issues of bounded rationality and opportunism to Coases work2. Williamson opened the path to new ways of conceiving and complementing the theory of the firm in general, and the transactions costs theory in particular. By enabling to the economic theory the enhancing and the building of new connections between cognitive psychology and economics. Connections that have allowed, among other things, the development of a larger view in the roll of the firm, no only as an avoider of costs, but also as a creator of knowledge. All in better accordance with the modern firms logic of making business. In order to understand the transaction costs theory, one has to comprehend that the competitive market structure, is only a reference to be taken into account, when one analyses the observed structure of markets, which are called “imperfect competitive”, For the market is not given under a homogenous form to all economic agents, but is continuously changing under agents decisions and behaviours 3 ....
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...articulate its two core propositions, and (c) outline how this view contributes to the four fundamental questions in strategy. Overall, we suggest that the institution-based view represents the third leg of a strategy tripod, overcomes the long-standing criticisms of the industrybased and resource-based views’ lack of attention to contexts, and contributes significant new insights as part of the broader intellectual movement centered on new institutionalism. A s part of a broader intellectual movement centered on new institutionalism throughout the social sciences in recent decades (DiMaggio & Powell, 1983, 1991; North, 1990, 2005; Scott, 1987, 1995, 2008b; Williamson, 1975, 1985), strategic management researchers have increasingly realized that institutions are more than background conditions (Oliver, 1997; Peng & Heath, 1996). Instead, “institutions directly determine what arrows a firm has in its quiver as it struggles to formulate and implement strategy” (Ingram & Silverman, 2002, p. 20, emphasis added). Consequently, an institution-based view of strategic management has emerged (Peng, 2002, 2003). More important, this view has been argued to be one of We thank the AMP editor, Garry Bruton, and two anonymous reviewers for excellent guidance and encouragement, Dick Scott for helpful written comments, and Joseph Clougherty and Klaus Meyer for interesting discussion. This...
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