Economic Approaches to Organization

Series
Pearson
Author
Sytse Douma / Hein Schreuder  
Publisher
Pearson
Cover
Softcover
Edition
6
Language
English
Total pages
408
Pub.-date
March 2017
ISBN13
9781292128900
ISBN
1292128909
Related Titles



Description

This text explains in a non-technical way different economic approaches (including game theory, agency theory, transaction costs economics, economics of strategy and evolutionary approaches) using practical real-world examples to aid understanding of how the concepts relate to economic and organizational problems in the world today.

This book is unique in the market in its attempt to make the link between management and economics. This text straddles the disciplines of management and economics. The original conceptual framework developed by the authors and used to structure the text is a large attraction for lecturers of management and organisational studies.

Features

  • Covers Game Theory, Strategy, and Evolution.
  • Packed with empirical results and real world data
  • Builds a step-by-step conceptual framework to explain fundamental economic approaches to organisations.
  • Discusses the 5 different economic approaches to organisations
  • Contains useful learning features: real-life examples, end-of-chapter questions, quotations, diagrams, further reading and study.
  • Wide range of cases with a global link.
  • Assumes no prior knowledge of economics.
  • Clearly written in a concise, informative and student-friendly style.
  • Instructor's Manual with answers to questions, overheads and further reading.

New to this Edition

  • Introduction of digital platforms as coordination mechanism and platform organizations as new organizational type. Economic explanation of the business models of Airbnb, Amazon, Google, Uber and similar platform organizations.
  • A separate chapter on behavioural economics covering bounds on rationality and self-interest as well as prospect theory.
  • An update of the exciting new field of complexity economics focusing on learning and adaptation.
  • Three application chapters on mergers and acquisitions, corporate governance and hybrid forms (for example: joint ventures, business groups and franchising) offered electronically in addition to the material in the book.
  • Table of Contents

    Preface xi

    Acknowledgements xv

    Part I Foundations 1

    1 Markets and organizations 3

    1.1 The economic problem 3

    1.2 The division of labour 5

    1.3 Specialization 7

    1.4 Coordination 9

    1.5 Markets and organizations 11

    1.6 Information 14

    1.7 The environment and institutions 16

    1.8 Historical perspective 22

    1.9 Summary: the conceptual framework of this book 24

    1.10 Outline of the book 25

    Questions 26

    Note 26

    2 Markets 27

    2.1 Introduction 27

    2.2 Market interaction: analysis of demand and supply 28

    2.3 Decision-making by consumers 29

    2.4 Decision-making by producers 31

    2.5 Market coordination 32

    2.6 The paradox of profits 33

    2.7 Competitive markets 33

    2.8 The main assumptions underlying standard

    microeconomic theory 34

    2.9 Summary: how according to standard microeconomic

    theory decisions are coordinated by the market 36

    Questions 37

    3 Organizations 38

    3.1 The world of organizations 38

    3.2 Organizational coordination 39

    3.3 Types of organizations 44

    3.4 Organizational markets 49

    3.5 Organized markets 50

    3.6 The rise of the Internet and the digitization of organizations 53

    3.7 Digital platforms: a new coordination mechanism 56

    3.8 The Platform Organization 59

    3.9 Summary: how organizations achieve coordination 62

    Questions 64

    Notes 64

    4 Information 66

    4.1 Coordination and information 66

    4.2 Hidden information 71

    4.3 Hidden action 78

    4.4 The value of information 83

    4.5 Information as an economic good 86

    4.6 Summary: information problems for markets and organizations 88

    Questions 90

    Notes 91

    5 Game theory 92

    5.1 Introduction 92

    5.2 The prisoner’s dilemma 93

    5.3 Coordination games 97

    5.4 The entry game 99

    5.5 The iterated prisoner’s dilemma 103

    5.6 Auctions 105

    5.7 Evolutionary game theory 111

    5.8 Summary: insights from game theory 116

    Questions 118

    6 Econs and Humans 119

    6.1 Introduction 119

    6.2 The social domain versus the economic domain 120

    6.3 Economic, social and moral man: bounds

    on self-interest 121

    6.4 Bounds on rationality 124

    6.5 Prospect theory 127

    6.6 Summary: behavioural economics 130

    Questions 131

    Part II Economic Approaches 133

    7 Behavioural theory of the firm 135

    7.1 Introduction 135

    7.2 The firm as a coalition of participants 135

    7.3 Organizational goals 139

    7.4 Organizational expectations 142

    7.5 Organizational choice 142

    7.6 From bounded rationality to behavioural economics 145

    7.7 Summary: goals and decision-making within

    the firm in behavioural theory 150

    Questions 152

    Note 154

    8 Agency theory 155

    8.1 Introduction 155

    8.2 Separation of ownership and control 156

    8.3 Managerial behaviour and ownership structure 159

    8.4 Entrepreneurial firms and team production 165

    8.5 The firm as a nexus of contracts 167

    8.6 Theory of principal and agent 169

    8.7 Applying agency theory 178

    8.8 Summary: agency relations between owners,

    managers and employees 182

    Questions 184

    Note 186

    9 Transaction cost economics 187

    9.1 Introduction 187

    9.2 Behavioural assumptions: bounded rationality

    and opportunism 189

    9.3 Dimensions of transactions 195

    9.4 Peer groups 200

    9.5 Simple hierarchies 202

    9.6 Multistage hierarchies: U-form and M-form enterprises 204

    9.7 Organizational markets 205

    9.8 Digitization and transaction costs 208

    9.9 Markets and organizations: are these all there is? 211

    9.10 Governance in a three-level schema 223

    9.11 Summary: effect of transaction costs on choosing

    between markets and organizations and

    organizational forms 225

    Questions 227

    Notes 228

    10 Economic contributions to business/competitive

    strategy 229

    10.1 Introduction 229

    10.2 Industry analysis 232

    10.3 Competitor analysis 236

    10.4 Competitive strategy 239

    10.5 Resource-based view of the firm 240

    10.6 Dynamic capabilities 244

    10.7 Move and counter move 248

    10.8 Summary: how economic analysis can contribute

    to the formulation of competitive strategies 258

    Questions 259

    Note 259

    11 Economic contributions to corporate strategy 260

    11.1 Introduction 260

    11.2 Unrelated diversification 263

    11.3 Related diversification 270

    11.4 Horizontal multi-nationalization 276

    11.5 Vertical integration 279

    11.6 Summary 284

    Questions 286

    Notes 287

    12 Evolutionary approaches to organizations 288

    12.1 Introduction 288

    12.2 Giraffes 288

    12.3 Organizations and giraffes 290

    12.4 Organizational ecology 293

    12.5 An evolutionary theory of economic change 302

    12.6 Comparison 307

    12.7 The evolution of dynamic capabilities 310

    12.8 Further developments 317

    12.9 Summary: the evolutionary perspective 323

    Questions 325

    Notes 327

    13 All in the family 328

    13.1 Introduction 328

    13.2 The basic conceptual framework 328

    13.3 Family resemblances 330

    13.4 Family differences 333

    13.5 Summary: all in the family? 341

    13.6 Organizations as complex, adaptive systems 342

    Questions 357

    Notes 358

    Bibliography 359

    Index 373

    Back Cover

    Why do organizations exist?

    What is the relationship between markets and organizations?

    When does one perform better than the other?

    Find the answers in Economic Approaches to Organizations!

     

    Now in its sixth edition, this text emphasizes the importance of economic perspectives and theories in the study of organisations and management.

     

    It explains in a non-technical way different economic approaches such as behavioural theory of the firm, game theory, agency theory, transaction cost economics, economics of strategy and evolutionary approaches.

     

    This fully updated edition is packed with practical examples from real-world companies, helping you to understand how the concepts relate to economic and organisational problems happening in the world today.

     

    New to this edition:

    ·    Introduction of digital platforms as coordination mechanism and platform organizations as new organizational type. Economic explanation of the business models of Airbnb, Amazon, Google, Uber and similar platform organizations.

    ·    A separate chapter on behavioural economics covering bounds on rationality and self-interest as well as prospect theory.

    ·    An update of the exciting new field of complexity economics focusing on learning and adaptation.

    ·    Three application chapters on mergers and acquisitions, corporate governance and hybrid forms (for example: joint ventures, business groups and franchising) offered electronically in addition to the material in the book.

     

    This is the ideal textbook for courses on Organisation and Management from an economic perspective. The text can also be used as a supplement to a larger text on Organisation and Management or Strategic Management. Economics students will benefit from a concise introduction to a field that is related, but all too often unexplored.

     

    Sytse Douma is honorary professor of Business Administration at Tilburg University. 

    Hein Schreuder was Executive Vice President of Corporate Strategy and Acquisitions at Royal DSM N.V. until 2012. He is a honorary professor of Business Economics at Maastricht University and Board member of the Vlerick Business School in Belgium. He is also chairman of Ecorys, a leading research-based economic consultancy firm in Europe.

     

    Author

    Sytse Douma is professor of business administration at Tilburg University.

    Hein Schreuder was executive vice president of corporate strategy and acquistitions at Royal DSM N.V. until 2012. He is honorary professor of business economics at Maastricht University and board member of the Vlerick Business School in Belgium.