Hauswirth Effective and Efficient Organisations?

Government Export Promotion in Germany and the UK from an Organisational Economics Perspective
1. Auflage 2007
ISBN: 978-3-7908-1731-7
Verlag: Physica
Format: PDF
Kopierschutz: 1 - PDF Watermark

E-Book, Englisch, 260 Seiten, eBook

Reihe: Contributions to Economics

This book develops a conceptual framework for the relationship between organisation and output, and applies it to the analysis of German and British export support services. These findings help to explain why one organisation may be different from another, but equally effective and efficient, and why no panacea for effective and efficient organisation has been found. They also suggest angles from which existing organisations and blueprints of 'better' organisations can be examined.

Zielgruppe

Research

Autoren/Hrsg.

Hauswirth, Iris A.

Inhaltsverzeichnis

The context.- Efficient and effective organisations — Approaches in organisational economics.- Incentives, knowledge and adaptability.- The research design.- The organisation of trade fair support in Germany.- The organisation of trade fair support in the United Kingdom.- Organisation matters.

Leseproben

Chapter 3: Efficient and effective organisations - Approaches in organisational economics (p. 25-26)

3.1 Overview

The purpose of this chapter is to engage with different theories in organisational economics, to explore and synthesise their contributions to the question of which factors in organisational design are linked to 'efficiency and effectiveness'. 'Organisational economics' is a name that was given to approaches within New Institutional Economics (NIE) by non-economists (Moe 1984, Barney and Ouchi 1986, Perrow 1986, Donaldson 1990, Donaldson and Barney 1990). Its definition depends as much on the author as the definition of NIE itself, a label that has been applied to a large number of economic approaches, which analyse institutions and organisations from the perspective of methodological individualism (Langlois 1989, Mayhew 1989, Hodgson 1989, 1993, Reuter 1994, Rutherford 1989, 1994, Cheung 1992). Here, in line with some authors (e.g. Picot et al. 1997, Furobotn 1997), 'organisational economics' is used as a term that subsumes property rights theory, agency theory, and transaction cost theory.

To provide a backdrop for the three theories' arguments, the first section of the chapter gives a brief introduction to the main themes in the field, followed by a discussion of the basic assumptions on which the deductive theories are based. Attention is then focused on the main theoretical arguments of property rights theory, agency theory and transaction cost theory. Each is presented on its own, with an outline of the reasoning, a summary of the applications and empirical evi- dence, and a look at the criticisms, followed by a summary of major insights into the causal links between organisation and 'efficiency and effectiveness'. In the last part of the chapter the findings are synthesised.

3.2 The foundations of organisational economics

3.2.1 Organisation as a facilitator of exchanges

Economics is concerned with the question of how scarce resources are allocated efficiently.' This perspective, as a normative concept, has for a long time been used to discuss how 'the economy' should be organised. The two co-ordination mechanisms around which the discussion has revolved (e.g. in the famous Mises/Hayek vs. LangeLerner debate) have been the allocation of scarce re- sources through the price-mechanism, as opposed to allocation by a central deci- sion maker. Economists' mainstream consensus has been that price allocation is superior to the central direction alternative, since it involves far lower information costs, and since it triggers an automatic adaptation to changed scarcity patterns. Prices enable very many agents to make simultaneous 'small computations' with only low information requirements, whereas centralised allocation needs vast in- formation inputs and matching computation capacities (Hayek 1945). A further factor in favour of price allocation is the reduced incentive for individuals to dis- tort the allocation by giving wrong signals to the central decision maker, e.g. for rent-seeking purposes (Samuelson 1954, Marschak 1987). The price mechanism has thus been seen as the structure which co-ordinates the use of scarce resources in a way that is beneficial to society as a whole, although each individual is fol- lowing his or her self-interest.

But some scholars looked more closely at the implicit assumptions of the ar- gument. Ronald Coase (1937) made the point that if prices and the associated markets were always the best allocative mechanism, firms would not exist. As they did exist, the economy in fact worked with a mixture of price and administra- tive allocation processes. It was necessary to find an explanation when and why co-ordination occurred through 'planning' as opposed to 'markets'. Coase argued that economic activity was based on exchanges or 'transactions', which all involved search, negotiation, monitoring and enforcement efforts, i.e. they were not costless. The efficiency of alternative modes of co-ordinating ex- changes was determined by their comparative cost, and the way economic activity was organised influenced these costs. In some cases 'hierarchies' were more effi- cient than markets. More than twenty years later Coase (1960) made a second important contribu- tion to organisational economics. He pointed out that there were constraints to ex- changes, as the prerequisite to market exchange was a clear delimitation of rights. Any exchange required a prior specification of what individuals were allowed to exchange. Moreover, since 'ownership' was often not complete or not specified, the choices of one individual could have 'external effects' on others. Organisation, i.e. a specific allocation of property rights, mattered, since in a world with transac- tion costs, it delineated actors' choices.