Inside Organizations: Pricing, Politics, and Path Dependence
When economists have considered organizations, much attention has focused on the boundary of the firm, rather than its internal structures and processes. In contrast, this review sketches three approaches to the economic theory of internal organization—one substantially developed, another rapidly em...
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| Format: | Article |
| Language: | en_US |
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Annual Reviews
2012
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| Online Access: | http://hdl.handle.net/1721.1/69100 https://orcid.org/0000-0001-6765-3039 |
| _version_ | 1826200986738229248 |
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| author | Gibbons, Robert S. |
| author2 | Sloan School of Management |
| author_facet | Sloan School of Management Gibbons, Robert S. |
| author_sort | Gibbons, Robert S. |
| collection | MIT |
| description | When economists have considered organizations, much attention has focused on the boundary of the firm, rather than its internal structures and processes. In contrast, this review sketches three approaches to the economic theory of internal organization—one substantially developed, another rapidly emerging, and a third on the horizon. The first approach (pricing) applies Pigou's prescription: If markets get prices wrong, then the economist's job is to fix the prices. The second approach (politics) considers environments where important actions inside organizations simply cannot be priced, so power and control become central. Finally, the third approach (path dependence) complements the first two by shifting attention from the between variance to the within. That is, rather than asking how organizations confronting different circumstances should choose different structures and processes, the focus here is on how path dependence can cause persistent performance differences among seemingly similar enterprises. |
| first_indexed | 2024-09-23T11:44:50Z |
| format | Article |
| id | mit-1721.1/69100 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T11:44:50Z |
| publishDate | 2012 |
| publisher | Annual Reviews |
| record_format | dspace |
| spelling | mit-1721.1/691002022-09-27T21:37:14Z Inside Organizations: Pricing, Politics, and Path Dependence Gibbons, Robert S. Sloan School of Management Gibbons, Robert S. Gibbons, Robert S. When economists have considered organizations, much attention has focused on the boundary of the firm, rather than its internal structures and processes. In contrast, this review sketches three approaches to the economic theory of internal organization—one substantially developed, another rapidly emerging, and a third on the horizon. The first approach (pricing) applies Pigou's prescription: If markets get prices wrong, then the economist's job is to fix the prices. The second approach (politics) considers environments where important actions inside organizations simply cannot be priced, so power and control become central. Finally, the third approach (path dependence) complements the first two by shifting attention from the between variance to the within. That is, rather than asking how organizations confronting different circumstances should choose different structures and processes, the focus here is on how path dependence can cause persistent performance differences among seemingly similar enterprises. 2012-02-14T15:11:22Z 2012-02-14T15:11:22Z 2010-03 Article http://purl.org/eprint/type/JournalArticle 1941-1383 1941-1391 http://hdl.handle.net/1721.1/69100 Gibbons, Robert. “Inside Organizations: Pricing, Politics, and Path Dependence.” Annual Review of Economics 2.1 (2010): 337-365. https://orcid.org/0000-0001-6765-3039 en_US http://dx.doi.org/10.1146/annurev.economics.050708.143304 Annual Review of Economics Creative Commons Attribution-Noncommercial-Share Alike 3.0 http://creativecommons.org/licenses/by-nc-sa/3.0/ application/pdf Annual Reviews Prof. Gibbons via Alex Caracuzzo |
| spellingShingle | Gibbons, Robert S. Inside Organizations: Pricing, Politics, and Path Dependence |
| title | Inside Organizations: Pricing, Politics, and Path Dependence |
| title_full | Inside Organizations: Pricing, Politics, and Path Dependence |
| title_fullStr | Inside Organizations: Pricing, Politics, and Path Dependence |
| title_full_unstemmed | Inside Organizations: Pricing, Politics, and Path Dependence |
| title_short | Inside Organizations: Pricing, Politics, and Path Dependence |
| title_sort | inside organizations pricing politics and path dependence |
| url | http://hdl.handle.net/1721.1/69100 https://orcid.org/0000-0001-6765-3039 |
| work_keys_str_mv | AT gibbonsroberts insideorganizationspricingpoliticsandpathdependence |