Traditional Economic Theory

Williamson's Transactional Cost Analysis
Markets and Hierarchies

Organizations form to minimize economic impact of:


The internal markets of organizations can minimize these factors by:


Contractual Man

Three forms of rationality:


Three Levels of Self-Interest


Transactions have three dimensions:


Fundamental transformation allows first partners a future bidding advantage over other competitors ("locked-in" behavior)

Granovetter's Embeddedness Theory



Internal vs External Organizations



* force or fraud acted out in one's self-



Under and Oversocialized Assumptions



* arrangement of extensive, long-term

relationships among other firms


Vertical Integration

* occurs where transacting firms lack a

network of personal relations


Interlocking Behavior