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

Embeddedness

 

Internal vs External Organizations

 

Malfeasance

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

interest

 

Under and Oversocialized Assumptions

 

Quasi-Firm

* arrangement of extensive, long-term

relationships among other firms

 

Vertical Integration

* occurs where transacting firms lack a

network of personal relations

 

Interlocking Behavior