Organization Theories• Transaction Cost Economics (TCE)

– Opportunism, Information impactedness– efficiency, outsourcing vs. integration

• Agency Theory– Nexus of contracts. Fiduciary Duty. Principal-Agent legal structures. Alignment of interests, financial

market controls. Output control vs. process control. Agency costs.• Systems Theory

– Open/Organic, Closed/Mechanistic, Socio-technical system, Micro uncertainty macro predictability• Institutional Theory

– Original Selznic: Institutions “infused with value distinct from that created to reach to basic profit/product objectives of the firm. Modern: Dimaggio and Powell: Instituional Isomorhism, Collective Rationality, Mimetic, Coercive, Legitimacy forces.

• Resource Based View– Unique Resources and Capabilities Packages. Core competencies.

• Resource Dependency– Power, Politics, trade-offs

• Population Ecology: – Consonance, Industry evolution, niches, survival of strategic groups, punctuated equilibrium

• A sociology vs. an organization theory– Sociology: A loosely coupled system or web of beliefs and practices that solve the common problem of

living together sustainably.– Organization Theory: Reason why there are organizations and what they are as entities in and of

themselves.

McGregor, 1967Original Open Systems Organization Theory

• Organizations are open systems– Subsystems with an organization are also open

systems• Organizations are organic systems– Actively adaptive and dynamic. Neg-entropy.

• Organizations are socio-technical systems– Interactive-interdependent processes of people

and technologies.

Selznick, 1957Orignial Institutional Theory

• Organizations become Institutions• Institutions are infused with value that is

distinct from that created to reach to basic profit/product objectives of the firm.

• Institutional forces restrict change• Leaders of institutions must be statesmen