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Consistency in Organization

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  • Ekkehart Schlicht

Abstract

Internal organization relies heavily on psychological consistency requirements. This perspective has been emphasized in modern compensation theory, but has not been extended to organization theory. The idea is developed by starting from Williamson's discussion of idiosyncratic exchange. The perspective sheds new light on several topics in the theory of the firm, like the boundaries of the firm (Williamson's puzzle), the importance of fairness concerns within firms, the attenuation of incentives, or the role of routines. It implies a perceptional theory of the firm that is realistic in the sense advocated by COASE [1937].

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Bibliographic Info

Article provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.

Volume (Year): 164 (2008)
Issue (Month): 4 (December)
Pages: 612-623

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Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200812)164:4_612:cio_2.0.tx_2-

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  1. Schlicht, Ekkehart, 1998. "On Custom in the Economy," OUP Catalogue, Oxford University Press, number 9780198292241, Octomber.
  2. Fehr, Ernst & Gächter, Simon, 2001. "Do Incentive Contracts Crowd Out Voluntary Cooperation?," CEPR Discussion Papers 3017, C.E.P.R. Discussion Papers.
  3. Armen A. Alchian & Harold Demsetz, 1971. "Production, Information Costs and Economic Organizations," UCLA Economics Working Papers 10A, UCLA Department of Economics.
  4. Clark, Gregory, 1984. "Authority and Efficiency: The Labor Market and the Managerial Revolution of the Late Nineteenth Century," The Journal of Economic History, Cambridge University Press, vol. 44(04), pages 1069-1083, December.
  5. Moore, John, 1992. "The firm as a collection of assets," European Economic Review, Elsevier, vol. 36(2-3), pages 493-507, April.
  6. Coase, R H, 1978. "Economics and Biology: Evolution, Selection, and the Economic Principle: Discussion," American Economic Review, American Economic Association, vol. 68(2), pages 244-45, May.
  7. Frank, Robert H, 1984. "Are Workers Paid Their Marginal Products?," American Economic Review, American Economic Association, vol. 74(4), pages 549-71, September.
  8. R. Isaac & Deborah Mathieu & Edward Zajac, 1991. "Institutional framing and perceptions of fairness," Constitutional Political Economy, Springer, vol. 2(3), pages 329-370, September.
  9. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
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Cited by:
  1. Aidan Walsh, 2011. "Learning from pondlife and fishermen: towards a modular financial services industry," Journal of Financial Regulation and Compliance, Emerald Group Publishing, vol. 19(4), pages 312-322, November.

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