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Governing Project-based Firms: Promoting Market-like Processes within Hierarchies

  • Lars Lindkvist


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    This article takes an empirical point of departure in an in-depth study of an R&D organization that was transformed into a strongly project-based organization. As demonstrated in the analysis, its mode of governance differed radically from traditional bureaucratic and cultural conceptions of governance. Instead the new “rules-of-the-game” introduced amounted to creating an institutional framework, promoting new individual responsibilities and enabling lower level market-like processes of self-organizing discovery. The specific set-up used, included anew organization structure, new responsibilities, etc and the use of “prices”, playing a role both in shaping incentives and guiding knowledge work. The interpretation put forward relies on combining economic theories of governance with more “fine-grained” organization theories, and suggests that there is some discretion for top managers to engage in the design of a market-promoting mode of governance for their project-based firms. Copyright Kluwer Academic Publishers 2004

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    Article provided by Springer in its journal Journal of Management and Governance.

    Volume (Year): 8 (2004)
    Issue (Month): 1 (March)
    Pages: 3-25

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    Handle: RePEc:kap:jmgtgv:v:8:y:2004:i:1:p:3-25
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    1. Prencipe, Andrea & Tell, Fredrik, 2001. "Inter-project learning: processes and outcomes of knowledge codification in project-based firms," Research Policy, Elsevier, vol. 30(9), pages 1373-1394, December.
    2. Anna Grandori, 2001. "Neither Hierarchy nor Identity: Knowledge-Governance Mechanisms and the Theory of the Firm," Journal of Management and Governance, Springer, vol. 5(3), pages 381-399, September.
    3. Jason Potts, 2001. "Knowledge and markets," Journal of Evolutionary Economics, Springer, vol. 11(4), pages 413-431.
    4. Nicolai J. Foss, 2001. "Selective Intervention and Internal HybridsInterpreting and Learning from the Rise and Decline of the Oticon Spaghetti Organization," DRUID Working Papers 01-16, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    5. Nicolai Foss, 2002. "'Coase vs Hayek': Economic Organization and the Knowledge Economy," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 9(1), pages 9-35.
    6. Vaughn, Karen I, 1999. " Hayek's Implicit Economics: Rules and the Problem of Order," The Review of Austrian Economics, Springer, vol. 11(1-2), pages 129-44.
    7. Todd Zenger, 2002. "Crafting Internal Hybrids: Complementarities, Common Change Initiatives, and the Team-Based Organization," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 9(1), pages 79-95.
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