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Some Transaction Cost Effects of Authoritarian Management


  • Tamara Todorova
  • Aleksandar Vasilev


This paper studies the transaction cost economizing effects of authoritarian management in organizations and systems subject to higher transaction costs originating from various sources. We analyze the nature, mechanisms, and transaction cost aspects of the authoritarian management style. We argue that the higher the transaction costs of internal organization, the more autocratic the manager is likely to be. We discuss the features of authoritarian managers, illustrating some of our key hypotheses with the example of Henry Ford and his running of the Ford Motor Company. In the context of non-market economies, we relate authoritarian leadership to economic centralism in high transaction cost systems such as East European societies with significant transactional or organizational opportunism, as well as other sources of market failure.

Suggested Citation

  • Tamara Todorova & Aleksandar Vasilev, 2017. "Some Transaction Cost Effects of Authoritarian Management," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 24(3), pages 295-314, September.
  • Handle: RePEc:taf:ijecbs:v:24:y:2017:i:3:p:295-314
    DOI: 10.1080/13571516.2017.1322258

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    References listed on IDEAS

    1. Taylor, Frederick Winslow, 1911. "The Principles of Scientific Management," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number taylor1911.
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    1. repec:hur:ijarbs:v:7:y:2017:i:12:p:761-782 is not listed on IDEAS

    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation


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