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Non-Hierarchical Aspects of the Internal Organization of the Enterprise: A Partial Survey in Comparative Perspective

In: Economics in a Changing World

Author

Listed:
  • Masahiko Aoki

    (Stanford University)

  • John McMillan

    (University of California at San Diego)

Abstract

It has become evident that one of the fundamental causes of the failure of socialist economies was the incompatibility of centralized national planning with efficient systems of information transfer and incentives. But will problems associated with the former centrally planned economies be resolved if the monolithic, single-peaked, hierarchy of the national planning apparatus is replaced by multiple hierarchies of management and control which will compete in the product market and whose entry and exit will be controlled by the capital market? If we turn our eyes to market economies we find a variety of forms of internal structure and governance of enterprises as well as differences in the degree and methods of control by the capital market. Why does such a variety exist, and what are its implications for efficiency? Will enterprises of different national, cultural, and historical origins eventually converge to the ideal economists’ model of a hierarchy exploiting economies of specialization, scope, and scale under the discipline of perfectly competitive markets?

Suggested Citation

  • Masahiko Aoki & John McMillan, 1996. "Non-Hierarchical Aspects of the Internal Organization of the Enterprise: A Partial Survey in Comparative Perspective," International Economic Association Series, in: Beth Allen (ed.), Economics in a Changing World, chapter 11, pages 239-280, Palgrave Macmillan.
    • Handle: RePEc:pal:intecp:978-1-349-25168-1_11
    DOI: 10.1007/978-1-349-25168-1_11
    as

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