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A Neo-Weberian Theory of the Firm

  • P.P.M.A.R. Heugens
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    In the field of organization studies, two types of theories of the firm exist: “why†and “how†theories. “Why†theories use the instrument of comparative analysis to explain why firms exist despite various institutional alternatives. “How†theories, in contrast, employ intra-organizational perspectives to explore how firms meaningfully connect the actions of many interdependently operating individuals to collective outcomes. Since both theories are complements rather than substitutes, the field of organization studies would benefit from the development of a parsimonious theory that integrates “why†and “how†perspectives. It is argued that Max Weber’s writings on bureaucracy, and especially his focus on the organization as a set of decision rules (Urteilsgründe), provide an exceptionally meaningful conceptual background structure for such a theory. The paper demonstrates that a Neo-Weberian, decision rule-based theory of the firm can simultaneously provide reasons for the existence of the firm and explore the nature of coordination and cooperation within the firm itself.

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    File URL: http://dspace.library.uu.nl/bitstream/handle/1874/309391/04_02.pdf
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    Paper provided by Utrecht School of Economics in its series Working Papers with number 04-02.

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    Date of creation: Feb 2004
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    Handle: RePEc:use:tkiwps:0402
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    1. Williamson, Oliver E, 1981. "The Modern Corporation: Origins, Evolution, Attributes," Journal of Economic Literature, American Economic Association, vol. 19(4), pages 1537-68, December.
    2. Richard N. Langlois, 1993. "Capabilities and Coherence in Firms and Markets," Industrial Organization 9309003, EconWPA.
    3. Greif, Avner, 1989. "Reputation and Coalitions in Medieval Trade: Evidence on the Maghribi Traders," The Journal of Economic History, Cambridge University Press, vol. 49(04), pages 857-882, December.
    4. Dosi, Giovanni, 1997. "Opportunities, Incentives and the Collective Patterns of Technological Change," Economic Journal, Royal Economic Society, vol. 107(444), pages 1530-47, September.
    5. Nelson, Richard R & Winter, Sidney G, 1974. "Neoclassical vs. Evolutionary Theories of Economic Growth: Critique and Prospectus," Economic Journal, Royal Economic Society, vol. 84(336), pages 886-905, December.
    6. John H Dunning, 1988. "The Eclectic Paradigm of International Production: A Restatement and Some Possible Extensions," Journal of International Business Studies, Palgrave Macmillan, vol. 19(1), pages 1-31, March.
    7. Demsetz, Harold, 1988. "The Theory of the Firm Revisited," Journal of Law, Economics and Organization, Oxford University Press, vol. 4(1), pages 141-61, Spring.
    8. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
    9. R. Joseph Monsen & Jr. & Anthony Downs, 1965. "A Theory of Large Managerial Firms," Journal of Political Economy, University of Chicago Press, vol. 73, pages 221.
    10. Pursey P. M. A. R. Heugens & Cees B. M. van Riel & Frans A. J. van den Bosch, 2004. "Reputation Management Capabilities as Decision Rules," Journal of Management Studies, Wiley Blackwell, vol. 41(8), pages 1349-1377, December.
    11. Martin Schulz, 2003. "Impermanent institutionalization: the duration dependence of organizational rule changes," Industrial and Corporate Change, Oxford University Press, vol. 12(5), pages 1077-1098, October.
    12. 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.
    13. Fama, Eugene F, 1980. "Agency Problems and the Theory of the Firm," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 288-307, April.
    14. A. E. Fernández Jilberto, 1991. "Introduction," International Journal of Political Economy, M.E. Sharpe, Inc., vol. 21(1), pages 3-9, April.
    15. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-95, December.
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