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On the Evolution of Organizational Governance: Divided Governance and Survival in the Long Run

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  • Roger D. Congleton

    (West Virginia University, Department of Economics)

Abstract

This paper analyzes the formation, refinement, and evolution of organizational decisionmaking processes, e.g. organizational governments. In doing so, it develops a framework for analyzing a broad cross section of private and non-private formal organizations. Formal organizations are all founded, e.g. they have a beginning. As a consequence, decisionmaking authority within an organization is often initially distributed in a manner that provides their founders (formeteurs) with substantial control over their organizations. However, that control is rarely, if ever, complete, because formeteurs have interests that can often be advanced by trading and/or delegating authority to others in exchange for services and other resources that increase organizational surplus. The result tends to be divided, rule-based, governance based on the king and council template.

Suggested Citation

  • Roger D. Congleton, 2015. "On the Evolution of Organizational Governance: Divided Governance and Survival in the Long Run," Working Papers 15-25, Department of Economics, West Virginia University.
  • Handle: RePEc:wvu:wpaper:15-25
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    File URL: http://busecon.wvu.edu/phd_economics/pdf/15-25.pdf
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    References listed on IDEAS

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    1. Congleton, Roger D., 2007. "From royal to parliamentary rule without revolution: The economics of constitutional exchange within divided governments," European Journal of Political Economy, Elsevier, vol. 23(2), pages 261-284, June.
    2. Williamson, Oliver, 2009. "The Theory of the Firm as Governance Structure: From Choice to Contract," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 6, pages 111-134, December.
    3. Dennis Leech, 2002. "An Empirical Comparison of the Performance of Classical Power Indices," Political Studies, Political Studies Association, vol. 50(1), pages 1-22, March.
    4. Ulrich Witt, 1999. "Do Entrepreneurs Need Firms? A Contribution to a Missing Chapter in Austrian Economics," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 11(1), pages 99-109, January.
    5. Roger Congleton, 2001. "On the Durability of King and Council: The Continuum Between Dictatorship and Democracy," Constitutional Political Economy, Springer, vol. 12(3), pages 193-215, September.
    6. Hillman, Arye L. & Katz, Eliakim, 1987. "Hierarchical structure and the social costs of bribes and transfers," Journal of Public Economics, Elsevier, vol. 34(2), pages 129-142, November.
    7. Viktor Vanberg, 1992. "Organizations as constitutional systems," Constitutional Political Economy, Springer, vol. 3(2), pages 223-253, March.
    8. Congleton, Roger D., 1991. "The economic role of a work ethic," Journal of Economic Behavior & Organization, Elsevier, vol. 15(3), pages 365-385, May.
    9. Congleton, Roger D., 1984. "Committees and rent-seeking effort," Journal of Public Economics, Elsevier, vol. 25(1-2), pages 197-209, November.
    10. Congleton, Roger D., 1989. "Efficient status seeking: Externalities, and the evolution of status games," Journal of Economic Behavior & Organization, Elsevier, vol. 11(2), pages 175-190, March.
    11. Roger Congleton, 2007. "Informational limits to democratic public policy: The jury theorem, yardstick competition, and ignorance," Public Choice, Springer, vol. 132(3), pages 333-352, September.
    12. Wohlgemuth, Michael, 2002. "Evolutionary Approaches to Politics," Kyklos, Wiley Blackwell, vol. 55(2), pages 223-246.
    13. Frey, Bruno S & Jegen, Reto, 2001. " Motivation Crowding Theory," Journal of Economic Surveys, Wiley Blackwell, vol. 15(5), pages 589-611, December.
    14. repec:mes:jeciss:v:30:y:1996:i:4:p:1212-1216 is not listed on IDEAS
    15. Buchanan, James M, 1975. "A Contractarian Paradigm for Applying Economic Theory," American Economic Review, American Economic Association, vol. 65(2), pages 225-230, May.
    16. Kirzner, Israel M., 1978. "Competition and Entrepreneurship," University of Chicago Press Economics Books, University of Chicago Press, number 9780226437767.
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    Keywords

    organizational governance; divided governance; decisionmaking;

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