Hostname: page-component-586b7cd67f-t7fkt Total loading time: 0 Render date: 2024-11-24T01:58:37.773Z Has data issue: false hasContentIssue false
  • English
  • Français

Atmosphere, private ordering, and industrial pluralism: Williamson's evolving science of organization

Published online by Cambridge University Press:  02 August 2021

Virgile Chassagnon
Virgile Chassagnon*
Affiliation:
Univ. Grenoble Alpes, Grenoble INP*, CREG, 38000Grenoble, France IREPE Research Institute, Grenoble, France
*
Corresponding author. Email: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

The major contribution of Oliver Williamson, who was a 2009 Nobel Prize co-Laureate in economics, consists of proposing a heuristic analysis of governance structures, namely, the firm, the market, and what he will later call the ‘hybrid forms’. This cardinal issue in organizational economics has made it possible to propose rigorous arbitration tools for the famous ‘make or buy’ decisions in modern market economies based on asset specificity and quasi-rents. However, Williamson's work goes far beyond these contributions alone. His contribution is based on a multidisciplinary theoretical background in building the science of organization. This is the important but sometimes neglected aspect of Williamson's work that I wish to highlight in this paper in memory of Williamson in regard to three major pieces on atmosphere (and informal organization), private ordering, and industrial pluralism. In doing so, I also propose reconsidering the different stages of Williamson's evolving science of organization from recent neo-institutional works.

Keywords

Atmosphereindustrial pluralisminformal organizationOliver E. Williamsonprivate orderingscience of organizationB20B40D20L20
Type
Research Article
Information
Journal of Institutional Economics , Volume 18 , Issue 2 , April 2022 , pp. 237 - 251
Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press on behalf of Millennium Economics Ltd.

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Akerlof, G. A. (1984), ‘Gift Exchange and Efficiency-Wage Theory: Four Views’, American Economic Review, 74(2): 79–83.Google Scholar
Anderson, E. (2017), Private Government: How Employers Rule Our Lives (and Why We Don't Talk About It), Princeton: Princeton University Press.Google Scholar
Aoki, M. (2007), ‘Endogenizing Institutions and Institutional Change’, Journal of Institutional Economics, 3(1): 1–31.CrossRefGoogle Scholar
Arrow, K. J. (1974), The Limits of Organization, New York: Norton & Company Inc.Google Scholar
Baker, G. P., Gibbons, R. S. and Murphy, K. J. (2002), ‘Relational Contracts and the Theory of the Firm’, Quarterly Journal of Economics, 107(1): 39–84.CrossRefGoogle Scholar
Baker, G. P., Gibbons, R. S. and Murphy, K. J. (2008), ‘Strategic Alliances: Bridges Between Islands of Conscious Power’, Journal of the Japanese and International Economies, 22(2): 146–163.CrossRefGoogle Scholar
Barnard, C. I. (1938), The Functions of the Executive, Cambridge, MA: Harvard University Press.Google Scholar
Baron, J. and Kreps, D. M. (1999), Strategic Human Resources: Frameworks for General Managers, New York: John Wiley & Sons.Google Scholar
Baudry, B. and Chassagnon, V. (2010), ‘The Close Relation between Organization Theory and Oliver Williamson's Transaction Cost Economics: A Theory of the Firm Perspective’, Journal of Institutional Economics, 6(4): 477–503.CrossRefGoogle Scholar
Baudry, B. and Chassagnon, V. (2012), ‘The Vertical Network Organization as a Specific Governance Structure: What are the Challenges for Incomplete Contracts Theories and What are the Theoretical Implications for the Boundaries of the (Hub-) Firm?’, Journal of Management and Governance, 16(2): 285–303.CrossRefGoogle Scholar
Baudry, B. and Chassagnon, V. (2019), ‘The Williamsonian Contradiction on Authority and Power in Transaction Cost Economics’, Journal of Economic Issues, 53(1): 258–277.CrossRefGoogle Scholar
Bénabou, R. and Tirole, J. (2003), ‘Intrinsic and Extrinsic Motivation’, The Review of Economic Studies, 70(3): 489–520.CrossRefGoogle Scholar
Bénabou, R. and Tirole, J. (2006), ‘Incentives and Prosocial Behavior’, American Economic Review, 96(5): 1652–1678.CrossRefGoogle Scholar
Blair, M. M. and Stout, L. A. (1999), ‘A Team Production Theory of Corporate Law’, Virginia Law Review, 85(2): 247–328.CrossRefGoogle Scholar
Bowles, S. and Gintis, H. (2011), A Cooperative Species: Human Reciprocity and Its Evolution, Princeton: Princeton University Press.Google Scholar
Bowles, S. and Polania-Reyes, S. (2012), ‘Economic Incentives and Social Preferences: Substitutes or Complements?’, Journal of Economic Literature, 50(2): 368–425.CrossRefGoogle Scholar
Carney, J. T. (1983), ‘In Defense of Industrial Pluralism’, Dickinson Law Review, 87(2): 253–264.Google Scholar
Chassagnon, V. (2011), ‘The Network-Firm as a Single Real Entity: Beyond the Aggregate of Distinct Legal Entities’, Journal of Economic Issues, 45(1): 113–136.CrossRefGoogle Scholar
Chassagnon, V. (2014a), ‘Toward a Social Ontology of the Firm: Reconstitution, Organizing Entity, Institution, Social Emergence and Power’, Journal of Business Ethics, 124(2): 197–208.CrossRefGoogle Scholar
Chassagnon, V. (2014b), ‘Beyond Markets and Hierarchies: An Economic Analysis of Vertical Quasi-Integration’, Review of Economic Philosophy, 15(1): 137–167.Google Scholar
Chassagnon, V. (2014c), ‘Consummate Cooperation in the Network-Firm: Theoretical Insights and Empirical Findings’, European Management Journal, 32(2): 260–274.CrossRefGoogle Scholar
Chassagnon, V. (2018), Economie de la Firme-Monde. Pouvoir, Régime de Gouvernement et Régulation, Louvain-la-Neuve: De Boeck.Google Scholar
Chassagnon, V. and Haned, N. (2019), ‘The Private and Public Normative Orderings of the Modern Firm: Industrial Pluralism in a History of Organizational Thought Perspective’, Papers in Political Economy, 76(1): 89–116.Google Scholar
Chassagnon, V. and Hollandts, X. (2014), ‘Who are the Owners of the Firm? Shareholders, Employees or No One?’, Journal of Institutional Economics, 10(1): 47–69.CrossRefGoogle Scholar
Chassagnon, V. and Hollandts, X. (2019), ‘Human Capital and the Pluralistic Governance of the Modern Firm: The Emergence of Flattened Hierarchies at Work’, Review of Industrial Economics, 168(2): 79–102.CrossRefGoogle Scholar
Chassagnon, V., Baudry, B. and Haned, N. (2020), ‘Atmosphère Organisationnelle et Démocratie Industrielle: Une Analyse (Néo-)Institutionnaliste Théorique et Empirique’, in Chassagnon, V. and Dutraive, V. (eds), Vers une économie Politique Institutionnaliste de L'entreprise: Travail, Démocratie et Gouvernement, Paris: Classiques Garnier, pp. 233–258.Google Scholar
Chassang, S. (2010), ‘Building Routines: Learning, Cooperation and the Dynamics of Incomplete Relational Contracts’, American Economic Journal, 100(1): 448–465.Google Scholar
Coase, R. H. (1937), ‘The Nature of the Firm’, Economica, 4(16): 386–405.CrossRefGoogle Scholar
Coase, R. H. (1992), ‘The Institutional Structure of Production’, American Economic Review, 82(4): 713–719.Google Scholar
Commons, J. R. (1934), Institutional Economics. Its Place in Political Economy, Madison: The University of Wisconsin.Google Scholar
Deakin, S. (2012), ‘The Corporation as Commons: Rethinking Property Rights, Governance and Sustainability in the Business Enterprise’, Queen Law Journal, 37(2): 339–381.Google Scholar
Deci, E. L. and Ryan, R. M. (1985), Intrinsic Motivation and Self-Determination in Human Behavior, New York: Plenum Press.CrossRefGoogle Scholar
Dickinson, D. and Villeval M-C, M.-C. (2008), ‘Does Monitoring Decrease Effort? The Complementarity between Agency and Crowding Out Theories’, Games and Economic Behavior, 63(1): 56–76.CrossRefGoogle Scholar
DiMaggio, P. J. and Powell, W. W. (1983), ‘The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields’, American Sociological Review, 48(2): 147–160.CrossRefGoogle Scholar
Doeringer, P. and Piore, M. (1971), Internal Labor Markets and Manpower Analysis, Boston: D.C. Heath and Company.Google Scholar
Fehr, E. and Gachter, S. (2000), ‘Fairness and Retaliation: The Economics of Reciprocity’, Journal of Economic Perspectives, 14(3): 159–181.CrossRefGoogle Scholar
Fehr, E. and Schmidt, K. M. (2013), ‘Use and Abuse of Authority: A Behavioral Foundation of the Employment Relation’, Journal of the European Economic Association, 11(4): 711–742.Google Scholar
Fehr, E., Fischbacher, U. and Gachter, S. (2002), ‘Strong Reciprocity, Human Cooperation and the Enforcement of Social Norms’, Human Nature, 13(1): 1–25.CrossRefGoogle ScholarPubMed
Fehr, E., Gachter, S. and Kirchsteiger, G. (1997), ‘Reciprocity as a Contract Enforcement Device: Experimental Evidence’, Econometrica, 65(4): 833–860.CrossRefGoogle Scholar
Fehr, E., Hart, O. and Zehnder, C. (2011), ‘Contracts as Reference Points – Experimental Evidence’, American Economic Review, 101(2): 493–525.CrossRefGoogle Scholar
Fuller, L. (1954), ‘American Legal Philosophy at Mid-Century’, Journal of Legal Education, 6(4): 457–485.Google Scholar
Galanter, M. (1981), ‘Justice in Many Rooms: Courts, Private Ordering and Indigenous Law’, Journal of Legal Pluralism, 19(1): 1–47.CrossRefGoogle Scholar
Gibbons, R. S. (2000), ‘Why Organizations Are Such a Mess (and What an Economist Might Do About It)’, Unpublished Manuscript. Working paper available here: http://web.mit.edu/rgibbons/www/Why%20Organizations%20Are%20Such%20a%20Mess.pdf.Google Scholar
Gibbons, R. S. (2003), ‘Team Theory, Garbage Cans and Real Organizations: Some History and Prospects of Economic Research on Decision-Making in Organizations’, Industrial and Corporate Change, 12(4): 753–797.CrossRefGoogle Scholar
Gibbons, R. S. (2005), ‘Four Formal(izable) Theories of the Firm’, Journal of Economic Behavior and Organization, 58(2): 200–245.CrossRefGoogle Scholar
Gibbons, R. S. (2021), ‘Deals That Start When You Sign Them’, Journal of Institutional Economics, forthcoming.CrossRefGoogle Scholar
Gibbons, R. S. and Roberts, J. (2013), The Handbook of Organizational Economics, Princeton: Princeton University Press.CrossRefGoogle Scholar
Goldberg, V. P. (1976), ‘Toward an Expanded Economic Theory of Contract’, Journal of Economic Issues, 10(1): 45–61.CrossRefGoogle Scholar
Gouldner, A. W. (1960), ‘The Norm of Reciprocity: A Preliminary Statement’, American Sociological Review, 25(2): 161–179.CrossRefGoogle Scholar
Hart, O. D. (2020), ‘Building the Theory of the Firm’, Williamson Honor Series, Society for Institutional and Organizational Economics (SIOE), June 10, 2020 (online).Google Scholar
Hart, O. D. and Holmström, B. (2010), ‘A Theory of Firm Scope’, Quarterly Journal of Economics, 125(2): 483–513.CrossRefGoogle Scholar
Hart, O. D. and Moore, J. (2008), ‘Contracts as Reference Points’, Quarterly Journal of Economics, 123(1): 1–48.CrossRefGoogle Scholar
Héritier, A., Mueller-Debus, A. K. and Thauer, C. R. (2009), ‘The Firm as an Inspector: Private Ordering and Political Rules’, Business and Politics, 11(4): 1–32.Google Scholar
Hodgson, G. M. (1988), Economics and Institutions, Cambridge: Polity Press.CrossRefGoogle Scholar
Hodgson, G. M. (2002), ‘The Legal Nature of the Firm and the Myth of the Firm-Market Hybrid’, International Journal of the Economics of Business, 9(1): 36–60.CrossRefGoogle Scholar
Hodgson, G. M. (2009), ‘On the Institutional Foundations of Law: The Insufficiency of Custom and Private Ordering’, Journal of Economic Issues, 43(1): 143–166.CrossRefGoogle Scholar
Hodgson, G. M. and Knudsen, T. (2010), ‘Generative Replication and the Evolution of Complexity’, Journal of Economic Behavior and Organization, 75(1): 12–24.CrossRefGoogle Scholar
Hodgson, G. M. and Vatiero, M. (2021), ‘Oliver E. Williamson (1932–2020): An Institutional Researcher’, History of Economic Ideas, 3: 129–137.Google Scholar
Holmström, B. (1999), ‘The Firm as a Subeconomy’, Journal of Law, Economics and Organization, 15(1): 74–102.CrossRefGoogle Scholar
Langlois, R. N. (1992), ‘Transaction-Cost Economics in Real Time’, Industrial and Corporate Change, 1(1): 99–127.CrossRefGoogle Scholar
Lawler, E. J. (1992), ‘Affective Attachments to Nested Groups: A Choice-Process Theory’, American Sociological Review, 57(3): 327–339.CrossRefGoogle Scholar
Leibenstein, H. (1966), ‘Allocative Efficiency vs. “X-Efficiency”’, American Economic Review, 56(3): 392–415.Google Scholar
Macneil, I. R. (1978), ‘Contracts: Adjustment of Long-Term Economic Relations under Classical, Neoclassical, and Relational Contract Law’, Northwestern University Law Review, 72(6): 854–905.Google Scholar
Macneil, I. R. (1980), The New Social Contract: An Inquiry into Modern Contractual Relations, New Haven: Yale University Press.Google Scholar
Mahoney, J. and Nickerson, J. (2021), ‘Oliver Williamson: A Hero's Journey on the Merits’, Journal of Institutional Economics, 1–13. doi:10.1017/S1744137421000151.CrossRefGoogle Scholar
Mayo, E. (1945), The Social Problems of an Industrial Civilization, New Hampshire: Ager.Google Scholar
Nelson, R. and Winter, S. (1982), An Evolutionary Theory of Economic Change, Cambridge, MA: Harvard University Press.Google Scholar
North, D. (1986), ‘The New Institutional Economics’, Journal of Institutional and Theoretical Economics, 142(1986): 230–237.Google Scholar
Ostrom, E. (1990), Governing the Commons. The Evolution of Institutions for Collective Action, Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Ostrom, E. (2005), Understanding Institutional Diversity, Princeton: Princeton University Press.Google Scholar
Pagano, U. and Vatiero, M. (2015), ‘Costly Institutions as Substitutes: Novelty and Limits of the Coasian Approach’, Journal of Institutional Economics, 11(2): 265–281.CrossRefGoogle Scholar
Putterman, L. (1986), ‘On Some Recent Explanations of Why Capital Hires Labor’, in Putterman, L. (ed), The Economic Nature of the Firm: Overview, Cambridge: Cambridge University Press, pp.1–29.Google Scholar
Rajan, R. G. and Zingales, L. (1998), ‘Power in a Theory of the Firm’, Quarterly Journal of Economics, 113(2): 387–432.CrossRefGoogle Scholar
Rajan, R. G. and Zingales, L. (2001), ‘The Firm as a Dedicated Hierarchy: A Theory of the Origins and Growth of Firms’, Quarterly Journal of Economics, 116(3): 805–851.CrossRefGoogle Scholar
Roberts, J. (2004), The Modern Firm: Organizational Design for Performance and Growth, Oxford: Oxford University Press.Google Scholar
Roberts, J. (2010), ‘Designing Incentives in Organizations’, Journal of Institutional Economics, 6(1): 125–132.CrossRefGoogle Scholar
Schlager, E. and Ostrom, E. (1992), ‘Property-Rights Regimes and Natural Resources: A Conceptual Analysis’, Land Economics, 68(3): 249–269.CrossRefGoogle Scholar
Simon, H. A. (1951), ‘A Formal Theory of the Employment Relationship’, Econometrica, 19(3): 293–305.CrossRefGoogle Scholar
Simon, H. A. (1957), Models of Man, New York: John Wiley & Sons.Google Scholar
Stone, K. V. W. (1992), ‘The Legacy of Industrial Pluralism: The Tension Between Individual Employment Rights and the New Deal Collective Bargaining System’, University of Chicago Law Review, 59(2): 575–644.CrossRefGoogle Scholar
Swedberg, R. (1990), Economis and Sociology, Princeton, NJ: Princeton University Press.CrossRefGoogle Scholar
Tomer, J. F. (1999), The Human Firm. A Socio Economic Analysis of its Behavior and Potential in a New Economic Age, New York: Routledge.Google Scholar
Vatiero, M. (2020), The Theory of Transaction in Institutional Economics, London: Routledge.CrossRefGoogle Scholar
Williamson, O. E. (1963), ‘Selling Expense as a Barrier to Entry’, American Economic Review, 52(5): 112–128.Google Scholar
Williamson, O. E. (1964), The Economics of Discretionary Behavior: Managerial Objectives in a Theory of the Firm, Englewood Cliffs, NJ: Prentice-Hall.Google Scholar
Williamson, O. E. (1967), ‘Hierarchical Control and Optimum Firm Size’, Journal of Political Economy, 75(2): 123–138.CrossRefGoogle Scholar
Williamson, O. E. (1971), ‘The Vertical Integration of Production: Market Failure Considerations’, American Economic Review, 61(2): 112–123.Google Scholar
Williamson, O. E. (1974), ‘The Economics of Antitrust: Transaction Costs Considerations’, University of Pennsylvania Law Review, 122(6): 1439–1496.CrossRefGoogle Scholar
Williamson, O. E. (1975), Markets and Hierarchies: Analysis and Anti-Trust Implications, New York: Free Press.Google Scholar
Williamson, O. E. (1979), ‘Transaction-Cost Economics: The Governance of Contractual Relations’, Journal of Law and Economics, 22(2): 233–261.CrossRefGoogle Scholar
Williamson, O. E. (1983), ‘Credible Commitments: Using Hostages to Support Exchange’, American Economic Review, 73(4): 519–540.Google Scholar
Williamson, O. E. (1984a), ‘Corporate Governance’, Yale Law Journal, 93(7): 1197–1230.CrossRefGoogle Scholar
Williamson, O. E. (1984b), ‘Credible Commitments: Further Comments’, American Economic Review, 74(3): 488–490.Google Scholar
Williamson, O. E. (1985), The Economic Institutions of Capitalism, New York: Free Press.Google Scholar
Williamson, O. E. (1988), ‘The Logic of Economic Organization’, Journal of Law, Economics and Organization, 4(1): 65–93.Google Scholar
Williamson, O. E. (1990), ‘Chester Barnard and the Incipient Science of Organization’, in Williamson, O. E. (ed.), Organization and Theory, from Chester Barnard to the Present and Beyond, Oxford: Oxford University Press, pp. 172–206.Google Scholar
Williamson, O. E. (1991), ‘Comparative Economic Organization: The Analysis of Discrete Alternative’, Administrative Science Quarterly, 36(2): 269–296.CrossRefGoogle Scholar
Williamson, O. E. (1993a), ‘Transaction Cost Economics and Organization Theory’, Industrial and Corporate Change, 2(2): 107–150.CrossRefGoogle Scholar
Williamson, O. E. (1993b), ‘The Evolving Science of Organization’, Journal of Institutional and Theoretical Economics, 149(1): 36–63.Google Scholar
Williamson, O. E. (1993c), ‘Calculativeness, Trust, and Economic Organization’, Journal of Law and Economics, 36(1): 453–486.CrossRefGoogle Scholar
Williamson, O. E. (1995), ‘Hierarchies, Markets and Power in the Economy: An Economic Perspective’, Industrial and Corporate Change, 4(1): 21–49.CrossRefGoogle Scholar
Williamson, O. E. (1996a), ‘Revisiting Legal Realism: The Law, Economics, and Organization Perspective’, Industrial and Corporate Change, 5(2): 383–420.CrossRefGoogle Scholar
Williamson, O. E. (1996b), ‘Efficiency, Power, Authority and Economic Organization’, in Groenewegen, J. (ed.), Transaction Cost Economics and Beyond, London: Kluwer Academic Publishers, pp. 11–42.CrossRefGoogle Scholar
Williamson, O. E. (1996c), The Mechanisms of Governance, New York: Oxford University Press.Google Scholar
Williamson, O. E. (1999a), ‘Public and Private Bureaucracies: A Transaction Cost Economics Perspective’, Journal of Law, Economics and Organization, 15(1): 306–342.CrossRefGoogle Scholar
Williamson, O. E. (1999b), ‘Strategy Research: Governance and Competence Perspectives’, Strategic Management Journal, 20(12): 383–420.3.0.CO;2-Z>CrossRefGoogle Scholar
Williamson, O. E. (2000), ‘The New Institutional Economics: Taking Stock Looking Ahead’, Journal of Economic Literature, 38(3): 595–613.CrossRefGoogle Scholar
Williamson, O. E. (2002), ‘The Lens of Contract: Private Ordering’, American Economic Review, 92(2): 438–443.CrossRefGoogle Scholar
Williamson, O. E. (2005a), ‘Why Law, Economics and Organization?’, Annual Review of Law and Social Science, 1: 369–396.CrossRefGoogle Scholar
Williamson, O. E. (2005b), ‘The Economics of Governance’, American Economic Review, 95(2): 1–18.CrossRefGoogle Scholar
Williamson, O. E. (2007), ‘An Interview with Oliver Williamson’, Journal of Institutional Economics, 3(3): 373–386.Google Scholar
Williamson, O. E. (2008), ‘Transaction Cost Economics and Organization Theory’, Communication for the HBS Conference on ‘Organizational Design: Current Debated and Future Opportunities’, 5–6 December 2008, Harvard University (available at: http://www.hbs.edu/units/ob/pdf/HBS_Org_Design_Conf_v2_12–08Williamson.pdf).Google Scholar
Williamson, O. E. (2009), ‘Pragmatic Methodology: A Sketch, with Applications to Transaction Cost Economics’, Journal of Economic Methodology, 16(2): 145–157.CrossRefGoogle Scholar
Williamson, O. E. (2010a), ‘Transaction Cost Economics: The Natural progression’, American Economic Review, 100(3): 673–690.CrossRefGoogle Scholar
Williamson, O. E. (2010b), ‘Corporate Boards of Directors: In Principle and in Practice’, Journal of Law, Economics and Organization, 24(2): 247–272.CrossRefGoogle Scholar
Williamson, O. E. (2014), ‘Transaction Cost Economics: The Origins’, Journal of Retailing, 86(3): 227–231.CrossRefGoogle Scholar
Williamson, O. E. (2016), ‘The Transaction Cost Economics Project: Origins, Evolution, utilization’, in Ménard, C. and Bertrand, E. (eds), The Elgar Companion to Ronald H. Coase, Cheltenham, UK and Northampton, MA: Edward Elgar Publishing, pp. 34–42.CrossRefGoogle Scholar
Williamson, O. E. and Ouchi, W. G. (1983), ‘The Markets and Hierarchies Program of Research: Origins, Implications, Prospects’, in Francis, A., Turk, J. and Williams, P. (eds), Power, Efficiency and Institution : A Critical Appraisal of the ‘Markets and Hierarchies’ Paradigm, London: Heineman, pp. 13–34.Google Scholar
Williamson, O. E., Wachter, M. L. and Harris, J. E. (1975), ‘Understanding the Employment Relation: The Analysis of Idiosyncratic Exchange’, Bell Journal of Economics, 6(1): 250–278.CrossRefGoogle Scholar