Organizations and Markets

Integrating Hirschman and TCE

21 September 2006 at 12:16 am Peter G. Klein 2 comments

| Peter Klein |

Another interesting paper from the May 2006 issue of Economic History Review is Tetsuji Okazaki’s “‘Voice’ and ‘Exit’ in Japanese Firms During the Second World War: Sanpo Revisited.”  The “Sanpo” was a government-sponsored labor-bargaining organization for large firms. “This article examines the role of sanpo, using prefecture-level and firm-level data, based on a framework integrating the ‘voice view’ of unionism and transaction cost economics.”

Incidentally, Williamson has an interesting discussion of voice in “Calculativeness, Trust, and Economic Organization” (JLE, April 1993; ch. 10 of The Mechanisms of Governance). Responding to the claim that TCE (and the economic notion of “calculative trust” more generally) elevates exit over voice, Williamson writes:

First, if voice in the absence of an exit option is relatively ineffective, which evidently it is (Hirschman, 1970), then voice really does have a calculative aspect. Second, voice works through mechanisms, and those mechanisms are often carefully designed. . . . The voice mechanics are often defined by the terms of the contract. . . . Plainly, the procedures through which voice is expected to work [in a contract] are laid out in advance. Again, therefore, calculativeness is implicated in the design of ex post governance (voice).

In TCE, therefore, the “importance of voice is not in the least discredited. Instead, voice is encompassed within the extended calculative perspective” (pp. 255-56).

Entry filed under: - Klein -, Business/Economic History, Recommended Reading.