Organizations and Markets

Efficient Organizational Design by Marco Weiss

25 June 2007 at 2:57 pm Nicolai Foss Leave a comment

| Nicolai Foss |

Good textbooks in organizational economics are badly missing from the market. In particular, good textbooks that are more advanced than Brickley, Smith, and Zimmerman’s Managerial Economics and Organizational Architecture (great book, BTW), but still more accessible than the average organizational economics research papers, basically do not exist. Milgrom and Roberts’s Economics, Organization, and Management has much interesting material in it, but there is simply too much material (students drown) and the book is extremely uneven in terms of readability (some chapters, e.g., chpt. 4 are hard to read even for advanced readers and even more for students). George Hendrikse’s Economics and Management of Organizations is organized much like the Milgrom and Roberts book but is more readable. However, parts of it are too difficult for the average 3rd or 4th year business student.

Efficient Organizational Design by Marco Weiss is not a textbook per se, but it does fill a gap and it is useable as a textbook in organizational economics courses. As the title indicates, this is organizational design theory from an economics perspective, mainly the kind of thinking best associated with Paul Milgrom and John Roberts, that is, a mix of incentives and property rights theory, held together by an emphasis on complementarity between organizational elements.

Weiss is extremely widely read and summarizes a large and difficult literature in a most admirable fashion, relating it to not only currents in strategic management and organization theory but also to Austrian and evolutionary economics. The almost 200 pages that consistute Part I of the book, “Theory of Organizational Design,” is a tour de force. Part II consists of 2 case studies of the European securities transaction industry and the German cooperative banking groups, and a discussion of open-source project organization. These are fine cases that illuminate many of the principles of organizational design in Part I.

A highly recommended contribution.

Entry filed under: - Foss -, New Institutional Economics, Recommended Reading, Theory of the Firm.