Strategy Research: Governance and Competence Perspectives Oliver E

Slides:



Advertisements
Similar presentations
S TRATEGY R ESEARCH : G OVERNANCE A ND C OMPETENCE P ERSPECTIVES Written by: Oliver E. Williamson Published in: 1999 Presented by : Orange.
Advertisements

Presented by Carla Fernández-Corrales, Fall, 2014
Law, Economics and Organization in Proactive International Contracting A presentation at the Future Law, Lawyering, and Language - Helping People and.
STRATEGIC ASSETS AND ORGANIZATIONAL RENT Amit, R., & Schoemaker, P. J. H., SMJ, 1993 Youngsoo Kim, BADM 545 Fall 2013.
Silverman – 1999, MS TECHNOLOGICAL RESOURCES AND THE DIRECTION OF CORPORATE DIVERSIFICATION: TOWARD AN INTEGRATION OF THE RESOURCE-BASED VIEW AND TRANSACTION.
Resources and Transaction Costs: How Property Rights Economics Furthers the Resource-Based View Authors: Kirsten Foss and Nicolai J. Foss Strategic Management.
Strategy Research: Governance and Competence Perspectives Oliver E. Williamson, 1999, SMJ Presented by Wenting (Christy) ZHU 1.
……Motivation: contracts, information and incentives M/R Chapter 5.
DJ, 2003 Theories of the Firm Transaction Cost. DJ, 2003 Introduction z Coase – on the nature of the firm y Firms exist to minimise transaction costs.
1 A Naturalistic Approach to the Theory of the Firm: The Role of Cooperation and Cultural Evolution Christian Cordes Evolutionary Economics Group November.
Dynamic Capabilities and Strategic Management
Economic Foundations of Strategy Chapter 2: Transaction Costs Theory
Economic Organization Theory by Erlan Bakiev, Ph. D.
OM 석사 2 학기 이연주 Markets for technology and their implications for corporate strategy Arora et al. (2001)
Technological Resources and the Direction of Corporate Diversification: Toward an Integration of the Resource- based View and Transaction Cost Economics.
 Don’t Fence Me In: Fragmented Markets for Technology and the Patent Acquisition Strategies of Firms Ziedonis, Rosemarie H. Management Science, 50 (6):
Producer decision Making City University Producer Decision Making The firm Production Function Q = F(L,K, N)
1 Transaction Cost Economics of Agricultural Product Exchanges for Biopower: Theory and Evidence Ira Altman Graduate Research Assistant Community Policy.
The Network Economy Session Five February 24, 2010 Information, Transaction Costs & Organizational Change.
Author: Villalonga, B. and McGahan, A. Strategic Management Journal, 26 (13): Presented by Nan Zhang.
Technological change as an evolutionary process
BA 5201 Organization and Management Organizational governance and control Instructor: Ça ğ rı Topal 1.
Page 1/20 The Choice of Organizational Form: Vertical Financial Ownership Versus Other Methods of Vertical Integration Joseph Mahoney, SMJ, 1992 Presented.
1 Knowledge-based Approaches to the Theory of the Firm: Some Critical Comments Prepared by group 3: Jason Franken, Prasanna Karhade Jason Franken, Prasanna.
Comparative Economic Organization: The Analysis of Discrete Structural Alternatives Oliver E. Williamson, 1991 Published in Administrative Science Quarterly.
Raphael Amit & Paul Schoemaker – 1993, SMJ STRATEGIC ASSETS AND ORGANIZATIONAL RENT.
1 Testing Alternative Theories of the Firm: Transaction Cost, Knowledge-Based, and Measurement Explanations for Make-or-Buy Decisions in Information Systems.
Dynamic Capabilities and Strategic Management
1 New Institutional Economics: Implications for Rural Development Research and Extension Programs James N. Barnes, Ph.D. Assistant Professor of Rural Development.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1 Industrial Dynamics: Introduction and Basic Concepts Industrial Structures and Dynamics: Evidence, Interpretations and Puzzles by Dosi, G., F. Malerba,
Collis & Montgomery, Chapter 5 By Dwi Joko Pramudito Song Young Kang.
1 New Institutional Economics: An Evolutionary View of the Literature James N. Barnes, Ph.D. Assistant Professor of Rural Development Department of Agricultural.
Article by Caroline Moser
The Cost of Organization
Research Problem, Questions and Hypotheses
Comparative Economic Organization: The Analysis of Discrete Structural Alternatives Oliver E. Williamson, 1991 Published in Administrative Science Quarterly.
Economics of innovation (1)
1A-0 Bateman Snell Management Competing in the New Era 5th Edition.
An Empirical Examination of Transaction- and Firm-Level Influences on the Vertical Boundaries of the Firm Leiblein, Michael.
Strategy Organization (2012), 10(3):
Weihao Li (Originally created by Youngsoo Kim)
CONTRACTUAL COMMITMENTS, BARGAINING POWER, AND GOVERNANCE INSEPARABILITY: INCORPORATING HISTORY INTO TRANSACTION COST THEORY NICHOLAS S. ARGYRES JULIA.
Presented by: Hyeonsuh Lee
The Choice of Organizational Form
6 The Manager as a Decision Maker.
Management Practices Lecture 8.
Slides by Minjae Lee, BADM 545 Fall 2013
Real Options: Taking Stock and Looking Ahead
The Choice of Organizational Form: Vertical Financial Ownership versus Other Methods of Vertical Integration (Joe Mahoney, SMJ 1992) I-Chen Wang.
Malmgren, Harold B. (1961). “Information, Expectations, and the Theory of the Firm,” Quarterly Journal of Economics 75: Group 3: Jason Franken.
The Costs of Organization
Articulate how the practice of management has evolved
TRANSACTION COST ECONOMICS: THEORY
Strategy Research: Governance and Competence Perspectives
1 Limits, Alternatives, and Choices
Evolution of mgt. theories
Is My Firm-Specific Investment Protected
Vertical Integration and The Scope of the Firm
Economic Foundations of Strategy Chapter 2: Transaction Costs Theory
Dynamic capabilities and strategic management
Economics of Organization Chapter 2: Transaction Costs Theory
Prepared by: Enrique, Lihong, John, Jongkuk
Vertical Integration and The Scope of the Firm
Economic Foundations of Strategy Chapter 2: Transaction Costs Theory
Mutual Accountability and Development Partnerships
Testing Alternative Theories of The Firm:
Dynamic Capabilities and Strategic Management
Joseph T. Mahoney and Lihong Qian Strategic Management Journal (2013)
The Choice of Organizational Form: Vertical Financial Ownership V. S
Presentation transcript:

Strategy Research: Governance and Competence Perspectives Oliver E Strategy Research: Governance and Competence Perspectives Oliver E. Williamson, 1999, SMJ Eva Herbolzheimer

Objective and Introduction Comparing the Governance (TCE) and the Competence (Capabilities) approaches and exploring future research opportunities and issues. “Six Key Moves” through which TCE has been operationalized, and applying the same moves to the competence perspective Key issues that TCE must address: Dynamic Transaction Costs Learning Generic Governance in TCE

Six moves to operationalize TCE (I) Human actors Bounded rationality, which leads to incomplete contracting Foresight (to build in dispute settling to incomplete contract) Self-interest Adverse selection, moral hazard and opportunism Unit of analysis Transaction TCE variables: frequency, uncertainty, and asset specificity Describing the firm In organizational terms as a governance structure rather than technological term (firm vs. market) Incentive intensity, administrative controls and legal rules regime To deal with Coasean puzzle: “replication,” “selective intervention,” and bureaucratic costs

Six moves to operationalize TCE (II) Purposes Served Discriminating alignment hypothesis: transactions are aligned with governance structures (transaction specific investment cost = k; safeguards = s)

Six moves to operationalize TCE (III) Empirical The theory and evidence display a remarkable congruity Efficiency criterion No feasible superior alternative More conceptual rather than operational Rebuttable

Six moves to operationalize competence (I) Human actors Bounded rationality (implicit) e.g., learning and incomplete contracting Myopia (fire department) Emphasize elusive notion of trust instead of opportunism Unit of analysis Resource in the resource-based approach Routine for evolutionary economics theory Describing the firm Emphasizes management and organization features and rejects that firm is a production function Firm as bundle of resources / routines Doesn’t address limit to firm size issue (only limit to growth)

Six moves to operationalize competence (II) Purposes served When to learn and develop interpersonal relations in a single, combined firm rather than in two separate firms? Which firms are more and which are less competent in deploying their institutional capabilities to protect their knowledge? Empirical Entails ex post rationalizations for success and has been remiss in predictive respects Research opportunity: view TCE as feeding into the competence perspective in much the same way as organization theory is grist for the study of governance Efficiency criterion Competence deals with dynamic efficiency (learning and innovation) A feasible criterion for judging dynamic efficiency is never proposed Path dependency

Overdrawn critiques of TCE Opportunism does not have the organizational consequences that have been ascribed to it Opportunism absent: no moral hazard, adverse selection, shirking, filtering, undisclosed sub-goal pursuit, distortions etc. Initial conditions can be more consequential Transaction cost is a static concept and needs to be made dynamic Timely adaptation and timely convergence Intertemporal arguments are central to TCE But, TCE could benefit from more dynamic constructions Governance does not engage the issues of management Underdeveloped cognitive specialization, imperfect understanding of bureaucracy and entrepreneurship

Research opportunities from “competence perspective” for TCE (I) Beyond piecemeal Redefine the transaction to consider interaction effects The firm as a whole is larger than the sum of parts (e.g. informal organization) Learning Relate learning to foresight and examine the myopic tendencies of learning. Call for the lens of both TCE and competence to uncover the myopic biases Beyond generic governance: strategy (see table 1)

Research opportunities from “competence perspective” for TCE (II)

Conclusion Governance and competence are both rival and complementary (more complementary). Both can answer the key questions of existence, structure, and boundaries of firms. For the competence perspective, the principal factor explaining the existence, structure, and boundaries of firms is the capacity of such an organization to protect and develop the competences of groups and individuals contained within it For TCE, the principal factor is transaction cost. TCE informs the generic decision to make-or-buy while competence brings in particulars (learning, path dependences, technological opportunities, and complementary assets)

Discussion What advances in operationalization has the competence perspective made in the time since Williamson’s 1999 article was published? What advances has TCE made in order to respond to the critiques of the advocates of the competence perspective?