Theories of the Firm - or Frameworks ? JC Spender LUSEM & ESADE

questions what are organizations ? why do they exist ? what do managers do ? unelected - to be held responsible as citizens ? management education & research methods ? ‘horses for courses’ several possible discourses – functional – power, capitalist ethos, professionalization – emancipation, opportunity, human flourishing – economic functioning - orgs/markets – K-generative/value chain, endogenous, entrepreneurship – May-2010Lund ToF Seminar2

uncertainty - agency - rhetoric - responsibility Knightian uncertainty Lockean model of the individual (MoI) – reason + imagination rationality vs agency methodology issues - theory vs framework framing the agentic space Barnard Porter PAT constrained maximization - Bentham theory of the employment situation – subordination & manipulation responsibility, business ethics 18-May-2010Lund ToF Seminar3

theories of employment 18-May-2010Lund ToF Seminar4 tyranny oath market“employment” Coase - subordination principal-agent theory rational-expectations Barnard - executive contribution (Etzioni) coercivecultural calculative nexus of contracts transaction cost - governance Simon - docility

theories of the firm - or are they frameworks ? bureaucracy system organism culture psychic prison CMS resource dependence new institutional theory population ecology self-organizing principal-agent transaction cost team production, property rights IO / 5-forces / RBV 18-May-2010Lund ToF Seminar5 peoplethings elementsPATRBV/IO/5F entitiesTCETP/PR Penrose 1959 decomposable systems Simon (PAPS 1962)

Barnardian framework 18-May-2010Lund ToF Seminar6 personal socialphysical executive function “organizational system” - meta-discourse

Porterian - framework 18-May-2010Lund ToF Seminar7 competitors customers suppliers new entrants substitutes value chain / rent stream confidence level methodological illustration bases of mkt power in strategic group managerial choice

principal-agent... NOT agency Jensen & Meckling agency costs – monitoring – bonding – residual loss single period - time-less single dimension/resource incentive design Rational Man determinative BUT - logical error ** Mitnick, Fama, White ‘managing’ - versus - ‘risk bearing’ risks distributed ex-post & reputational measures multiple periods - time-full multiple dimensions (financial, social and human capital) Learning & Trusting MoI non-determinative 18-May-2010Lund ToF Seminar8

determined vs agentic action 18-May-2010Lund ToF Seminar9 independent & dependent variables primacy of analysis I1I1 I2I2 I3I3 D managing causes to control effects interactive / under-determined open space action non-objective constraints primacy of Q = agency/experience D = f (I 1-n ) + ε O = f (C 1-n ) * Q Schumpeter, agent as cause C1C1 C2C2 C3C3 (a) selecting field of action (b) put in motion

ToF as Framework sole entrepreneur factor Q all one can say - without a theory of judgment distributed agency what managers cannot do for themselves co-option and mutuality Tarde, Bales Penrose ‘mgt team’ managing - the rhetorical shaping of others’ agentic action - docility (Simon, Freud) Organization Man (Whyte 1956) Balanced Scorecard casework empirical research 18-May-2010Lund ToF Seminar10

post-Enlightenment theory of the self - my MoI 18-May-2010Lund ToF Seminar11 individuality sociability imaginationrationality docility memory emotion learning

methodology & managing theory - positivist finding a theory discovery of facts analysis rational decision-making control & measurement objective & irresponsible framework - agentic managerial choice in-the-world of experienced contingent constraints judging possibilities, augenblick promoting watchful & learning activity responsibility case-work & historical method 18-May-2010Lund ToF Seminar12 deductiveinductive agenticevolutionary

18-May-2010Lund ToF Seminar13

18-May-2010Lund ToF Seminar14 agentic/openinstrumental/closed elementsPATRBV entitiesTCE/5FTP/PR