Transcript Theories of the Firm - or Frameworks

Theories of the Firm - or Frameworks ?
JC Spender
ESADE & LUSEM
units of analysis & problematics
environment
organization
/ firm
people (e.g. employee)
things (e.g. resource, routine)
market
boundary
fit
adapt
change
vitality
manage
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ESADE seminar
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1st - organization as (social) system
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Herbert Spencer, Talcott Parsons, Chester Barnard
mechanism / servo-system
bio-system / organism / autopoietic / evolutionary
culture - meaning system / language-game
chaotic / complex / ordered system (Boisot)
• system elements - inanimate stuff or people ?
• methodological individualism
• what model of the individual (MoI) ?
– rational
– something else
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ESADE seminar
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2nd - non-systems - societies writ small ?
society
Natural Law -
gemeineschaft
Natural
Rights -
gesellschaft
freedom
property
ethics, duty
organization
invisible hand & economic man *
imperfections of two types
John Locke
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ESADE seminar
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John
Locke
1632-1704
Michael Dahl, oil on canvas, 1696
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ESADE seminar
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3rd - theories of employment
(Etzioni)
tyranny
coercive
cultural
oath
calculative
“employment”
market
nexus of contracts
rational-expectations
Coase - subordination
principal-agent theory
transaction cost - governance
Barnard - executive contribution
Simon - docility
11-May-2010
ESADE seminar
what MoI to
adopt? What does
s/he do?
endogenous growth
entrepreneurship
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reprise - current theories of the firm (ToF)
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bureaucracy
organism / self-organizing
culture
political system
CMS
psychic prison
flux
domination
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resource dependence
new institutional theory
population ecology
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principal-agent
transaction cost
team production, property rights
IO / 5-forces / RBV
people
things
elements
PAT
RBV/IO/5F
entities
TCE
TP/PR
decomposable systems
Simon (PAPS 1962)
Penrose 1959
11-May-2010
ESADE seminar
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imperfection / uncertainty
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what do people actually do ?
mediate rationally between cause & effect
equilibrium or other theory
determinative
judgment
rationality
• incompleteness - e.g. bounded rationality
(emic/etic)
• “uncertainty” (not risk)
– ignorance
– indeterminacy
– incommensurability
• apply judgment / imagination / agency
• “open space” - ‘ba’
• framework - non-determinative
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ESADE seminar
reasoned practice
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Barnard
social
personal
executive function
“organizational
system”
11-May-2010
physical
ESADE seminar
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Porter
confidence level
customers
new entrants
value chain /
rent stream
competitors
substitutes
suppliers
evaluating mkt power
industry - strategic group
managerial choice
11-May-2010
ESADE seminar
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principal-agent
Jensen & Meckling
• agency costs
– monitoring
– bonding
– residual loss
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incentive design
single period - time-less
single dimension/resource
determinative
BUT - logical error
Mitnick, Fama, White
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11-May-2010
managing - or - risk bearing
risks distributed
multiple periods - time-full
multiple dimensions (financial and
human capital)
learning - emic imperfections
risk management - etic imperfections
ex-post & reputational measures different etic imperfections
trust
non-determinative
ESADE seminar
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determined vs agentic action
independent &
dependent variables
primacy of analysis
I2
I1
I3
D
D = f (I1-n) + ε
managing causes to
command & control effects
C2
C1
interactive / under-determined
open space action
non-objective constraints
primacy of Q = agency & experience
C3
O = f (C1-n) * Q
Schumpeter
11-May-2010
selecting field of action
& put in motion
ESADE seminar
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managing ?
theory - positivist
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finding a theory
discovery of facts
analysis
rational choice
control
measurement
objective
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framework - constructivist
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ESADE seminar
managerial choice
in-the-world milieu
experienced constraints
judging possibilities
acting
learning
subjective
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ToF as Framework
sole entrepreneur
• factor Q
• all one can say
• theory of judgment
distributed agency
• what managers cannot do for
themselves
• complexity
• Penrose ‘mgt team’
• managing - the rhetorical shaping of
others’ agentic action
• Balanced Scorecard
• strategic tools & discourse
• empirical research
• casework
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ESADE seminar
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summary
• do we have a theory of the firm ?
• what is management ?
• firm as engine of wealth creation
– exogenous
– endogenous
• can we differentiate:
– entrepreneurship
– leadership
– strategizing
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agentic/open
instrumental/closed
elements
PAT
RBV
entities
TCE/5F
TP/PR
ESADE seminar
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