Zusammenfassung OT

- Increased specialization leads to higher productivity

- Specialization increases with lower cost of exchange

- Institutions influence the cost of exchange in a country

- Asymmetrical Information

- Transaction partners are characterized by bounded rationality

- Transaction partners act opportunistic

Actors strive for rational decisions but have limited information processing capacity.

            -->They rely on heuristics (decision rules based on experience)

- Strategical maximization of own benefit even at the cost of others

- Might even use deception

- Not perfectly transparent

- Reduce uncertainty and protect from opportunistic behaviour by negotiation of a contract

- Socially constructed constraints on human interaction with the purpose to increase order and decrease uncertainty

- Contain enforcement characteristics (e.g., contract)

- Lack of Information (asymmetry) --> reduced by organisations

- High transaction costs --> reduced by organizations and legal systems

- Achievability of economics of scale --> Government (provision of public goods)

- Externalities --> Legal system

- Logic: Compare arrangements: market, hierarchy (firm), hybrid

- Use: Make or buy, integration, cooperation?

- Aim: Understanding principal agent relationships

- Logic: Compare mechanisms to align interests

- Ex-Ante: Searching and bargaining.

- Ex-Post: Monitoring and Enforcement

- Construction (administration and maintenance)

- Operating (information cost due to monitoring staff, physical transfer of goods)

- P delegates to A who is in turn accountable to P (organized via contract)

- Information asymmetry (A>P)

- Different utility functions

- A tends to act opportunistic

--> Agent’s interests must be aligned with those of principal.

- Ex ante information unknown to principal --> adverse selection

- Solutions: Signalling and Screening

-Signalling (hire ability via certificate) --> higher education leads to higher wage

- Screening (Tests such as assessment centres) --> higher search costs and information quality

- Outcome of agent’s actions cannot be assessed (results due to environment or effort?)

--> Moral hazard (e.g., shirking)

- Solutions: Outcome based contracting and Monitoring

+ Perceived goal conflict, risk aversion of P, measurability of outcome

- Risk aversion of A, outcome uncertainty

+ Specificity (also leads to hold up problem)

+ Complexity (e.g., delivering new non standardized components)

+ Connectedness ( to other transactions e.g., other OEMS)

+ Difficulty of measuring (Has the desired outcome been achieved?)

- Frequency (of similar transactions)

- Low --> Market

- Medium --> Cooperation

- High --> Hierarchy

- Organizations as adaptive coalitions

- Boundedly rational decision making

- Study of Market factors must be supplemented by examining internal factors of the firm. (Opening up the black box of the firm)

--> hence the effects of organisational structure on the development of goals, expectations and choices

- To understand the reality of organizational decision-making processes with a focus on large, multi-product firms operating under uncertainty in an imperfect market

- How are goals defined

- How is goal attainment evaluated

- How do organizations react to failed goal attainment

- How do organizations search for solutions and how they learn?

- Effects of past experiences and biases

- Coalitions (goal conflicts with room for negotiation)

- Routines (Exploits wisdom and gives stability, economizes time and attention)

- Aspirations (1. Identifying meaningful goal variables e.g., profit - 2. Defining aspiration level = lowest satisfactory level of goal attainment) à Satisficing means achieving aspiration level regarding all goal variables

- Organizational search (yields information about alternatives and triggers adaptation)

- Historical (e.g., based on own past achievements)

- Social (based on comparison – e.g., relative to similar companies)

- Quasi resolution of conflict

- Uncertainty avoidance

- Problemistic search

- Organizational learning

- Specialisation (allocation of goals to subunits)

- Sequential attention to conflicting goals 

- Avoid uncertainty e.g., by contracts

- Short run feedback rather than foresight (firefighting approach)

- Reliance on industry wide best practices

- Motivated by a problem (occurs for a reason)

- Simple minded (in proximity of problem symptom and only broadened if no result is found)

- Biased (shaped by prior experience but also power dynamics)

- Adaption of goals (Again by comparison with historical goals or with competitors)

- Adaption of attention rules ( towards goal variables which produces results deemed satisfactory by decision makers) --> Focus on achievable goal values e.g., focusing on research funding instead of teaching excellence. Or just comparing to German Universities instead of globally

- Adaption of search rules (when local search yields no result search is broadened)

- Extra resources ( Performance – Aspiration > 0) lead to Slack (Extra resources) which might also increase slack search (finding ideal way to use these resources)

- Problemistic search (when performance relative to aspiration decreases search is intensified)

- Slack research (When slack increases so do search efforts)

- Threat rigidity (innovative search only occurs as a response to performance shortfalls if immediate survival isn’t threatened)

- Highlights limitations of organisational adaptation such as structural inertia

--> Leads to environmental selection.

- Purpose is to explain birth, growth and death of organizational forms

- Focus on entire populations of organizations

- Assumption that resulting value of adaptation is random (like mutations)

- Population (consisting of similar organizations)

- Structural inertia (Adaptation is slower than environmental change)

- Evolutionary Process (Variation, selection, retention)

- Bounded rationality

- Organizations are inert hence they can only imperfectly adapt

- Inertia might also be beneficial since value of changes is random

- Organizational change mainly occurs on the population level (Emergence of new firms not individual adaptations)

- Organizational change influenced mainly the environment instead of managerial agency (deterministic)

- Common form (e.g., Product) --> How they transform inputs into outputs

- Common environmental vulnerability (e.g., changing customer preferences like online shopping)

- Formal structure (e.g., organized in physical stores)

- Patterns of activity

- Normative orders (how to be successful)

- Social Pressure

- Demographic Pressure

- Economic Pressure

- Ethical Pressure

- Sunk cost (previous investments)

- Internal information constraints (lacking information regarding environmental impact on subunit)

- Internal political constraints (short term cost leads to resistance from subunit leads)

- Legal and fiscal barriers (market entry and exit barriers)

- External information constraints (information about relevant developments is costly and difficult to obtain)

- Organizational legitimacy (Fear of reputation loss)

- Caused by entrepreneurial activity

- Inter population imitation (from other populations)

- Spin offs (e.g., paid university courses for executives)

- Government intervention (Bologna reform)

--> Variations in the same population with random future value

- Organizational forms compete for scarce resources (e.g., qualified staff members)

- Reliability (of methods) and accountability (for decisions made) lead to easier resource access

--> Environment selects (survival of the fittest)

- Death of unfit organizations

- Routinization (conserving survival enhancing features) and institutionalization (in the form of cultural beliefs and values)

- Inertia is a byproduct of the retention mechanism

- Might lead to separation or spinoff ( split into adapted and old type of organization)

 e.g., conventional and online university

- Foundation of a new organization

--> even if the individual organization did not change variety is introduced to the population.

- Quality of fit determines ability to attract scarce resources --> leads to survival or death

- Standardization in the form of routines (Routinization) e.g., a rating system for exams

- Institutionalization in the form of structures e.g., a committee which has been established --> when a structure is taken for granted (e.g., bachelor master system as part of what defines a university) the institutionalization is completed

--> Stronger routinization and Institutionalization lead to higher Inertia (paradox of inertia)

- May be useful since survival enhancing features are not changed without a reason

- May also be harmful because if reduces the adaptive flexibility.

- Previous theories explain organizational diversity but Institutional Theory tries to explain homogeneity of organizational forms and practices.

- Initially organizations display diversity but then there’s a push towards homogenization (Isomorphism)

- Theory of interrelations between organizations and institutions

- Theme of Efficiency vs Legitimacy

- The claim is that this isomorphism is not mainly due to identical environmental circumstances as proposed by Population ecology theory (competitive Isomorphism)

- This increases legitimacy in the eyes of important stakeholder --> access to resources

- Legitimacy might even be more important than efficiency

- Develop models of how organizations react to institutional pressure

- Bounded rationality

- Institutional environments create expectations to which the organization should conform

- Organisations can be passive respondents or active shapers in the institutional environment

- Socially constructed rules which guide and constrain human behaviour

- Three pillars of institutions (Regulative, Normative, Cognitive)

- Rules and laws which can be legally enforced e.g., student representation (Must be followed)

- Morally right and socially desirable e.g., offer a course on business ethics (should be followed)

- Taken for granted and no longer questioned e.g., business schools should also do research and not just teaching

- Social judgement by meaningful actors as desirable or appropriate

- Subject of legitimacy ( e.g., management or practices)

- Source of legitimacy (audience e.g., state or general public)

- Type of legitimacy pragmatic (self-interest), moral or cognitive (acceptance as necessary

- Institutions are given and exert pressure on organizations --> institutional determinism

- Organizations as passive responders which predominantly conform to pressures --> Institutional diffusion

- Organizations may also actively shape institutions

- Organizations shape external expectations and norms --> Institutional Entrepreneurship

+ Dependence on resources

+ Uncertainty about how to achieve goals.

+ Centralization of resources

- Coercive e.g., environmental regulations (Regulative Institutions)

- Normative (motivated by need to keep a professional standard)

- Mimetic = Observing and imitating organizations seen as legitimate (motivated by need to overcome uncertainty)

- Method to overcome the goal conflict between legitimacy and efficiency

- Decoupling of visible formal structures while activity varies in response to operational considerations (creating a facade of conforming)

- Type of decoupling aimed at exploiting institutional differences between countries (e.g., production in non-European countries due to lower environmental regulations)

- Conforming (following mimicking)

- Avoiding (Decoupling)

- Defying (Ignoring e.g., keep offering diploma degree)

- Manipulating (Shaping or even dominating institutions)

- Sustained competitive advantage stems from resources controlled by the firm

- These resources have to be valuable, rare, imperfectly imitable and not substitutable (VRIN) (Also Exploited by organization)

- These resources also include reputation, management skills and routines

- Explaining sustained competitive advantage within one industry

- What determines strategic value of firm resources

- How can resources be protected from obsolescence and imitation

- Unlike environmental determinism there is scope for managerial agency

- Existence of intra–industry differences attributed to resource endowments

- Structure of industry explains performance (External view)

- Focus on industry analysis (Porters 5 forces e.g., rivalry, bargaining power of suppliers & customers, threat of substitutes or new competitors)

- Resources (Intra industry differences) explain performance (Internal view)

- Focus on resource analysis

--> Antithesis to market-based view

- Value creating strategy which can’t be imitated by competing firms

- Strengths the firms can use to implement their strategies which improve efficiency and effectiveness (efficiency shouldn’t be part of the definition)

Attributes of resources

- They differ between organizations

- They are imperfectly mobile

- They can be strategically relevant

- Tangible (Financial, e.g., borrowing capacity --> credit rating

- Intangible (Technology, e.g., patents --> Nr of patents owned)

- Human (e.g., External networks --> Quality of partners)

- Focus on quality and quantity of resources

- Little emphasis on resource reconfiguration and agility

- Focus on optimal orchestration in response to context (e.g., soft soil for tanks)

- Emphasis on routines that facilitate rapid coordination and reconfiguration

--> sense, seize and reconfigure.

- Sensing changes in needs and the environment (demand for remote degree)

- Seizing = responding to insights (offering a remote degree)

- Reconfiguration = changing of resource configuration (finding new partners which are necessary to realize the introduction of a online course)

- Product development

- Introducing and defending industry standards

- Mergers and acquisition

- Incremental dynamic capabilities = continuous improvement of resource base (fine tuning which is used in stable environments)

- Renewing dynamic capabilities = periodical refreshing and adapting the resource base ( e.g., develop new technologies for dynamic environments)

- Regenerative dynamic capabilities = rethinking the way we change our resources (e.g., including students in the development of the curriculum)