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

Theories of the Firm - or Frameworks ?

JC SpenderLUSEM & 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– ......

18-May-2010 Lund ToF Seminar 2

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


theories of employment


tyranny oath market“employment”

Coase - subordination

principal-agent theory

rational-expectations

Barnard - executive contribution

(Etzioni) coercive cultural 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


people things

elements PAT RBV/IO/5F

entities TCE TP/PR

Penrose 1959

decomposable systemsSimon (PAPS 1962)

Barnardian framework


personalpersonal

social physical

executive function“organizational system” - meta-discourse

Porterian - framework


competitors

customers

suppliers

new entrants

substitutes

value chain /rent stream

confidence level

methodological illustrationbases of mkt power in strategic groupmanagerial 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


determined vs agentic action


independent & dependent variablesprimacy of analysis

I1

I2 I3

D managing causes to control effects

interactive / under-determinedopen space action

non-objective constraintsprimacy of Q = agency/experience

D = f (I1-n) + ε

O = f (C1-n) * QSchumpeter, agent as cause

C1

C2

C3

(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


post-Enlightenment theory of the self - my MoI


individuality

sociability

imaginationrationality

docilitymemoryemotionlearning

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


deductive inductive

agentic evolutionary



agentic/open instrumental/closed

elements PAT RBV

entities TCE/5F TP/PR

Documents

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