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| Preface | |
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| The Problem of Economic Organization | |
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| Does Organization Matter? | |
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| Business Organization | |
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| Crisis and Change at General Motors | |
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| Toyota | |
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| The Hudsons' Bay Company | |
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| The Northwest Company | |
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| Organizational Strategies of Modern Firms | |
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| Salomon Brothers and the Investment Banking Industry | |
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| The Changing Economies of Eastern Europe | |
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| Recent History | |
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| Building Socialism | |
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| The Collapse of Communism | |
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| Patterns of Organizational Success and Failure | |
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| Economic Organization and Efficiency | |
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| Economic Organizations: A Perspective | |
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| Formal Organizations | |
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| The Level of Analysis: Transactions and Individuals | |
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| Efficiency | |
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| The Concept of Efficiency | |
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| Efficiency of Resource Allocations | |
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| Efficiency of Organizations | |
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| Efficiency as a Positive Principle | |
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| The Tasks of Coordination and Motivation | |
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| Specialization | |
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| The Need for Information | |
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| Organizational Methods for Achieving Coordination | |
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| Transactions Costs Analysis | |
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| Types of Transaction Costs | |
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| Dimensions of Transactions | |
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| Limits of the Transaction Costs Approach | |
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| Wealth Effects, Value Maximation and the Coase Theorem | |
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| The Value Maximization Principle | |
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| The Coase Theorem | |
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| The Transaction Costs Approach versus Alternative Views | |
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| Organizational Objectives | |
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| Profit Maximization | |
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| Other Goals and Stakeholders' Interests | |
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| Modelling Human Motivation and Behavior | |
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| Rationality-Based Theories | |
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| Case Study: Coordination, Motivation, and Efficiency in the Market for Medical Interns | |
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| Matching Problems and Failed Solutions | |
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| The Nation Intern Matching Program | |
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| The Evolution and Persistence of Organizational Forms | |
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| Coordination: Markets and Management | |
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| Using Prices for Coordination and Motivation | |
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| Prices and Coordination | |
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| One Objective and a Single Scarce Resource | |
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| A Market-Clearing Interpretation | |
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| Extensions and Difficulties | |
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| The Fundamental Theorem of Welfare Economics | |
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| The Neoclassical Model of a Private Ownership Economy | |
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| Scope of the Neoclassical Model | |
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| Incentives and Information Transfer Under Market Institutions | |
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| Incentives in Markets | |
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| Informational Efficiency of Markets | |
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| The Neoclassical Model and Theories of Organization | |
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| Market Failures | |
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| Market Failures and Organization | |
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| Using the Price System within Organizations | |
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| Patterns of Internal Organization in Firms | |
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| Transfer Pricing in Multidivisional Firms | |
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| Coordinating Plans and Action | |
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| The Variety of Coordination Problems and Solutions | |
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| Design Attributes | |
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| Innovation Attributes | |
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| Comparing Coordination Schemes | |
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| Prices versus Quantities: Assessing Brittleness | |
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| Some Examples | |
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| A Mathematical Formulation and Analysis | |
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| Constant and Increasing Returns to Scale | |
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| Economizing on Information and Communication | |
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| The Informational Requirements of Production Planning | |
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| Judging Informational Efficiency | |
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| Planning with Design Attributes | |
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| Coordination and Business Strategy | |
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| Scale, Scope, and Core Competencies of the Firm | |
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| Complementarities and Design Decisions | |
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| Complementarities, Innovation Attributes, and Coordination Failure | |
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| Management, Decentralization, and the Means of Coordination | |
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| Centralization and Decentralization | |
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| The Role of Management in Coordination | |
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| Motivation: Contracts, Information, and Incentives | |
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| Bounded Rationality and Private Information | |
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| Perfect, Complete Contracts | |
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| The Requirements of Complete Contracting | |
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| The Problems of Actual Contracting | |
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| Bounded Rationality and Contractual Incompleteness | |
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| Bounded Rationality | |
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| Contractual Responses to Bounded Rationality | |
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| Effects of Contractual Incompleteness | |
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| Investments and Specific Assets | |
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| Achieving Commitment | |
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| Private Information and Precontractual Opportunism | |
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| Bargaining over a Sale | |
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| Incentive Efficiency | |
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| Efficient Agreements with Large Numbers of Participants | |
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| Bargaining Costs | |
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| Measurement Costs and Investments in Bargaining Position | |
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| The De Beers Diamond Monopoly | |
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| Investing in Bargaining Advantages | |
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| Adverse Selection | |
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| Adverse Selection and the Closing of Markets | |
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| Adverse Selection and Rationing | |
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| Signalling, Screening and Self-Selection | |
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| Signaling | |
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| Screening | |
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| Implications | |
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| Moral Hazard and Performance Incentives | |
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| The Concept of Moral Hazard | |
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| Insurance and Misbehavior | |
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| Efficiency Effects of Moral Hazard | |
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| The Incidence of Moral Hazard | |
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| Case Study: The U.S. Savings and Loan Crisis | |
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| The Savings and Loan Industry | |
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| Deposit Insurance and Risk Taking: An Example | |
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| Incentives for Risk Taking with Borrowed Funds | |
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| The Perverse Effect of Competition | |
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| Fraud in the SandLs | |
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| Who's to Blame? | |
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| Public versus Private Insurance | |
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| Other U.S. Government Insurance and Guarantee Programs | |
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| Private or Public Insurance? | |
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| Moral Hazard in Private Life Insurance | |
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| Moral Hazard in Organizations | |
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| Moral Hazard and Employee Shirking | |
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| Managerial Misbehavior | |
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| Moral Hazard in Financial Contracts | |
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| Controlling Moral Hazard | |
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| Monitoring | |
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| Explicit Incentive Contracts | |
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| Bonding | |
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| Do-It-Yourself, Ownership Changes, and Organizational Redesign | |
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| Influence Activities and Unified Ownership | |
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| Unified Ownership and Selective Intervention | |
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| Influencing Interventions | |
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| Influence Costs and Failed Mergers | |
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| Efficient Incentives: Contracts and Ownership | |
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| Risk Sharing and Incentive Contracts | |
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| Incentive Contracts As a Response to Moral Hazard | |
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| Sources of Randomness | |
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| Balancing Risks and Incentives | |
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| Decisions Under Uncertainty and the Evaluation of Financial Risks | |
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| Computing Means and Variances | |
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| Certainty Equivalents and Risk Premia | |
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| Risk Premia and Value Maximization | |
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| Risk Sharing and Insurance | |
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| How Insurance Reduces the Cost of Bearing Risk | |
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| Efficient Risk Sharing: A Mathematical Example | |
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| Optimal Risk Sharing Ignoring Incentives | |
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| Principles of Incentive Pay | |
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| Basing Pay on Measured Performance | |
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| A Model of Incentive Compensation | |
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| The Informativeness Principle | |
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| The Incentive-Intensity Principle | |
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| The Monitoring Intensity Principle | |
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| The Equal Compensation Principle | |
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| Intertemporal Incentives: The Ratchet Effect | |
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| Moral Hazard with Risk-Neutral Agents | |
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| Problems with the Risk-Neutral Agent Scenario | |
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| Rents and Efficiency | |
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| When Distribution Affects Efficiency | |
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| Efficiency Wages for Employment Incentives | |
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| The Shapiro-Stiglitz Model | |
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| A Mathematical Example: Comparative Statics for Efficiency Wages | |
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| A Marxian View of Efficiency Wages | |
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| Additional Aspects and Applications of Efficiency Wage Theory | |
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| Reputations as Contract Enforcers | |
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| The Elementary Theory: Reputations in Repeated Transactions | |
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| Ambiguity, Complexity, and Limits of Reputations | |
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| The Advanced Theory: Reputations Aided by Institutions | |
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| Rent-Seeking, Influence Costs and Efficient Decision Routines | |
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| Rents and Quasi-rents | |
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| Rent Seeking in the Public and Private Sectors | |
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| Organizational Design: Optimizing Influence Activities | |
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| Influence Costs and the Legal System | |
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| Participatory Management | |
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| Ownership and Property Rights | |
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| The Concept of Ownership | |
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| Residual Control | |
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| Residual Returns | |
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| Pairing Residual Control and Returns | |
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| The Coase Theorem Reconsidered | |
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| Ill-Defined Property Rights and the Tragedy of the Commons | |
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| Untradable and Insecure Property Rights | |
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| Bargaining Costs and the Limits of the Coase Theorem | |
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| Legal Impediments to Trade | |
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| Transaction Costs and the Efficient Assignment of Ownership Claims | |
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| The Ethics of Private Property | |
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| Predicting Asset Ownership | |
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| Asset Specificity and the Hold-Up Problem | |
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| Uncertainty and Complexity | |
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| Frequency and Duration | |
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| Difficulty of Performance Measurement | |
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| Connectedness | |
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| Human Capital | |
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| Ownership of Complex Assets | |
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| Owning Complex Return Streams | |
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| Who Owns a Public Corporation? | |
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| Whose Interests Should Count? | |
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| Employment: Contracts, Compensation, and Careers | |
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| Employment Policy and Human Resource Management | |
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| The Classical Theory of Wages, Employment, and Human Capital | |
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| Wages and Levels of Employment | |
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| Human Capital | |
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| Defects of the Classical Model | |
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| Labor Contracts and the Employment Relationship | |
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| Employment as a Relationship | |
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| Employment Contracts | |
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| Implicit Contracts | |
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| Risk Sharing in Employment Relations | |
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| Borrowing and Lending in Employment Relationships | |
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| Recruitment, Retention and Separation | |
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| Recruiting | |
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| Retention | |
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| Separations | |
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| Case Study: Human-Resource Policies in Japan | |
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| Hiring and Retention | |
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| Protecting Interests of Permanent Employees | |
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| Internal Labor Markets, Job Assignments, and Promotions | |
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| Internal Labor Markets | |
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| Labor Market Segmentation Patterns | |
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| Pay in Internal Labor Markets | |
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| The Rationale for Internal Labor Markets | |
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| Long-Term Employment | |
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| Firm Specific Human Capital | |
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| Promotion Policies | |
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| Pay Attached to Jobs | |
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| Internal Labor Markets as Systems | |
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| Influence Costs, Incentives, and Job Assignment | |
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| A Job-Assignment Problem | |
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| Organizational Responses | |
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| Tenure and Up-Or-Out Rules | |
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| Tenure | |
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| Up-Or-Out Rules | |
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| Compensation and Motivation | |
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| The Forms and Functions of Compensation | |
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| Differing Forms of Pay | |
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| The Objective of Compensation Policy | |
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| Incentives for Individual Performance | |
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| What to Motivate? | |
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| Explicit Incentive Pay | |
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| Piece Rates | |
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| Sales Commissions | |
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| Individual Incentive Pay in Other Contexts | |
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| Eliciting Employees' Private Information | |
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| Implicit Incentive Pay | |
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| Performance Evaluation | |
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| Performance Evaluation with Explicit Performance Pay | |
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| Performance Evaluation in Subjective Systems | |
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| Job Design | |
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| Job Design and Incentive Pay | |
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| Job Enrichment Programs and Complementarities Between Tasks | |
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| Responsibility and Personal Business | |
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| Incentive Pay for Groups of Employees | |
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| Forms of Group Incentives | |
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| The Effectiveness of Group Incentive Contracts | |
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| Pay Equity and Fairness | |
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| Executive and Managerial Compensation | |
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| Patterns and Trends in Executive Compensation | |
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| CEO Compensation in Large U.S. Firms | |
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| Patterns and Comparisons | |
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| Middle-Level Executives | |
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| Motivating Risk-Taking | |
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| The Puzzle | |
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| Managerial Investment Decisions and Human Capital Risk | |
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| Inducing Risk Taking | |
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| Paying for Investment Proposals | |
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| Deferred Compensation | |
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| Commitment Problems | |
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| Performance Pay for CEOs? | |
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| Setting CEO Pay | |
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| The Debate on Executive Compensation | |
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| The Tasks and Temptations Facing Senior Executives | |
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| Value Maximization and Incentives | |
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| The Evidence on Performance and Pay | |
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| Does CEO Pay Affect Performance | |
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| Implications and Conclusions | |
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| Finance: Investments, Capital Structure, and Corporate Control | |
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| The Classical Theory of Investments and Finance | |
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| The Classical Economics of Investment Decisions | |
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| The Fisher Separation Theorem | |
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| Net Present Values | |
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| Strategic Investments as Design Decisions | |
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| Classical Analyses of Financial Structure Decisions | |
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| The Modigliani-Miller Analyses | |
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| The Allocation of Investment Capital by Markets | |
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| Investment Risk and the Cost of Capital | |
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| Risk and Return | |
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| The Capital Asset Pricing Model | |
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| Expectations, Asset Pricing, and Efficiency | |
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| Information and the Prices of Financial Assets | |
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| Forms of the Efficient Market Hypothesis | |
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| Evidence on the Efficient Markets Hypothesis | |
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| Shortsighted Markets and Shortsighted Management | |
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| Implications of the New Theories for Organizations | |
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| Financial Structure, Ownership, and Corporate Control | |
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| Changes in Corporate Control: Patterns and Controversies | |
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| Corporate Control Changes in the 1980s | |
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| The Rise of Debt | |
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| The Debate | |
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| International Patterns of Financing and Ownership | |
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| Financial Structure and Incentives | |
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| Conflicting Interests: Managers versus Owners | |
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| Conflicting Interests: Current Lenders versus Other Capital Suppliers | |
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| Owners' Incentive for Monitoring | |
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| Monitoring Incentives for Lenders | |
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| Default and Bankruptcy Costs | |
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| Financial Structure, Incentives, and Value | |
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| Signalling and Financial Decisions | |
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| Debt and Equity | |
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| Dividends, Monitoring, and Signaling | |
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| Objectives in Selecting Financial Structure | |
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| Corporate Control | |
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| The Mechanics of Control | |
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| Takeovers and Restructurings in the United States in the 1980s | |
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| Takeover Defenses | |
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| The Aftermath | |
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| Alternatives to the Publicly Held Corporation | |
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| Partnerships | |
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| Charitable Activities and Not-for-Profit Organizations | |
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| The Design and Dynamics of Organizations | |
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| The Boundaries and Structure of the Firm | |
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| The Changing Nature of the Firm | |
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| Emergence of the Industrial Enterprise | |
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| The Development of the Multidivisional Form | |
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| The Multiproduct Firm | |
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| Drivers of Change: Complementarities and Momentum | |
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| The Internal Structure of the Firm | |
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| Advantages of the Multidivisional Form | |
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| Problems of Managing a Divisionalized Firm | |
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| Vertical Boundaries and Relations | |
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| Advantages of Simple Market Procurement | |
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| Advantages of Vertical Integration | |
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| Alternative Vertical Relations | |
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| Horizontal Scope and Structure | |
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| Competitive Strategy and Organizational Innovation | |
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| Directions of Divisional Expansion | |
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| Disadvantages of Horizontal Integration | |
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| Business Alliances | |
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| Keiretsu | |
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| The Evolution of Business and Economic Systems | |
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| The Present and Future of the Business Firm | |
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| Technological and Organizational Change in Manufacturing | |
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| The Service Industries | |
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| Globalization of Economic Activity | |
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| Innovations in Ownership, Financing and Control | |
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| Human Resources | |
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| The Present and Future of Economic Restructuring in Eastern Europe and the USSR | |
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| The Communist and Capitalist Systems | |
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| Managing the Transition | |
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| The Future of Economics, Organization, and Management | |
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| Glossary | |
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| Index | |