Foundations of Organizational Strategy by Michael C. Jensen
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Foundations of Organizational Strategy
By Michael C. Jensen

Foundations of Organizational Strategy

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Format: Paperback

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Foundations of Organizational Strategy by Michael C. Jensen

Book Description

In this volume, Michael Jensen and his collaborators present the foundations of an integrated theory of organizations. The theory assumes: that organizations are equilibrium systems that, like markets, can be influenced but cannot be told what to do; that human beings are rational and self-interested for the most part; and that information is costly to produce and transfer among agents. The theory also treats business organizations as entities existing in a system of markets (including financial, product, labour, and materials markets) that must be considered in the formulation of organizational strategy. Jensen argues that the cost of transferring information makes it necessary to decentralize some decision rights in organizations and in the economy. This decentralization in turn requires organizations to solve the control problem that results when self-interested persons do not behave as perfect agents. Capitalist economies solve these control problems through the institution of alienable decision rights. But because organizations must suppress the alienability of decision rights, they must devise substitute mechanisms that perform its functions. Jensen argues that three critical systems, which he calls the organizational rules of the game, are necessary to substitute for alienability in organizations: a system for allocating decision rights among agents in the firm; a system for measuring and evaluating performance in the firm; and a system for rewarding and punishing individuals for their performance. These concepts should offer a major competitive advantage for organizations.

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Book Details

ISBN: 9780674005648
ISBN-10: 0674005643
Format: Paperback
(235mm x 155mm x 29mm)
Pages: 430
Imprint: Harvard University Press
Publisher: Harvard University Press
Publish Date: 19-Jul-2001
Country of Publication: United States

Other Editions...

Books By Author Michael C. Jensen

Moral Markets by Michael C. Jensen Moral Markets, Paperback (January 2008)

Argues that market exchange works only because most people, most of the time, act virtuously. This book shows how the rules of market exchange have evolved to promote moral behavior and how exchange itself may make us more virtuous. It examines the biological basis of economic morality and traces the connections between morality and markets.

Theory of the Firm by Michael C. Jensen Theory of the Firm, Paperback (September 2003)

This collection examines the forces, both external and internal, that lead corporations to behave efficiently and to create wealth.

» View all books by Michael C. Jensen


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Author Biography - Michael C. Jensen

Michael C. Jensen is Jesse Isidor Straus Professor of Business Administration Emeritus, Harvard Business School.

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Moral Markets by Michael C. Jensen
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