Internal Organization In a Dynamic Context: Some Theoretical Considerations

Abstract

Introduction. This essay is an attempt to suggest how process or evolutionary considerations might best be integrated into the rapidly developing transaction-cost approach to the theory of internal organization. The analysis begins by arguing that the theoretical issues in the transaction-cost approach to organization reduce to and can be integrated around a single analytical concept: imperfect structural (as distinguished from parametric) knowledge. The paper goes on to argue that this concept points toward a reinterpretation of “efficiency” explanations of internal organization in terms of an evolutionary logic of explanation. The article concludes by showing how such a reinterpretation might proceed, and suggests some substantive implications susceptible to empirical and historical scrutiny.

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