Internal Market Structures

Abstract

A distinguishing feature of contemporary organizations is the growing number of internal employees providing services to other employees. General Electric, Hewlett Packard, Dell Computer, Cisco, and other firms have enhanced service units and functions within their organizations. Nevertheless, much of what we know about these internal services is inadequate. Moreover, control of these internal services tends to be based erroneously on traditional concepts of hierarchies. Despite the growing importance of internal services, it has been difficult to assess their value or “price.” Without proper consideration of value, goods and services may be offered at less than their appropriate value. This article introduces organizing principles based on internal market structures as an alternative perspective to rethink the impact and control of internal services. The authors also present eight specific propositions that describe the structure, functions, politics, processes, and pricing of internal market structures. Implications are provided for academicians and practicing managers.

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