The Organization of Work: Concluding Remarks

Victor Goldberg observes that “conflict and struggle are . . . fundamental elements of the radical’s world view, and it is, therefore, quite natural for issues of power to surface in their analyses.” He further holds that the “lesson the nonradicals should draw from the radical account is to take issues of power seriously” (1980, p. 269). My own view is that there is merit in all explanations that add to our understanding of complex phenomena. The main problem with power is that the concept is so poorly defined that power can be and is invoked to explain virtually anything. Such an undisciplined approach to the study of complex social science phenomena is clearly unsatisfactory. A serious effort at operationalization is greatly needed if power is to be properly evaluated.

To be sure, efficiency analysis stands in need of refinement as well. A systematic strategy for assessing the transaction cost consequences of alternative modes of contracting has nevertheless been emerging. The comparative institutional assessment of alternative internal modes attempted here involves:

  1. Ascertaining where trading is feasible and where it is not. This requires that tasks be described in sufficient microanalytic detail to disclose what parts of the task are technologically separable.
  2. Identifying alternative work modes and describing their operation in sufficient detail to permit their transaction cost properties to be assessed.
  3. Identifying the relevant set of performance dimensions with respect to which alternative modes are to be assessed.

This chapter demonstrates that each step can be implemented and that the piecemeal defects of prior studies (because interfaces were not identified, because mode comparisons were unnecessarily restricted, or because some of the relevant performance dimensions were omitted) can be avoided. Although I focus attention on a rather simple task—pinmaking—it is the obvious task to consider, given the history of the work mode literature. Indeed, failure to address pinmaking would certainly raise issues of noncomparability between my assessment and earlier studies.

The noncomparability of tasks ought not, however, to be exaggerated. The organization of any „batch process manufacturing activity poses very similar transaction cost issues. Additionally, although technology may be either more (as with petroleum refining) or less (as with the organization of a legal office) determinative of work modes when other than batch process manufacturing is considered, the same microanalytic approach for evaluating work modes applies quite generally. It entails identifying the relevant transaction cost dimensions, describing alternative modes for organizing the transactions in question, and performing a comparative institutional assessment. Thus although both modes and transaction cost attributes will vary among activities, the same microanalytic and comparative institutional research strategy that is employed in this book has broad applicability.

One of the striking results of this chapter is that ownership is only weakly related to hierarchy. That holds both in contractual and command hierarchy respects. Additionally, if simple aggregation is permitted, the modes that have the worst performance attributes are those with the weakest hierarchical properties. The question of optimal work organization is thus poorly posed when it is put in terms of hierarchy or its absence. Attention ought to be shifted instead to whether reliance on hierarchy is excessive (generates adverse side effects) and whether appointments to hierarchical positions are made in a way that both promotes efficiency and commands general respect. My examination of those issues continues in the following chapter.

Source: Williamson Oliver E. (1998), The Economic Institutions of Capitalism, Free Press; Illustrated edition.

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