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Tutorial notes Organization Theory (441074-B-6)
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Tutorial notes of all 3 tutorials of the course OT. Complete!
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Organizational theory WCOrganizational Theory WC
1
, Organizational theory WC
WC1:
Meso-level: Inter-organizational Theories (IOT):
Transaction Cost Theory (TCT) and Resource
Dependence Theory (RDT).
TCT (T/F-QUESTIONS)
1. In transaction cost theory, a governance structure is any combination of
governance mechanisms
→ FALSE
→ specifieke combinaties, niet zomaar bij elkaar gehusselt.
Output pricing gaat samen met intense contractual guarantees
Input pricing gaat samen met no or few contractual guarantees
Output price - paying per piece
If you go to AH and buy something → full ownership. The moment you have payed
output price for it, it is fully yours
RISK by buying: that it is bad quality → to protect consumers: GARANTIES.
Input price - paying per hour
People get paid to show up. ⇒ payment for effort
Under hierarchy: right to deploy. Boss can tell me how I have to deploy the hours
RISK being a bad teacher. Solution: planning for controlling behavior + administrative control
2
, Organizational theory WC
2. A student states that a transaction in which a buyer, a supplier, and a
real estate agent are involved is a typical example of classical/market
contracting. This statement is
→ FALSE
3 parties involved - trilateral governance
→ without the third person they may betray each other. 3th partner is a mediator
If there is an information asymmetry between buyer and seller, you need a third party.
BV: a second hand car, a house. Expert takes part of the asymmetry away, can judge if
bv a crack is a serious business or not
3. A low level of asset specificity equals a high level of alternative use
→ TRUE
Not about goods, asset specificity = transaction specific investment
An investment specific for a transaction
All investment that transacters do to make a transaction possible, stuff we do to support it!
BV: Scanner in AH. Transaction specific investment
Makes it possible that AH can sell and we can buy something
⇒ specificity is low. Same device can be used for a transaction between AH and
consumer everytime again.
Clients are different every time!
Toyota car - next to Toyota there is a factory that produces car seats.
⇒ specificity is high. It can only be used for THAT SPECIFIC transaction between the
factory and toyota
Client stays the same!
4. Transaction costs theory is part of organizational economics. The basic
question that transaction cost theory tries to answer is: why do some
organizations outperform others?
→ FALSE
‘Why do organizations exist?’ is the basic question from TCT
Answer to this: organizations are sometimes more efficient than markets for transactions! Use of
market is not for free. There are transaction costs here
BV: would be very inefficient if tilburg university would let the market organize the contracts of
the employers for that day
By organizing it through an organization - problem solved by ONE signature (labor contract)
3
, Organizational theory WC
5. A governance structure has the following two characteristics: intense
contractual guarantees are used, and intense administrative controls are
in place. These are characteristics of the market governance structure.
→ FALSE
Market governance is a specific combination of output pricing and few intensive guaranties
Giving guarantees and intense administrative controls are very costly!
RDT (T/F-questions)
1. Resource dependency theory is an intra-organisational theory
→ FALSE
It is INTER-organisational. You are in touch / interact / dependent on other social actors in the
environment.
2. In resource dependency theory, an organization is the interlocking of social actors
→ FALSE
It’s the interlocking of the BEHAVIOR. If you would interlock the social actors - it would be
slavery
Now: act in role of lecturer
When done with working: act in role of a dad
3. In Resource dependency theory, organizations can implement a number of options to
minimize environmental dependencies. Typical examples of these options are vertical
integration and political action
→ TRUE
Vertical integration
2 of the steps of a production chain merge.
(bv baking factories that buy a couple of shop - forwards vertical integration)
(bv a farmer that buys a seed fabric - backwards vertical integration)
Production chain: production of bread starts with a seed → to farmer for grain →
flower → baking factories → shop → consumer
Horizontal - if you are taking over, you give away autonomy
If you have a joint venture - 50.50 have autonomy → so DEPENDS on how you
organize it
Political action
4
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