The Choice of Governing Mechanism: An Organization Economics Perspective

Organization economics, with its two main strands of transaction cost economics and agency theory, primarily deals with the question of how organizations emerge and survive. It focuses on the analysis of competition within hierarchies (organizations) rather than markets and addresses questions such as why organizations exist, how they are managed, why some perform better than others, and why they tend to cooperate. This study attempts to juxtapose other relevant perspectives and organization theories to bear on the same questions. The purpose is to understand where and how organization economics and other perspectives converge and diverge. The study depends on the work of famous scholars contributing to various perspectives for drawing conclusions.