81 Pages Posted: 3 Nov 2007 Last revised: 20 May 2008
Date Written: October 30, 2007
This chapter reviews and discusses rational-choice approaches to organizational governance. These approaches are found primarily in organizational economics (virtually no rational-choice organizational sociology exists), particularly in transaction cost economics, principal-agent theory, and the incomplete-contracts or property-rights approach. We distill the main unifying characteristics of these streams, survey each stream, and offer some critical commentary and suggestions for moving forward.
Keywords: rational choice, organizational economics, governance structures, governance mechanisms
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