Consistency in Organization (Updated)

24 Pages Posted: 18 Apr 2011

See all articles by Ekkehart Schlicht

Ekkehart Schlicht

University of Munich - Department of Economics; IZA Institute of Labor Economics


Internal organization relies heavily on psychological consistency requirements. This thought has been emphasized in modern compensation theory, but has not been extended to organization theory. The perspective sheds new light on several topics in the theory of the firm, like the boundaries of the firm, the importance of fairness concerns within firms, the attenuation of incentives, or the role of routines and incentives. It implies a perceptional theory of the firm that is realistic in the sense advocated by Ronald Coase (1937).

Keywords: theory of the firm, hierarchy, evolutionary theory of the firm, perceptional theory of the firm, consistency, small numbers, centralization paradox, Williamsonメs puzzle, compensation, boundaries of the firm, fairness, idiosyncratic exchange, entitlements, obligations, routines, framing, Simon, employment relationship, fairness, ownership effect, skunkworks, disruptive technologies, Tayloristic organization, holistic organization

JEL Classification: B52, D02, L2

Suggested Citation

Schlicht, Ekkehart, Consistency in Organization (Updated). IZA Discussion Paper No. 5644. Available at SSRN:

Ekkehart Schlicht (Contact Author)

University of Munich - Department of Economics ( email )

Ludwigstrasse 28
Munich, D-80539

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072

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