Foundations of Organizational Strategy: Preface and Introduction

10 Pages Posted: 17 Oct 2000 Last revised: 17 Jan 2011

See all articles by Michael C. Jensen

Michael C. Jensen

Harvard Business School; SSRN; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); Harvard University - Accounting & Control Unit

Date Written: July 1, 1998


There are three main elements in an organization's total strategy: its competitive strategy, its organization strategy, and its human strategy. This volume contains twelve articles written over the last twenty-five years which deal with a firm's organizational strategy. In these articles my co-authors (noted in each chapter) and I lay out the foundations of a theory of organizations that is both integrated and powerful. The development of this material had its genesis in the early 1970s at the University of Rochester, where two complementary initiatives spurred this effort. One was the research that William Meckling and I began on agency theory in 1973, which opened up a new set of insights into the behavior of managers and firms. The second was the course development effort that Meckling and I began at the same time, which has led to major courses at both Rochester and Harvard.

In our course at Harvard Business School, entitled Coordination, Control, and the Management of Organizations (CCMO), my colleagues (George Baker, Carliss Baldwin, Karen Wruck, and Malcolm Salter) and I apply the concepts to a wide range of management and organizational problems. The course, one of the most successful in the second year of the MBA program, attracts about 600 students each year. The history of the course is summarized in Organizations and Markets at the Harvard Business School, 1984-1996 by Michael C. Jensen, George Baker, Carliss Baldwin, and Karen H. Wruck, in The Intellectual Venture Capitalist: John H. McArthur and the Work of Harvard Business School 1980-1995, edited by Thomas K. McCraw and Jeffrey L. Cruikshank (Harvard Business School Press, 1998). This article and a complete description of the CCMO course, including the course syllabus, reading list, course notes, and practice questions, are available in four electronic documents at: Coordination, Control, and the Management of Organizations: Complete Package of Course-Related Materials (in four documents)

Keywords: organizations, REMM, PAM, nature of man, specific knowledge, general knowledge, transfer of knowledge, control systems

Suggested Citation

Jensen, Michael C., Foundations of Organizational Strategy: Preface and Introduction (July 1, 1998). Michael C. Jensen, FOUNDATIONS OF ORGANIZATIONAL STRATEGY, Harvard University Press, 1998, Harvard Business School NOM Unit Working Paper No. 1998, Available at SSRN: or

Michael C. Jensen (Contact Author)

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