Slide 1

People, Power, and Pay title slide

Slide 2

Think about the workplace

Slide 3

Think back in time

Slide 4

We need a theory of organization

Slide 5

Outline

Slide 6

What do firms do discussion prompt

Slide 7

What do firms do in neoclassical economics

Slide 8

Why the firm is a black box

Slide 9

Production function black box

Slide 10

Issues with the black box

Slide 11

Do organization and structure matter

Slide 12

Henry Ford and the five dollar day

Slide 13

Annual working hours per worker chart

Slide 14

Toyota and Japanese reindustrialization

Slide 15

Toyota problem and solution

Slide 16

Toyota worker using the kanban system

Slide 17

Productivity per hour worked chart

Slide 18

Communism and capitalism

Slide 19

Economic systems allocate authority differently

Slide 20

The ratchet effect rewards concealment

Slide 21

Every organization must coordinate and motivate

Slide 22

Organizational choices work as a system

Slide 23

Firms replace some prices with authority

Slide 24

Firms combine contracts and decision rights

Slide 25

Transactions are the unit of analysis

Slide 26

Transaction costs arise before and after exchange

Slide 27

Market exchange has transaction costs

Slide 28

Internal organization also has transaction costs

Slide 29

Transaction costs reflect coordination and motivation

Slide 30

Five transaction attributes shape governance

Slide 31

Efficiency predicts pressure for change, not justice

Slide 32

Institutions make organizational choices possible

Slide 33

Organizational gains compound into large changes

Slide 34

Incomplete contracts create discretion and power

Slide 35

What we carry forward