Riassunto esame Business of the firm

cooperative interaction among acquired subsidiaries and merged parts =

How do different policies and activities of an organization fit together? = Problem of "fit" 7

I representation : mapping and matrix enhanced effects

to

]

relations among environmental Complementarity among choice variables = generate different models

strategy and structure need to fit :

I. I

,

features and choice variables doing more of one of them increases the returns of doing more of

Design problem : identify and select among well fitting → the other (work well together = synergy)

(from technological and behavioural reasons) (= substitution : doing more of one of them decreases the returns of doing more

.

strategies + organisational design + environment : need to fit of the other) (example) evolution of production

Complements get active together but decrease the ←

probability that you implement something that is substitute

things that must be together generate different ways and solution

• and models

implications arising from complementary and substitution

1.

non-convexity and non-concavity

] L

.

Concavity : given two choices

Convexity : given two I

I with same performance, any

options available any choice between the two leads

intermediate one is to higher performance

also available (in between there's a maximum)

relates to alternatives relates to performance implications:

.

I picks are locally stable : no small changes, only

radical ones improve performance (many and

in the real market they do not exist simultaneously)

Non convexity (indivisibilities) Non concavity : multiple picks, deviation can lock-in in suboptimal stable states

some things cannot be divided give bad outputs (dependence)

(ex. either in or out) (ex. performance, efficiency, experience) being too good : inhibits improvement

.

.

economies of scale

complementarity learning trap (QWERTY) .

-

1

Feedback : do something - receive something back : old industrial economy = economies of scale = supply side (automotive) not only

"

orient action or trigger reaction new informational economy = economies of networks = demand side (social networks)

.

Negative : deviation reduced (get things under control)

ii. value depends on number of

Tippy market : once you take an important

Positive : deviation gets amplified (stability after a while) people already connected to it

-

I part, take it all (= single winner market) (fewer limits - no diseconomies)

based on the demand side (not just supply) effects . gets larger and larger

tippyness : how much utility depends on

network externalities (positive externality) I externalities; depends on the balance

÷ indirect

one market participant affects others bandwagons : consumer’s

between two fundamental forces: expectations : drives success

without compensation being directly paid economies of scale and variety

Central problems in the Firm : coordination and motivation

1- in

powerful

be

should

. solve

to

order

not strong enough and

motivational

] (fails to solve) coordinations

problems

Why should motivation and coordination be problems carried others than by markets?

• , 1. Negative externalities

function : allocating and use of resources among players it faits to represent 2. Informational asymmetries

(not efficient enough) -

firm are an efficient alternative 3. Contractual incompleteness

- model)

agent

&

(principal

L firms can substitute markets whenever they fail : In some context observing the market is better, in other the firm is better

. I

metter of : transaction costs & ownership and power

firm controls access to resources (firms work related to owner,

when you have to enter the market (ex. coordination, establishing

[ who controls resources) - ownership : specify the rules of the

specifications and prices, negotiating, monitoring-enforcing agreement) game (hierarchical arrangement = more efficient)

remedies : vertical integration, substituting market with

authority, monitoring (break information asymmetries) Whenever markets are costly and it is more efficient to have someone that determines

Motivation arising from contrasting interests the rules of the game or access to resources, then firms will substitute markets

I. T.si

'

'

problem of incentives (re-align) (worker = organisation) *

have problems too

sources : little effort and overactivity limited observability of actions and moral hazard

,

problem of un-observability : is difficult to capture the actual effort (noise in performance) principal-agent model (deal with information asymmetries)

t

there are three attitudes towards risk : agent uses the machines on behalf of the principal who owns them

decides the “effort level” ←

1. averse : prefers certainty to risk payment)

same

income,

(lower

risks

principal

:

payment

Fixed

-

uncertain payment less attractive than fixed rate payment

more

agent,

to

transferred

risk

more

the

:

pay

Variable

against outcome variability