With two distinct objectives, this texts approach to managerial economics takes models from recent economics research and applies the research to the internal structure of a firm. After teaching basic applied economics, the authors look inside the firm and apply this analysis to management decision making. Authors Brickley, Smith, and Zimmerman contend that organizational architecture consists of three aspects of corporate organization: the assignment of decision rights within the company; methods of rewarding individuals; and, the structure of systems to evaluate the performance of both individuals and business units. These three components can be likened to a stool with three legs. If one of the legs is shorter, the stool is out of balance. These three elements must be in balance in the organization as well.
Part 1: Basic Concepts 1 Introduction 2 Economists View of Behavior 3 Markets, Organizations, and the Role of Knowledge Part 2: Managerial Economics 4 Demand 5 Production and Cost 6 Market Structure 7 Pricing with Market Power 8 Economics of Strategy: Creating and Capturing Value 9 Economics of Strategy: Game Theory 10 Incentive Conflicts and Contracts Part 3: Designing Organizational Architecture 11 Organizational Architecture 12 Decision Rights: The Level of Empowerment 13 Decision Rights: Bundling Tasks into Jobs and Subunits 14 Attracting and Retaining Qualified Employees 15 Incentive Compensation 16 Individual Performance Evaluation 17 Divisional Performance Evaluation Capstone Case Study on Organizational Architecture: Arthur Anderson LLP Part 4: Applications of Organizational Architecture 18 Corporate Governance 19 Vertical Integration and Outsourcing 20 Leadership: Motivating Change within Organizations 21 Understanding the Business Environment: The Economics of Regulation 22 Ethics and Organizational Architecture 23 Organizational Architecture and the Process of Management Innovation