Efficiency and Rationality in Organizations

Abstract

Gibbons argues persuasively that economic modeling offers a useful set of tools that noneconomists may employ to good effect in their research on organizations. His arguments are even more persuasive if it is understood that this brand of modeling lends itself naturally to one of the key theoretical problems facing such researchers—the need for a theory of aggregation, sometimes called a theory of action. Such a theory is necessary to link the behavior of individuals with properties of collectivities, such as corporations. Gibbons demonstrates that organizations populated with utility-maximizing actors can nevertheless be characterized by political chicanery, foolishness, and structural inertia, all of which can be seen as kinds of “organizational messes.” So building a macro theory on rationalist assumptions does not require one to ignore many of the phenomena that have interested organizations researchers in the past.