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ON THE ECONOMIC EFFICIENCY OF ORGANIZATIONS: TOWARD A SOLUTION OF THE EFFICIENT GOVERNMENT ENTERPRISE PARADOX

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Author(s): Robert E. Wright

Journal: Essays in Economic & Business History
ISSN 0896-226X

Volume: 25;
Issue: 1;
Date: 2007;
Original page

ABSTRACT
The modern widely-held joint-stock corporation appears to epitomize the economically efficient large-scale organization. Some scholars observe, however, that other types of organizations, including government-owned enterprises, have also achieved high degrees of efficiency and that some joint stock corporations have been inefficient. It is here argued that the economic efficiency of organizations is largely a function of two major variables—markets tructure and incentives within the organization—and not organizational form or ownership structure per se. Case studies of two business firms: a mutual life insurer and a family-controlled publisher, and two industries: higher education and custom construction, demonstrate the importance of internal incentives and market structures to organizational economic efficiency.
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