Hybrid Modes of Organization. Alliances, Joint Ventures, Networks, and Other 'Strange' Animals

The central message conveyed in this chapter is that there is a whole class of economic organizations that contribute substantially to what Coase (1992) called "the institutional structure of production". These arrangements fall neither under pure market relationships nor within 'firm boundaries'. They have multiplied because they are viewed as efficient in dealing with knowledge-based activities, solving hold-up problems, and reducing contractual hazards. They have properties of their own that deserve theoretical attention and empirical investigation.Hybrids, Alliances, Joint Ventures, organization theory, transaction costs, incomplete contracts

Hybrid Organizations

This paper focuses on forms that involve multiple partners pooling some strategic decision rights and even some property rights while keeping distinct ownership over key assets, so that they require specific governance to monitor and discipline their interactions. I identify these arrangements as 'hybrid organisations', in line with the terminology proposed by Oliver Williamson (1996). In the second section I go farther in identifying and delineating these arrangements. The third section discusses the forces at work that may explain why parties accept to share strategic rights. The fourth section exhibits different mechanisms of coordination that may play distinctly or in combination. The fifth section suggests a typology of hybrid organisations based on the prevalence of each different mechanism. The final section concludes by emphasising problems raised by the very existence of hybrids, particularly with respect to competition policies.Hybrid organizations; hierarchies; coordination; rent sharing

A New Institutional Perspective on Environmental Issues

This paper focuses on how to deal with environmental problems, through the lenses of the New Institutional Economics. The emphasis is on the intertwined role of organizational solutions and their institutional settings. This is not to say that technological solutions to environmental problems should be dismissed. However, it is argued that 'environmental innovation' is often of organizational nature, deeply embedded in institutions that adapt very slowly, making 'societal transitions' particularly challenging. The New Institutional Economics provides some key concepts to explore these dimensions and their interactions, thus shedding light on alternative solutions and the conditions of their implementation. Most examples come from the water sector.Organizations, Institutions, Property Rights, Contracts, Regulation, Transaction Costs, Water

Private Ordering, Collective Action, and the Self-Enforcing Range of Contracts. The Case of French Livestock Industry

Contract enforcement is acknowledged as a major issue in Law and in Economics. Contrasting substitution and complementary perspectives with respect to the role of private versus public enforcement institutions, this article analyses how contract law can support private institutions, and enhance economic efficiency. With multilateral agreements at stake, self-regulation and reputation mechanisms at the core of private ordering have limitations that collective organizations backed by the Law help to overcome. The analysis is substantiated by empirical data from the cattle industry. Our results suggest the need for a broader approach to contract regulation by legal scholars and antitrust-authorities.Contract Law, Private Enforcement, Transaction Costs, Self-Regulation, Coalitions, Cartels, Collective Organization

Organizational Issues in the Agrifood Sector: Toward a Comparative Approach

This paper outlines a research program comparing the economic organization of agriculture in the United States and European Union. Both have highly developed agricultural sectors but their organizational arrangements vary widely. Comparative analysis not only provides a broad set of firms and industries to compare, but also highlights the interaction between the institutional environment and the arrangements established to govern agricultural transactions. We first assess the common trend toward consolidation and vertical integration, turning next to the economic organization of formal and informal networks. While history and path dependence explain some of the variety among U.S. and European practices, other local conditions are important as well. We conclude by assessing the policy implications of recent changes in economic organization.

A New Institutional Perspective on Environmental Issues

International audienceThis paper focuses on how to deal with environmental problems, through the lenses of the New Institutional Economics. The emphasis is on the intertwined role of organizational solutions and their institutional settings. This is not to say that technological solutions to environmental problems should be dismissed. However, it is argued that 'environmental innovation' is often of organizational nature, deeply embedded in institutions that adapt very slowly, making 'societal transitions' particularly challenging. The New Institutional Economics provides some key concepts to explore these dimensions and their interactions, thus shedding light on alternative solutions and the conditions of their implementation. Most examples come from the water sector

El reto economico de abrir la caja negra de la toma de decisiones politicas

International audienceInstitutions, particularly informal ones, are heavily value-loadedand evolve slowly over time. Economic policies adopted through majority voting procedures atdifferent tiers of government, which is a central characteristic of democratic regimes, are deeplyinfluenced by the singular institutions of each country. Scholars wanting to understand the logic ofthese policies must take this situational, contextualization aspect on board (and even more so if theyintend to make recommendations and influence policy-makers). As stressed along this book and byOstrom in the final chapter, we must get rid of the technocratic views about the ‘one fits all’approach to economic policies. We must all become fully aware, as the contributors to this book are,that alternative solutions always exist, and that choices must be based on comparatively assessingthese alternatives, which needs careful investigation, particularly since public policies almost ofteninvolve important and unexpected distributional consequences. We must be grateful to the editorsof this book for having initiated a project that contributes so nicely to this goal

About some distortions in the interpretation of 'The Problem of Social Cost'

International audienceThe extraordinary influence of The Problem of Social Cost" is now well acknowledged. Beyond the official recognition coming with the award of the Alfred Nobel Memorial Prize in Economic Sciences as well as the myriad citations, what may matter most, as emphasized by Mary Shirley (2013), is that in introducing the concept of 'transaction costs', Coase initiated a revolution in the way economists and social scientists should look at the organization of economic activities in a market economy. Actually, the concept of transaction could well be considered one of the most important in economic theory, together with the concept of the division of labor. As emphasized by Coase (1998), the two concepts complement each other. In order to take advantage of the division of labor economic actors must specialize their activity; this is sustainable and beneficial if and only if they can organize transactions among them at a cost that is less than the expected benefits. Paradoxically, this organizational dimension that Coase pinpointed as "The Institutional Structure of Production" in his Nobel Lecture has been largely neglected in the literature inspired by "The Problem of Social Cost." In what follows, I would like to show how this missing dimension is rooted in some misinterpretations of the 1960 paper (section 1) and what consequences it should have in partially redefining the research agenda sketched by Coase in his paper (section 2)

The Contribution of Douglass North to New Institutional Economics

Douglass North, along with Ronald Coase and Oliver Williamson, transformed the early intuitions of new institutional economics into powerful conceptual and analytical tools that spawned a robust base of empirical research. NIE arose in response to questions not well explained by standard neoclassical models, such as make or buy and why rich or poor? Today NIE is a success story by many measures: four Nobel laureates in under 20 years, increasing penetration of mainstream journals, and significant impact on major policy debates from anti-trust law to development aid. This paper provides a succinct overview of North's evolving ideas about institutions and explains how North's work shaped the emerging field of new institutional economics and had a potent impact on economics and the social sciences more broadly. North provides a powerful example of how persistent and well placed confidence and hard work can productively transform the status quo. North's influence continues strong and his enthusiasm for exploring new frontiers and cooperating across artificial academic boundaries has never waned.New Institutional Economics, institutions, transaction costs, development and growth

Is Public-Private Partnership Obsolete? Assessing the Obstacles and Shortcomings of PPP

Chapitre dans: Piet de Vries and Etienne B. Yehoue, The Routledge Companion to Public-Private Partnerships, London, Routledge. Ouvrage à paraitre (publication prévue: été 2012)Public-Private Partnership has been high on the agenda of public decision makers since the 1990's. Primarily a contractual approach to the delivery of infrastructures, goods and services traditionally provided by the public sector or by private operators submitted to tight regulation, PPP is also a very special contractual practice as it seeks to introduce market-type relationships in a context in which non-market forces play a major role. An important consequence is the overlapping of decision rights as well as property rights, which exposes PPP to a double alignment problem, organizational and institutional. Away from the ideological controversies about the legitimacy of PPP in provisioning public goods, this chapter focuses on problems rooted in the very nature of PPPs and the actual design of their supportive contracts, as well as in the institutions in which they are embedded and that define the capacity to implement and monitor these arrangements properly