Hybrid Organization of Production and Distribution
Keywords:
hybrid organizations, transaction costs, modes of governance, asset specificity, franchisingAbstract
This paper emphasizes the central role of arrangements called “hybrids” in the organization of production and distribution in market economies. Several forms are taken into account, such as subcontracting, supply-chain systems, distribution networks, franchising, partnerships, alliances, or cooperatives. It is argued that under the apparent heterogeneity of these forms are shared characteristics qualifying them as specific “institutional structures of production”. The paper stresses that beyond their relevance for economists wishing to understand the coexistence of alternative modes of governance in market economies, hybrid arrangements provide unique opportunities for theoretical investigation on the nature of inter-firm coordination.Downloads
References
Alchian, A., & Demsetz, H. (1972). Production, information costs and economic organization. American Economic Review, 62(5), 777–795.
Alchian, A., & Woodward, S. (1987). Reflections on the theory of the firm. Journal of Institutional and Theoretical Economics, 143(1), 110–137.
Anderson, E., & Schmittlein, D. C. (1984). Integration of the sales force: An empirical examination. The RAND Journal of Economics, 15(3), 385–395. https://doi.org/10.2307/2555446
Aoki, M. (1988). Information. Incentives, and Bargaining in the Japanese Economy. Cambridge (UK), Cambridge University Press.
Arrow, K. J. (1964). Control in large organizations. Management Science, 10(3), 397–408. https://doi.org/10.1287/mnsc.10.3.397
Arrow, K. J. (1974). The limits of organization. Norton and Co.
Bajari, P., & Tadelis, S. (2001). Incentives versus transaction costs: A theory of procurement contracts. The RAND Journal of Economics, 32(3), 387–407. https://doi.org/10.2307/2696361
Baker, G., Gibbons, R., & Murphy, K. J. (2002). Relational contracts and the theory of the firm. The Quarterly Journal of Economics, 117(1), 39–84. https://doi.org/10.1162/003355302753399445
Baker, G., Gibbons, R., & Murphy, K. (2003). Relational contracts in strategic alliances. Unpublished manuscript. Cambridge: MIT, Sloan School of Management.
Barzel, Y. (1982). Measurement cost and the organization of markets. The Journal of Law and Economics, 25(1), 27–48. https://doi.org/10.1086/467005
Cheung, S. (1983). The contractual nature of the firm. Journal of Law and Economics, 26(1), 1–22.
Coase, R. H. (1937). The nature of the firm. Economica, 2(1), 386–405.
Coase, R. H. (1988). The nature of the firm: Origin, meaning, and influence. Journal of Law, Economics, and Organization, 4(1), 3–59.
Coase, R. H. (2000). The acquisition of fisher body by general motors. The Journal of Law and Economics, 43(1), 15–32. https://doi.org/10.1086/467446
Commons, J. (1934). Institutional economics. Its Place in Political Economy. New York, Macmillan.
Cook, M. L. (1995). The future of U.S. Agricultural cooperatives: A neo‐Institutional approach. American Journal of Agricultural Economics, 77(5), 1153–1159. https://doi.org/10.2307/1243338
Cook, M. L., & Iliopoulos, C. (2000). Ill-Defined property rights in collective action: The case of US agricultural cooperatives. In: C. Menard (ed.), Institutions, Contracts and Organizations. Perspectives from New Institutional Economics. Cheltenham; U. K. and Northampton, Mass; E. Elgar, 335–348.
Dahlman, C. J. (1979). The problem of externality. The Journal of Law and Economics, 22(1), 141–162. https://doi.org/10.1086/466936
Demsetz, H. (1988). The theory of the firm revisited. Journal of Law, Economics, and Organization, 4(1), 141–161.
Demsetz, H. (2002). Theories of the firm and externalities: A critical evaluation of the role of transaction costs. Mimeo.
Dnes, A. (1996). The economic analysis of franchise contracts. Journal of Institutional and Theoretical Economics, 152(1), 297–324.
Dwyer, F. R., & Oh, S. (1988). A transaction cost perspective on vertical contractual structure and interchannel competitive strategies. Journal of Marketing, 52(2), 21–34. https://doi.org/10.1177/002224298805200202
Dyer, J. H. (1997). Effective interfirm collaboration: How firms minimize transaction costs and maximize transaction value. Strategic Management Journal, 18(7), 535–556.
Eccles, R. G. (1981). The quasifirm in the construction industry. Journal of Economic Behavior & Organization, 2(4), 335–357. https://doi.org/10.1016/0167-2681(81)90013-5
Farrell, J., & Scotchmer, S. (1988). Partnerships. Quarterly Journal of Economics, 103(2), 279–297.
Fearne, A. (1998). The evolution of partnership in the meat supply chain: Insights from the beef industry. Supply Chain Management, 3, 214–231.
Fein, A. J., & Anderson, E. (1997). Patterns of credible commitments: Territory and brand selectivity in industrial distribution channels. Journal of Marketing, 61(2), 19–34. https://doi.org/10.1177/002224299706100202
François Hennart, J. (1988). Upstream vertical integration in the aluminum and tin industries. Journal of Economic Behavior & Organization, 9(3), 281–299. https://doi.org/10.1016/0167-2681(88)90038-8
Garvey, G. T. (1995). Why reputation favors joint ventures over vertical and horizontal integration A simple model. Journal of Economic Behavior & Organization, 28(3), 387–397. https://doi.org/10.1016/0167-2681(95)00042-9
Gaucher, S. (2002). Organisation de filière et politiques d’Approvisionnement. Analyse appliquée au cas des filières agroalimentaires. Ph.D., Ecole des Mines de Paris, 343 p.
Ghosh, M., & John, G. (1999). Governance value analysis and marketing strategy. Journal of Marketing, 63, 131–145. https://doi.org/10.2307/1252107
Goldberg, V. P. (1976). Toward an expanded economic theory of contract. Journal of Economic Issues, 10(1), 45–61. https://doi.org/10.1080/00213624.1976.11503326
Goldberg, V. P. (1980). Relational exchange. American Behavioral Scientist, 23(3), 337–352. https://doi.org/10.1177/000276428002300304
Grandori, A., & Soda, G. (1995). Inter-firm networks: Antecedents, mechanisms and forms. Organization Studies, 16(2), 183–214. https://doi.org/10.1177/017084069501600201
Gulati, R. (1998). Alliances and networks. Strategic Management Journal, 19(4), 293–317. https://doi.org/10.1002/(sici)1097-0266(199804)19:4<293::aid-smj982>3.0.co;2-m
Hadfield, G. K. (1990). Problematic relations: Franchising and the law of incomplete contracts. Stanford Law Review, 42(4), 927–992. https://doi.org/10.2307/1228908
Hakansson, H., & Johanson, J. (1993). The network as a governance structure: Interfirm cooperation beyond markets and hierarchies. In: G. Grabher (ed.), The Embedded Firm: On the Socioeconomics of Networks. London: Routledge, 35–51.
Hayek, F. (1945). The use of knowledge in society. American Economic Review, 35(4), 519–530.
John, G., & Weitz, B. A. (1988). Forward integration into distribution: An empirical test of transaction cost analysis. Journal of Law, Economics, and Organization, 4(2), 337–355.
Jorde, T. M., & Teece, D. J. (1989). Competition and cooperation: Striking the right balance. California Management Review, 31(3), 25–37. https://doi.org/10.2307/41166568
Joskow, P. (1985). Vertical integration and long-Term contracts: The case of coal-Burning electric generating plants. Journal of Law, Economics, and Organization, 1(1), 33–80.
Joskow, P. (2005). Vertical integration. In: C. Ménard and M. Shirley (eds.), Handbook of New Institutional Analysis. Springer, 319–348.
Khanna, T. (1998). The scope of alliance. Organization Science, 9(3), 340–355.
Klein, B. (1980). Transaction costs determinants of <> contractual arrangements. American Economic Review, 70(5), 356–362.
Klein, B. (1988). Vertical integration as organized ownership: The fisher body-General motors relationship revisited. Journal of Law, Economics, and Organization, 4(1), 199–233.
Klein, B. (2000). Fisher—general motors and the nature of the firm. The Journal of Law and Economics, 43(1), 105–142. https://doi.org/10.1086/467449
Klein, B., Crawford, R. G., & Alchian, A. A. (1978). Vertical integration, appropriable rents, and the competitive contracting process. The Journal of Law and Economics, 21(2), 297–326. https://doi.org/10.1086/466922
Klein, P. (2005). The make-or-Buy decisions. Lessons from empirical studies. In: C. Ménard and M. Shirley (eds.), Handbook of New Institutional Analysis. Springer, 435–464.
Lafontaine, F., & Shaw, K. L. (1999). The dynamics of franchise contracting: Evidence from panel data. Journal of Political Economy, 107(5), 1041–1080. https://doi.org/10.1086/250090
Lafontaine, F., & Slade, M. E. (1997). Retail contracting: Theory and practice. The Journal of Industrial Economics, 45(1), 1–25. https://doi.org/10.1111/1467-6451.00032
Loasby, B. (1994). Organizational capabilities and interfirm relationships. Metroeconomica, 45(3), 248–265.
MacAulay, S. (1963). Non-Contractual relations in business: A preliminary study. American Sociological Review, 28(1), 55–67. https://doi.org/10.2307/2090458
Malmgren, H. B. (1961). Information, expectations and the theory of the firm. The Quarterly Journal of Economics, 75(3), 399–421. https://doi.org/10.2307/1885131
Marshall, A. (1920). Principles of economics. 8th ed. London, MacMillan.
Masten, S. E. (1984). The organization of production: Evidence from the aerospace industry. The Journal of Law and Economics, 27(2), 403–417. https://doi.org/10.1086/467071
Maze, A. (2002). Retailer’s branding strategy: Contract design, organisational change and learning. Journal of Chain and Network Science, 2(1), 33–45.
Menard, C. (1994). Organizations as coordinating devices. Metroeconomica, 45(3), 224–247.
Menard, C. (1996). On clusters, hybrids and other strange forms. The case of the french poultry industry. Journal of Institutional and Theoretical Economics, 152(1), 154–183.
Menard, C. (2004a). The economics of hybrid organizations. Journal of Institutional and Theoretical Economics, 160(3), 345–376.
Menard, C. (2005a). A new institutional approach to organization. In: C. Ménard and M. Shirley (eds.). Handbook of New Institutional Analysis. Springer, 281–318.
Menard, C. (2005b). The inadequacy of competition policies: A new institutional approach. In: M. Oppenheimer and N. Mercuro (eds). Law and Economics: Alternative Economic Approaches to Legal and Regulatory Issues. New York: M.E. Sharpe, 27–54.
Menard, C. (2006a). Cooperative: Hierarchies or hybrids. In: K. Karantininis and J. Nilsson (eds.), Vertical Markets and Cooperative Hierarchies, chap. 1, 7–27.
Menard, C. (2006b). Oliver williamson and the economics of hybrid organizations. In: M. Augier, J. March and D. Teece (eds.), Title to be determined, Oxford: Oxford University Press (forthcoming).
Nooteboom, B. (1999). Inter-Firm alliances. Taylor & Francis. https://doi.org/10.4324/9780203265277
North, D. C. (1981). Structure and change in economic history. Norton and Co.
North, D. C. (1990). Institutions. Institutional Change, and Economic Performance. Cambridge, Cambridge University Press.
North, D. C. (1991). Institutions. Journal of Economic Perspectives, 5(1), 97–112.
Oxley, J. E. (1997). Appropriability hazards and governance in strategic alliances: A transaction cost approach. Journal of Law, Economics, and Organization, 13(2), 387–409. https://doi.org/10.1093/oxfordjournals.jleo.a023389
Oxley, J. E. (1999). Institutional environment and the mechanisms of governance: The impact of intellectual property protection on the structure of inter-firm alliances. Journal of Economic Behavior & Organization, 38(3), 283–309. https://doi.org/10.1016/s0167-2681(99)00011-6
Palay, T. M. (1984). Comparative institutional economics: The governance of rail freight contracting. The Journal of Legal Studies, 13(2), 265–287. https://doi.org/10.1086/467741
Palay, T. M. (1985). Avoiding regulatory constraints: Contracting safeguards and the role of informal Agreements. Journal of Law, Economics, and Organization, 1(1), 155–175.
Pisano, G. P. (1990). The R&D boundaries of the firm: An empirical analysis. Administrative Science Quarterly, 35(1), 153–176. https://doi.org/10.2307/2393554
Podolny, J., & Page, K. (1998). Network forms of organizations. Annual Review of Sociology, 24, 57–76.
Powell, W. W. (1990). Neither market nor hierarchy: Network forms of organization. In: L.L. Cummpings and B. Staw (eds.), Readings in Organizational Behavior, Greenwich, Conn.: JAI Press (Greenwich, Conn.), 12, 295–336.
Powell, W. W. (1996). Inter-Organizational collaboration in the biotechnology industry. Journal of Institutional and Theoretical Economics, 152(1), 197–215.
Power, W., Koput, K., & Smith-Doerr, L. (1996). Interorganizational collaboration and the locus of innovation: Networks of learning in biotechnology. Administrative Science Quarterly, 41(1), 116–145.
Raynaud, E. (1997). Propriété et exploitation partagée d’une marque commerciale: Aléas contractuels et ordre privé. Ph.D. Université de Paris (Panthéon-Sorbonne).
Rubin, P. H. (1978). The theory of the firm and the structure of the franchise contract. The Journal of Law and Economics, 21(1), 223–233. https://doi.org/10.1086/466918
Rubin, P. H. (2005). Legal systems as frameworks for market exchanges. In C. Ménard and M. Shirley (eds.). Handbook of New Institutional Analysis. Chapter 9, 205–228.
Sauvee, L. (2002). Governance in strategic networks. WP, ISAB. 19 pp.
Seung Ho Park (1996). Managing an interorganizational network: A framework of the institutional mechanism for network control. Organization Studies, 17(5), 795–824. https://doi.org/10.1177/017084069601700505
Simon, H. A. (1951). A formal theory of the employment relationship. Econometrica, 19(3), 293–305. https://doi.org/10.2307/1906815
Teece, D. J. (1992). Competition, cooperation, and innovation. Journal of Economic Behavior & Organization, 18(1), 1–25. https://doi.org/10.1016/0167-2681(92)90050-l
Teece, D., & Pisano, G. P. (1994). The dynamic capabilities of firms: An introduction. Journal of Economic Behavior and Organization, 27(3), 537–556.
Thorelli, H. B. (1986). Networks: Between markets and hierarchies. Strategic Management Journal, 7(1), 37–51. https://doi.org/10.1002/smj.4250070105
Whinston, M. D. (2003). On the transaction cost determinants of vertical integration. Journal of Law, Economics, and Organization, 19(1), 1–23. https://doi.org/10.1093/jleo/19.1.1
Williamson, O. E. (1967). Hierarchical control and optimum firm size. Journal of Political Economy, 75(2), 123–138. https://doi.org/10.1086/259258
Williamson, O. E. (1971). The vertical integration of production: Market failure considerations. American Economic Review, 61(2), 112–123.
Williamson, O. E. (1975). Markets and hierarchies: Analysis and antitrust implications. Free Press.
Williamson, O. E. (1979). Transaction-Cost economics: The governance of contractual relations. The Journal of Law and Economics, 22(2), 233–261. https://doi.org/10.1086/466942
Williamson, O. E. (1981). The economics of organization. The transaction cost approach. American Journal of Sociology, 87(3), 548–577.
Williamson, O. E. (1983). Credible commitments: Using hostage to support exchange. American Economic Review, 73(5), 519–540.
Williamson, O. E. (1985). The economic institutions of capitalism. The Free Press-Macmillan.
Williamson, O. E. (1991). Comparative economic organization: The analysis of discrete structural alternatives. Administrative Science Quarterly, 36(2), 269–296. https://doi.org/10.2307/2393356
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2006 Claude Menard
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Article usage
- ViewsTimes this article's page was opened since the journal started recording statistics. One person can visit more than once.
- 258
- DownloadsTimes the full text of this article (usually the PDF) was opened or downloaded.
- 2,215
All time, as recorded by the journal.
Among the top 8% by views · last 2 yearsCompared with all the journal's articles by views in the last 2 years, this one is among the top 8%.
Last 2 years: 145 views, 439 downloads.
Main countries of traffic origin:Countries this article was consulted from, according to the internet connection. They are not necessarily people. United States 24% · Singapore 18% · China 12%
8.59 downloads per view (journal average 1.65).Downloads of the full text for every abstract view of this article, compared with the whole journal.
Explore the journal's metrics
