os-samenvatting-chapter-1-7-intermediate-exam 2.pdf

lOMoARcPSD|45682025 OS samenvatting Chapter 1-7 (intermediate exam) Organizational Structure (Rijksuniversiteit Groningen) Scannen om te openen op Studeersnel Studeersnel wordt niet gesponsord of onderste...

lOMoARcPSD|45682025 OS samenvatting Chapter 1-7 (intermediate exam) Organizational Structure (Rijksuniversiteit Groningen) Scannen om te openen op Studeersnel Studeersnel wordt niet gesponsord of ondersteund door een hogeschool of universiteit Gedownload door Lars Hut ([email protected])  lOMoARcPSD|45682025 § Ch. 1: Organizations and Organizational Effectiveness Organization: A tool people use to coordinate their actions to obtain something they desire or value. Entrepreneurship: The process by which people recognize opportunities to satisfy needs and then gather and use resources to meet those needs. Value creation takes place at three stages: 1. Inputs(from the environment): Raw materials, capital, human resources, information etc. 2. Conversion. (transform inputs an adds value): Machinery, Computers, human skills, … 3. Output. (release to environment): finished goods/services, dividends, salaries Organization environment: Set of forces and conditions that operate beyond an organization but affects its ability to acquire and use resources to create value. Such as customers, shareholders, suppliers, government, etc. These four are in a circle/cycle. Why do organizations exist? (Working together instead of alone) 1. To increase specialization and the division of labor. 2. To use large-scale technology. Economies of scale are cost savings that result when the production is in large volume. Economies of scope are cost savings that result when an organization is able to use underutilized resources more effectively because they can be shared across different products or tasks. Use resource more efficiently when you can use it on several products. 3. To manage the organizational environment. 4. To economize on transaction costs. = costs associated with negotiating, monitoring, and governing exchanges between people. 5. To exert power and control. To get the job done efficiently people must come to work in a predictable fashion, behave and interests of the organization, and accept the authority of the organization and its managers. All these requirements make production less costly and more efficient. Employees can be rewarded by good performance. Organizational change: Organizations redesign their structures/cultures to move from their present state to some desired future state to increase their effectives. Organizational design and change have to deal with: Contingency. An event that might occur and must be planned for. Like changing climate and governments rules and changing technology. Gaining competitive advantage. The ability of one company to outperform another because its managers are able to create more value. It springs from core competences (managers’ skills and abilities). Developing a new strategy (specific pattern of decisions and actions) Gedownload door Lars Hut ([email protected])  lOMoARcPSD|45682025 Managing diversity. An organization needs to design a structure and control system to make optimal use of the talents of a diverse workforce and to develop an organizational culture that encourages employees to work together. The consequence of poor organizational design. The managers can loss control of their organizational structures and culture. The company became so big that the managers were unable to change. The talented employees will leave the company. Resources become harder to acquire. A new development: appointment of chief operating officers (COO)s who are responsible of organizational structure and culture. How do managers measure organizational effectiveness? Efficiency: developing modern production facilities using new technologies that can produce and distribute a company’s products in a timely and cost effective manner. To evaluate the effectiveness, we have three approaches: 1. External resource approach: how effectively an organization manages and controls its external environment. To measure it, they use dicators, such as stock price, profitability, and return on investment. 2. Internal systems approach: how effectively an organization functions and operates. To be effective, an organization needs a structure/culture that is adaptable and can give a quick response on changing conditions. It also needs to be flexible. Measures of an organization’s capacity of innovation is the time to make a decision, the time that is needed to get new products on the market, etc. 3. Technical approach: how efficiently an organization can convert some fixed amount of organizational skills and resources into finished goods and services. It’s measured in terms of productivity and efficiency. (ratio outputs to inputs). To type of goals used to evaluate organizational effectiveness: 1. Official goals: guiding principles that the organization formally states in its annual report and in other public documents. These goals lay out on the mission: explain why the organization exists and what it should be doing. 2. Operative goals: Specific long/short-term goals that guide managers and employees as the perform the work of the organization. Ch. 4: Basic Challenges of Organizational Design The principal design challenge is how to manage differentiation to achieve goals. Differentiation: The process by which an organization allocates people and resources to organizational tasks ad establishes the task and authority relationships that allow the organization to achieve its goals. In short, it is the process of the division of labor: the degree of specialization. Organizational role: the set of task-related behaviors required of a person by his or her position Authority: The power to hold people accountable (responsible) for their actions and to make decisions concerning the use of organizational resources. Gedownload door Lars Hut ([email protected])  lOMoARcPSD|45682025 Control: the ability to coordinate and motivate people to work in the organization’s interest. You get control by understanding the responsibility of your role. Subunits: Functions and Divisions People with related and similar roles are in subunit. A function: a subunit composed by people, working together who possess similar skills or use the same kind of knowledge, tools or techniques. Division: a subunit that consist of a collection of functions or departments that share responsibility for producing a particular good/service. The number of different functions and divisions are measures of the organization’s complexity, its degree of differentiation. As organizations grow, they differentiate into five different functions: Support functions: functions that facilitate an organization’s control of its relations with the environment and its stakeholders. Production functions: manage and improve the efficiency of an organization’s conversion processes so more value is created. Maintenance functions: functions that enable an organization to keep its departments in operation. Adaptive functions: Functions that allow an organization to adjust to changes in the environment. Managerial functions: Functions that facilitate the control and coordination of activities within and among departments. Vertically differentiation: The way an organization designs its hierarchy of authority and creates reporting relationships to link organizational roles and subunits. (Decision making authority) Hierarchy: a classification according to authority and rank. Horizontal differentiation: The way an organization groups organizational tasks into roles and roles into subunits. (functions and divisions) Differentiates roles according to their main task responsibilities. It establishes the division of labor. (Task responsibility) Design challenges that managers confront: 1. Differentiation 2. How to link and coordinate organizational activities 3. Determine who will make decisions 4. Decide which types of mechanisms are the best suited to controlling specific employee tasks and roles. Specializations limits communication between subunits and prevent them from learning from each other. Subunit orientation: a tendency to view one’s role in the organization strictly from the perspective of the time frame, goals, and interpersonal orientations of one’s subunit. Integration: The process of coordinating various tasks, functions and divisions so that the work together and not at cross purposes. (read page 122 and table 4.1) Integrating role: Full-time position established specifically to improve communication between divisions Task force: temporary committee set up to handle a specific problem. Gedownload door Lars Hut ([email protected])  lOMoARcPSD|45682025 Managers must achieve a balance between differentiation and integration. Centralized: The authority to make important decisions is retained by managers at the top of the hierarchy. Decentralized: Authority to make important decisions about organizational resources and to initiate new projects is delegated to managers at all levels in the hierarchy. The challenge facing all organizations, is to design a structure that achieves the right balance between standardization and mutual adjustment. Standardization: conformity to specific models or examples (defined by sets of rules and norms) that are considered proper in a given situation. Mutual adjustment: The compromise that emerges when decision making and coordination are evolutionary processes and people use their judgement rather than standardize rules to address a problem. Formalizations is the use of written rules and procedures to standardize operations. No room for mutual adjustment. Socialization: The process by which organizational members learn the norms of an organization and internalize these unwritten rules of conduct. Mechanistic and Organic Organizational Structures Two concepts for understanding how managers manipulate all these challenges collectively to influence the way an organizational structure works is Mechanistic and Organic Organizational Structures. Mechanistic structures: Structures that are designed to induce people to behave in a predictable, accountable way. (centralized) Organic structures: Structures that promote flexibility, so people initiate change and can adapt quickly to changing conditions. (decentralized) The decision about whether to design an organic or mechanistic structure depends on the environment the company confronts, its technology, complexity etc. Also the contingencies. Contingency approach: A management approach in which the design of an organization’s structure is tailored to the sources of uncertainty facing an organization. (e.g. nature of environment) Organization must design an internal structure to control the external environment. Lawrence and Lorsch on Differentiation, Integration, and Environment Lawrence and Lorsch investigated how companies in different industries differentiate and integrate their structures to fit with the environment. Gebleven bij pagina 136) Ch. 5: Designing Organizational Structure: Authority and Control The vertical dimension of organizational structure: hierarchy of authority. Gedownload door Lars Hut ([email protected])  lOMoARcPSD|45682025 Authority: The power to hold people accountable for their actions and influence what they do and how. The shape of this hierarchy is important. The hierarchy begins to emerge when managers have difficulties with motivating the employees. These are specialized/divided in labour. An organization can do two things: increase the number of managers (to evaluate and reward), and increase number of levels in hierarchy. It creates direct supervision. Tall organization: many hierarchy levels relative to the size of the organization Flat organization: few levels relative to its size. Problems with tall hierarchies: Communication problems. Communication between top and bottom of the hierarchy takes longer. Also distortion (twist of message through levels), deliberately (on purpose) manipulate information for own interests. Motivation problems. When levels increase, the authority of managers decreases. Moreover, managers often shift responsibility to a manager above. Bureaucratic costs. Costs associated with running and operating an organization. Managers cost money. Principle of minimum chain of command: An organization should choose the minimum number of hierarchical levels consistent with its goals and the environment. Organization should be kept as flat as possible. How can an organization avoid becoming too tall yet maintain control? Increase its managers’ span of control: number of subordinates a manager directly manages. The manager’s ability to supervise and control subordinates is limited by two factors: the complexity and the interrelatedness of subordinates’ tasks. (Interrelatedness: Managers must manage the relationships) Control: Factors Affecting the Shape of the Hierarchy How managers can get control over employees when they cannot increase the number of levels in the hierarchy. Horizontal differentiation. Decentralization. Less direct supervision is needed, lower-level managers can do this. Standardization. Standardize behaviour of employees to predict their actions. Organizational design is difficult because all these decisions need to be made simultaneously. The Principles of Bureaucracy Bureaucracy: A form of organizational structure in which people can be held accountable for their actions because they are required to act in accordance with rules and standard operating procedures. Weber developed six principles of bureaucracy, these together define bureaucracy or bureaucratic structure. 1. A bureaucracy is founded on the concept of rational-legal authority. = the authority a person possesses because of his/her position in an organization. The choice should be based on the needs of the task, not on the needs of the person performing task. People are appointed to positions; they do not own them. Gedownload door Lars Hut ([email protected])  lOMoARcPSD|45682025 2. Organizational roles are held on the basis of technical competence, not because of social status, kinship, or heredity. 3. A role’s task responsibility and decision-making authority and its relationship to other roles in the organization should be clearly specified. Role conflict: two or more people have different views of what another person should do and, as a result, make conflict. Role ambiguity: The uncertainty that occurs for a person whose tasks/authority are not clearly defined. 4. The organization of roles in a bureaucracy is such that each lower office in the hierarchy is under control and supervision of a higher office. 5. Rules, standard operating procedures, and norms should be used to control the behaviour and the relationship among roles in an organization. Rules, SOPs (standard operating procedure), and norms clarify people’s expectations about one another. 6. Administrative acts, decisions, and rules should be formulated and put in writing. Management by Objectives (MBO): A system of evaluating subordinates on their ability to achieve specific organizational goals or performance standards and to meet operating budgets. Three specific steps: 1. Specific goals and objectives are established at each level of the organization 2. Managers and their subordinates together determine the subordinates’ goals 3. Managers and their subordinates periodically review the subordinates’ progress toward meeting goals The influence of the Informal Organization Because an organization is a network of informal social relations as well as a hierarchy of formal task and authority relations, managers must harness the power of the informal organization to help achieve organizational goals. The increasing use of IT has led to a decentralization of authority in organizations and an increasing use of teams. Empowerment: Process of giving employees throughout an organization the authority to make important decisions and to be responsible for their outcomes. Self-managed teams: Work groups consisting of people who are jointly responsible for ensuring that the team accomplishes its goals and who are empowered to lead themselves. Cross-functional teams: Formal work groups of employees from across organization’s different functions that are empowered to direct and coordinate the value-creation activities necessary to complete different programs or projects. Another trend, for organizations that have flattened their structures, is contingent workers: workers who are employed for temporary periods by an organization and who receive no indirect benefits such as health insurance and pensions. Advantage: cost less Disadvantage: lack of motivation Gedownload door Lars Hut ([email protected])  lOMoARcPSD|45682025 Ch. 6: Designing Organizational Structure: Specialization and Coordination Functional structure: A design that groups people together on the basis of their common expertise and experience or because they use the same resources. It is the foundation of horizontal differentiation. Advantages of functional structure: - People can learn from one another and become more specialized and productive. - People can supervise one another and control one another’s behaviour - People who work closely in extended time develop norms and values. Control Problems in a Functional Structure Problems arise from the organization’s success: Skills and quality increase, so does the demand of customers. Production needs to increase quickly, which often results in decreased product quality and rising costs. Also, more pressure on R&D of staying ahead of competition. Communication problems: more distance from each other. Measurement problems: measure and evaluate task performance. Location problems: A growing company may need geographic spread. Customer problems: When the demand increases, more customers with different kind of needs are attracted. Production, marketing, and sale need to specialize in one specific customer group. Strategic problems: Managers are busy with solving problems and don’t have time to plan for future product development. From functional Structure to Divisional Structure How managers can solve problems: 1. An organization limits itself to producing a small number of similar products 2. Produces those products in one or a few locations 3. Sells them to only one major type of customer Three design choices to get a more complex structure: 1. An increase in vertical differentiation: Increase number of levels, decide how much decision-making authority, deciding how much rules 2. An increase in horizontal differentiation. 3. An increase in integration: between subunits Divisional structure: Functions are grouped together according to the specific demands of products, markets, or customers. Create smaller, more manageable subunits. Product structure: (when problem is due number or complexity of products), products are grouped into sperate divisions, according to their similarities or differences. - Product division structure: A divisional structure in which a centralized set of support functions services the needs of a number of different product lines. - Multidivisional Structure: A structure in which each product division in given its own set of support functions so they become self-contained (each set has own set Gedownload door Lars Hut ([email protected])  lOMoARcPSD|45682025 of support functions and controls its own value-creation activities) divisions. It has two innovations. First, independence of each division (because self-contained). Second, corporate headquarters staff : Corporate managers who are responsible for overseeing the activities of the divisional managers heading up the different divisions. - Product Team Structure: Divisional structure in which specialists from the support functions are combined into product development teams that specialize in the needs of a particular kind of product. Cross between multidivisional and product division structure. Geographic structure: (problem number of locations), A divisional structure in which divisions are organized according to the requirements of the different locations in which an organization operates. Market structure: (problem need to service a large number of different customer groups). Each customer division has a different marketing focus, develop products for each group. - Matrix structure: A structure in which people and resources are grouped in two ways simultaneously: by function and by project or product. Two-bosses’ employees: employees who report to two superiors: the product team managers and the functional manager. Organic structure, it relies on maximal horizontal control. Differences between product division and multidivisional structure: A product division structure can only be used to control the activities of a company that is operating in one business/industry. A multidivisional structure can operate in different business. Advantages of a multidivisional structure: - Increased organizational effectiveness. Division of labor - Increased control: Corporate managers monitor the performance of divisional managers - Profitable growth: Corporate executives can make better capital resource allocation decisions to promote corporate growth. Multidivisional structure allows a company to growth without communication problems. - Internal labor market: Divisional managers are promoted to become corporate managers, so more motivation Disadvantages of a multidivisional structure: - Managing the corporate-divisional relationship: how much authority to (de)centralize. Balanced between these two. - Coordination problems between divisions: Measures of effectiveness such as return on investment can be used to compare divisions’ performance, and headquarters can allocate capital to the divisions. The rivalry between the divisions may prevent them from cooperating - Transfer pricing: The price at which one division sells a product or information about innovations to another division. Divisions want a higher price. - Bureaucratic costs: of support functions, activities, and corporate headquarters. - Communication problems: distortion of information Gedownload door Lars Hut ([email protected])  lOMoARcPSD|45682025 Advantages of a matrix structure: § Reduce functional barriers and overcome the problem of subunit orientation. Organization is flexible and able to respond quickly. § Opening op communication between functional specialists and provides an opportunity for team member from different functions to learn from one another and develop their skills. § Effectively use the skills of its specialized employees who move from product to product as needed. § The dual functional and product focus promotes concern for both cost and quality. Disadvantages of matrix structure: - Lack of advantages of bureaucratic structure - Lack of clearly defined hierarchy of authority Multidivisional matrix structure: A structure that provides for more integration between cooperate and divisional managers and between divisional managers. (Different divisions with different structures) Hybrid structure: The structure of a large organization that has many divisions and simultaneously uses many different types of organizational structure. Network structure: a cluster of different organizations whose actions are coordinated by contrasts and agreements, rather than by a formal hierarchy of authority. Advantages of network structures: § Production costs reduced (with outsource) § Because of organization contracts with other organization, it avoids high bureaucratic costs for operating an organizational structure. § Organization can act in organic way. Organization can quickly alter its network. § If any of its network fails, they can be replaced. § Organization gain access to low-cost overseas sources of inputs. Disadvantages of network structures: - Close interaction is needed between divisions. - Groups must interact so that they can learn from one another - Managers must be there to integrate the activities - Different companies perform different parts of the work process à coordination problems - Must be trust between different groups Boundaryless Organization: Ability of managers to develop a network structure to produce or provide the goods and services their customers want, rather than create a complex organizational structure. E-commerce: trade that takes place between organizations (and customers), using IT and the internet. Gedownload door Lars Hut ([email protected])  lOMoARcPSD|45682025 Business-to-business (B2B) commerce: trade between companies using IT/internet. Reduces operating costs and may improve product quality. Business-to-customer (B2C) commerce: trade between company and its network of individual customers using IT/internet. Increase control of network. Ch. 2: Stakeholders, Managers, and Ethics Stakeholders: People who have interest, claim, or stake in an organization, in what it does, and in how well it performs. Inducement: Rewards such as money, power, and organizational status Contributions: The skills knowledge, and expertise that organizations require of their members during task performance. Stakeholders Contribution Inducement Inside Shareholders Money and capital (owners of organization) Dividends and stock appreciation Managers Skills and expertise (responsible for coordinating) Salaries, bonuses, status, power Workforce Skills and expertise Wages, bonuses, promotion Outside Customers Revenue of purchase goods/services Quality/price of goods/services Suppliers High-quality inputs Revenue from purchase of inputs Government Rules governing good business practice Fair and free competition Trade unions Free and fair collective bargaining (negotiations) Equitable share of inducements Community Social and economic infrastructure Revenue, taxes, and employment General public Customer loyalty and reputation National pride An organization is viable when the coalition of stakeholders has control (are balanced) over inducement so that it can obtain the contributions. When all stakeholder interests are minimally satisfied, the relative power of a stakeholder group to control the distribution of inducements determines how an organization will attempt to satisfy different stakeholder goals. Problems that an organization faces are related to choosing which stakeholder goals to satisfy. - Competing goals - Allocating rewards. Which inducement or reward for each group? Inside directors: hold office in company, full-time employees Outside directors: not employees, professional directors who hold positions on the board of many companies. Chain of command: System of hierarchical reporting relationships in an organization. Gedownload door Lars Hut ([email protected])  lOMoARcPSD|45682025 Chief Executive Officer (CEO): ultimately responsible for setting organizational strategy and policy. CEO influences in 5 ways: 1. The CEO is responsible for setting organization’s goals and designing its structure. 2. CEO selects key executives to occupy the topmost levels of the managerial hierarchy. 3. CEO determines top management’s reward and incentives. (motivation) 4. CEO controls the allocation of scare resources such as money decision-making power among the organization’s functional areas or business divisions. 5. CEO’s actions and reputation have a major impact on inside and outside stakeholders’ view of the organization and affect the organization’s ability to attract resources from its environment. Chief Operating Officer (COO or President): next most important executive, directly reports to CEO and together they share responsibility for managing business. Line role: Managers who have direct responsibility for the production of goods/services/ Staff role: Managers who are in charge for a specific organizational function, such as sales or R&D. Top-management team: Group of managers who report to the CEO and COO and help the CEO set the company’s strategy and its long-term goals and objectives. Corporate managers: Members of top-management team whose responsibility is to set strategy for the corporation as a whole. Divisional managers: Managers who set policy only for a division. Functional managers: Managers who are responsible for developing the functional skills and capabilities that collectively provide the core competences that give the organization its competitive advantages. Agency problem: A problem in determining managerial accountability that arises when delegating authority to managers. Shareholders or principals are at an information disadvantage compared with top managers. It is difficult for them to judge the effectiveness of top management team over several years. When a principal finds it difficult to judge and the agent possess an informative advantage, a moral hazard problem can exist. Agents have the opportunity to pursue their own interests. Self-dealing: Managers who take advantage of their position in an organization to act in ways to further their own self-interests. Solving agency problem by using governance mechanism: Forms of control that align the interests of principal and agents so both parties have the incentive to work together to maximize organizational effectiveness. Ways of reward contingent (change) on organizational performance: - Stock-based compensation schemes: monetary rewards in the form of stocks that are linked to the company’s performance. - Promotion tournaments and career paths: Managers can rise to the top. Ethical dilemma: Decide to help someone else even it its harms others and isn’t in their own interests. Ethics: moral principles or beliefs about what is right or wrong. Gedownload door Lars Hut ([email protected])  lOMoARcPSD|45682025 Sources of ethics: - Social ethics - Professional ethics (like doctors to help people) - Individual ethics Ethical rules: - Reduce transaction costs (of negotiating) - Confers reputation effect Why unethical behavior: - Personal ethics (are different) - Self-interest - Outside pressure Ch. 3: Organizing in a Changing Global Environment Environment: Set of forces surrounding an organization that have the potential to affect the way it operates and its access to scare resources. Organizational domain: The particular range of goods and services that the organization produces and the customers and other stakeholders it serves. Specific environment: Forces from outside stakeholder groups that directly affect an organization’s ability to secure resources. Changes in the number and types of customers, and in customer tastes, are another force that affects an organization. Organization also must decide how to manage relationship with suppliers/distributors. Global supply chain management: coordination of the flow of raw materials, components, semifinished goods and finished goods around the world. General environment: Forces that shape the specific environment and affect the ability of all organizations in a particular environment to obtain resources. - Economic forces. Interests rates, wage levels etc, determine demand and price of inputs. - Technological forces. New production techniques, new equipment influence organizations’ operations. - Political, ethical, and environmental forces. Influence government policy toward organizations and their stakeholders. - Demographic, cultural, and social forces (age, education, lifestyles) shape organizations’ customers, managers and employees. These forces create uncertainty for the organization. The forces cause: - Environmental complexity: Strength, number, and interconnectedness of the specific and general forces that an organization has to manage. More complex, more uncertainty. - Environmental dynamism: Degree to which forces in specific/general environment change quickly and thus contribute to the uncertainty. Gedownload door Lars Hut ([email protected])  lOMoARcPSD|45682025 - Environmental richness: Amount of resources available to support organization’s domain. Environment can be poor when an organization is located in a poor country or when there is a high level of competition. Resource dependence theory: A theory that argues the goal of an organization is to minimize its dependence on other organizations for the supply of scare resources in its environment and to find ways of influencing them to make resources available. To reduce uncertainty, an organization needs to devise interorganizational strategies to manage the resource interdependencies in its environment. Two basic types of interdependencies cause uncertainty: 1. Symbiotic interdependencies. Exist between an organization and its suppliers and distributors. 2. Competitive interdependencies. Exist among organizations that compete for scare inputs and outputs. Four strategies to manages symbiotic interdependencies. The more formal a strategy, the greater the prescribed area of cooperation between organizations. The four strategies from most informal to formal: 1. Develop good reputation. High regard and trusted by other parties. 2. Cooptation: neutralizing problematic forces in the specific environment. A common way is to bring outside stakeholders in the organization to make them inside stakeholders. Interlocking directorate: A linkage that results when a director from one company sits on the board of another company. 3. Strategic Alliances An agreement that commits two or more companies to share their resources to develop a new joint business opportunity. Several types, also from informal to formal: - Long-term contracts - Network: more ties link member organizations and there is greater formal coordination of activities. - Minority ownership stake in each other. Keiretsu: Group of organizations, each of which owns shares is the other organizations in the group, that work together to further the group’s interests. - Joint venture: Strategic alliance among two or more organizations that agree to jointly establish and share the ownership of a new business. 4. Merger and Takeover. Rather exchange within a organization than between. Four strategies to manage competitive interdependencies From informal to formal: 1. Collusion and cartels. Collusion: Secret agreement among competitors to share information for a deceitful or illegal purpose. (such as keeping prices high) Cartel: association of firms that explicitly agree to coordinate their activities. Both are illegal in US. 2. Third-party linkage mechanisms: Regulatory body that allows organizations to share information and regulate the way they compete. (Trade associations) Gedownload door Lars Hut ([email protected])  lOMoARcPSD|45682025 3. Strategic Alliances 4. Merger and Takeover Transaction costs (when negotiating, exchanges between people) also arise when organizations exchange resources and information. Transaction cost theory: Theory that states the goal of an organization is to minimize the costs of exchanging resources in the environment and the costs of managing exchanges inside the organization. Specific assets: Investments in skills, machinery, knowledge, and information, that create value in one particular exchange relationship but have no value in any other exchange relationship. Three linkage mechanisms that help organizations to avoid bureaucratic costs while still minimizing transaction costs are keiretsu, franchising and outsourcing. Gedownload door Lars Hut ([email protected])