Efficient Labour Organization: Incentives, Power and the Transactions Cost Approach

In a number of recent writings, Oliver Williamson has laid great emphasis on the transactions costs approach to industrial organization; for examples, see Williamson (1975, (1980). In the preceding chapter of this volume he argues strongly for the superiority of the transactions costs approach in explaining the nature of work structure and labour organization, particularly when compared with what he terms the neo-classical approach (which emphasizes the role of incentives and risk bearing) and with explanations based on concepts of power. Lying behind much of his argument is a view which might (although perhaps somewhat unfairly) be characterized as ‘Efficiency will always win out in the end’.