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Markets, Bureaucracies, and Clans

William G. Ouchi
Administrative Science Quarterly
Vol. 25, No. 1 (Mar., 1980), pp. 129-141
DOI: 10.2307/2392231
Stable URL: http://www.jstor.org/stable/2392231
Page Count: 13
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Markets, Bureaucracies, and Clans
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Abstract

Evaluating organizations according to an efficiency criterion would make it possible to predict the form organizations will take under certain conditions. Organization theory has not developed such a criterion because it has lacked a conceptual scheme capable of describing organizational efficiency in sufficiently microsopic terms. The transactions cost approach provides such a framework because it allows us to identify the conditions which give rise to the costs of mediating exchanges between individuals: goal incongruence and performance ambiguity. Different combinations of these causes distinguish three basic mechanisms of mediation or control: markets, which are efficient when performance ambiguity is low and goal incongruence is high; bureaucracies, which are efficient when both goal incongruence and performance ambiguity are moderately high; and clans, which are efficient when goal incongruence is low and performance ambiguity is high.

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