Throughout this book we have referred to organizations without always distinguishing among political, social, profit-seeking, or not-for-profit entities. These associations of agents are otherwise called companies, firms, charities, countries, and so on, referring to their specific type of incorporation or reason for assembly. Some organizations come together spontaneously, with an expected temporary existence, while others are formed with a vision of permanence or, at least, endurance.
Why do organizations even exist in the first place? Do they have common characteristics that allow for a universal approach to governance, or can one type of organization learn from the successes or failures of other types?
The first question has been a focus of studies in the field of Economics since early in the twentieth century, and several notable efforts have been made to describe the reasons that prompt “firms” to form. We're interested to know this as well. Newer research helps us in knowing what to do with an organization, regardless of its purpose, once it has been created. From this new knowledge we can further refine our governance framework, so that our organizations can generate the most value from the initiative that caused them to form in the first place.
Markets and/or Hierarchies
The classic debate of why companies exist has a similar dichotomy to that of the dominant division in Traditional Economics between Interventionists and the Invisible Hand ...