Management Dilemma: Bureaucratic Political Economy

Author: Gary J. Miller [USA]
Publisher:
Publish Date: 2002-11-01
Features: The main purpose of this book is to explore the literature of political economy, creating a theoretical bridge between these two types of literature in bureaucratic organizations. The first two-thirds of the book explain that the narrow, neoclassical view of organizational economics is not naturally established. Although the economic explanation for the existence of bureaucracy is that it can correct market failures, the inherent logic of self-interest among subordinates and superiors cannot make bureaucracy function like a smoothly operating, efficient machine. Instead, the conclusions described in social choice theory, principal-agent theory, and incentive compatibility literature show inherent logical inconsistencies. This makes it impossible to design an incentive-control system that simultaneously regulates the self-interested behavior of both superiors and subordinates. For various incentive systems with other good characteristics, there are always some people with an " Shirking " incentive—pursuing narrower interests, leading to an equilibrium result that everyone in the organization perceives as inefficient.