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Understanding Industrial and Corporate Change$
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Giovanni Dosi, David J. Teece, and Josef Chytry

Print publication date: 2004

Print ISBN-13: 9780199269426

Published to Oxford Scholarship Online: September 2007

DOI: 10.1093/acprof:oso/9780199269426.001.0001

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Incentives, Routines, and Self-Command *

Incentives, Routines, and Self-Command *

(p.37) Incentives, Routines, and Self-Command*
Understanding Industrial and Corporate Change

Steven Postrel

Richard P. Rumelt

Oxford University Press

In explaining the advantages of the principle of hierarchy representing organizations over market exchanges, coordination of specialized efforts and control of opportunistic behaviour are often brought up as methods for governing transactions. Yet these approaches fail to account for many observed internal workings of organizations that may be attributed to impulsiveness, and the consequent mechanisms of impulse control with regard to those moment-by-moment ways by which individuals fail to take action in what they believe to be their own long-term interest. This chapter proposes a model that assumes the existence of such impulsiveness, as well as overall automatic thought and behaviour. This model builds on psychological literature but also on economists' work on time-inconsistent choice, and brings both into the structure of organizational theory. The chapter is a timely reminder of the importance of enriching efficiency views of economic organization with more realistic models of human behaviour.

Keywords:   impulsive man, time-inconsistent choice, habitual routines, hierarchy, self-opportunism

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