Markets, Bureaucracies, and Clans

* Article: Markets, Bureaucracies, and Clans. William G. Ouchi. Administrative Science Quarterly, Vol. 25, No. 1 (Mar., 1980), pp. 129-141.

URL = https://www.jstor.org/stable/2392231

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."