Open AccessNote—Modeling Coordination in Organizations and Markets
Author(s) -
Neil B. Niman
Publication year - 1992
Publication title -
management science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.954
H-Index - 255
eISSN - 1526-5501
pISSN - 0025-1909
DOI - 10.1287/mnsc.38.12.1819
Subject(s) - flexibility (engineering) , vulnerability (computing) , order (exchange) , cost structure , industrial organization , business , opportunity cost , microeconomics , market structure , computer science , operations management , risk analysis (engineering) , economics , operations research , management , mathematics , computer security , finance
In an earlier issue of Management Science, Thomas Malone (1987) utilizes the concept of vulnerability costs in order to compare the degree of flexibility exhibited by markets and hierarchies. The purpose of this note is to redefine the concept of vulnerability to include the corresponding opportunity costs that are created when a coordinating structure restricts the ability to adjust to a change in market conditions. The conclusion reached is that those structures experiencing the lowest opportunity costs are the least vulnerable, and can therefore be classified as the most flexible.organizational economics, coordination, information processing, organizational structure, transaction costs