Organizational Economics - Definition
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What is Organizational Economics?
Organizational economics focuses on an individual firm and studies its operations, transactions, management decisions, policies, organizational structure, and plans.
Back to: Management & Organizational Behavior
A Little More on What is Organizational Economics
Organizational economics has three subfields, these are;
- Agency theory,
- Transaction cost economics and
- Property rights theory.
Aside from studying how a firm is able to coordinate its operations, organization economics also identifies the areas a firm is lacking. This branch of applied economics is most useful in the aspect of firm structure, developing company policies, making management decisions, assessing business risks, implementing incentives and rewards and the overall structure of the firm.