Chapter

Varieties of Hierarchies and Markets: an Introduction

Gary G. Hamilton and Robert C. Feenstra

in Technology, Organization, and Competitiveness

Published in print March 1998 | ISBN: 9780198290964
Published online November 2003 | e-ISBN: 9780191596162 | DOI: http://dx.doi.org/10.1093/0198290969.003.0004
 Varieties of Hierarchies and Markets: an Introduction

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The paper presents both a theoretical and an empirical argument that the concept of hierarchy in relation to business firms needs to be reconceptualized. In the theoretical discussion, a synthesis is developed between Ronald Coase's and O. E. Williamson's conception of a market/hierarchy dichotomy and M. Weber's distinction between economic power and authority. The authors hold that the authoritative aspects of hierarchies, especially within networks of firms, have independent effects on the formation of market economies. An empirical demonstration is given of the relevance of this reconceptualization in an analysis of the economies of South Korea and Taiwan. The two case studies show that two different types of authoritative interfirm networks, one vertically arranged (Korea) and the other horizontally arranged (Taiwan), substantially shape the performance of these economies.

Keywords: authority; economic performance; economic power; firm networks; firms; hierarchies; horizontal interfirm networks; interfirm networks; market economies; market/hierarchy dichotomy; markets; South Korea; Taiwan; vertical interfirm networks

Chapter.  17946 words.  Illustrated.

Subjects: Microeconomics

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