In demonstration method of informing, you organize the steps into a time-ordered hierarchy.

Abstract

Why are firms sometimes more efficient than markets at organizing transactions? Why are most transactions arrayed neither at the pure "market" nor at the pure "hierarchy" end of the continuum, but rather in the "swollen middle," incorporating features of both "market" and "hierarchy"? Why don't firms make greater use of price incentives? This paper addresses these three questions by developing a model of the choice of institution. One key building block is the distinction between organizing methods (hierarchy and the price system) and institutions (firms and markets). Hierarchy and the price system are two distinct methods for organizing transactions, each with particular costs and benefits. Markets and firms are institutions which use one or both of these methods. Although markets predominantly use prices and firms rely principally on hierarchy, there is not a one-to-one correspondence between prices and markets or between hierarchy and firms. Indeed, the paper argues that it is generally more efficient to use a mix of both methods than to specialize in either. The paper focuses on the enforcement properties of prices and hierarchy. Hierarchy controls individuals directly by constraining their behavior (by imposing behavior constraints) while prices do it indirectly by measuring their outputs (through price constraints). Under hierarchy, individuals receive a salary to do as told, while self-employed individuals governed by the price system are rewarded on the basis of their output. Each system has its own biases: using prices maximizes effort (minimizes shirking) but incites individuals to inflate the price and/or reduce the quality of their output. (It encourages cheating.) Relying on hierarchy results in the opposite bias: under hierarchy individuals are not paid in function of their output, but instead are rewarded for following directives. They have, thus, strong incentives to minimize effort (to shirk) unless properly supervised, but, being paid a fixed sum to follow orders, they have few incentives to cheat. Hence the price system experiences low shirking, but potentially high cheating costs, while hierarchy faces low cheating but high shirking costs. Organizing costs are the sum of shirking and cheating costs. Any given transaction will be organized by the mix of price and hierarchy (i.e., by the mix of price and behavior constraints) that minimizes organizing costs. A transaction will be organized within a firm if the reduction in cheating costs achieved by replacing price constraints by behavior constraints exceeds the resulting increase in shirking costs and by the market in the opposite case. The paper shows that cheating and shirking costs increase more than proportionately as one concentrates in either pure price or behavior constraints. Hence using a mix of both methods generally minimizes the sum of cheating and shirking costs. This explains why most transactions exhibit features of both markets and hierarchy. The paper shows clearly the tradeoff involved between price and behavior constraints. It explains the costs and benefits of using two types of price incentives in firms, piecework and profit centers, and predicts when they will be used.

Journal Information

This unique journal scans the globe for new research that draws upon multiple disciplines or levels of analysis: achieves genuine integration of theory, data, and managment applications; and improves organizational functioning. Artificial Intelligence Communications Theory Economics History Hypercompetition Information Science Organization theory Political Science Psychology Strategic Management Systems Theory

Publisher Information

With over 12,500 members from around the globe, INFORMS is the leading international association for professionals in operations research and analytics. INFORMS promotes best practices and advances in operations research, management science, and analytics to improve operational processes, decision-making, and outcomes through an array of highly-cited publications, conferences, competitions, networking communities, and professional development services.

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If a speaker wants to explain or describe facts, truths, and principles in a way that stimulates interest, facilitates understanding, and increases understanding, then he/she would want to use a(n) speech.

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A speaker whose audience is already familiar with a topic will have an easy time adapting the material.

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Process thinking occurs when we contemplate something from a variety of perspectives.

Informative speeches are designed to do which of the following?

In Sarah’ speech about environmental movements, she states “recycling a single plastic bottle can conserve enough to energy to light a 60-watt lightbulb for six hours.” She is engaging in the ____________ method of informing.

In demonstration method of informing, you organize the steps into a time-ordered hierarchy.

Well-constructed, effective informative speeches contain __________ key characteristics.

Of the following, all are characteristics of effective informative speaking except __________.

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If a speaker presents either entirely new information, or familiar information in a new way, then he/she is utilizing __________.

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__________ can be achieved through techniques such as visual aids, transitions, and humor.

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The __________ method is used to create an accurate vivid picture of the speech’s subject, while the __________ method explains something by identifying its meaning.

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The most common framework for an informative speech is a process of __________ that shows how something is done, or how something works.

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If a speaker wants to inform the audience about on the meanings of trust, he/she would develop the speech through definition.

If the process to be demonstrated is longer than the available time, the speaker should not waste that time on the demonstration.

Expository speeches use various methods of informing, such as descriptions, comparisons, and demonstrations, in one speech.

When delivering an exposition of historical events and forces, a speaker has a special obligation to seek out narratives that can enliven the speech.

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Which of the following is informative speeches designed to do?

When delivering an exposition of historical events and forces a speaker has a special obligation?

What are ways to identify new insights about a topic quizlet?

When a speaker tries to think about something a variety of perspectives it is known as ?