oliver williamson, the nobel prize and organization theory
So, beyond the seminal contributions of his work (which O&M will undoubtedly discuss), here’s why Oliver Williamson’s Nobel prize in economics is also a huge win for the fields of organization theory, strategic management and organizational sociology:
- Many of Williamson’s articles (including highly cited ones) are published in organization theory, strategy and sociology journals: Administrative Science Quarterly, American Journal of Sociology, Strategic Management Journal, Academy of Management Review, etc.
- Arguably the seminal piece of economic sociology, Granovetter’s 1985 article, is a direct reaction to Williamson’s work. Even though Granovetter’s piece is a critique of transaction cost economics, nonetheless I think critiques will also receive indirect attention (and then, who knows?). Furthermore, both Granovetter and Williamson have highlighted the need for a meaningful integration of organizational economics and sociology, something that I think is desperately needed (no matter what some people think).
- Williamson’s work has also been criticized heavily in management, for example by Ghoshal and Moran, and I think this debate is healthy and important (though I largely side with Williamson).
- Many of Oliver Williamson’s students are doing outstanding research in strategy and OT departments at business schools. Off the top of my head, the following come to mind: Nick Argyres, Kyle Mayer, Jackson Nickerson, Joanne Oxley, and many others.
- Finally, more substantively, questions of organizational boundaries ought to be a central issue in any organization theory. For example, questions of organizational capability are intimately tied with questions of organizational boundaries (plug: this was part of the impetus for this upcoming, pdf, Organization Science special issue.)
Overall, Williamson was long due for the award. And, for what it’s worth, I think Elinor Ostrom was also a beautiful choice. It’s fantastic to see scholars awarded for work that is so directly linked to organization theory.
Update: Time Magazine columnist Justin Fox is keeping track of the reactions across the blogosphere.
orgtheory.net 
[…] one of us; many orgTheorists find his work compelling or at least a useful foil. But I’ll let others comment on Williamson because, for my money, the questions and topics that Ostrom work on […]
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of cows and collective action « orgtheory.net
October 12, 2009 at 4:29 pm
I’m blown away by some of the reactions that the prize is getting among economists. It’s just plain wrong to say that the prize is nothing more than a political message from the committee (or equating Williamson and Ostrom with behavioral economics??).
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brayden
October 12, 2009 at 5:37 pm
Woosh — I’m sorry, some of those commentators (in your WSJ link) have absolutely no idea what they are talking about (e.g., the “sending a message” bit — give me a break!).
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tf
October 12, 2009 at 5:43 pm
Bryaden, some of those comments are just sad. The fact the people haven’t heard of Elinor Ostrom is more a comment on economists than Ostrom. To any person who reads widely in the social sciences, Ostrom is clearly one of the leading scholars of her generation.
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fabiorojas
October 12, 2009 at 5:44 pm
The Levitt comment is also interesting — “What’s interesting is that in the ensuing 15 years, it seems to me that economists have talked less and less about Williamson’s research, at least in the circles in which I run. I suspect most assistant professors of economics have barely heard of him.”
I wonder what proportion of productive Williamson students are in b-schools versus in econ departments (Peter: do you know?), that might have something to do with the seeming lack of attention to Williamson (in mainstream economics, compared to OT/strategy).
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tf
October 12, 2009 at 5:47 pm
Almost all are in B schools. Off the top of my head: Scott Masten, Jackson Nickerson, Brian Silverman, Nick Argyres, Joanne Oxley, Janet Bercovitz, John de Figueriedo, Kyle Mayer, Jeff Macher (I’m sure I’m leaving some out, sorry). A couple are in law schools (Howard Shelanski and Emerson Tiller, Brayden’s colleague at Northwestern). Almost none are in econ departments.
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Peter Klein
October 12, 2009 at 6:02 pm
Fantastic prize. Similar reaction from economist to when Herbert Simon won the Nobel prize in 1978. I was a Ph.D. student in economics at the time (revealing my age here… ) and no one could believe it.
I read later that even Carnegie Mellon economists were apalled that their colleague Herbert Simon had won. Now Herbert Simon is viewed as an important precursor to behavioral economics but it took a long time for this to happen.
Although neither Ostrom nor Williamson are sociologists their reasoning is very sociological. Williamson basically has a Weberian theory of bureaucracy to describe hierarchies, linked with the Barnard-Simon-March theory of employment relationships.
Granovetter called Williasmon’s theory of organizations oversocialized but by this criteria Weberian theory of organizations would also imply oversocialization.
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Willie
October 12, 2009 at 6:04 pm
Peter: Is it really true that young economists don’t read Williamson? Aren’t firms, like, important to economics profession?
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fabiorojas
October 12, 2009 at 6:05 pm
[…] news today is encouraging. It’s clear that this is a good prize. You should definitely read Teppo and Sean’s informative responses. I’ll take a moment to also congratulate my colleague […]
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three cheers for indiana! « orgtheory.net
October 12, 2009 at 6:05 pm
Willie – You’re right, Granovetter does imply that Weberian accounts of economic behavior/organizations are oversocialized. Granovetter wasn’t just distinguishing the relational view from Williamson’s TCE but also from the majority of organizational sociologists at the time.
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brayden
October 12, 2009 at 6:28 pm
[…] contention that this is more a social science prize than an economics one, BYU's Teppo Fellin calls Williamson's Nobel a "huge win for the fields of organization theory, strategic management and organizational […]
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Elinor Ostrom and Oliver Williamson with the economics Nobel - The Curious Capitalist - TIME.com
October 12, 2009 at 7:16 pm
Peter: Thanks, that is what I thought (i.e., Williamson students are now largely in b-schools, and, for the most part they publish in management/orgs rather than econonomics journals) — it’d be interesting to do an analysis of citation patterns to Williamson’s work. I am guessing organizational scholars in b-schools would overwhelmingly trump econ scholars in terms of citations to his work.
(If some enterprising person wants to quickly do the analysis [I’m teaching all day] — I think Web of Science would allow one to quickly generate the results — it would be really interesting to see the citation patterns to Williamson from orgs/strategy versus economics journals.)
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tf
October 12, 2009 at 7:41 pm
Fabio, sadly, yes, I think it probably is true. It’s not that firms aren’t important, but that Williamson’s approach has been largely superseded by the more formal treatments offered by Oliver Hart, Milgrom and Roberts, Jean Tirole, etc. Williamson’s own work is too eclectic, too verbal, too broad-social-science-oriented for the typical mainstream economist to handle.
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Peter Klein
October 12, 2009 at 8:24 pm
Via Marcel Bogers (on FB), Williamson’s interview at 4am, after hearing about the prize: http://nobelprize.org/nobel_prizes/economics/laureates/2009/williamson-telephone.html
In the interview Williamson highlights the Carnegie school and the “interdisciplinary effort to draw economics and organization theory together.”
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tf
October 12, 2009 at 9:26 pm
[…] contemporary literature in strategy and organizations, Williamson’s influence is huge. Teppo provides a nice summary. Indeed, while the resource-based view, and its capabilities, knowledge-based, and dynamic […]
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Williamson Miscellany « Organizations and Markets
October 13, 2009 at 2:28 pm
[…] a comment » As discussed previously, Williamson’s Nobel prize is a huge win for organization theory as well. Williamson’s […]
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the williamson school (2.0): heterogeneity, microanalytics and boundaries « orgtheory.net
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[…] within the logic of neoclassical economics — won the Nobel Prize for economics, Orgtheory.net linked to “Economic Action and Social Structure: The Problem of Embeddedness” by Mark […]
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[…] within the logic of neoclassical economics — won the Nobel Prize for economics, Orgtheory.net linked to “Economic Action and Social Structure: The Problem of Embeddedness” by Mark […]
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