Book contents
- Frontmatter
- Contents
- List of tables and figures
- Series editors' preface
- Acknowledgments
- Introduction
- PART I WHY HAVE HIERARCHY?
- PART II MANAGERIAL DILEMMAS
- PART III COOPERATION AND LEADERSHIP
- 9 The possibilities of cooperation: Repeated vertical dilemmas
- 10 The indeterminacy of cooperation: Conventions, culture, and commitment
- 11 The political economy of hierarchy: Commitment, leadership, and property rights
- Epilogue: Politics, rationality, and efficiency
- References
- Name Index
- Subject Index
11 - The political economy of hierarchy: Commitment, leadership, and property rights
Published online by Cambridge University Press: 05 June 2012
- Frontmatter
- Contents
- List of tables and figures
- Series editors' preface
- Acknowledgments
- Introduction
- PART I WHY HAVE HIERARCHY?
- PART II MANAGERIAL DILEMMAS
- PART III COOPERATION AND LEADERSHIP
- 9 The possibilities of cooperation: Repeated vertical dilemmas
- 10 The indeterminacy of cooperation: Conventions, culture, and commitment
- 11 The political economy of hierarchy: Commitment, leadership, and property rights
- Epilogue: Politics, rationality, and efficiency
- References
- Name Index
- Subject Index
Summary
A critical factor surrounding the rules governing economic exchange is the degree to which the political regime or sovereign is committed to or bound by these rules. Rules that are readily revised by the sovereign differ significantly in their implications for performance than do exactly the same rules when not subject to revision. The more likely property rights are to be altered by the sovereign for his own benefit, the lower the expected returns from investment and the lower in turn the incentive to invest. A necessary condition for economic growth is that the sovereign or government, beyond establishing the relevant set of rights, establish a credible commitment to them.
North and Weingast (1989: 1)Firms such as Volvo have developed an organizational style based on self-managed teams. Volvo's success, and the challenge from Japan, began to have an impact on U.S. auto companies by the late seventies and early eighties. Ford Motor Company, without the capital for the high-tech renovations of General Motors, by 1982 initiated a similar program of cultural change encouraging productivity, cooperation, and teamwork. By 1986 Ford had started to outearn General Motors, despite the fact that the latter had just embarked on a much-heralded capitalization program. General Motors responded by hiring William Scherkenbach, one of Ford's experts in cultural change. Mr. Scherkenbach was quoted as saying, “At Ford, the sense of community and teamwork is a lot more obvious than it is here” (Wall Street Journal 1989a).
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- Chapter
- Information
- Managerial DilemmasThe Political Economy of Hierarchy, pp. 216 - 234Publisher: Cambridge University PressPrint publication year: 1992