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The division of labor in the firm: Agency, near-decomposability and the Babbage principle

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  • REINSTALLER, ANDREAS

Abstract

This paper devises a simulation model that combines insights from the evolutionary perspective on the division of labor with ideas from the labor process literature. It characterizes technical change and the development of a near-decomposable production process as the outcome of technological search and of organizational problem solving, where the conflict between workers and firms over the organization of work plays a central role. It is argued that a near-decomposable organization of the production process also allows management to tighten its control over workers. Consequently, more extensive divisions of labor within a firm develop where the power of workers to oppose decisions by the management is low. In these scenarios the performance of firms is also highest. The model is used to interpret historical evidence about different development paths in technical change in the UK and the US at the beginning of the twentieth century.

Suggested Citation

  • Reinstaller, Andreas, 2007. "The division of labor in the firm: Agency, near-decomposability and the Babbage principle," Journal of Institutional Economics, Cambridge University Press, vol. 3(3), pages 293-322, December.
    • Handle: RePEc:cup:jinsec:v:3:y:2007:i:03:p:293-322_00
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    Cited by:

    1. Andreas Reinstaller, 2012. "Modularity and its Implications for the Theory of the Firm," Chapters, in: Michael Dietrich & Jackie Krafft (ed.), Handbook on the Economics and Theory of the Firm, chapter 32, Edward Elgar Publishing.
    2. Ron Boschma & Koen Frenken, 2009. "Some Notes on Institutions in Evolutionary Economic Geography," Economic Geography, Clark University, vol. 85(2), pages 151-158, April.
    3. Danny MacKinnon & Andrew Cumbers & Andy Pike & Kean Birch & Robert McMaster, 2009. "Evolution in Economic Geography: Institutions, Political Economy, and Adaptation," Economic Geography, Clark University, vol. 85(2), pages 129-150, April.
    4. Andrea Pacella, 2008. "The Effects Of Labour Market Flexibility In The Monetary Theory Of Production," Metroeconomica, Wiley Blackwell, vol. 59(4), pages 608-632, November.
    5. Anna Dimitrova & Katarina Hollan & Daphne Channa Laster & Andreas Reinstaller & Margit Schratzenstaller-Altzinger & Ewald Walterskirchen & Teresa Weiss, 2013. "Literature Review on Fundamental Concepts and Definitions, Objectives and Policy Goals as well as Instruments Relevant for Socio-ecological Transition. WWWforEurope Working Paper No. 40," WIFO Studies, WIFO, number 47015, March.
    6. Andreas Reinstaller, 2011. "The Modularity of Technology and Organisations. Implications for the Theory of the Firm," WIFO Working Papers 398, WIFO.
    7. Andreas Reinstaller, 2013. "An Evolutionary View on Social Innovation and the Process of Economic Change. WWWforEurope Working Paper No. 43," WIFO Studies, WIFO, number 47018, March.

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