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The Economics of Business Process Design: Motivation, Information and Coordination Within the Firm

Author

Listed:
  • Peter Buckley
  • Martin Carter

Abstract

This paper presents a transaction cost analysis of the internal business processes of firms. Business processes are collections of activities which are technologically or managerially linked so that they jointly affect value added. Their organisation is characterised by their 'architecture'—the allocation of responsibilities amongst individuals and groups and communication between them for information and coordination—and their incentive structure. The overall costs of organisation are determined by losses due to imperfect motivation of process members, which flows from the incentive structure, and imperfect information and coordination, which flow from the architecture, together with the resource costs associated with incentives and architecture. Perfect motivation corresponds to 'team behaviour' and a quantitative model, based on team theory, indicates how the best architecture depends on the degree interaction between activities comprising the business process.

Suggested Citation

  • Peter Buckley & Martin Carter, 1996. "The Economics of Business Process Design: Motivation, Information and Coordination Within the Firm," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 3(1), pages 5-24.
    • Handle: RePEc:taf:ijecbs:v:3:y:1996:i:1:p:5-24
    DOI: 10.1080/758533485
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    Citations

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    Cited by:

    1. Buckley, Peter J. & Carter, Martin J., 2002. "Process and structure in knowledge management practices of British and US multinational enterprises," Journal of International Management, Elsevier, vol. 8(1), pages 29-48.
    2. Francisco J. Santos-Arteaga & Celia Torrecillas & Madjid Tavana, 2019. "Dynamic effects of learning on the innovative outputs and productivity in Spanish multinational enterprises," The Journal of Technology Transfer, Springer, vol. 44(1), pages 97-131, February.
    3. Xiaohui Liu & Jiangyong Lu & Seong-jin Choi, 2014. "Bridging Knowledge Gaps: Returnees and Reverse Knowledge Spillovers from Chinese Local Firms to Foreign Firms," Management International Review, Springer, vol. 54(2), pages 253-276, April.
    4. Bürker, Matthias & Franco, Chiara & Minerva, G. Alfredo, 2013. "Foreign ownership, firm performance, and the geography of civic capital," Regional Science and Urban Economics, Elsevier, vol. 43(6), pages 964-984.
    5. Mark Casson & Nigel Wadeson, 1998. "Communication Costs and the Boundaries of the Firm," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 5(1), pages 5-27.
    6. Li, Ke, 2007. "Transaction cost, corporate governance and division of labor--A general equilibrium analysis of professional managers and its implication to China's practice," Research in International Business and Finance, Elsevier, vol. 21(3), pages 447-468, September.
    7. Buckley, Peter J., 2016. "The contribution of internalisation theory to international business: New realities and unanswered questions," Journal of World Business, Elsevier, vol. 51(1), pages 74-82.
    8. Marcus Matthias Keupp & Maximilian Palmié & Oliver Gassmann, 2011. "Achieving Subsidiary Integration in International Innovation by Managerial “Tools”," Management International Review, Springer, vol. 51(2), pages 213-239, April.

    More about this item

    Keywords

    Transaction costs; Business processes; Organisation design; Team theory. JEL classifications: D23; L22;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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