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

Published online by Cambridge University Press:  01 December 2007

ANDREAS REINSTALLER
ANDREAS REINSTALLER*
Affiliation:
Austrian Institute of Economic Research
*
*Correspondence to: Austrian Institute of Economic Research (WIFO), POB 91, 1103 Vienna, Austria. Email: Andreas.Reinstaller@wifo.ac.at.
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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.

Type
Research Article
Information
Journal of Institutional Economics , Volume 3 , Issue 3 , December 2007 , pp. 293 - 322
Copyright
Copyright © The JOIE Foundation 2007

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Footnotes

This paper has enormously benefited from discussions with Bulat Sanditov and Koen Frenken. Mike Dietrich, Werner Hölzl and the three referees of this journal also provided a number of comments that helped improve the quality of this paper.

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