Theories of Economic Organization: The Case for Realism and Balance

The article reports on the economic theory of industrial organization. The authors focus on responding to a criticism of their article “Bad for Practice: A Critique of Transaction Cost Theory.” They go on to suggest that markets and industrial organizations feature a vastly different set of dynamics. It is suggested that managers cannot run business enterprises or corporations based on transactional cost economics (TCE) because that particular theory is meant to decipher market situations. The authors endeavor to provide a realistic and balanced view of organizational behavior.