The main perspective in this paradigm is the belief that the market is better in Integration in organisation than the hierarchy would be able to. As such organisations need to find their core activities and outsource other activities or even push them off.
In contrast with Scientific Management it sees the world as an open-system and embraces it. The growing influence of shareholders and financial institutions play a dominant role in this paradigm. The pressure to push off activities or focus on core elements often comes from shareholders, or a prerequisite to ensure financial resources. Often these decisions are coupled to rewards for the managers that take these decisions.
Control is still a central element, but its rationality now is economically driven instead of the technical rationality in Scientific Management.
| Short overview | |
|---|---|
| theoretical base | transactional cost theory, agency theory |
| Rationality|Rationality | Economical efficiency |
| Instruments | rewards of managers, outsourcing, privatisation |
| Competing Values Framework | external, control |