Efficiency and power: Organizational economics meets organization theory

The disputes between sociologically informed organization theory and organizational economics revolve around the relative importance of efficiency and power. The concepts of efficiency and power are clarified in this paper, with distinctions being made between subjectivist and essentialist versions of efficiency, and between institutional and processual perspectives on power. Economists have largely ignored sociologists’ discussions of power. It is argued that if path dependency is allowed for then organizational economics may well be compatible with an institutional view of power. The main theme of the paper is that efficiency is no less of an ‘essentially contested concept’ than power.