Wednesday, September 11, 2013

My Own Experiences with Organizations and Transaction Costs

    I have worked in education institution this summer. It is a relatively small firm with onlt 16 employers. The structure is simple in this company. The boss is responsible for the whole company's development; there are only three departments, one is for teaching, one is for general managements, and one is for advertisement. Leader of the teaching group decides schedules and courses for other teachers. Managers do daily affairs, making sure the company is functioning well. If the boss has any instructions or comments, he can either find the leader of the department or individual employer directly. Although the company is small, it is very efficient in functioning and the transaction costs are relatively low within the company.
    In university, people always contact with others through emails. This can be viewed as an efficient and cheap way to communicate; however, this method might not be the most optimal one. People might not check emails in time, so if there are emergencies, students cannot respond to these emails immediately. Also, if network is not going well, students are very likely to miss important notifications. When these come true, transaction costs of communicating through emails become much higer.Therefore, school attempt to have other ways to decrease transactions costs. For instance, police department will send us texts through telephones if there are emergencies. If useful methods are combined, the efficiency can be much higher.

1 comment:

  1. I gather that in the education institution where you worked everyone was in close physical proximity and face to face communication was the common practice. When I worked in the College of Business, my staff was right next door. I would often walking into their office to talk about things. But we did a lot of email too. Because each of was was also interacting with others outside our group and that interaction often was by email, we'd share some of those interactions.

    There is an interesting recent essay by Atul Gawande Slow Ideas. In that piece he argues that face to face trumps electronic means in the spread of effect practice, particularly when the benefit is only received after some lag. If the benefit is immediate the feedback from it is sufficient to get the person to adopt the practice. This is when email might very well work. Otherwise, a face to face message from a credible peer is much better, even if that is more expensive to deliver.

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