1. Bill Adams, FEA, University of Malaya
Organizational
Economics Theory

2. Bill Adams, FEA, University of Malaya

3. Bill Adams, FEA, University of Malaya
Describing an Elephant in the Dark

4. Psychology Interpersonal
Behavior
Sociology Group Behavior
Anthropology Organizational
Culture
Political Science Political & Power
Relationships
Bill Adams, FEA, University of Malaya
Statistics Quantitative
“Mgt. Science”
Economics Economic
Analysis

5. Bill Adams, FEA, University of Malaya
Organizational
Economics Theory

6. People respond to incentives!
(We constantly weigh costs and benefits)
Costs Benefits
Bill Adams, FEA, University of Malaya
So if the market is free to set prices
based on demand, resources will be
allocated to try to meet that demand.

7. Jensen & Meckling: Agency Costs, Managers & Firms
Organization = cluster of contracting
(legal) relationships among individuals.
So, important to understand:
● legal “property rights”
● agent status (owner delegates
decision-making authority to agents)
Bill Adams, FEA, University of Malaya
● monitoring expenses
● bonding expenses
● “residual loss” (agent errors)
(what about “residual gain?!”)

8. Jensen & Meckling: Agency Costs, Managers & Firms
Managers may not act entirely
in the interests of the owners!
Bill Adams, FEA, University of Malaya
Because managers will usually act
in their own personal best interests,
owners must use incentives and
must monitor the managers.

9. Williamson: Transaction Costs
With specialization
(division of labor),
as process/products
move between people,
“transaction costs” are due to:
Bill Adams, FEA, University of Malaya
● time (and delays),
● monitoring (supervision/record-keeping),
● imperfect communication (misunderstandings)

10. Williamson: Transaction Costs
Sometimes a big
advantage of doing
things “in-house”
within an organization
(not “outsourcing”)
may be lower
Bill Adams, FEA, University of Malaya
“transaction costs”
If outsourced: imperfect contracts,
opportunism, conflict resolution hassles,
and communication transaction costs.

11. Williamson: Transaction Costs
“… structures that have
better transaction cost
economizing properties
will eventually displace
those that have worse,
Bill Adams, FEA, University of Malaya
ceteris paribus. The
cetera, however, are
not always paria.”

12. Bill Adams, FEA, University of Malaya
and
Email
Memos
Writing

13. Why write a memo?
 Memo: To/From/Date/Subject on paper
 Communicate news, policy, discussions
 Summarize complex issues/information
Bill Adams, FEA, University of Malaya
 Paper “of record” as a reference
 Saves management time over meetings

14. Elements of an effective memo
 Succinct but informative subject line
 Concise (ideally one page max)
 Short declarative sentences
 Uses active, not passive, voice
Bill Adams, FEA, University of Malaya
 Uses bullets and/or short paragraphs
(i.e., not a huge mass of gray text)

15. Types of Memos Recommendation
News Options Memo
(Announcement)
Options
Plus, the
Headline Issue (& recommendation
(journalism style) Importance)
Key lead Schedule goal
paragraph for decision Policy
Option A (define, Clear policy
Bill Adams, FEA, University of Malaya
Details pros, cons) statement
For more info, Option B (define, Details of the
go to… pros, cons) new policy
Option C (define, Justification? &
pros, cons) “for more info”

16. Other Memo Tips
 Order names by  Before sending it,
professional status, be sure to profread,
then alphabetically. proofreed, proofread!
 Consider using 1.5  Uses attachments if
line spacing. necessary rather than
pack the cover memo.
Bill Adams, FEA, University of Malaya
 Use headings for
memo sections (e.g.,  Memos can be cold.
Option A, Option B, Consider closing with
Recommendation). a warm touch (thank you
for your help in this matter).

17. Paper or electronic?
PAPER:
 Some especially important things
carry more “weight” via paper
 When people will need to refer to it
 When you need a signoff signature
Bill Adams, FEA, University of Malaya
EMAIL:
 Increasing used of course
 Rapid distribution
 Less expensive

18. Email Tips
 Cogent subject line
 Maintain correct full names by each email in
your address book.
 CC your supervisor selectively to keep up to
date on activities.
Bill Adams, FEA, University of Malaya
 If important, write a reply so it can “stand
alone” and makes sense without prior email.
 All memo tips apply, but even more concise!

19. Responding to Email
 If “reply all” check
the CCs to be sure.  If you cannot answer
soon, (because people
 Consider whether expect instant replies)
every recipient really notify when you will.
Bill Adams, FEA, University of Malaya
needs to receive it! (“Sorry, but I’m in
meetings all day. Will
 Be careful what you get back to you early
put in writing! tomorrow.”)

20. Some things should never be written!
Do NOT use paper memos or email,
IF the topic involves…
 any complaints to a colleague
 even the hint of personal criticism
 any inter-personal “issues”
 humor (especially sarcasm) can easily
Bill Adams, FEA, University of Malaya
be misunderstood & look unprofessional
 anything you would not want published
verbatim on the front page of The Star!
 plots, gossip, criticism of a third party!

21. Some things should never be written!
Consider “disassociating” yourself from
inappropriate emails by a gentle rebuke
(“I think you’re being awfully hard on
him. We can chat over lunch.”) or a more
explicit request if they do not get the hint.
Bill Adams, FEA, University of Malaya

22. Using Email or Paper Memos for a
“Paper Trail” of Documentation!
After an important meeting (with
anybody), consider the value of a
“for the record” statement of your
understanding of the conclusion!
Can be helpful to have a record of
an (otherwise unwritten) agreement.
Bill Adams, FEA, University of Malaya
● Sometimes subtle
(“good to see you. I look forward to…”)
● Sometimes explicit
(“Just to confirm my understanding…”)

23. A Little Latin Lesson!
ceteris paribus =
other things being equal
Bill Adams, FEA, University of Malaya

24. Range of Latin & Roman Empire (circa 100AD)
[English]
French
Romanian
Spanish Italian
Bill Adams, FEA, University of Malaya
Portuguese

25. Common Latin Words & Phrases
LATIN TRANSLATION
pro for (favor, support)
pro bono for public good (not money)
pro rata for the portion (proportionally)
Bill Adams, FEA, University of Malaya
pro forma for form (formality)
pro for the time (temporarily)
tempore e.g., “President pro tempore of the Senate”

26. Common Latin Words & Phrases
LATIN TRANSLATION
per for each
per capita for each person
per se for itself; by itself
Bill Adams, FEA, University of Malaya
per annum for each year
per diem for each day
carpe diem “seize the day!”

27. Common Latin Words & Phrases
LATIN TRANSLATION
post after
p.s. (post scriptum) after writing
post partum after childbirth
Bill Adams, FEA, University of Malaya
post mortem after death (autopsy)
ex post facto after the fact

28. Common Latin Phrases
LATIN TRANSLATION
ex post facto after the fact
ipso facto due to that fact
de facto in fact; in reality
Bill Adams, FEA, University of Malaya
de jure in law; legally

29. Common Latin Abbreviations
LATIN TRANSLATION
etc. (et cetera) and so forth
et al. and others
e.g. for example
Bill Adams, FEA, University of Malaya
i.e. in other words
circa; c. about; approx.

30. Common Latin Words & Phrases
LATIN TRANSLATION
from the office (so holds
ex officio
another role automatically)
in absentia in one's absence
ad hoc just for this purpose
Bill Adams, FEA, University of Malaya
current thing;
status quo
current state of affairs
quid pro quo thing for a thing; favor for favor