Organizational Economics

DEFINITION of 'Organizational Economics'

A branch of applied economics that studies the transactions that occur within individual firms, as opposed to the transactions that occur within the greater market. Organizational economics is broken down into three major subfields: agency theory, transaction cost economics and property rights theory. Courses in organizational economics are usually taught at the graduate or doctoral level.

BREAKING DOWN 'Organizational Economics'

Organizational economics is useful in developing a firm's human resource management policies, determining how a firm should be organized, assessing business risk, implementing rewards systems and making, analyzing and improving management decisions. For example, organizational economics could be used to assess why the 2010 BP oil spill in the Gulf of Mexico was able to occur and how a similar disaster could be prevented in the future.



RELATED TERMS
  1. Organizational Behavior - OB

    Organizational Behavior (OB) is the study of the way people interact ...
  2. Organizational Chart

    A diagram that outlines the internal structure of a company. ...
  3. Organizational Structure

    Explicit and implicit institutional rules and policies designed ...
  4. Mainstream Economics

    A term used to describe schools of economic thought considered ...
  5. Applied Economics

    The application of economic theories and principles to real world ...
  6. Endogenous Growth Theory

    An economic theory which argues that economic growth is generated ...
Related Articles
  1. Markets

    Macroeconomics: Conclusion

    By Stephen Simpson Given the enormous scale of government budgets and the impact of economic policy on consumers and businesses, macroeconomics clearly concerns itself with significant issues. ...
  2. Trading

    7 Controversial Investing Theories

    We take a closer look at the theories that attempt to explain and influence the market.
  3. Investing

    Understanding Organizational Behavior

    Organizational behavior is the study of how humans interact in group environments.
  4. Markets

    The Difference Between Finance And Economics

    Learn the differences between these closely related disciplines and how they inform and influence each other.
  5. Markets

    Keynesian Economics

    Learn more about this economic theory that incorporates government intervention in the marketplace.
  6. Markets

    Economics 101

    Economics is the study of how individuals, governments, businesses and other organizations make choices that effect the allocation and distribution of scarce resources.
  7. Markets

    The Right Mindset for CEO Success

    Owning the role of CEO is no simple task so it is imperative that CEOs have the correct mindset to ensure the success of their organization.
  8. Markets

    Calculating Economic Profit

    Economic profit is the difference between the revenue a firm earns from sales and the firm’s total opportunity costs.
  9. Managing Wealth

    The Science of Making Better Investment Decisions

    Neuroeconomics attempts to bridge neuroscience, cognitive psychology and economics in order to understand the mechanisms underlying economic decision making.
  10. Markets

    What's Economic Capital?

    While regulatory and economic capital use some of the same measurements of risk to determine how much capital a firm should hold in reserve, economic capital uses more realistic measures.
RELATED FAQS
  1. What's the difference between agency theory and stakeholder theory?

    Learn how agency theory and stakeholder theory are used in business to understand common business communication problems ... Read Answer >>
  2. How can key performance metrics (KPIs) help evaluate employees?

    Discover how key performance indicators can be used to evaluate employee performance around goals which support organizational ... Read Answer >>
  3. How are arm's-length transactions determined by law?

    Determine if transactions are conducted at arm's length by checking if the parties to a contract are independent and transact ... Read Answer >>
  4. What are some of the limitations and drawbacks of economics as a field?

    Find out why the field of economics is full of controversy. Policy decisions, political campaigns and personal finances are ... Read Answer >>
  5. Is a good's production cost related to its value?

    Learn about the history and debate regarding the metrics used to determine the value of a good and which theories place emphasis ... Read Answer >>
  6. What impact does economics have on government policy?

    Learn about the impact of economic conditions on government policy and understand how governments engineer economic conditions ... Read Answer >>
Hot Definitions
  1. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  2. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  3. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  4. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  5. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  6. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
Trading Center