Efficiency and Control in the 19th Century Firm: The Failure of the "New Institutionalism".

Abstract

Economists have recently begun to apply rational, decision-making models to explain historical changes in economic organization. Leading this microeconomic view of business history is Oliver E. Williamson. Williamson has focussed on changes in the internal organization of the firm and has argued that such changes have occurred as efficient, rational responses by owners to increasing transaction costs. This paper shows that, although efficiency may logically explain such changes, the historical record reveals that control over both production and worker social behavior have been equally, if not more, important. This paper focusses on a 19th century factory -- Winchester Repeating Arms Company -- and the transition from the