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Economics of Organisations and Strategy

  • Module code: BE6002
  • Year: 2018/9
  • Level: Year 6
  • Credits: 30.00
  • Pre-requisites: BE5001 Competition and the Firm
  • Co-requisites: None


This module is a core requirement at Level 6 for students taking the BSc Business Economics. It develops pluralist approaches to understanding the aims, methods and outcomes of production and exchange organizations ("businesses" for short), with particular reference to the limitations as well as the possibilities of markets.

The core theme is the contrast between neo-classical and other perspectives, including the "capabilities" approach, transaction cost economics and other heterodox schools of thought.

Particular themes include the aims and methods of business strategy, the "make or buy" decision, the nature of relationships within and between businesses, and the costs and benefits of different systems of governance of economic exchange.


  • To develop students' understanding of organizational design and strategy in the context of market economies
  • To develop students' skills in researching and analysing business case studies to illustrate and assess theoretical accounts of organization and strategy
  • To introduce students to the aims and methods of literature review
  • To enable students to make independent judgements about the claims of rival theoretical perspectives in economic thought.

Learning outcomes

On successful completion of the module, students will be able to:

  • demonstrate how organizational forms and strategies are moulded not only by transaction, management and production costs but also by changing market and technological possibilities
  • collect and analyse case-study material in business strategy and organization and account for the decisions and outcomes discussed
  • identify, compare and contrast key arguments advanced by protagonists in relevant academic debates
  • evaluate differing theoretical paradigms in economics in respect of the contribution they make to understanding businesses and their actions.

Curriculum content

  • Relationships and contracts
  • Distinctive capabilities and competitive advantages
  • Innovation, change and organisational responses
  • Schumpeterian competition, the Penrosian firm and global competition
  • Informational asymmetry and bounded rationality
  • Transaction costs and the nature of the firm
  • Opportunism and asset specificity
  • The employment relation.

Teaching and learning strategy

The learning and teaching experience will involve a combination of lectures and tutorials. Lectures will present an overview of the theoretical perspectives addressed by the course. Seminars will develop research and other academic skills in preparation for the coursework assignments, as well as providing an opportunity for deeper engagement with the substantive content of the module.

Group work will be encouraged through task assignment and exchange of prepared material.

Breakdown of Teaching and Learning Hours

Definitive KIS Category Indicative Description Hours
Scheduled learning and teaching Lecture 23
Scheduled learning and teaching Seminar 23
Guided independent study Preparation of essay/case-study 39
Guided independent study Preparation of literature review 39
Guided independent study General independent study and exam revision 96
Total (number of credits x 10) 300

Assessment strategy

Students will prepare two pieces of coursework for formative assessment in the first instance. They will submit a revised version (1,500 words) of one of these as part of the summative assessment, together with a supplementary essay (500 words) justifying their choice of work for final presentation and reflecting on the feedback given on the original work.

In the first semester students will undertake a literature search and review related to a case-study in transaction costs economics. This will assess practical ability to apply differing conceptual frameworks and evaluate their usefulness in the context of a canonical case study.

In the second semester students will write an essay and illustrative case study on a topic related to corporate strategy. This will assess ability to integrate case study and survey material relating to the formulation of strategic decisions and evaluation of their effects.

Breadth and depth of knowledge, along with the ability to apply this to a specified problem without special preparation, is assessed by the final two-hour exam.

Mapping of Learning Outcomes to Assessment Strategy (Indicative)

Learning Outcome Assessment Strategy
Demonstrate understanding of what corporate strategy is, appreciation of the significance of strategic decisions and critical awareness of different approaches to formulating strategy Essay/case-study Exam
Evaluate how organisations respond to and affect changing market and technological opportunities Essay/case-study
Evaluate different approaches to transaction cost economics Literature review Exam
Use economic theory to analyse issues in business organisation and strategy. Exam

Breakdown of Major Categories of Assessment

Assessment Type Assessment Name Assessment Weighting
CWK Essay/case study or literature review 50
EXWR Two hour unseen examination 50
Total (to equal 100%) 100%

Achieving a pass

It IS NOT a requirement that any major assessment category is passed separately in order to achieve an overall pass for the module

Bibliography core texts

Barney, J. B. (2002) Gaining and sustaining competitive advantage, second edition, Upper Saddle River, NJ: Prentice Hall.

FitzRoy, F. R., Acs, Z. and Gerlowski, D. A. (1997) Management and economics of organisation, London: Prentice Hall Europe.

Himmelweit, S. et al. (2001) Microeconomics: neoclassical and institutionalist perspectives on economic behaviour, London: Thomson/The Open University

Kay, J. (1995) Foundations of corporate success, Oxford: Oxford University Press.

Putterman, D. and Kroszner, R. S. (ed.s) (1996) The economic nature of the firm, Cambridge: Cambridge University Press.

Bibliography recommended reading

Besanko, D., et al. (2007) The economics of strategy, fourth edition, Wiley & Sons.

Brickley, J. A., Smith, C. W., and Zimmerman, J. L. (2001) Managerial economics and organisational architecture, second edition, London: McGraw-Hill.

Hendrikse, G. (2003) Economics and management of organisations, Maidenhead: McGraw-Hill.

Milgrom, P. and Roberts, J. (1992) Economics, organisation and management, Englewood Cliffs, NJ: Prentice Hall.

Ricketts, M. (2002) The economics of business enterprise, Third edition, Cheltenham: Edward Elgar.

Nalebuff, A. M. and Brandenburger, B. J. (1996) Co-opetition, Harper Collins.

Oster, S. M. (1994/99) Modern competitive analysis, Oxford University Press, second/third editions.

Williamson, O. E. (1996) The mechanisms of governance, Oxford: Oxford University Press.

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