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J. (2001). Bringing the market inside the firm? American Economic Review Papers and Proceedings, 91, 212–218. , & Murphy, K. J. (2002). Relational contracts and the theory of the firm. Quarterly Journal of Economics, 117, 39–83. Baron, J. , & Kreps, D. M. (1999). Strategic human resources. New York: Wiley. Barzel, Y. (1989). Economic analysis of property rights. Cambridge: Cambridge University Press. , & Swistak, P. (2001). The evolution of norms. American Journal of Sociology, 106, 1493– 1545.

They are, for instance, not extremely good in predicting the exact pattern of timing of the adoption of certain innovations. ” With regard to adoption decisions, there is large uncertainty The Rational Choice Approach 41 about the potential merits of an item. Therefore, there is much need to draw on experiences of other (successful) actors and thus social learning and herding behavior abound. Once adopted, an organization makes its own experiences with a new structural element and can therefore judge whether it will probably pay off to retain it.

In large organizations, institutional rules and procedures may contain commitment devices. That is, an organization may use the rule that every instance of cheating will be sanctioned even if this will be more costly to the organization than the damage due to cheating (some large department stores and insurances companies announce publicly to use such rules). Another aspect that would explain this is reputation: It can be perfectly rational that an organization reacts in a provocable way on cheating, if this will be publicly known and helps to stabilize a reputation with regard to provocability.

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