Organisational Economics and the Evolution of a New Management Science

This paper reviews the origins of organisational economics and critically examines its influence on business-school scholarship and pedagogy in the eighties and nineties and argues three points. First, it is useful to analyse the infiltration of economic ideas about internal organisation of firms into organisational science within the context of the methodology of scientific research programmes. Second, the adoption by management theorists of organisational economics as part of a new science of organisations represented a significant change in research style within business schools and may have contributed to practices that came under heavy criticism in the last decade. Third, the influence of economic ideas on management science represented not only an infusion of methods and models, but an infusion of ideology as well, raising important philosophical questions concerning the development of management science.