Productivity and the Complementary Nature of the Internal Institutions of the Firm

This essay is based upon the final chapter of my dissertation Mei (2007). After a brief description of the dissertation and its conceptual framework, the complementary relationship of internal structures of the firm is explained. The firm can be regarded as a relational production in which different individual productions are organized under formal and informal institutions such as hierarchies and teams. An institution corresponds with a certain relationship among the relational productivity and (or) individual productivity of agents. When processing different tasks becomes necessary for producing outputs, different institutions may be set up to coexist in a firm and complement each other to maximize its output.