Module Directory

The module covers two important aspects of organisations: the economics of corporate architectures as well as their governance and control.  We apply economic-contracting and transactions-cost approaches to the study of these two aspects of organising. Corporate architecture is an umbrella term for several forces that impinge on corporate decision making, including evolving issues such as sustainability, international relations and the law.  The architecture provides guidance, at the same time as imposing restrictions, on how the corporation can be governed.  The primary focus, of this module, is on applying the concepts, tools and methods developed within economics towards the coordination and administration of an organisation’s activities.

This module addresses key principles of economics, and how they are applied in contemporary organisations. Managers need to be aware of, and be able to critically evaluate, basic economic concepts such as, supply and demand in markets, market structure, marginal and opportunity costs of organising within a firm, and explain the role of agency and information asymmetry in the transaction cost approach to understanding the coordination and administration of organised activities. The module has a two-fold aim:

1. Assess the perspectives of contracting (explicit, implicit, or incomplete), agency costs and asymmetric information, which are core devices developed in economics, that help garner insights into important resource choices confronting senior managers so as to suitably govern their organizations.


2. The larger framework within which these choices are embedded is the corporate governance system and it is the second aim to describe the macroeconomic context, the constraints of sustainability and the political economy perspective associated with the risk distributions among stakeholders of corporations.

The module has four outcomes.

1. Employ economic concepts to assess the conflicts of interest inherent in markets and corporations and explain how, in resolving such conflicts, the administration that minimises transactions costs gains competitive advantage.


2. Understand the control mechanisms that can reduce conflicts of interest and explain the complementarities among these mechanisms.


3. Develop a thorough understanding of the concepts of agency and signalling, as well as explain how these two concepts help analyse important events in corporate governance and control, such as executive compensation, mergers and acquisitions, reorganisations and liquidations.

Develop an understanding of the different macroeconomic and associated corporate governance systems prevalent globally, the issues of sustainability and the political economy associated with the different risk distributions among the stakeholders in these broad macroeconomic settings.

We focus on three topical trade-offs. These are but three of a myriad of tradeoffs that managers of successful organizations need to make: concepts and tools from economics can act as guides, and we study these guides. The three-part approach to the economic analysis of architecture is: first, decide who should decide, second, decide the rewards for deciding ‘well’ and third, decide who has decided ‘well’. Determining what it means to decide ‘well’ requires agreement on the objective of corporations.  Deciding a suitable objective for an organisation is a role for political economy and then for corporate law, which brings us naturally to the second important aspect we shall cover - systems of corporate governance.

The notion of governance and control in an organisation is best illustrated by an array of events that occur infrequently in the life of organisations but with large consequences when they do.  The topics cover the entire cycle from birth to death.  We study some of these in this module and examine them from the perspectives of contracts and transactions costs. The central question of corporate governance is: In whose interests should a corporation be run?  We examine the main corporate governance systems prevalent globally to study the different balances between risk and return that underlie them and how these systems differently spread the risk among corporate stakeholders.

There are recorded and live teaching sessions. There are four recorded sessions, and they cover the foundation and technical material you need to understand to make best use of the main teaching sessions. These recorded sessions are a combination of readings, videos, lecture notes and quizzes, and are available on the Moodle page of the module. In the main teaching week, there are eight teaching sessions on every weekday except Wednesday. Teaching starts at 1000 each day and lasts till 1700, with breaks in between obviously. Overall, you should budget for 100 hours in total to the module. Of this total, the preparation and main sessions together comprise 44 hours. The remaining 56 hours are an estimate of the additional hours of your own time (typically spread over two weeks).  The lectures and discussion of cases during the main teaching week comprise 24 hours, while 20 hours are for the recorded sessions and its associated readings and quizzes. The main teaching is distributed over four weekdays in one week.