• Be able to describe and apply the organizational-economic theories and models presented during the course.
• Be able to discuss the theories and models presented in the course, their opportunities and limitations, and argue in what way and to what extent these theories and models draw on economic theory.
• Be able to apply the models and theories presented in the course to specific organizational problems.
• Be able to argue for the choice of specific theories and models regarding how to use these in action/practice.
• Be able to discuss and perspective on the consequences of using the theories compared to other organizational approaches.

The purpose of ‘The Economic Organization of the Firm’  is that the students acquire knowledge about how companies can be organized as efficiently as possible. During the HA study program, the students have been presented to classical Managerial Economics (production functions, costing, markets, optimization, etc.) and many other economic, financial, managerial and organizational courses. This course – The Economic Organization of the Firm - builds a common frame of reference for approaching organizational objects using economic theory. The theoretical approach from the Managerial Economics course presented at the HA-study program’s 1^st. and 2^nd. semesters is complemented with transaction cost theory as well as principal/agent theory. Particular attention is drawn to the assumptions that individuals are self-utility maximizing and that knowledge in companies is usually distributed asymmetrically. With these two assumptions, a frame of reference is built up, the purpose of which is partly to analyze organizational issues, but more importantly to provide guidelines on how to organize the company's "economic, organizational architecture" effectively. One can say that the subject draws the market logic into the company ("Bringing the Market Inside the Firm", Baker et al., 2002). In other words, the course combines behavioral economics and organizational theory.

The frame of reference of the course - often theoretically referred to as Organizational Economics – deals with three key issues;

1. How the allocation of decision rights in organizations can be organized and assigned

2. How to measure and evaluate the performance of individuals and organizational units as well as

3. How incentive structures and reward systems can be properly designed (for item 2) to maximize firm value.

The theoretical frame of reference is thus intended to be able to analyze organizational problems in practice through the lenses and logics of economics. The course is ‘economical by nature’ in the sense that the ideas of organizational efficiency and utility maximization are central when analyzing organizations and organizational problems.

Brickley, Smith & Zimmerman: Managerial Economics and Organizational Architecture, 6th. ed., 2016, McGraw Hill, app. 700 pages.