In this work the authors present a general theory ofbureaucracy and use it to explain behaviour in large organizationsand to explain what determines efficiency in both governments andbusiness corporations. The theory uses the methods of standardneoclassical economic theory. It relies on two central principles:that members of an organization trade with one another and thatthey compete with one another. Authority, which is the basis forconventional theories of bureaucracy, is given a role, despitereliance on the idea of trade between bureaucracies. It is argued,however, that bureaucracies cannot operate efficiently on the basisof authority alone. Exchange between bureaucrats is hamperedbecause promises are not enforceable. So trust and loyalty betweenmembers of bureaucratic networks play an important part. Theauthors find that vertical networks promote efficiency whilehorizontal ones impede it.
