Economic Theory, Public Policy, and the Challenge of Innovative Work Practices

This chapter focuses central argument that the neoclassical worldview is too narrow to accommodate the possible existence and persistence of inferior work cultures. As the authors have discussed, the theoretical framework addresses the paradox of the persistence of inefficient economic regimes even when both efficient and inefficient firms face the same external economic and institutional constraints. An unequivocal public policy implication is that firms employing the relatively superior work cultures need not pose a threat to firms with the relatively inferior work cultures; therefore market forces alone will not displace the latter. This discussion is a subset of the ongoing and controversial question in economics, first articulated by Harvey Leibenstein, as to whether or not x-inefficiency exists and whether or not it can be expected to persist over time.