SEMAINE D'ÉTUDE SUR LE ROLE DE L ANALYSE ECONOMETRIOUE ETC. 1015

For non-economic or hybrid organizations, the question of
the conversion of an average productivity-participation potential
 curve into an extra-returns curve is still more difficult. For
a system planning bureau, having jurisdiction over all local,
regional and national planning, change in average productivity
may be associated with change in the quality of the service
it provides (as measured by the effectiveness of its planning for

Dollars

. x{ra
Pelurns

social welfare). But, as we al! know, and as is the case for
many economic, non-economic and hybrid organizations, it is
exceedinglv difficult to measure changes in quality, to price

positive effect upon organization maintenance. (See James E. McNulty,
Some Economic Aspects of Business Bureaucracy, Wharton School, Univer
sity of Pennsylvania, 1962, mimeographed, pp. 43-53.) In this connection
McNULTy and others have suggested the following relationships:
1) when there is a highly centralized decision-making structure and all flows
are vertical, lateral communication (and thus morale and average pro
ductivity) is relatively low;
2) with decreases in centralization there tends to be increase in lateral com.
munication (and thus morale and average productivity);
however, when the decision-making structure tends to be highly decentralized
 (approaches local autonomy) lateral communication (and hence
morale and average productivity) may tend to decline.
Consequently, the « extra-returns » function associated with participation
potential is to be adjusted for the lateral communications factor when this
factor is a variable for a set of possible decision-making structures

3)

21 Isard - pag. 12