02. Sharing Anchors Community

As groups grow in size, transaction costs rise as well; transaction costs can be lowered in a large group by organizing the group hierarchically. However, transaction costs involved with organizing large groups have been significantly lowered with the availability of new communication technologies.

People have now been able to aggregate and disperse photos and information regarding worldly events such as the 2005 London Transit Bombings and the military coup in Thailand. Platforms, such as Flickr have taken traditional forms of managerial organisation and transformed it by allowing for traditional oversight to be minimized, if not eradicated all together. People can also communicate with one another easier on a more latent level to help to keep in contact with those closest to them and to form other social circles with a common goal.

The organizational chart is an essential tool for institutions because as the scale of business rose, management problems also increased. McCullum was the first to create a commercial organizational chart through introducing the use of a strong hierarchical oversight and identifying six principles for running a hierarchical organization. Creating a hierarchy and roles for individuals is useful when taking on a task and needing to coordinate everyone, aiding in management of transaction costs. Coase’s theory stipulates that an organization can get so large that it can’t function. However, new tools allow us to organize group effort without the need for a hierarchy because loosely affiliated groups are able to accomplish goals better than institutions.

Electronic networks have made group forming and group interactions much less difficult. This is due the collapse of transaction costs. Sharing, cooperation, and collective action, the three processes involved in group action, are changing as a result of this. The Tragedy of the Commons can help us understand why people felt that it was not in our bests interests to self assemble in order to create collective action. With the aid of the new electronic networks, there are a multitude of new kinds of groups forming.