MIT alumnus gets Nobel in economics

Williamson shared the award with another American, Indiana University professor Elinor Ostrom, the first woman to receive the economics prize since it was first awarded 40 years ago.

Williamson, 77, is professor emeritus of business, economics, and law at Haas School of Business at the University of California at Berkeley. He was honored for his work on how differences in organizations can be used to understand the decisions that companies make.

“According to Williamson’s theory, large private corporations exist primarily because they are efficient,’’ the Nobel committee said in its announcement. “They are established because they make owners, workers, suppliers, and customers better off than they would be under alternative institutional arrangements.’’

Williamson and Ostrom shared the $1.4 million economics prize for work that “advanced economic governance research from the fringe to the forefront of scientific attention,’’ the Royal Swedish Academy of Sciences said.

In an interview yesterday, Williamson said academic studies of businesses historically focused more on their impact on markets than on their in-house workings.

“There was very little attention paid to the internal organization of the firm,’’ Williamson said. “It was not really very interesting for economists to interest themselves in this.’’

But Williamson said he began studying the question as he looked at the intersection of law and economics. He found that large businesses tend to organize their internal structures in ways that minimize conflicts between employees, suppliers, and customers.

Williamson, who was born in Superior, Wis., earned a management degree at the Massachusetts Institute of Technology’s Sloan School after spending his first three years at MIT studying chemical engineering. He obtained a master’s of business administration from Stanford University in Palo Alto, Calif., and a doctorate in economics from Carnegie Mellon University in Pittsburgh.

While his Nobel Prize-winning research was not done in Cambridge, officials at MIT were clearly taking pride in his tie to the school yesterday.

“It’s a wonderful honor for MIT,’’ said spokeswoman Patti Richards. “It’s wonderful always when we hear this kind of news.’’

Ostrom, 76, was honored for research on how people use property that is owned collectively, rather than by an individual or a firm.

It’s commonly assumed that collective ownership leads to waste and inefficiency, because individual members of the collective have no incentive to use the resources wisely. But Ostrom’s research found that collective ownership arrangements often work quite well, because individuals voluntarily develop rules and practices that mitigate waste.

She earned her undergraduate degree, master’s, and doctorate in political science at the University of California at Los Angeles, and joined the Indiana University faculty in 1965. She is currently a professor of political science, and a professor at the university’s school of public and environmental affairs.

Ostrom was also the fifth woman to win a Nobel award this year - a record for the prestigious honors.

It was also an exceptionally strong year for the United States, with 11 American citizens - some of them with dual nationality - among the 13 Nobel winners, including President Obama, who won the Nobel Peace Prize on Friday.

Material from the Associated Press was used in this report. Hiawatha Bray can be reached at bray@globe.com.