Firms, Organizations and Contracts A Reader in Industrial Organization

by Buckley, Peter; Michie, Jonathan; Coase, Ronald

• ISBN13: 9780198774358
• ISBN10: 0198774354
• Format: Hardcover
• Copyright: 1996-09-12
• Publisher: Oxford University Press

Summary

What is a firm? Why do firms exist? How is production and administrationbest co-ordinated? What are the reasons for vertical integration? Anddisintegration? Is there a conflict between establishing and developinglong-term relationships on the one hand, and the operation of free marketcompetition on the other? Is there a choice between markets and hierarchies?What about networks and clans? These questions continue to be explored witheconomics, management, sociology and other related disciplines.Firms, Organizations and Contracts brings together the best inter-disciplinaryanalysis of the topic, and contains classic contributions and material notnormally seen by those outside their own particular disciplines. It combinespioneer articles with more recent discussions of an area attracting growingattention amongst those studying industrial organization--whether on courses ineconomics, management, strategy, organization, law, or public administration.The volume includes Coase's initial enquiry into 'The Nature of the Firm' andOuchi's analysis of 'Markets, bureaucracies and clans'; Kaldor's questioning of'The Nature of the Firm' and Dore's discussion of 'Goodwill and the spirit ofmarket capitalism'.This book will be an invaluable tool for students in economics, management andsociology. In view of the growing use of contracts within the public sector,and within the private regulated sector, the book also sets out some of the keyissues of concern to policy makers and public sector strategists.

Table of Contents

Introduction and Overview	1	(22)
Peter J. Buckley
Jonathan Michie
I. THEORY OF THE FIRM
The Equilibrium of the Firm	23	(17)
Nicholas Kaldor
Focuses attention on the size of the firm by reference to the behaviour of its costs as output rises and comes to a view that a fixed factor---entrepreneurship or co-ordination---is a necessary element of explanation.
The Nature of the Firm	40	(19)
R. H. Coase
A truly seminal article which explains the existens the scope of the firm as a consequence of the costs of market transactions.
The Organization of Industry	59	(16)
G. B. Richardson
Shows that a simple firm / market dichotomy misses the essence of business behaviour, for in reality the firm enters into many different collaborative relationships.
Production, Information Costs, and Economic Organization	75	(28)
Armen A. Alchian
Harold Demsetz
Team production is crucial in firms, therefore difficulties of metering outputs and monitoring workers are essential elements of management.
Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure	103	(65)
Michael C. Jensen
William H. Meckling
This article goes inside the `black box' of the firm to illustrate the nature and incidence of the costs of monitoring and motivating agents working on behalf of a principal.
Transaction-Cost Economics: The Governance of Contractual Relations	168	(31)
Oliver E. Williamson
Illustrates the importance of transaction costs in determining the governance (ownership and direction) of the firm by reference to key concepts such as opportunism (self-seeking with guile), transaction-specific assets, and the role of information.
An Economist's Perspective on the Theory of the Firm	199	(22)
Oliver Hart
Shows the importance of property rights as support to a contract-based theory of the firm.
II. MARKETS AND INDUSTRIAL ORGANIZATION
Corporate Culture and Economic Theory	221	(55)
David M. Kreps
Authority derives not from ownership, but from reputation which may arise in an intangible asset such as a firm.
Co-operative Agreements and the Organization of Industry	276	(17)
P. Mariti
R. H. Smiley
Co-operative agreements are long-term alternatives to firms (ownership) and market transactions as means of organizing industries and activities.
Interpenetration of Organization and Market	293	(27)
Ken-ichi Imai
Hiroyuki Itami
Illustrates the interpenetration of firm and market by reference to `arena' and `principle'.
Vertical Quasi-Integration	320	(19)
K. J. Blois
Shows how firms can gain the benefits of vertical integration, particularly certainty of supply, without joint ownership.
Non-Contractual Relations in Business: A Preliminary Study	339	(20)
Stewart Macaulay
Investigates the balance of advantage between contractual and non-contractual relationships between firms.
Goodwill and the Spirit of Market Capitalism	359	(26)
Ronald Dore
Analyses `obligational relational contracting' where informal relationships, including goodwill, mediate self-interested bargaining, particularly where long-run relationships are involved.
III. JOINT VENTURES, NETWORKS, AND CLANS
Joint Ventures and Interorganizational Interdependence	385	(25)
Jeffrey Pfeffer
Phillip Nowak
Envisages joint ventures as reducing uncertainty in situations where firms are resource interdependent.
Joint Ventures	410	(19)
Peter J. Buckley
Mark Casson
Defines co-operation as `co-ordination effected through mutual forbearance' and examines the roles of trust, reputation, and repeated interaction in promoting successful co-operation, particularly in an international context.
Organizations: New Concepts for New Forms	429	(13)
Raymond E. Miles
Charles C. Snow
Examines the creation of a `dynamic network' of co-operative links as a new organization form in increasingly competitive times.
Markets, Bureaucracies, and Clans	442	(17)
William G. Ouchi
Introduces the notion of a clan as achieving organic solidarity amongst individuals by unifying their objectives, which has important competitive and efficiency properties.
Economic Theories of the Firm: Past, Present, and Future	459
Paul Milgrom
John Roberts
A survey of the field with pointers for future research.