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| | Maximization Debates |
 | | Even in modern firms, where management is divorced from residual claims, external equity and bond markets in effect play the role of the monitoring agency on managers. | | | The Marginalist debate changed tone in the 1970s with the emergence of the theories of agency costs, property rights, transactions costs theories of the firm. | | | The Oxford results were accompanied by a paper from Harrod (1939) which argued that perhaps profit- maximization was not observed in many firms partly because the necessary information - marginal revenue and costs - for such calculations was hard to obtain. |
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http://cepa.newschool.edu/het/essays/product/Maxim.htm
(1932 words)
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| | [No title] |
| | The remoteness is manifest in theories such as population ecology and transaction cost analysis in which the focal level of analysis either lies in gross aggregations such as organizational populations or in the micro-level detail of specific transactions. | | | We conclude by arguing for the need to create a "managerial theory of the firm" that would be more attuned to the premises of the key actors within the firm so as to be able to illuminate the corporate world as seen by managers and encompass the issues that they perceive to be important. | | | It is this managerial perspective that we would like to see legitimized in a new theory of the firm that would focus on the distinctive characteristics of large business organizations and illuminate issues that managers of such firms perceive to be important. |
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http://www.gsia.cmu.edu/bosch/bart.html
(12936 words)
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| | SSRN-Implications of High Performance Production and Work Practices for Theory of the Firm and Corporate Governance by ... |
| | Theories of the firm based on agency theory, transaction cost economics, and the nexus of contract conception have gained currency in the past three decades. | | | The article thus posits a model of the firm that builds on the notion of organizational capabilities, such as those described in the account of contemporary production offered here, and relies on a governance structure that makes boards of directors responsible for coordinating the inputs of all members of the corporate team. | | | Specifically, it seeks to deepen the insights of the human capital turn in theory of the firm through a comprehensive analysis of the changed role of employees in production and the intricate workings of contemporary business organizations. |
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http://papers.ssrn.com/sol3/papers.cfm?abstract_id=546402
(439 words)
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| | Luigi Zingales - Corporate Governance and the Theory of the Firm |
| | Before we can discuss how a firm should be governed, we need to define what it is. This question is also important because it helps us identify to what extent, if any, corporate governance is different from the governance of a simple contractual relationship, such as the machine example. | | | The definition of a firm as a nexus of specific investments does not necessarily coincide with the legal definition, but it does coincide with the economic essence of a firm: a network of specific investments that cannot be replicated by the market. | | | For example, a manager may specialize the firm in activities the firm is best at running because this increases the firm’s marginal contribution ex post and thus its share of the ex post rents (Shleifer and Vishny 1989). |
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http://www.inwent.org/ef-texte/instn/zingales.htm
(6162 words)
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| | The Theory of the Firm, Managerial Responsibility, and Catholic Social Teaching |
| | Under this theory, business decisions must account for the interests of employees, customers, and even the community in which the firm is located. | | | The primary duty of those who manage a firm is to maximize the interests of the firm’s shareholders; that is, to maximize profits. | | | Firms, however, are critical economic institutions, but they are not characterized internally by market- or contract-based transactions. |
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http://www.acton.org/publicat/m_and_m/2003_fall/garvey.html
(5946 words)
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| | Amazon.ca: A Theory of the Firm: Governance, Residual Claims, and Organizational Forms: Books |
| | A complete theory of the firm thus requires one to balance the virtues of discretion against the need to require that discretion be used responsibly. | | | Although agency cost theory undeniably is critical to understanding the modern corporate form, too many agency cost theorists have narrowly focused on agency costs to the exclusion of other institutional considerations, which easily can distort one's understanding. | | | Instead, it reconstructs a theory of the firm on a positive agency theory foundation, arguing that it is the contractual relationship between the suppliers and users of capital and talent that determine what, how and when production occurs. |
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http://www.amazon.ca/exec/obidos/ASIN/0674002954
(1926 words)
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| | Synergy Fest: Theory of the Firm and the Business Judgment Rule |
| | Transaction Cost Theories: Firms exist because people engaged in business may in some circumstances save transactions costs (such as negotiating, drafting contracts, and other costs of using markets) by internalizing production within a single organizational form. | | | In any of the above or other theory of the firm views, corporate governance and control are a topic of interest. | | | The business judgment rule is based on “The presumption that in making business decisions not involving direct self- interest or self-dealing, corporate directors act on an informed basis, in good faith, and in the honest belief that their actions are in the corporation's best interest. |
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http://synergypartners.typepad.com/weblog/2004/01/theory_of_the_f.html
(1796 words)
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| | The Transaction Cost Approach to the Theory of the Firm |
| | The transaction cost approach to the theory of the firm was created by Ronald Coase. | | | Repair services in some firms may be supplied by an internal organization; in others it is provided by specialized firms from outside. | | | Coase observes that market prices govern the relationships between firms but within a firm decisions are made on a basis different from maximizing profit subject market prices. |
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http://www.sjsu.edu/faculty/watkins/coase.htm
(952 words)
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| | Mises Economics Blog: The Theory of the Firm (lecture 13 of 32) |
| | Marginalist productivity theory: factor prices tend to be equal to their discounted marginal revenue (value) products. | | | ther individuals employed by the firm are not really a part of the firm, but imply individually contracting with the firm. | | | Optimal boundary of the firm -- determined by cost of market transaction. |
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http://blog.mises.org/archives/002134.asp
(314 words)
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| | Back to the Drawing Board: Is the Traditional Theory of the Firm Obsolete? - Knowledge@Wharton |
| | In economics, finance, marketing, operations, and accounting, the theory of the firm plays a central role, and Wharton faculty members are now questioning whether an idea of the firm that traces its lineage all the way back to Adam Smith is still a relevant model today. | | | Such measures as customer retention, employee turnover, and environmental success aren't included in traditional financial accounting, yet they can be essential aspects of a company's value, and sometimes even serve as leading indicators to firm performance, says David Larcker, a professor of accounting who serves on the SEI Center's advisory board. | | | In accounting, for instance, a better theory of the firm might help lead to better ways to measure value. |
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http://knowledge.wharton.upenn.edu/index.cfm?fa=viewFeature&id=1047
(1152 words)
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| | CHAPTER D6. CHALLENGES TO THE THEORY OF THE FIRM |
| | This is no problem in the single-product firm: all overhead (i.e., fixed) costs go to the single product, and are then "spread" across all of the units produced. | | | Explain why marginal decision criteria may not be useable when the objective of the firm is to pursue some goal other than profit maximization. | | | Identify conditions under which the management of a firm might deliberately choose not to try to maxmize the firm's profit; in each case what is the relevant decision criterion? |
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http://facweb.furman.edu/~dstanford/mecon/d6.htm
(2343 words)
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| | Toward a Knowledge-Based Theory of the Firm |
| | Firms exist because markets are incapable of coordinating the knowledge of individual specialists. | | | The ability of a firm to integrate knowledge held by individuals within the organization creates its competitive advantage. | | | Knowledge is the most strategically important of a firm's resources |
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http://socrates.berkeley.edu/~iir/cohre/grant.html
(553 words)
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| | EconPapers: Financial Innovation, Communication and the Theory of the Firm |
| | In order to guarantee that the firm does not choose to innovate trivial assets, it is then shown to be crucial that the firm`s shareholders agree on the same set of beliefs. | | | To disentangle these two conflicting roles of the firm's decision, we then suggest to let the firm choose a relevant financial policy by issuing securities being collaterized by the production plan. | | | In our main result we demonstrate that competitive equilibria with communication of shareholders and a relevant financial policy of the firm are Pareto- efficient, provided there are at least as many firms as there are shareholders. |
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http://econpapers.repec.org/paper/zuriewwpx/032.htm
(333 words)
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| | MPI Jena - Workshop: "Cognition and Evolution in the Theory of the Firm" |
| | However, it stops short of providing an adequate understanding of the role of firms (and other types of economic organization) as entities that not only coordinate production and organization knowledge, but also act as cognitive devices that focus collective learning processes, thus creating production and organization knowledge. | | | Unfortunately these contributions remain scattered throughout various fields that are taken up with firms and organizations. | | | Anna Grandori (Milano): Knowledge governance mechanisms and the theory of the firm |
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http://www.mpiew-jena.mpg.de/english/news/cog_evo.html
(605 words)
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| | Money Capital in the Theory of the Firm - Cambridge University Press |
| | Production, pricing, investment, and financing interdependence in the firm; 5. | | | In this highly integrative work, issues in production, pricing, capital investment and financial theory are brought to new levels of interdependence. | | | Additionally, the book provides the essential mathematical development of such advanced topics as utility functions defined over stochastic arguments, the equilibrium theory of financial asset prices and yields, the cost of money capital, and investment decision criteria. |
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http://www.cambridge.org/catalogue/catalogue.asp?isbn=0521021928
(317 words)
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| | Chapter 2 The Labor Process, conflict theory of the firm, segmented labor markets |
| | The important question for welfare theory is whether application of the Babbage Principle serves the social interest as fully as the private interest of the employer. | | | Reich demonstrates that in this model necessary conditions for profit maximization are that individual employers make the white/black wage ratio in their firms greater than one and the white/black employment ratio greater than the whitelblack ratio in the labor force at large. | | | He further stipulates that the "bargaining power" of employees is a function of the white/black wage ratio and the white/black employment ratio within the firm. |
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http://www.zmag.org/books/2/2.htm
(8536 words)
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| | Collective action |
| | The theory explores the market failure s where individual consumer rationality and firms' profit-seeking do not lead to efficient provision of the public goods, i.e. | | | Mancur Olson made the provocative claim that individual rational choice leads to situations where individuals with more resources, will carry a higher burden in the provision of the public good than poorer ones. | | | Theory of the Firm, Theory of the State |
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http://www.serebella.com/encyclopedia/article-Collective_action.html
(971 words)
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| | An Entrepreneurial Theory of the Firm - Microsoft Reader Catalog of eBooks |
| | Traditional theories of the firm have concentrated on such topics as technology, evolution and transaction costs whilst failing to account for one of the most fundamental aspects of the market process: entrepreneurial activity. | | | An Entrepreneurial Theory of the Firm makes a thorough and comprehensive enquiry into the nature of the relationship that exists between firms and markets, with separate, in-depth explorations of the issues of both the existence and inner organisation of the firm. | | | Sautet develops a model that explains the emergence of the firm in the market process as the result of entrepreneurial activity in the context of genuine uncertainty. |
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http://www.mslit.com/details.asp?bookid=0203569393
(197 words)
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| | Theory of the Firm |
| | First we will talk a bit about business firms and their role in a market economy, then we will return to the marginal productivity approach. | | | As a first step, we need to think about the decision-makers in supplying goods and services, and what a "rational decision" to supply goods and services would mean. | | | To understand decisions of that kind, we will be exploring what economists call the Theory of the Firm. |
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http://william-king.www.drexel.edu/top/prin/txt/ch/firm3.html
(222 words)
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| | S-WoPEc: Inside vs Outside Ownership: A Political Theory of the Firm |
| | Abstract: If contracting within the firm is incomplete, managers will expend resources on trying to appropriate a share of the surplus that is generated. | | | In case managers have to be provided with incentives to make firm-specific investments, there is a tradeoff between minimizing rent-seeking costs and maximizing output. | | | This suggests, among other things, an explanation of why some firms are organized as partnerships and others as stock corporations. |
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http://swopec.hhs.se/hastef/abs/hastef0344.htm
(244 words)
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| | Entrepreneurship and the Economic Theory of the Firm: Any Gains from Trade? |
| | "Incentives versus Transaction Costs: A Theory of Procurement Contracts," RAND Journal of Economics, The RAND Corporation, vol. | | | Keywords: Entrepreneurship; heterogeneous assets; judgment; ownership; firm boundaries; internal organization | | | In this approach, the existence of the firm may be understood in terms of limits to the market for judgment relating to novel uses of heterogeneous assets; and the boundaries of the firm, as well as aspects of internal organization, may be understood as being responsive to entrepreneurial processes of experimentation. |
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http://ideas.repec.org/p/aal/abbswp/04-12.html
(711 words)
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| | SSRN-Publications and Documents That Reference 'Norms and the Theory of the Firm' by Oliver Hart |
| | 19 Johanson, J., and J.-E. Vahlne (1977), The internationalization process of the firm - A model of knowledge development and increasing foreign market commitment, Journal of International Business Studies, 4, 20-29. | | | Fama, E. (1980), "Agency Problems and the Theory of the Firm," Journal of Political Economy, 88(2), 288-307. | | | Fama, Eugene, (1980), \Agency Problems and the Theory of the Firm", Journal of Political Economy, 88:2. |
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http://papers.ssrn.com/sol3/RefPointingTo.cfm?abid=269234
(364 words)
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| | A Behavioral Theory of the Firm - Book Information |
| | Antecedents of the Behavioral Theory of the Firm. | | | A Summary of Basic Concepts in the Behavioral Theory of the Firm. | | | has become a classic work in organizational theory, and is one of the most significant contributions to improving the theory of the firm. |
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http://www.blackwellpublishing.com/book.asp?ref=0631174516
(161 words)
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| | EconPapers: Power in a Theory of the Firm |
| | Working Paper: Power in a Theory of the Firm (1998) | | | Working Paper: Power in a Theory of the Firm (1997) | | | CRSP working papers from Center for Research in Security Prices, Graduate School of Business, University of Chicago |
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http://econpapers.repec.org/paper/wopchispw/335.htm
(148 words)
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| | The Theory of the Firm - Mind Map |
| | Home > Educators > Economics > Firms > The Theory of the Firm - Mind Map | | | Mind Maps have been produced to introduce topics and give students an overview of key topics being studied. | | | The Theory of the Firm - Mind Map |
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http://www.bized.ac.uk/educators/16-19/economics/firms/presentation/costs_map.htm
(93 words)
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