Firms, Organizations and Contracts: A Reader in Industrial Organization

By Peter J. Buckley; Jonathan Michie | Go to book overview

activities in the two countries. To some extent these reasons also explain why many venture activities in Japan are either part of or under the control of large established firms.


6. Conclusion

We hope that the foregoing analysis has been able to convince the readers that our basic framework (especially that of interpenetration) is a worthwhile vehicle to enhance our conceptual understanding of how real-life resource allocations are conducted both in the markets and in the organizations. By having a single common framework to view resource allocation in these two arenas, the hope is to understand two allocation mechanisms and their interpenetration in a better perspective.

Commonality of the conceptual framework is also evident in our discussions of American and Japanese resource allocation. We have analysed several examples using the same framework presented in Section 2. Any meaningful international comparison has to analyse the different behavior patterns from the same, common perspective. We hope that we can now understand corporate behavior in the two countries better and that seemingly 'mystical or irrational' behavior of Japanese firms and other economic agents is no longer so mystical nor irrational.

This paper is only a beginning. There is a lot more to be done. On the conceptual level, for example, the question of "optimal mixture' or 'optimal penetration' of various resource allocation principles is intriguing. For example, a firm can choose which mechanism to use for its internal resource allocation and can also select among various alternative transaction modes with the external markets. The firm should make these internal and external transaction decisions simultaneously. This is a decision on the design of the total transaction system of the firm. What would the optimal transaction system design be? What kind of variables will effect the choice of system design? These are but a few examples of questions we can begin to ask using our interpenetration framework.

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Firms, Organizations and Contracts: A Reader in Industrial Organization
Table of contents

Table of contents

  • Title Page iii
  • Preface and Acknowledgements v
  • Acknowledgements vi
  • Contents viii
  • List of Contributors xi
  • Foreword xiii
  • Introduction and Overview 1
  • Notes 18
  • References 20
  • I. THEORY OF THE FIRM 21
  • 1: The Equilibrium of the Firm 23
  • 2: The Nature of the Firm 40
  • 3: The Organization of Industry 59
  • 4: Production, Information Costs, and Economic Organization 75
  • Summary 95
  • Notes 96
  • References 102
  • 5: Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure 103
  • Conclusions 151
  • Notes 151
  • References 163
  • 6: Transaction-Cost Economics: The Governance of Contractual Relations 168
  • Conclusion 192
  • 7: An Economist's Perspective on the Theory of the Firm 199
  • Conclusion 212
  • Notes 212
  • II. MARKETS AND INDUSTRIAL ORGANIZATION 219
  • 8: Corporate Culture and Economic Theory 221
  • Introduction 221
  • Conclusion 261
  • Appendix 262
  • Appendix 271
  • Appendix 273
  • References 274
  • 9: Co-operative Agreements and the Organization of Industry 276
  • References 292
  • 10: Interpenetration of Organization and Market: Japan's Firm and Market in Comparison with the US 293
  • Conclusion 317
  • References 319
  • 11: Vertical Quasi-Integration 320
  • Conclusions 336
  • Notes 337
  • 12: Non-Contractual Relations In Business: A Preliminary Study 339
  • 13: Goodwill and the Spirit of Market Capitalism 359
  • III. JOINT VENTURES, NETWORKS, AND] CLANS 383
  • III. JOINT VENTURES, NETWORKS, AND] CLANS 385
  • References 407
  • 15: Joint Ventures 410
  • Conclusion 427
  • References 428
  • 16: Organizations: New Concepts for New Forms 429
  • Conclusion 440
  • Notes 441
  • 17: Markets, Bureaucracies, and Clans 442
  • References 456
  • Notes 459
  • References 473
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