The American Corporation Today

By Carl Kaysen | Go to book overview

10
The Modern Corporation as an Efficiency Instrument: The Comparative Contracting Perspective

OLIVER E. WILLIAMSON JANET BERCOVITZ

As James Q. Wilson reports, those who view the modern corporation from a power perspective regard it as a deeply problematic form of organization. 1 We examine the modern corporation from a different perspective and reach different results. As set out herein, both the key legal features of the corporation -- perpetuity, contracting rights, and limited liability -- and the main contractual regularities that link the firm with each of its constituencies are examined with reference to efficiency (or the lack thereof).

The efficiencies to which we refer are principally of a transaction cost rather than a production cost economizing kind. Such efficiencies are ascertained by examining the firm not in orthodox terms (as a production function, which is a technological construction) but in organizational terms (as a governance structure). This involves us in a microanalytical exercise in which the contractual relation between the corporation and each of its constituencies is examined in terms of the attributes of the transaction. The main obstacles to efficiency that we identify have their origins in information asymmetries.

The general efficiency approach, including a discussion of what we refer to as the "remediableness standard," is set out in section 1. The legal structure of the corporation, managerial discretion, and information im

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The American Corporation Today
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Foreword vii
  • Contributors ix
  • 1 - Introduction and Overview 3
  • Appendix 20
  • 2 - The Rise and Transformation of the American Corporation 28
  • Notes 67
  • 3 - How American is the American Corporation? 74
  • Notes 97
  • 4 from Antitrust to Corporation Governance? the Corporation and the Law: 1959-1994 102
  • Notes 122
  • 5 - Financing the American Corporation: the Changing Menu of Financial Relationships 128
  • References 178
  • 6 - The U.S. Corporation and Technical Progress 187
  • References 231
  • 7 - The American Corporation as an Employer: Past, Present, and Future Possibilities 242
  • References 267
  • 8 - The Corporation Faces Issues of Race and Gender 269
  • Notes 290
  • 9 - Corporate Education and Training 292
  • References 319
  • 10 - The Modern Corporation as an Efficiency Instrument: the Comparative Contracting Perspective 327
  • Notes 354
  • Notes 356
  • 11 - The Corporation as a Dispenser of Welfare and Security 360
  • Notes 379
  • References 380
  • 12 - Almost Everywhere: Surging Inequality and Falling Real Wages 383
  • Notes 409
  • 13 - The Corporation as a Political Actor 413
  • Notes 433
  • 14 - Architecture and the Business Corporation 436
  • Notes 470
  • Index 487
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