Firms, Organizations and Contracts: A Reader in Industrial Organization

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

8
Corporate Culture and Economic Theory

David M. Kreps


1. Introduction

In this chapter, I explore how an economic theorist might explain or model a concept such as corporate culture. While the theoretical construction that is given is far from inclusive (which is to say that many aspects of corporate culture are not covered), I conclude that economic theory is moving in the direction of what seems a reasonable story. But before that story can be considered told, we must employ tools that are currently missing from the economist's tool kit. In particular, we require a framework for dealing with the unforeseen.

I can give two explanations for why I present this topic. The first concerns

This work was prepared in 1984 for presentation to the Second Mitsubishi Bank Foundation Conference on Technology and Business Strategy. It subsequently appeared in Japanese in Technological Innovation and Business Strategy, M. Tsuchiya (ed.), Nippon Keizai Shimbunsha Press, Tokyo, 1986, and appears here in English with the kind permission of the previous publishers. The chapter surveys the current state of research and is, of course, quite dated now. But, with the kind permission of the current editors, it appears now much as it was written in 1984, except that references have been updated where appropriate and punctuation and English have been made more correct. In a very brief postscript, following the appendix, I engage in a bit of updating and revisionist thinking. And, in one place in the text, where it is too painful to reread what I wrote, I alert the reader that something more on this issue will be said in the postscript.

I have benefited from discussion with too many colleaques to give a comprehensive list, but two individuals must be cited for particularly helpful ideas: Jose Scheinkman, concerning the overlapping generations model, and Bengt Holmstrom for stressing to me the important distinction between observability and verifiability. The financial assistance of the National Science Foundation (Grants SES-8006407 and SES-8408468), the Sloan Foundation, and the Mitsubishi Bank Foundation are all gratefully acknowledged.

-221-

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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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