Firms, Organizations and Contracts: A Reader in Industrial Organization

By Peter J. Buckley; Jonathan Michie | Go to book overview
passed with enough surplus left for B so that the maintained reputation is worthwhile, and then we could not wish to apply the unambiguous and not very productive calculus based scheme. Some measure of ambiguity is worth tolerating if there is a corresponding gain in the arrangement's efficiency. The Appendix near the end of the chapter contains an explicit illustration of this point.
8.
Seemingly outside the scope of economic theory are notions such as the following: a strong corporate culture increases the degree to which individuals internalize the common good of the organization. But one can approach this notion within an economic framework on the supposition that control in the organization will be based on adherence to the culture. An easy approach is to view this form of control as a simple screen. Somewhat less direct would be a story in which individuals are happier in situations in which they will be evaluated by criteria that leave little to chance--where they have relatively greater control of their own destinies. This could be a primitive taste, or one induced from risk aversion to capricious evaluation. In either case, if adherence to the culture provides an evaluation criterion that is predictable in application, it can provide an economic bond to the organization.

References

Abreu D., Pearce D., and Stachetti E. ( 1987), "Towards a Theory of Discounted Repeat Games with Imperfect Monitoring', mimeo, Harvard University.

Arrow K. ( 1974), The Limits of Organization ( New York: Norton).

----- and Hahn F. ( 1971), General Competitive Analysis ( San Francisco: Holden- Day).

Brown C. and Medoff J. ( 1978), "'Trade Unions in the Production Process'", Journal of Political Economy, 86: 355-78.

Coase R. ( 1937), "'The Nature of the Firm'", Economica, 4: 386-405.

Crawford V. and Haller H. ( 1987), 'Learning How to Cooperate: Optimal Play in Repeated Coordination Games', Mimeo, University of California, San Diego.

Fudenberg D., Holstrom B., and Milgrom P., "'Short-Term Contracts and Long- Term Agency Relationships'", Journal of Economic Theory, forthcoming.

----- and Kreps D., ( 1988), A Theory of Learning, Experimentation and Equilibrium in Games, mimeo, Stanford University.

----- and Maskin E. ( 1986), "'The Folk Theorem with Discounting and with Incomplete -- Information'", Econometrica, 54: 533-54.

Grossman S. and Hart O. ( 1986), "'The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration'", Journal of Political Economy, 94: 691-719.

Holstrom B. ( 1979), "'Moral Hazard and Observability'", Bell Journal of Economics, 10: 74-91.

-274-

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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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