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The Network Firm as a Single Real Entity: Beyond the Aggregate of Distinct Legal Entities

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  • Virgile Chassagnon
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    Abstract

    This conceptual paper starts with a question regarding the nature of the firm: is the firm a nexus of contracts or a real entity? To answer this question, the article departs from a critique of firm contract theory that usually focuses on moral personification to propose some theoretical foundations of the firm as a real entity. This provides crucial insights for the analysis of modern complex organizations. Then, this paper applies the real entity paradigm to the case of the network firm: is the network firm merely a collection of distinct legal entities or a single real entity? The integrating and unifying role of intra-network power relationships is emphasized, and some legal and economic aspects of the network firm are discussed to clarify the argument that the network firm is a singular real entity composed from distinct legal entities. Considering the network firm as a single real entity has strong policy implications in terms of employment protection rights and politico-legal responsibilities.

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    Bibliographic Info

    Article provided by M.E. Sharpe, Inc. in its journal Journal of Economic Issues.

    Volume (Year): 45 (2011)
    Issue (Month): 1 (March)
    Pages: 113-136

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    Handle: RePEc:mes:jeciss:v:45:y:2011:i:1:p:113-136

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    Web page: http://www.mesharpe.com/mall/results1.asp?acr=jei

    Related research

    Keywords: law and economics; network firm; power; real entity; theories of the firm;

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