The Network Firm as a Single Real Entity: Beyond the Aggregate of Distinct Legal Entities
AbstractThis 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 InfoArticle provided by M.E. Sharpe, Inc. in its journal Journal of Economic Issues.
Volume (Year): 45 (2011)
Issue (Month): 1 (March)
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Web page: http://www.mesharpe.com/mall/results1.asp?acr=jei
law and economics; network firm; power; real entity; theories of the firm;
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