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Property rights theory, transaction costs theory, and agency theory: an organizational economics approach to strategic management

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  • Jongwook Kim

    (Western Washington University, Bellingham, USA)

  • Joseph T. Mahoney

    (University of Illinois at Urbana-Champaign, Champaign, USA)

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    Abstract

    Property rights theory has common antecedents with contractual theories of the firm such as transaction costs and agency theories, and is yet distinct from these theories. We illustrate fundamental theoretical principles derived from these three theories by analyzing the business case of oil field unitization. Theoretical principles and application of theory to oil field unitization are each summarized. From this, it is possible to see how property rights theory is well suited to explain business situations where inefficient economic outcomes persist. Additionally, property rights theory forges new theoretical connections with other branches of organizational economics, in particular, resource-based theory. Copyright © 2005 John Wiley & Sons, Ltd.

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    Bibliographic Info

    Article provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.

    Volume (Year): 26 (2005)
    Issue (Month): 4 ()
    Pages: 223-242

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    Handle: RePEc:wly:mgtdec:v:26:y:2005:i:4:p:223-242

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    Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976

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    Cited by:
    1. Ng, Desmond W. & Salin, Victoria, 2012. "An Institutional Approach to the Examination of Food Safety," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), International Food and Agribusiness Management Association (IAMA), vol. 15(2).
    2. Kirsten Foss & Nicolai J. Foss & Peter G. Klein, 2006. "Original and Derived Judgment An Entrepreneurial Theory of Economic Organization," DRUID Working Papers, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies 06-09, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    3. Bowe, Michael & Golesorkhi, Sougand & Yamin, Mo, 2014. "Explaining equity shares in international joint ventures: Combining the influence of asset characteristics, culture and institutional differences," Research in International Business and Finance, Elsevier, Elsevier, vol. 31(C), pages 212-233.
    4. Pitelis, Christos & Teece, David, 2009. "The (new) nature and essence of the firm," MPRA Paper 24317, University Library of Munich, Germany.
    5. Agarwal, Rajshree & Croson, Rachel & Mahoney, Joseph T., 2007. "Decision Making in Strategic Alliances: An Experimental Investigation," Working Papers, University of Illinois at Urbana-Champaign, College of Business 07-0108, University of Illinois at Urbana-Champaign, College of Business.
    6. Mahoney, Joseph T., 2012. "Towards a Stakeholder Theory of Strategic Management," Working Papers, University of Illinois at Urbana-Champaign, College of Business 12-0100, University of Illinois at Urbana-Champaign, College of Business.
    7. Kim, Jongwook & Mahoney, Joseph T., 2005. "Appropriating Economic Rents from Resources: An Integrative Property Rights and Resource-Based Approach," Working Papers, University of Illinois at Urbana-Champaign, College of Business 05-0123, University of Illinois at Urbana-Champaign, College of Business.
    8. Kim, Jongwook & Mahoney, Joseph T., 2008. "A Strategic Theory of the Firm as a Nexus of Incomplete Contracts: A Property Rights Approach," Working Papers, University of Illinois at Urbana-Champaign, College of Business 08-0108, University of Illinois at Urbana-Champaign, College of Business.
    9. Jell-Ojobor, Maria & Windsperger, Josef, 2014. "The Choice of Governance Modes of International Franchise Firms — Development of an Integrative Model," Journal of International Management, Elsevier, Elsevier, vol. 20(2), pages 153-187.
    10. Goldszmidt, Rafael G. Burstein & Brito, Luiz Artur Ledur & de Vasconcelos, Flávio Carvalho, 2011. "Country effect on firm performance: A multilevel approach," Journal of Business Research, Elsevier, Elsevier, vol. 64(3), pages 273-279, March.
    11. Ng, Desmond W. & Salin, Victoria, 2012. "An Institutional Approach to the Examination of Food Safety," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), International Food and Agribusiness Management Association (IAMA), vol. 15(2).
    12. Kim, Jongwook & Mahoney, Joseph T., 2006. "How Property Rights Economics Furthers the Resource-Based View: Resources, Transaction Costs and Entrepreneurial Discovery," Working Papers, University of Illinois at Urbana-Champaign, College of Business 06-0100, University of Illinois at Urbana-Champaign, College of Business.
    13. Klein, Peter G. & Mahoney, Joseph T. & McGahan, Anita M. & Pitelis, Christos N., 2012. "Who Is in Charge? A Property Rights Perspective on Stakeholder Governance," Working Papers, University of Illinois at Urbana-Champaign, College of Business 12-0102, University of Illinois at Urbana-Champaign, College of Business.
    14. Mazzola, Erica & Perrone, Giovanni, 2013. "A strategic needs perspective on operations outsourcing and other inter-firm relationships," International Journal of Production Economics, Elsevier, Elsevier, vol. 144(1), pages 256-267.

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