Firms, Incomplete Contracts and Organizational Learning
AbstractThis explorative paper argues that the central problem of economic organization is adaptation to unforeseen contingencies. However, flexibility is a rather neglected issue in the theory of economic organization. This contrasts with much organization theory, in which the seeking and processing of information about the organization's key uncertainties is seen as a determinant of organizational form. The notion of incomplete contracts is argued to provide a means to bridging ideas from organizational economics and organization theory, particularly organizational learning. Incomplete contracts are not only important because they provide room for incentive problems, but more importantly because they allow firms to exploit processes of organizational learning that must always involve some unforeseen contingencies. Firms are seen as efficient institutional responses to learning processes that involve strongly complementary problem-solving activities.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies in its series DRUID Working Papers with number 96-2.
Date of creation: 1996
Date of revision:
Contact details of provider:
Web page: http://www.druid.dk/
The theory of economic organization; incomplete firm contracts; organizational learning; t;
Find related papers by JEL classification:
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Oliver Hart & John Moore, 1985.
"Incomplete Contracts and Renegotiation,"
Working papers, Massachusetts Institute of Technology (MIT), Department of Economics
367, Massachusetts Institute of Technology (MIT), Department of Economics.
- Hardman Moore, John & Hart, Oliver, 1985. "Incomplete Contracts and Renegotiation," CEPR Discussion Papers, C.E.P.R. Discussion Papers 60, C.E.P.R. Discussion Papers.
- Holmstrom, Bengt & Milgrom, Paul, 1994. "The Firm as an Incentive System," American Economic Review, American Economic Association, American Economic Association, vol. 84(4), pages 972-91, September.
- Richardson, G B, 1972. "The Organisation of Industry," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 82(327), pages 883-96, September.
- Brian J Loasby, 1994. "Understanding Markets," Working Papers Series, University of Stirling, Division of Economics 94/4, University of Stirling, Division of Economics.
- Demsetz, Harold, 1988. "The Theory of the Firm Revisited," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 4(1), pages 141-61, Spring.
- Milgrom, Paul & Roberts, John, 1990. "The Economics of Modern Manufacturing: Technology, Strategy, and Organization," American Economic Review, American Economic Association, American Economic Association, vol. 80(3), pages 511-28, June.
- Anderlini, Luca & Felli, Leonardo, 1994.
"Incomplete Written Contracts: Undescribable States of Nature,"
The Quarterly Journal of Economics, MIT Press,
MIT Press, vol. 109(4), pages 1085-1124, November.
- Anderlini, L. & Felli, L., 1993. "Incomplete Written Contracts: Undescribable States of Nature," Papers, Cambridge - Risk, Information & Quantity Signals 183, Cambridge - Risk, Information & Quantity Signals.
- Witt, Ulrich, 1998. "Imagination and leadership - The neglected dimension of an evolutionary theory of the firm," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 35(2), pages 161-177, April.
- Dow, Gregory K., 1987. "The function of authority in transaction cost economics," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 8(1), pages 13-38, March.
- Henderson, Rebecca., 1994. "The evolution of integrative capability : innovation in cardiovascular drug discovery," Working papers, Massachusetts Institute of Technology (MIT), Sloan School of Management 3711-94., Massachusetts Institute of Technology (MIT), Sloan School of Management.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Keld Laursen).
If references are entirely missing, you can add them using this form.