The Firm as a Multicontact Organization
AbstractThe firm is often considered as a nexus of contracts linking the management and its different stakeholders: claim-holders, workers, unions, customers, suppliers, and the state, among others. This paper surveys recent work in contract theory, the multiprincipal incentive theory, and the theory of side contracts, which provides some insights into the structure of those contracts and therefore into the structure of the firm. First, we discuss the incomplete contracting assumptions underlying these variations of the usual grand contract approach. Second, we explain how the theoretical lessons learned from this work-the distribution of contracting rights, the power of incentive schemes within organizations, and the design of communication channels-apply to the theory of the firm. Copyright (c) 1997 Massachusetts Institute of Technology.
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Bibliographic InfoPaper provided by Toulouse - GREMAQ in its series Papers with number 95.390.
Length: 29 pages
Date of creation: 1996
Date of revision:
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CONTRACTS; MANAGEMENT; CORPORATIONS; SHAREHOLDERS;
Other versions of this item:
- K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)
- K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
- M10 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - General
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