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The Essence of the Modern Corporation: Markets, Strategic Decision-Making and the Theory of the Firm

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  • Cowling, Keith
  • Sugden, Roger

Abstract

Following Coase's fundamental concern with planning, this paper highlights strategic decision making as important for distinguishing the essence of the modern large corporation. It is consistent with industrial organization analysis of industries yet provides a novel starting point for the theory of the firm. The authors suggest different boundaries to the organization compared to those identified elsewhere and, whereas others peering into the black box of Walrasian theory merely see more of what is on the outside, they see transactions within and without the firm as fundamentally different. The analysis recognizes Pareto inefficiencies but concludes with an optimistic vision for economic policy. Copyright 1998 by Blackwell Publishers Ltd and The Victoria University of Manchester

Suggested Citation

  • Cowling, Keith & Sugden, Roger, 1998. "The Essence of the Modern Corporation: Markets, Strategic Decision-Making and the Theory of the Firm," The Manchester School of Economic & Social Studies, University of Manchester, vol. 66(1), pages 59-86, January.
  • Handle: RePEc:bla:manch2:v:66:y:1998:i:1:p:59-86
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    Citations

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    Cited by:

    1. Cowling, Keith & Tomlinson, Philip R., 2002. "Re-Visiting The Roots Of Japan'S Structural Decline:The Role Of The Japanese Corporation," The Warwick Economics Research Paper Series (TWERPS) 624, University of Warwick, Department of Economics.
    2. Strange, Roger & Newton, James, 2006. "Stephen Hymer and the externalization of production," International Business Review, Elsevier, vol. 15(2), pages 180-193, April.
    3. Stephen P. Dunn, 2012. "John Kenneth Galbraith and the Theory of the Firm," Chapters,in: Handbook on the Economics and Theory of the Firm, chapter 8 Edward Elgar Publishing.
    4. Grazia Ietto-Gillies, 2012. "The Multinational Firm: Characteristics, Activities and Explanations in Historical Context," Chapters,in: Handbook on the Economics and Theory of the Firm, chapter 14 Edward Elgar Publishing.
    5. Yamin, Mohammad & Forsgren, Mats, 2006. "Hymer's analysis of the multinational organization: Power retention and the demise of the federative MNE," International Business Review, Elsevier, vol. 15(2), pages 166-179, April.
    6. repec:spr:manint:v:51:y:2011:i:2:d:10.1007_s11575-011-0074-3 is not listed on IDEAS
    7. Silvia Sacchetti & Ermanno C. Tortia, 2013. "The Internal and External Governance of Cooperatives: Membership and Consistency of Values," Euricse Working Papers 1362, Euricse (European Research Institute on Cooperative and Social Enterprises).
    8. Grazia Ietto-Gillies, 2011. "Strategies of Transnational Companies in the Context of the Governance Systems of Nation-states," Chapters,in: Does Economic Governance Matter?, chapter 5 Edward Elgar Publishing.
    9. Branston, J. Robert & Cowling, Keith & Sugden, Roger, 2002. "Corporate Governance And The Public Interest," The Warwick Economics Research Paper Series (TWERPS) 626, University of Warwick, Department of Economics.
    10. Geoffrey Hodgson, 2002. "The Legal Nature of the Firm and the Myth of the Firm-Market Hybrid," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 9(1), pages 37-60.
    11. Jiang Wei & Minfei Zhou & Mark Greeven & Hongyan Qu, 2016. "Economic governance, dual networks and innovative learning in five Chinese industrial clusters," Asia Pacific Journal of Management, Springer, vol. 33(4), pages 1037-1074, December.
    12. Grazia Ietto-Gillies, 2011. "The Integration and Fragmentation Roles of Transnational Companies," Chapters,in: International Handbook on the Economics of Integration, Volume III, chapter 3 Edward Elgar Publishing.
    13. Grazia Ietto-Gillies, 2014. "The Theory of the Transnational Corporation at 50+," Economic Thought, World Economics Association, vol. 3(2), pages 1-38, September.
    14. James R. Wilson & Mari Jose Aranguren & Miren Larrea, 2009. "Academia and Public Policy: Towards the co-generation of knowledge and learning processes," Working Papers 200903, Orkestra - Basque Institute of Competitiveness.
    15. Roger Sugden, 2013. "Space in an inferno? The organization of modern universities and the role of academics," Chapters,in: Leadership and Cooperation in Academia, chapter 4, pages 43-57 Edward Elgar Publishing.
    16. Silvia Sacchetti, 2015. "Inclusive and Exclusive Social Preferences: A Deweyan Framework to Explain Governance Heterogeneity," Journal of Business Ethics, Springer, vol. 126(3), pages 473-485, February.

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