IDEAS home Printed from https://ideas.repec.org/a/eko/ekoeko/29_6.html
   My bibliography  Save this article

Institutional model of corporate strategies

Author

Listed:
  • Krzysztof Waśniewski

Abstract

The present paper presents a model of investment decisions made by corporations. The decisions in question are perceived as part of corporate strategies, defined in a behavioural way. The model attempts to integrate the classical microeconomics\’ point of view with that of the new institutional economics, formalizing the resulting assumptions on the grounds of three theories of games: Selten\’s, Harsany\i’s and Nash\’s. Corporate strategies are defined as a set of four games: the capital market game, the corporate governance game, the product markets game and the social responsibility game. The four games are played in parallel and in mutual interaction, each of them being a temporarily normalized sub-game of the Selten\’s extensive game with imperfect recall, and being played as a Harsanyi\’s game with imperfect information and various degrees of cooperation. In each of the four games the presence of Nash\’s dynamic equilibrium, manifested as a critical level of consistency in individual players\’ strategies, is of crucial importance. In presence of Nash\’s dynamic equilibrium, corporations orient their behaviour towards development, technological progress included. In the absence of Nash\’s dynamic equilibrium corporations would orient their strategies exclusively on managing risk.

Suggested Citation

  • Krzysztof Waśniewski, 2012. "Institutional model of corporate strategies," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 29.
    • Handle: RePEc:eko:ekoeko:29_6
    as

    Download full text from publisher

    File URL: http://ekonomia.wne.uw.edu.pl/ekonomia/getFile/334
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-795, December.
    2. Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, vol. 21(1), pages 128-140, April.
    3. Geoffrey M. Hodgson & Thorbjørn Knudsen, 2008. "The Complex Evolution of a Simple Traffic Convention: the Functions and Implications of Habit," International Economic Association Series, in: János Kornai & László Mátyás & Gérard Roland (ed.), Institutional Change and Economic Behaviour, chapter 9, pages 178-199, Palgrave Macmillan.
    4. Greif,Avner, 2006. "Institutions and the Path to the Modern Economy," Cambridge Books, Cambridge University Press, number 9780521480444.
    5. Oliver E. Williamson, 1991. "Strategizing, economizing, and economic organization," Strategic Management Journal, Wiley Blackwell, vol. 12(S2), pages 75-94, December.
    6. Geoffrey Hodgson & Thorbjørn Knudsen, 2006. "The nature and units of social selection," Journal of Evolutionary Economics, Springer, vol. 16(5), pages 477-489, December.
    7. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    8. Armen A. Alchian, 1950. "Uncertainty, Evolution, and Economic Theory," Journal of Political Economy, University of Chicago Press, vol. 58, pages 211-211.
    9. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    10. John C. Harsanyi, 1968. "Games with Incomplete Information Played by "Bayesian" Players Part II. Bayesian Equilibrium Points," Management Science, INFORMS, vol. 14(5), pages 320-334, January.
    11. Henry Mintzberg & James A. Waters, 1985. "Of strategies, deliberate and emergent," Strategic Management Journal, Wiley Blackwell, vol. 6(3), pages 257-272, July.
    12. John C. Harsanyi, 1953. "Cardinal Utility in Welfare Economics and in the Theory of Risk-taking," Journal of Political Economy, University of Chicago Press, vol. 61, pages 434-434.
    13. Hodgson, Geoffrey M. & Knudsen, Thorbjorn, 2006. "Why we need a generalized Darwinism, and why generalized Darwinism is not enough," Journal of Economic Behavior & Organization, Elsevier, vol. 61(1), pages 1-19, September.
    14. Harold Demsetz, 1968. "The Cost of Transacting," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 82(1), pages 33-53.
    15. Geoffrey Hodgson & Thorbjørn Knudsen, 2006. "Dismantling Lamarckism: why descriptions of socio-economic evolution as Lamarckian are misleading," Journal of Evolutionary Economics, Springer, vol. 16(4), pages 343-366, October.
    16. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-325, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Waśniewski, Krzysztof, 2010. "Emergence of alternative capital markets in developing countries as a process of institutional change," MPRA Paper 26681, University Library of Munich, Germany.
    2. Krzysztof Waśniewski, 2015. "Discretionary freedom of choice and risk in alternative capital markets," European Journal of Law and Economics, Springer, vol. 39(3), pages 573-605, June.
    3. Iavor Marangozov, 2005. "From Practice to Theory of the International Joint Ventures," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 44-77.
    4. Howell, Jason W., 2017. "The survival of the U.S. dual class share structure," Journal of Corporate Finance, Elsevier, vol. 44(C), pages 440-450.
    5. Maloney, Michael T., 2017. "Alchian remembrances," Journal of Corporate Finance, Elsevier, vol. 44(C), pages 561-582.
    6. Dequech, David, 2006. "The new institutional economics and the theory of behaviour under uncertainty," Journal of Economic Behavior & Organization, Elsevier, vol. 59(1), pages 109-131, January.
    7. Waśniewski, Krzysztof, 2012. "Comparative, dynamic efficiency of national healthcare systems," MPRA Paper 38029, University Library of Munich, Germany.
    8. Steven G. Medema, 2020. "The Coase Theorem at Sixty," Journal of Economic Literature, American Economic Association, vol. 58(4), pages 1045-1128, December.
    9. Kamath Shyam J., 1994. "Privatization: A Market Prospect Perspective," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 5(1), pages 1-52, March.
    10. J. Mulherin, 2005. "Corporations, collective action and corporate governance: One size does not fit all," Public Choice, Springer, vol. 124(1), pages 179-204, July.
    11. Waśniewski, Krzysztof, 2010. "Corporate strategies – the institutional approach," MPRA Paper 25190, University Library of Munich, Germany.
    12. Waśniewski, Krzysztof, 2014. "Public debt, fiscal decisions and political power," MPRA Paper 59635, University Library of Munich, Germany.
    13. Pier Paolo Saviotti, 2012. "R&D and the Firm," Chapters, in: Michael Dietrich & Jackie Krafft (ed.), Handbook on the Economics and Theory of the Firm, chapter 29, Edward Elgar Publishing.
    14. Dendi Ramdani & Arjen Witteloostuijn, 2012. "The Shareholder–Manager Relationship and Its Impact on the Likelihood of Firm Bribery," Journal of Business Ethics, Springer, vol. 108(4), pages 495-507, July.
    15. Rimon Emile & Aiman Ragab & Sandy Kyaw, 2014. "The Effect of Corporate Governance on Firm Performance, Evidence from Egypt," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(12), pages 1865-1877, December.
    16. Raghuram G. Rajan & Luigi Zingales, 1998. "The Governance of the New Enterprise," CRSP working papers 487, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
    17. Michael Carney, 2005. "Corporate Governance and Competitive Advantage in Family–Controlled Firms," Entrepreneurship Theory and Practice, , vol. 29(3), pages 249-265, May.
    18. Alley Ibrahim S. & Adebayo Abimbola L. & Oligbi Blessing O., 2016. "Corporate Governance and Financial Performance Nexus: Any Bidirectional Causality?," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 50(1), pages 82-99, June.
    19. Haider A. Khan, 2004. "General Conclusions: From Crisis to a Global Political Economy of Freedom," Palgrave Macmillan Books, in: Global Markets and Financial Crises in Asia, chapter 9, pages 193-211, Palgrave Macmillan.
    20. Volodymyr Babich & Simone Marinesi & Gerry Tsoukalas, 2021. "Does Crowdfunding Benefit Entrepreneurs and Venture Capital Investors?," Manufacturing & Service Operations Management, INFORMS, vol. 23(2), pages 508-524, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eko:ekoeko:29_6. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/fesuwpl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.