The Legal Nature of the Firm and the Myth of the Firm-Market Hybrid
A sharp conceptual distinction used to be drawn between the firm and the market. However, since the 1970s, many economists and sociologists have argued that the boundaries of the firm are indistinct. Ideas emerged of 'internal markets' within firms, of the 'quasifirm', of 'hybrid firms' and of firms as 'quasi-markets'. This article re-examines the formal, legal conception of the firm. It is argued that there is no good reason to abandon this conception, even in the light of relational contracting, networking, subcontracting and other developments. To avoid confusion, additional terms such as 'supplier network' or 'conglomerate' should be used to describe these phenomena, rather than abandoning a legally-based definition of the firm. With this clarified definition, 'internal markets' and 'hybrid firms' disappear from view.
Volume (Year): 9 (2002)
Issue (Month): 1 ()
|Contact details of provider:|| Web page: http://www.tandfonline.com/CIJB20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/CIJB20|
References listed on IDEAS
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.:
- 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.
- 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.
- Hart, Oliver D. & Moore, John, 1990.
"Property Rights and the Nature of the Firm,"
3448675, Harvard University Department of Economics.
- Menard, Claude, 1995. "Markets as institutions versus organizations as markets? Disentangling some fundamental concepts," Journal of Economic Behavior & Organization, Elsevier, vol. 28(2), pages 161-182, October.
- Klein, Benjamin, 1983. "Contracting Costs and Residual Claims: The Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 367-74, June.
- Richardson, G B, 1972. "The Organisation of Industry," Economic Journal, Royal Economic Society, vol. 82(327), pages 883-96, September.
- Handlin, Oscar & Handlin, Mary F., 1945. "Origins of the American Business Corporation," The Journal of Economic History, Cambridge University Press, vol. 5(01), pages 1-23, May.
- Imai, Ken-ichi & Itami, Hiroyuki, 1984. "Interpenetration of organization and market : Japan's firm and market in comparison with the U.S," International Journal of Industrial Organization, Elsevier, vol. 2(4), pages 285-310, December.
- Greif, Avner, 1996. "The Study of Organizations and Evolving Organizational Forms through History: Reflections from the Late Medieval Family Firm," Industrial and Corporate Change, Oxford University Press, vol. 5(2), pages 473-501.
- Anderson, Gary M & Tollison, Robert D, 1982. "Adam Smith's Analysis of Joint-Stock Companies," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1237-56, December.
- Khalil, Elias L, 1997. "Is the Firm an Individual?," Cambridge Journal of Economics, Oxford University Press, vol. 21(4), pages 519-44, July.
- Cheung, Steven N S, 1983. "The Contractual Nature of the Firm," Journal of Law and Economics, University of Chicago Press, vol. 26(1), pages 1-21, April.
- Putterman, Louis, 1988. "The Firm as Association Versus the Firm as Commodity," Economics and Philosophy, Cambridge University Press, vol. 4(02), pages 243-266, October.
- Masten, Scott E, 1988. "A Legal Basis for the Firm," Journal of Law, Economics and Organization, Oxford University Press, vol. 4(1), pages 181-98, Spring.
- Eccles, Robert G., 1981. "The quasifirm in the construction industry," Journal of Economic Behavior & Organization, Elsevier, vol. 2(4), pages 335-357, December.
- Helper, Susan & MacDuffie, John Paul & Sabel, Charles, 2000. "Pragmatic Collaborations: Advancing Knowledge While Controlling Opportunism," Industrial and Corporate Change, Oxford University Press, vol. 9(3), pages 443-87, September.
When requesting a correction, please mention this item's handle: RePEc:taf:ijecbs:v:9:y:2002:i:1:p:37-60. See general 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: (Michael McNulty)
If references are entirely missing, you can add them using this form.