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The Incentive Limits of Firms: A Comparative Institutional Assessment of Bureaucracy

In: Economic Incentives

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  • Oliver E. Williamson

Abstract

Why can’t a large firm do everything that a collection of small firms can do and more? This is a variant of a question that has been asked many times before but for which an adequate answer has never been devised — to wit, what is responsible for limitations in firm size? Yet another way of putting this same issue is this: why not organize everything in one large firm?

Suggested Citation

  • Oliver E. Williamson, 1986. "The Incentive Limits of Firms: A Comparative Institutional Assessment of Bureaucracy," International Economic Association Series, in: Bela Balassa & Herbert Giersch (ed.), Economic Incentives, chapter 7, pages 204-237, Palgrave Macmillan.
    • Handle: RePEc:pal:intecp:978-1-349-18204-6_7
    DOI: 10.1007/978-1-349-18204-6_7
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    1. Kirk Monteverde & David J. Teece, 1982. "Supplier Switching Costs and Vertical Integration in the Automobile Industry," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 206-213, Spring.
    2. Eccles, Robert G., 1981. "The quasifirm in the construction industry," Journal of Economic Behavior & Organization, Elsevier, vol. 2(4), pages 335-357, December.
    3. Oliver E. Williamson, 1967. "Hierarchical Control and Optimum Firm Size," Journal of Political Economy, University of Chicago Press, vol. 75(2), pages 123-123.
    4. Riordan, Michael H. & Williamson, Oliver E., 1985. "Asset specificity and economic organization," International Journal of Industrial Organization, Elsevier, vol. 3(4), pages 365-378, December.
    5. Buttrick, John, 1952. "The Inside Contract System1," The Journal of Economic History, Cambridge University Press, vol. 12(3), pages 205-221, July.
    6. Fama, Eugene F, 1980. "Agency Problems and the Theory of the Firm," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 288-307, April.
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    Cited by:

    1. Henrik Egbert & Teodor Sedlarski & Aleksandar B. Todorov, 2024. "Foundations of Contemporary Economics: New Institutional Economics vs. New Economic Sociology – The Granovetter-Williamson Debate," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 37-53.
    2. Ufuk Akcigit & Nathan Goldschlag, 2023. "Where Have All the "Creative Talents" Gone? Employment Dynamics of US Inventors," NBER Working Papers 31085, National Bureau of Economic Research, Inc.
    3. Cambini Carlo & Filippini Massimo & Piacenza Massimiliano & Vannoni Davide, 2011. "Corporatization and Firm Performance: Evidence from Publicly-Provided Local Utilities," Review of Law & Economics, De Gruyter, vol. 7(1), pages 191-213, July.
    4. Birger Wernerfelt, 1988. "Economic Organization of Trading Relationships: Hierarchies and Asset Ownership," Discussion Papers 824, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    5. Samuel, Sajay, 2018. "A conceptual framework for teaching management accounting," Journal of Accounting Education, Elsevier, vol. 44(C), pages 25-34.
    6. Kumkar, Lars, 1998. "Privatwirtschaftliche Koordinierungsstrukturen in vertikal strukturierten Industrien: Eine Analyse der Stromwirtschaft auf Grundlage der neuen Institutionenökonomik," Kiel Working Papers 873, Kiel Institute for the World Economy (IfW Kiel).

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