The Internal Organization of the Firm, Transaction Costs and Macroeconomic Growth
This paper proposes an analysis of the links between the internal organization of firms and macroeconomic growth. We present a Schumpeterian growth model in which firms face agency costs. These agency costs are due to the existence of asymmetries of information and the formation of internal vertical collusions. As a response to the opportunity of internal collusion, optimal incentive contracts depend on the efficiency of collusive side contracting within organizations. This un turn affects the firms profitability and the return to innovation and the stationary equilibrium growth rate of the economy. We then discuss the relationships between the structure of internal transaction costs, organizational technologies and macroeconomic growth.
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|Date of creation:||1999|
|Date of revision:|
|Publication status:||Published in Journal of Economic Growth, 2000, 5, pp, 315-340.|
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