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Norms and the Theory of the Firm

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  • Oliver Hart

Abstract

This paper discusses some of the attempts economists have made in the last ten years or so to integrate norms into the theory of the firm. The paper argues that (a) although norms are undoubtedly very important both inside and between firms, incorporating them into the theory has been very difficult and is likely to continue to be so in the near future; (b) so far norms have not added a great deal to our understanding of such issues as the determinants of firm boundaries (the "make-or-buy" decision)--that is, at this point a norm-free theory of the firm and a norm-rich theory of the firm don’t seem to have very different predictions.

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  • Oliver Hart, 2001. "Norms and the Theory of the Firm," Harvard Institute of Economic Research Working Papers 1923, Harvard - Institute of Economic Research.
    • Handle: RePEc:fth:harver:1923
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    File URL: http://www.economics.harvard.edu/pub/hier/2001/HIER1923.pdf
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    References listed on IDEAS

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    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • G3 - Financial Economics - - Corporate Finance and Governance

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