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Shared Ownership versus Third-Party Ownership


  • Stephan Nüesch

    () (Institute for Strategy and Business Economics, University of Zurich)

  • Egon Franck

    () (Institute for Strategy and Business Economics, University of Zurich)


Competitive advantage is based on a unique nexus of firm-specific investments that creates inimitable quasi-rents. Because of the impossibility of writing complete contracts, the distribution of the quasi-rents is vulnerable to opportunistic and inefficient behavior. This paper discusses two corporate governance models as institutional safeguards: shared ownership that assigns the rights of residual control to the firm-specific investors, and thirdparty ownership that assigns the rights of residual control to independent fiduciaries. Shared ownership entails higher costs of collective decision-making but lower agency costs than third-party ownership. The paper presents testable propositions, conditional on contextual factors, on which model is better able to incentivize firm-specific investments.

Suggested Citation

  • Stephan Nüesch & Egon Franck, 2010. "Shared Ownership versus Third-Party Ownership," Working Papers 0138, University of Zurich, Institute for Strategy and Business Economics (ISU).
  • Handle: RePEc:iso:wpaper:0138

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    Cited by:

    1. Gerald Eisenkopf & Stephan Nüesch, 2016. "Third Parties and Specific Investments," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 17(2), pages 151-172, August.

    More about this item


    Corporate Governance; Firm-Specific Investments; Residual Rights of Control; Third-Party Ownership;

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