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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.

Suggested Citation

  • Oliver Hart, 2001. "Norms and the Theory of the Firm," NBER Working Papers 8286, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:8286
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    References listed on IDEAS

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    5. Oliver Hart & John Moore, 1999. "Foundations of Incomplete Contracts," Review of Economic Studies, Oxford University Press, vol. 66(1), pages 115-138.
    6. Posner, Richard A, 1997. "Social Norms and the Law: An Economic Approach," American Economic Review, American Economic Association, vol. 87(2), pages 365-369, May.
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    12. Hart, Oliver, 1995. "Firms, Contracts, and Financial Structure," OUP Catalogue, Oxford University Press, number 9780198288817.
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    14. George Baker & Robert Gibbons & Kevin J. Murphy, 1994. "Subjective Performance Measures in Optimal Incentive Contracts," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 1125-1156.
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    Cited by:

    1. Sloof, Randolph & Sonnemans, Joep, 2011. "The interaction between explicit and relational incentives: An experiment," Games and Economic Behavior, Elsevier, vol. 73(2), pages 573-594.
    2. P. L. Sacco & M. Viviani, 2006. "La responsabilita' sociale d'Impresa - prospettive teoriche nel dibattito italiano," Working Papers 578, Dipartimento Scienze Economiche, Universita' di Bologna.
    3. Kvaløy, Ola, 2008. "Do norms matter for firm boundaries?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(3), pages 969-975, June.
    4. Rosenkranz, Stephanie & Schmitz, Patrick W., 2003. "Optimal allocation of ownership rights in dynamic R&D alliances," Games and Economic Behavior, Elsevier, vol. 43(1), pages 153-173, April.
    5. Bertacchini, Enrico & Dalle Nogare, Chiara, 2014. "Public provision vs. outsourcing of cultural services: Evidence from Italian cities," European Journal of Political Economy, Elsevier, vol. 35(C), pages 168-182.
    6. Huck, Steffen & Kübler, Dorothea & Weibull, Jörgen, 2012. "Social norms and economic incentives in firms," Journal of Economic Behavior & Organization, Elsevier, vol. 83(2), pages 173-185.
    7. Huck, Steffen & Kübler, Dorothea & Weibull, Jörgen, 2001. "Social Norms and Optimal Incentives in Firms," Working Paper Series 565, Research Institute of Industrial Economics.
    8. Bandiera, Oriana & Barankay, Iwan & Rasul, Imran, 2004. "Relative and Absolute Incentives: Evidence on Worker Productivity," CEPR Discussion Papers 4431, C.E.P.R. Discussion Papers.
    9. Lewellyn, Krista B. & Bao, Shuji ‘Rosey’, 2015. "R&D Investment in the Global Paper Products Industry: A Behavioral Theory of the Firm and National Culture Perspective," Journal of International Management, Elsevier, vol. 21(1), pages 1-17.
    10. Martin Brown & Armin Falk & Ernst Fehr, "undated". "Contractual Incompleteness and the Nature of Market Interactions," IEW - Working Papers 038, Institute for Empirical Research in Economics - University of Zurich.
    11. Nicolai J. Foss & Peter G. Klein, 2005. "The Theory of the Firm and Its Critics A Stocktaking and Assessment," DRUID Working Papers 05-03, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    12. Oliver Gürtler, 2008. "Implicit contracting with a (potentially) reliable agent," Journal of Economics, Springer, vol. 94(2), pages 177-189, July.
    13. repec:eee:worbus:v:52:y:2017:i:6:p:798-808 is not listed on IDEAS
    14. Jenny Kragl & Julia Schmid, 2009. "The Impact of Envy on Relational Employment Contracts," Post-Print hal-00723632, HAL.
    15. Paul H. Jensen & Robin E. Stonecash, 2004. "The Efficiency of Public Sector Outsourcing Contracts: A Literature Review," Melbourne Institute Working Paper Series wp2004n29, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    16. Kragl, Jenny & Schmid, Julia, 2009. "The impact of envy on relational employment contracts," Journal of Economic Behavior & Organization, Elsevier, vol. 72(2), pages 766-779, November.
    17. Ola Kvaløy & Trond E. Olsen, 2008. "Relative Performance Evaluation, Agent Hold-up and Firm Organization," NBER Chapters,in: Organizational Innovation and Firm Performance, pages 229-241 National Bureau of Economic Research, Inc.
    18. Barry E. Adler, 2012. "Game-Theoretic Bankruptcy Valuation," The Journal of Legal Studies, University of Chicago Press, vol. 41(1), pages 209-238.
    19. Kaufman, Bruce E., 2003. "The organization of economic activity: insights from the institutional theory of John R. Commons," Journal of Economic Behavior & Organization, Elsevier, vol. 52(1), pages 71-96, September.
    20. Iqbal, Zamir & Mirakhor, Abbas, 2004. "Stakeholders Model of Governance in Islamic Economic System," MPRA Paper 56027, University Library of Munich, Germany.
    21. Dragone, Davide & Viviani, Michele, 2007. "Cultura Organizzativa e Sostenibilita' della Governance Multistakeholder," AICCON Working Papers 40-2007, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
    22. Sacco, Pier Luigi & Viviani, Michele, 2005. "Corporate Social Responsibility: theoretical perspectives in the Italian Debate," AICCON Working Papers 11-2005, Associazione Italiana per la Cultura della Cooperazione e del Non Profit, revised 03 Feb 2007.

    More about this item

    JEL classification:

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

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