New Perspectives on the Modern Corporation series
Edited by Per-Olof Bjuggren and Dennis C. Mueller
Chapter 4: A Contractual Perspective of the Firm with an Application to the Maritime Industry
Per-Olof Bjuggren and Johanna Palmberg* 1. INTRODUCTION In 1776 Adam Smith developed a theory for markets as the coordinating device in an economy. However, economic activities are not only coordinated through the price mechanism of the market but are also guided by firms within which the production of goods and services takes place. In contrast to markets the firm is not so well developed in economic theory. This is reflected, for example, in basic economic textbooks that usually assume the firm as something exogenously given that need not be explained or analyzed. After acknowledging the existence of firms, textbooks quickly turn to the market and analyze its importance for a well-functioning economy.1 However, since the early 1970s there has been rapidly expanding research on the theory of the firm, largely inspired by an article dating back to 1937 about the nature of the firm written by the Nobel laureate, Ronald H. Coase. However, it took more than thirty years for researchers to draw inspiration from the ideas put forward by Coase. In the 1970s (primarily) Oliver E. Williamson continued along the line of research that Coase had outlined. Since then theories of the firm have been a new expanding area of research in economics. In this chapter, a contractual perspective on the firm is used, with the concept of institution being an important cornerstone, and a synthesis of different contractual perspectives on the firm as the coordinating institution within the maritime industry. This chapter recognizes the fact that the firm...
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