Property rights theory, transaction costs theory, and agency theory: an organizational economics approach to strategic management

Jongwook Kim and Joseph T. Mahoney
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Jongwook Kim: Western Washington University, Bellingham, USA, Postal: Western Washington University, Bellingham, USA
Joseph T. Mahoney: University of Illinois at Urbana-Champaign, Champaign, USA, Postal: University of Illinois at Urbana-Champaign, Champaign, USA

Managerial and Decision Economics, 2005, vol. 26, issue 4, pages 223-242

Abstract: Property rights theory has common antecedents with contractual theories of the firm such as transaction costs and agency theories, and is yet distinct from these theories. We illustrate fundamental theoretical principles derived from these three theories by analyzing the business case of oil field unitization. Theoretical principles and application of theory to oil field unitization are each summarized. From this, it is possible to see how property rights theory is well suited to explain business situations where inefficient economic outcomes persist. Additionally, property rights theory forges new theoretical connections with other branches of organizational economics, in particular, resource-based theory. Copyright © 2005 John Wiley & Sons, Ltd.

Date: 2005
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