Power, Ownership and Entity: Some Issues on the Nature of the (Network)Firm

Virgile Chassagnon

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Abstract: The firm was evicted from economic analysis for a long time. It appeared as a particular and substantial"scope" thanks to the economist R.H. Coase at the end of the 1930'S but sunk into oblivion for threedecades. This paper deals with the 1970's renewal of interest in the theory of the firm, particularly fromthe development of new institutional economics. But we argue that these contractual approaches need tobe refined by considering – as Rajan and Zingales argue – the impacts of "financial revolution" and of thevaluation of human capital on firm performance. Some alternative theories – based on critical resourcesor competences – become more and more evident to analyze the nature and the boundaries of the firm.This one conceals – beyond the metaphor of the "nexus of contracts" – the features of a real"organizational entity". In this article, we want to shed light on the crossed-fertilization effects betweenthese theories in order to raise the issue of the boundaries of the firm and to dissociate the legal andeconomic nature of the firm. It is hence suitable to deal with the theoretical analysis of the network-firm.The characterization of this complex organizational form, which is coordinated by a "hub-firm" that has apower over other legally independent firms without recourse to equity ownership, allows us to reveal boththe nature of interfirm cooperation and its implications on the theory of the firm. Finally, we propose aconception of the firm based on power.

Keywords: Theories of the firm; organizational entity; power; critical resources; network-firm (search for similar items in EconPapers)
Date: 2006-05
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Published in European School on New Institutional Economics (ESNIE), May 2006, France

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00374969

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