Monday, April 7, 2008

Another Empirical Review on the Boundary of the Firm

We had this post last September. Francine Lafontaine and Margaret Slade had a superb review paper on vertical integration titled "Vertical Integration and Firm Boundaries: The Evidence", which appeared in the Journal of Economic Literature (Non-gated version here).

A few months later, Kellogg professor Thomas Hubbard also published a paper on the same topic. "Viewpoint: Empirical research on firms' boundaries" appears in the current issue of the Canadian Journal of Economics. Instead of going through and summarizing all the major empirical work in the fields, like Lafontaine and Slade did last year, most of Hubbard's discussion concerns empirical work that is related to three key theoretical insights that build from each other, i.e. , relationship-specific investments, residual control rights and correlated organizational variables. Worth a read.

Hat tip to Organizations and Markets.

1 comment:

Lei Yu said...

When consider the nature of the firm, I think we confront two questions: 1.what factors influence the forms of organizations (say, firms) 2.how the forms of organizations influence (or bring) the consequence. Perhaps the first question is an economics question and another is mainly concerned by the staff of business school.