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Corporate Culture as a Theory of the Firm / Gary B. Gorton, Alexander K. Zentefis.
- Format:
- Book
- Author/Creator:
- Gorton, Gary B.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w27353.
- NBER working paper series no. w27353
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2020.
- Summary:
- Markets and firms offer contrasting methods to arrange production. In markets, contracts govern the purchase of parts and services that compose production. In firms, the shared values, customs, and norms coming from a corporate culture govern employees' joint development of those parts and services. We argue for this distinction as a theory of the firm. Firms exist because corporate culture at times is more efficient at carrying out production than detailed contracts. The firm's boundary encircles the parts of production for which a manager optimally chooses corporate culture as the organizing device. The model can explain why some mergers and acquisitions fail, in a way consistent with empirical evidence, and why corporate cultures are hard to change.
- Notes:
- Print version record
- June 2020.
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