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|Title:||How does opportunistic behavior influence firm size? |
Richerson, Peter J.
|Issue Date:||2006 |
|Series/Report no.:||Papers on economics and evolution 0618|
|Abstract:||This paper relates firm size and opportunism by showing that, given certain behavioral dispositions of humans, the size of a profit-maximizing firm can be determined by cognitive aspects underlying firm-internal cultural transmission processes. We argue that what firms do better than markets besides economizing on transaction costs is to establish a cooperative regime among its employees that keeps in check opportunism. A model depicts the outstanding role of the entrepreneur or business leader in firm-internal socialization processes and the evolution of corporate cultures. We show that high opportunism-related costs are a reason for keeping firms size small.|
|Subjects:||Theory of the Firm|
Transaction Cost Economics
|Document Type:||Working Paper|
|Appears in Collections:||Papers on Economics and Evolution, MPI für Ökonomik|
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