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Title:How does opportunistic behavior influence firm size? PDF Logo
Authors:Cordes, Christian
Richerson, Peter J.
McElreath, Richard
Strimling, Pontus
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
Cultural Evolution
Opportunism
Cooperation
JEL:D21
D23
D01
M14
C61
Document Type:Working Paper
Appears in Collections:Papers on Economics and Evolution, MPI für Ökonomik

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