Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/31856
Authors: 
Cordes, Christian
Richerson, Peter J.
McElreath, Richard
Strimling, Pontus
Year of Publication: 
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

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