Does hierarchical governance facilitate adaptation to changed circumstances?

Article Abstract:

The transaction-cost theory of economic organization was analyzed in a simple model that allowed hierarchical organizations to respond to varying circumstances under conditions of asset specificity and contractual incompleteness. The results upheld the fundamental transaction-cost theory that preference is given to heirarchical organization when assets specificity are minimum, but this organizational structure becomes more favored with greater specificity.

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Information concealment in the theory of vertical integration

Article Abstract:

The ability of an integrated firm to turn previously observable market data into private information has its basis in the ability of an integrated firm to trade internally. Gains can be made by an integrated firm by concealing information on acqusition costs of inputs, which results in ex ante profits for the firm in the form of higher ex post realized value. This benefit can be derived even if the firm's suppliers are inferior in service.

Economics, Research and Development in the Social Sciences and Humanities, Vertical integration, Vertical markets, Information theory, Information theory in economics

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Is firm size conducive to R&D choice? A strategic analysis of product and process innovations

Article Abstract:

A duopoly model of multiproduct firms showed that various innovation incentives make the larger company to focus more in process innovations and the small one to invest more resources to search for new products. Due to the difference of R&D behavior, the large firm maintains its dominance for the original product in the post-innovation market, while the small firm tends to be a major player in the new product market.

Small Business, Business Methods, Business planning

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