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Asset commitment, constitutional governance and the nature of the firm

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  • GRANDORI, ANNA

Abstract

Integrating organization theory, organizational economics, and organizational law considerations, it is argued that the ‘nature of the firm’ can be more completely understood if it is considered a complete society-establishing contract, including constitutional pacts on procedures for the selection of actions, rather than a nexus of incomplete transactional contracts complemented by authority, power, or relational norms. The explanation is more general since firm-establishing contracts are a sub-set of those society-establishing contracts that are capable of regulating any venture in condition of high uncertainty and potential conflict, and because the constitutional regime adopted (authority-based, democratic, or other) becomes a specification of particular types of firms rather than part of the explanation of the firm. Evidence from published studies, as well as from newly gathered data on firm-founding contracts and other partnership establishing contracts (500 record database on large multi-party projects), document that actual contracts under uncertainty do fit the hypothesized pattern.

Suggested Citation

  • Grandori, Anna, 2010. "Asset commitment, constitutional governance and the nature of the firm," Journal of Institutional Economics, Cambridge University Press, vol. 6(3), pages 351-375, September.
    • Handle: RePEc:cup:jinsec:v:6:y:2010:i:03:p:351-375_00
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    Cited by:

    1. Margaret M. Blair, 2013. "The four functions of corporate personhood," Chapters, in: Anna Grandori (ed.), Handbook of Economic Organization, chapter 23, Edward Elgar Publishing.
    2. Gaetano Martino & Giulia Giacchè & Enrica Rossetti, 2016. "Organizing the Co-Production of Health and Environmental Values in Food Production: The Constitutional Processes in the Relationships between Italian Solidarity Purchasing Groups and Farmers," Sustainability, MDPI, vol. 8(4), pages 1-22, March.
    3. Jean- François Hennart, 2013. "Internal and external hybrids and the nature of joint ventures," Chapters, in: Anna Grandori (ed.), Handbook of Economic Organization, chapter 25, Edward Elgar Publishing.
    4. Anna Grandori, 2013. "Human capital and property rights," Chapters, in: Anna Grandori (ed.), Handbook of Economic Organization, chapter 15, Edward Elgar Publishing.
    5. Blanche Segrestin & Armand Hatchuel & Kevin Levillain, 2021. "When the Law Distinguishes Between the Enterprise and the Corporation: The Case of the New French Law on Corporate Purpose," Journal of Business Ethics, Springer, vol. 171(1), pages 1-13, June.
    6. Josef Windsperger, 2013. "The governance of franchising networks," Chapters, in: Anna Grandori (ed.), Handbook of Economic Organization, chapter 27, Edward Elgar Publishing.
    7. Anupama Phene & Stephen Tallman, 2014. "Knowledge Spillovers and Alliance Formation," Journal of Management Studies, Wiley Blackwell, vol. 51(7), pages 1058-1090, November.
    8. Blanche Segrestin & Armand Hatchuel & Kevin Levillain, 2020. "When the law distinguishes between the enterprise and the corporation: the case of the new French law on corporate purpose," Post-Print hal-02441287, HAL.
    9. Blanche Segrestin & Armand Hatchuel & Kevin Levillain, 2021. "When the Law Distinguishes Between the Enterprise and the Corporation: The Case of the New French Law on Corporate Purpose," Post-Print hal-02465609, HAL.

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