IDEAS home Printed from https://ideas.repec.org/a/oup/ecinqu/v25y1987i1p103-16.html
   My bibliography  Save this article

The Entrepreneur's Reward for Self-policing

Author

Listed:
  • Barzel, Yoram

Abstract

Collaboration among people is often subject to shirking; the net gain from collaboration depends on the contract governing it. The author argues that the entrepreneur assumes the role of residual claimant because his actions are more costly to monitor than those of the factors with which he collaborates. By offering fixed pay contracts to others and becoming residual claimant, the entrepreneur curtails his incentive to gain at his partners' expense, and the net gain from collaboration is then maximized. Costly monitoring applies to both labor and capital , and thus the entrepreneur may supply both. The entrepreneur's capital serves to guarantee the pay of the other factors. Copyright 1987 by Oxford University Press.

Suggested Citation

  • Barzel, Yoram, 1987. "The Entrepreneur's Reward for Self-policing," Economic Inquiry, Western Economic Association International, vol. 25(1), pages 103-116, January.
    • Handle: RePEc:oup:ecinqu:v:25:y:1987:i:1:p:103-16
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Alberto Battistini, 2008. "Micro-Founded Institutions and Macro-Founded Individuals: The Dual Nature of Profit," Department of Economics University of Siena 550, Department of Economics, University of Siena.
    2. Kirsten Foss & Nicolai J. Foss & Peter G. Klein, 2006. "Original and Derived Judgment An Entrepreneurial Theory of Economic Organization," DRUID Working Papers 06-09, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    3. Marcello Basili, 2008. "The global strategy to cope with H5N1: the property rights caveat," Department of Economic Policy, Finance and Development (DEPFID) University of Siena 0908, Department of Economic Policy, Finance and Development (DEPFID), University of Siena.
    4. Kim, Jongwook & Mahoney, Joseph T., 2008. "A Strategic Theory of the Firm as a Nexus of Incomplete Contracts: A Property Rights Approach," Working Papers 08-0108, University of Illinois at Urbana-Champaign, College of Business.
    5. Richard N. Langlois & Nicolai J. Foss, 1999. "Capabilities and Governance: The Rebirth of Production in the Theory of Economic Organization," Kyklos, Wiley Blackwell, vol. 52(2), pages 201-218, May.
    6. Edward Gilmore & Ulf Andersson & Noushan Memar, . "How subsidiaries influence innovation in the MNE value chain," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    7. Jain, Amit, 2011. "Connaissance, ressources, concurrence et les frontières de l'entreprise," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/6403 edited by Thiétart, Raymond-Alain.
    8. Lovgren, Adam & Ross, R. Brent & Peterson, H. Christopher, 2012. "Overcoming Selection Bias in Measuring the Effect of Entrepreneurial Assistance Programs," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124815, Agricultural and Applied Economics Association.
    9. Scott L. Mitchell & Mark D. Packard & Brent B. Clark, 2022. "Decentralizing corporate governance? A praxeological inquiry," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 19(4), pages 413-429, December.
    10. Elaine Mosakowski, 1998. "Entrepreneurial Resources, Organizational Choices, and Competitive Outcomes," Organization Science, INFORMS, vol. 9(6), pages 625-643, December.
    11. Kirsten Foss & Nicolai Foss, 2001. "Assets, Attributes and Ownership," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 8(1), pages 19-37.
    12. Nicolai J. Foss & Peter G. Klein, 2013. "Entrepreneurship, entrepreneurial governance and economic organization," Chapters, in: Anna Grandori (ed.), Handbook of Economic Organization, chapter 22, Edward Elgar Publishing.
    13. Kirsten Foss & Nicolai J. Foss, 1999. "Understanding Ownership Residual Rights of Control and Appropriable Control Rights," DRUID Working Papers 99-4, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    14. Tamara Todorova, 2012. "Optimal Work Effort and Monitoring Cost," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 2(6), pages 1-3, December.
    15. Grossbard, Shoshana, 1993. "On the Economics of Marriage - A Theory of Marriage, Labor and Divorce. Out of print. Published originally by Westview Press in 1993 under name Grossbard-Shechtman," MPRA Paper 81059, University Library of Munich, Germany.
    16. Ennio E. Piano, 2022. "Specialization and the firm in Renaissance Italian art," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 46(4), pages 659-697, December.
    17. Kor, Yasemin Y. & Mahoney, Joseph T. & Michael, Steven C., 2005. "Resources, Capabilities and Entrepreneurial Perceptions," Working Papers 05-0120, University of Illinois at Urbana-Champaign, College of Business.
    18. Horan, Stephen M. & Johnsen, D. Bruce, 2008. "Can third-party payments benefit the principal?: The case of soft dollar brokerage," International Review of Law and Economics, Elsevier, vol. 28(1), pages 56-77, March.
    19. Kamath Shyam J., 1994. "Privatization: A Market Prospect Perspective," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 5(1), pages 53-104, March.
    20. Nicolai J. Foss & Peter G. Klein, 2004. "Entrepreneurshoip and the Economic Theory of the Firm Any Gains from Trade?," DRUID Working Papers 04-12, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    21. Ennio E. Piano, 2021. "Organizing high-end restaurants," Economics of Governance, Springer, vol. 22(2), pages 165-192, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:ecinqu:v:25:y:1987:i:1:p:103-16. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/weaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.