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Comparative Analysis of Organizational Forms in the Software Industry and Legal Services

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  • Alper Duman

    (Department of Economics, Izmir University of Economics)

Abstract

Law firms are expected to be controlled by the workers because given the difficulty of monitoring labor, the transaction cost would be very high and the essential human capital investment would be lacking in a form controlled by the capital suppliers. Expectations are confirmed by the data. However, following the same reasoning one can easily suggest that software firms should also be controlled by the labor suppliers given the similar difficulty of monitoring labor and essential human capital. As in a law firm, the software firm uses very generic capital such as offices, computers and programming languages. Moreover, the human capital of the software developer is indispensable and highly firm specific. While we observe widespread worker control in terms of partnerships in legal service industry, the majority of the software firms are not controlled by the labor suppliers: instead they are controlled by the capital suppliers.

Suggested Citation

  • Alper Duman, 2009. "Comparative Analysis of Organizational Forms in the Software Industry and Legal Services," Working Papers 0903, Izmir University of Economics.
    • Handle: RePEc:izm:wpaper:0903
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    More about this item

    Keywords

    Organizational forms; Asset specificity;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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