Holmstrom Roberts (1999) - The Boundaries Of The Firm Revisited

Reference(s)

• Holmstrom, Bengt and John Roberts (1999), "The Boundaries Of The Firm Revisited," Journal of Economic Perspectives, Vol. 12(4), Pages 73-94 pdf

Abstract

Why do firms exist? What is their function, and what determines their scope? These remain the central questions in the economics of organization. They are also central questions for business executives and corporate strategists. The worldwide volume of corporate mergers and acquisitions exceeded $1.6 trillion in 1997. It is hard to imagine that so much time, effort and investment bankers' fees would be spent on adjusting firm boundaries unless there was some underlying economic gain. Indeed, the exceptional levels of merger and acquisition activity over the past two decades are a strong indication that economically significant forces do determine organizational boundaries.

Reference(s)

• Holmstrom, Bengt (1999), "The Firm As A Subeconomy", Journal of Law, Economics, and Organization Vol. 15, Issue 1, pp. 74-102. pdf