The theory of the firm and its critics: a stocktaking and assessment

Includes bibliographical references."Prepared for Jean-Michel Glachant and Eric Brousseau, eds. New Institutional Economics: A Textbook, Cambridge, Cambridge University Press.""This version: August 22, 2005."Since its emergence in the 1970s the modern economic or Coasian theory of the firm has been discussed and challenged by sociologists, heterodox economists, management scholars, and other critics. This chapter reviews and assesses these critiques, focusing on behavioral issues (bounded rationality and motivation), process (including path dependence and the selection argument), entrepreneurship, and the challenge from knowledge-based theories of the firm

Incentives in Academics: Why Is There Tenure?

This paper models an academic department as an internal labor market. The major problem facing the university administration is t o ensure that members of its departments are willing to hire the best possible candidates. Academic tenure is seen to be a necessary condi tion for this. The analysis is also consistent with other aspects of the academic environment including "tenure-track" appointments, contr act buy-outs, early retirement plans, and, when a budget crunch hits, the elimination of entire departments. The results extend in a sim ple way to other organizations in which members have an input into ov erall decisions. Copyright 1988 by University of Chicago Press.