Resource title

The nature of the firm - A relationship-based theory

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Resource description

This paper is intended to propose a relationship-based theory of the firm (R’BT), analternative to the transaction cost theory. The R’BT takes relationship disharmony(rather than transaction costs) as its basic unit of analysis of the nature of the firm, andargues relationship disharmony derives from conflict of interests, a problem faced byany human organizations; to reduce the conflict of interests, the best way is toharmonize relationships by mutually accommodating or internalizing the other party’sinterests into its own consideration; the degree of harmony or disharmony in therelationships will in turn determine the performance of the organization in question.This paper provides a completely different explanation from the transaction costeconomics when addressing issues such like the existence, boundary and internalorganization of the firm. Also discussed are its implications for organizationalmanagement and economy.

Resource author

Xin Li

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Resource language

eng

Resource content type

application/pdf

Resource resource URL

http://hdl.handle.net/10398/7828

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