Department(s)
Business Administration
Document Type
Article
Version Deposited
Submitted manuscript
Publication Date
2-12-2018
Keywords
theory of the firm, hierarchy, autonomy, law and economics, corporate governance
Abstract
An influential set of economic theories argue that the firm is a nexus of contracts that institute a hierarchy to overcome the problems of incomplete contracting in the market. However, the economic theory of the firm as a hierarchy violates the moral requirement to respect the autonomy of those who contract into the firm. The internal logic of the theory depends on a morally unacceptable abdication of a part of the employee’s capacity to set her own ends in the future. So a different theory is needed to understand the nature and purpose of the firm. The development of such a theory can benefit from business ethicists engaging with existing economic theories of the firm to explore concepts like contracts, agency, and property.
Publication Title
Business Ethics Quarterly
Volume
28
Issue
2
First Page
153
Last Page
173
DOI
10.1017/beq.2017.54
Recommended Citation
Lee J. Contracts and Hierarchies: A Moral Examination of Economic Theories of the Firm. Business Ethics Quarterly. 2018;28(2):153-173. doi:10.1017/beq.2017.54
Comments
Publication can be accessed at this link: https://10.1017/beq.2017.54