How does opportunistic behavior influence firm size?

Arbeitspapier

This paper relates firm size and opportunism by showing that, given certain behavioral dispositions of humans, the size of a profit-maximizing firm can be determined by cognitive aspects underlying firm-internal cultural transmission processes. We argue that what firms do better than markets - besides economizing on transaction costs - is to establish a cooperative regime among its employees that keeps in check opportunism. A model depicts the outstanding role of the entrepreneur or business leader in firm-internal socialization processes and the evolution of corporate cultures. We show that high opportunism-related costs are a reason for keeping firms' size small.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Papers on Economics and Evolution ; No. 0618

Classification and Topics

• Classification: Wirtschaft ; Firm Behavior: Theory ; Organizational Behavior; Transaction Costs; Property Rights ; Microeconomic Behavior: Underlying Principles ; Corporate Culture; Diversity; Social Responsibility ; Optimization Techniques; Programming Models; Dynamic Analysis
• Subject: Theory of the Firm ; Transaction Cost Economics ; Cultural Evolution ; Opportunism ; Cooperation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Cordes, Christian ; Richerson, Peter J. ; McElreath, Richard ; Strimling, Pontus
• Event: Veröffentlichung
• (who): Max Planck Institute of Economics
• (where): Jena
• (when): 2006

Further information

• Handle: http://hdl.handle.net/10419/31856
• Last update: 10.03.2025, 11:42 AM CET