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The Modern Firm, Corporate Governance and Investment
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This book is a collection of papers from two workshops held in Jönköping,
Sweden, in 2006 and 2007. The theme of the workshop in 2006 was
‘Corporate Governance and Investment’ in a wide sense. Topics of papers
could be: to describe and analyse the ownership and corporate governance
structure of a given country; to make a comparative analysis of governance
structures in different countries; to study corporate governance and
performance in different types of firms (for example, family and non-family
owned firms); to explain the levels of investment of companies; and to draw
policy implications about how capital markets might be altered to improve
the allocation of capital and the overall performance of companies. The
workshop arranged in Jönköping was one in a series of annual meetings of
a European Corporate Governance Network. The network’s first meeting
was at Cambridge University (UK) in 1998 by initiative of Professor
Dennis C. Mueller and Professor Alan Hughes. Since then several meetings
have been organized. The 2006 workshop in Jönköping was the seventh.
The second workshop, held in Jönköping in September 2007, was the
first of its kind inspired by the emerging literature on the economics of the
firm. The background to the workshop was the revolutionary development
of the theory of the firm that has taken place during the last 35 years. In
spite of all the progress in the field, traces of the new developments in micro economic
and industrial organization textbooks are scant. The comments
made by Ronald Coase in 1971 at an NBER meeting about a non-existent
treatment of organization of economic activities within and between firms
in industrial organization textbooks are still valid.
But in other ways the situation today is quite different from 35 years ago.
At the same NBER meeting Coase also commented upon his celebrated
article from 1937 (‘The Nature of the Firm’) with the words ‘much cited
and little used’. This comment turned out to be a truthful description of the
situation in 1971, but not true for the rest of the 1970s. In the same year as
the NBER meeting (1971) Oliver E. Williamson published a seminal article
in the American Economic Review, which was the start of a large number of
books and articles that, like Coase, centred on the importance of transaction
costs in analyses of economic organizations. A new field of transaction
cost economics emerged.
Some other articles from which new fields of research have emanated were also published in the 1970s. The team production and the property
rights perspective introduced by Alchian and Demsetz (1972) and the
corporate governance perspective in Jensen and Meckling (1976) have
been especially infl uential. From the 1980s the evolutionary theory of the
fi rm presented by Nelson and Winter (1982) and the new property rights
approach by Grossman and Hart (1986) have reshaped research in a
similar fashion.
These and other branches of the growing tree of the theory of the fi rm
were the sources of inspiration for the workshop on ‘The Economics of the
Modern Firm’.
The output from the two workshops is merged in this book under the
title The Modern Firm, Corporate Governance and Investment. To merge
contributions from the two workshops makes sense given the close connection
between the topics and papers presented at the workshops. For
example, several papers at the second workshop were on corporate governance.
In all, 14 papers from the two workshops have been selected, nine
from the second workshop and five from the first. The keynote addresses
of Oliver E. Williamson and Dennis C. Mueller at the second workshop
are the first two chapters after the introduction.
The participants at the workshops and the referees of the different
articles in this book have helped to improve the contents. We thank them
for their questions and comments. The workshops and the preparation of
this book were financed by Sparbankstiftelsen Alfa, Torsten and Ragnar
Söderberg´s foundation and CESIS (Center of Excellence for Science and
Innovation Studies). We are grateful for their support that allowed us to
engage in this research. We are also indebted to Ibteesam Hossain and
Maria Eriksson for excellent research assistance with this book.
Edward Elgar - Personal Name
978 1 84844 225 2
NONE
Corporate Governance
English
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