STEPS TOWARDS A THEORY OF THE MANAGED FIRM (TMF)

Abstract

In 1937 Ronald Coase posed several killer questions about the nature of the firm; why (a) do they exist, (b) are their boundaries where they are, (c) are their internal arrangements as they are, and (d) is their performance so varied. These questions precipitated new ‘theories of the firm’ - principal-agent theory, transaction cost analysis, and so on. In this paper I turn these questions around and into a critique of ‘rational man’ theorizing. I argue the fundamental nature of the firm is as a ‘managed’ context for the exercise of imagination and judgment.