Four Formalizable Theories of the Firm
This paper by Robert Gibbons explores four fundamental theories of the firm, aiming to clarify their core tenets, distinctions, and potential for integration. It examines the rent-seeking, property-rights, incentive-system, and adaptation theories, tracing their intellectual origins and highlighting key contributions from prominent scholars. The essay formally models three of these theories and proposes an integrative framework to better understand their relationships, arguing for a unified perspective that considers both the costs and benefits of firm integration. Ultimately, the paper reflects on the challenges and importance of formalizing informal theories and suggests promising avenues for future research in organizational economics, emphasizing the need to consider hybrid governance structures and relational contracting.