
Published online:
26 September 2013
Published in print:
10 April 2013
Online ISBN:
9780804783224
Print ISBN:
9780804758307
Contents
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OUTLINE OF THIS CHAPTER OUTLINE OF THIS CHAPTER
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Definitions of the Firm Definitions of the Firm
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Theories of Why Firms Exist Theories of Why Firms Exist
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The Business Value Axiom The Business Value Axiom
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Institutional Requirements for a Firm Institutional Requirements for a Firm
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WHAT IS A FIRM? WHAT IS A FIRM?
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Key Questions About the Firm Key Questions About the Firm
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The Neglected Definition of a Vital Concept The Neglected Definition of a Vital Concept
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A Common Definition of the Firm A Common Definition of the Firm
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Abstractions and Definitions from Economics Abstractions and Definitions from Economics
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Neoclassical Abstraction: The Producer Neoclassical Abstraction: The Producer
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Modern Neoclassical: Endogenous Entrepreneurs Modern Neoclassical: Endogenous Entrepreneurs
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A NEW DEFINITION OF THE FIRM A NEW DEFINITION OF THE FIRM
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Defining the Firm: Three Essential Attributes Defining the Firm: Three Essential Attributes
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Distinctions Between a Firm and Other Activities Distinctions Between a Firm and Other Activities
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Profit Motive for Its Investors Does Not Mean Profit Maximization Profit Motive for Its Investors Does Not Mean Profit Maximization
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Differences Among Definitions Differences Among Definitions
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Profit Maximization or Just Profit Motive? Profit Maximization or Just Profit Motive?
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Replicable Business Processes or Just Transactions? Replicable Business Processes or Just Transactions?
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COMPETING THEORIES OF THE FIRM: TRANSACTION COSTS AND RESOURCES COMPETING THEORIES OF THE FIRM: TRANSACTION COSTS AND RESOURCES
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The Transaction Cost Theorem The Transaction Cost Theorem
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The Other Coase Theorem The Other Coase Theorem
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The Resource-Based Theory of the Firm The Resource-Based Theory of the Firm
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COMPETING THEORIES: AGENCY, SCALE, AND TEAM COMPETING THEORIES: AGENCY, SCALE, AND TEAM
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Modern Agency Theory Modern Agency Theory
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Efficient Scale Theories Efficient Scale Theories
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Team Theories Team Theories
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THEORIES OF THE SUCCESS OF THE FIRM THEORIES OF THE SUCCESS OF THE FIRM
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Rationales for the Success of a Firm Rationales for the Success of a Firm
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Success Attributes and the Firm Success Attributes and the Firm
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INSTITUTIONAL REQUIREMENTS FOR A FIRM INSTITUTIONAL REQUIREMENTS FOR A FIRM
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The Institutions Necessary for Business and Investment The Institutions Necessary for Business and Investment
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Economics and Institutions: A Continuing Critique Economics and Institutions: A Continuing Critique
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Mathematics of the Firm and Institutions Mathematics of the Firm and Institutions
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THE BUSINESS VALUE AXIOM THE BUSINESS VALUE AXIOM
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Why Firms Have Business Value Why Firms Have Business Value
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The “Four Bars of Gold” Examples The “Four Bars of Gold” Examples
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Cite
Anderson, Patrick L., 'The Nature of the Firm', The Economics of Business Valuation: Towards a Value Functional Approach (Redwood City, CA , 2013; online edn, Stanford Scholarship Online, 26 Sept. 2013), https://doi.org/10.11126/stanford/9780804758307.003.0004, accessed 28 Apr. 2025.
Abstract
This chapter presents three competing definitions of the firm, including a common definition of any organization that has a profit motive, a modern neoclassical definition of a transaction institution whose incentives differ from those of its owners, and a new three-part definition. The elements of the new definition of the firm include an organization with a profit motive for its investors, a separate identity, and replicable business practices.
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