Rethinking the Nature of the Firm: The Corporation as a Governance Object
35 Seattle Law Review 1269-1298, 2012
33 Pages Posted: 8 Sep 2012
Date Written: September 8, 2012
This article attempts to bridge two discourses — corporate governance and contract governance. Regarding the latter, a group of scholars has recently set out to develop a more comprehensive research agenda to explore the governance dimensions of contractual relations, highlighting the potential of contract theory to develop a more encompassing theory of social and economic transactions. While a renewed interest in the contribution of economic theory for a concept of contract governance drives one dimension of this research, another part of this undertaking has been to move contract theory closer to theories of social organization. Here, these scholars emphasize the “social” or “public” nature of contracts to return to a critical reflection on the classical model of one-off, spot contracts for an exchange of goods or services. The inspiration for this enterprise comes from corporate governance debates over the last two decades, which focused on competing claims of “convergence” versus “divergence” as part of an ambitious investigation into universal standards, the “end of history,” and the underlying “varieties of capitalism.” Meanwhile, the fundamental transformation of the state, which domestically and transnationally forms the background of the growing prominence of contract as a governance tool, must be seen as the other dimension of a renewed interest in “governing contracts.” This article places the corporation at the intersection of these contentions by drawing out the promise of rereading the nexus-of-contract model of the corporation from the perspective of relational contract theory.
Keywords: Corporation, Nature of the Firm, Contract Governance, Corporate Governance, Relational Contract, Governance
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