The V-Network Form: Economic Organization and the Theory of the Firm

19 Pages Posted: 9 Sep 2005

See all articles by David Gindis

David Gindis

University of Hertfordshire - Business School

Bernard Baudry

University of Lyon 2

Date Written: October 10, 2005

Abstract

In this paper, we characterize what we call the "V-network form," a vertical organization distinct from a horizontal network of firms, in which a "hub-firm" organizes and coordinates regular essential operations such as provision, production and distribution between legally independent entities. The hub-firm's economic problem is the provision of incentives to the parties in the network while coordinating their complementary capabilities or competences without recourse to equity ownership. We discuss the relation of this organizational form to the "firm versus market" typology and stress that the V-network form is not a "hybrid form." We argue that valuable insights for the theory of the firm may be gained from a thorough theoretical analysis of the V-network form. In particular, some of these insights may be used as an attempt to clarify the terms of the current debate between the contractual and competence theories of the firm. The approach also inevitably raises questions related to the legal apprehension of the V-network firm.

Keywords: V-Network Form, Organization of Production, Theory of the Firm, Law and Economics

JEL Classification: L22, L23, K

Suggested Citation

Gindis, David and Baudry, Bernard, The V-Network Form: Economic Organization and the Theory of the Firm (October 10, 2005). Available at SSRN: https://ssrn.com/abstract=795244 or http://dx.doi.org/10.2139/ssrn.795244

David Gindis (Contact Author)

University of Hertfordshire - Business School ( email )

Hatfield, Herts AL10 9AB
United Kingdom

Bernard Baudry

University of Lyon 2 ( email )

93 Chemin des Mouilles
69676 Bron Cedex
France

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