search query: @author Hennart, J-F. / total: 8
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| Author: | Hennart, J-F. |
| Title: | Control in multinational firms: the role of price and hierarchy |
| Journal: | Management International Review
1991 : VOL. 31:SPECIAL ISSUE, p. 71-96 |
| Index terms: | MULTINATIONAL COMPANIES INFORMATION ECONOMICS CONTROL SYSTEMS PRICES HIERARCHICAL ORGANIZATIONS COSTS |
| Language: | eng |
| Abstract: | The control problem in multinational companies under an information economics perspective is examined. In the institutional framework of markets and firms the two coordinative or control mechanisms, pricing and hierarchy, are being analyzed. The price system and hierarchy are substitutes, with the price system utilized in firms to overcome the basic flaws of hierarchy. A theory is developed which explains both the advantages and the drawbacks of firms as ways to organize economic activities. The framework is based on transaction cost and agency theory, but differs from both to some extent. The full range of control mechanisms is considered. It is shown how these mechanisms can be combined so as to minimize organization costs. |
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