In addition to AALS this past weekend, the American Economics Association held its own annual meeting in Chicago.   Over at the Organizations and Markets blog, Peter Klein has posted links to noteworthy AEA papers on organizations.  These include a paper on Firm Boundaries in the New Economy:  Theory and Evidence, by Krishnamurthy Subramanian.  "Subbu," a co-author of mine on a couple of projects, is a new, up-and-coming finance professor at the B-school here at Emory (Goizueta).  Here's what his paper is about:

The theory in this paper highlights the trade-offs that knowledge intensive firms confront when deciding among mergers/acquisitions, joint ventures, alliances, and arm’s length contracts.  I define a knowledge intensive firm as a collection of the knowledge assets that it owns and the agents who have full access to such assets. Therefore, boundary decisions between two firms are modeled using access to knowledge and ownership of knowledge. Modeling boundary choices using ownership cannot provide optimal incentives since ownership affects incentives asymmetrically, and ownership can encourage over-investment. In contrast, modeling the boundary choices using access and ownership can provide first best incentives since access and ownership complement each other in providing incentives: access affects incentives symmetrically while ownership affects them asymmetrically. The theory explains why some mergers/ acquisitions in knowledge intensive industries are successful while others fail and in what situations an alliance or a joint venture dominates a merger/ acquisition and vice-versa. Using a sample of alliances and joint ventures in the high technology industries, I provide empirical evidence to support the theory.

Conferences, Economics, Law & Economics, Organizational Theory | Bookmark

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