March 21, 2007
Boulder Diary: Googleplex Edition
Posted by Victor Fleischer

Campus_2 I just returned from a fascinating visit with Brad Schell, founder of SketchUp, which was acquired by Google last year.  The Sketchup offices are now a mini Google-plex right here in Boulder, complete with exercise balls, lava lamps, massage chairs, a cafeteria ... and more importantly, about 60 creative googlers. 

The visit was part of my research on internal branding -- can contracts be used to shape the image of the firm in the eyes of employees and managers?  Can contracts shape corporate culture?  Is corporate culture reflected in the firm's contracts?  As Gordon explains, contracts can serve a number of purposes beyond mitigating opportunism.

As much as I'd like the answer to that question to be yes (cf. Brand New Deal), I'm not so sure now.  The longer I look at this question, the more puzzled I am by the absence of contractual mechanisms addressing corporate culture. 

We know that corporate culture is an important asset for an organization to cultivate and protect.  So why is this asset not protected somehow by contract?  Most acquisition agreements have pages of reps and warranties about assets far less valuable than culture.  With the exception of the Disney-Pixar merger agreement, however, I have found it hard to find contractual terms directly addressing culture.  Why?  Any ideas?  Is it that it's too hard to reduce the concepts to language?  Does writing down a policy somehow change or diminish its value?  Would communicating/interpreting/enforcing the policy drive up transaction costs within the firm -- arguably defeating, according to Coasean logic, a key reason the firm exists in the first place? 

Any ideas would be welcomed.  I'm hoping that if I let this project simmer on the back burner long enough, something interesting will emerge. 

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