Working Paper Series
The Firm as a Competent Team
Abstract: Results from empirical studies of firm behavior are
synthesized into, a theory of the firm as a competent team. I demonstrate
the existence of a tacit organizational competence exercising a leverage on
the productivities of all other factors through selecting and allocating
competent people, thus earning a monopoly rent in the capital market.
The competence identified can only be fairly compensated through sharing in
firm value growth in the equity market, exhibiting undervaluation of prime
assets. Policies aimed at firm efficiency should improve the market
measurement function, including stimulating insiders to exhibit information
Keywords: Human capital; firm structure; factor compensation; efficiency; (follow links to similar papers)
JEL-Codes: D24; L23; (follow links to similar papers)
30 pages, December 1988, Revised February 1990
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