Bounded rationality prevents humans from tracing all action plans that could, in principle, be imagined. In the present paper, individuals' partly socially-shaped cognitive frames explain which action plans do gain attention. This provides the basis for a new entrepreneurial theory of the firm where `business conceptions,' which underlie any entrepreneurial venture, play a key role. Coordinatio...

We explain why European trucking carriers are much smaller and rely more heavily on owner-operators (as opposed to employee drivers) than their US counterparts. Our analysis begins by ruling out differences in technology as the source of those disparities and confirms that standard hypotheses in organizational economics, which have been shown to explain the choice of organizational form in US i...

This paper analyses the determinants of outward processing (OP) trade; specifically, imports of intermediates subsequent to processing abroad. A model where firms choose between OP and importing intermediates directly from a third country (generic offshoring, GO) predicts higher tariffs, lower monitoring costs and higher quality make OP more likely, while better institutions and rule of law abr...

We analyze in an incomplete contracts model whether a supplier should be integrated if in addition to his investment level he chooses the degree of relationship specificity. A basic trade-off arises: While non-integration leads to higher investment incentives, potential synergies are foregone. Hence, integration can be optimal even though only the supplier makes an investment decision. This may...

This paper examines the impact of the outsourcing of production on the volume and composition of the home country’s research and development. We find that outsourcing decreases the process R&D of the multinational firm in large markets when it only conducts process R&D (the substitution effect between outsourcing and process R&D). Outsourcing tends to emerge as a complementary factor to product...

We examine whether firms pursue target board structures. Using a broad panel from 1991–2003, we find that board changes are frequent, with two-thirds of firms changing board size or independence during a two-year period. Board changes are associated with changes in firm-specific fundamentals. The rate of change is positively associated with the benefits of effective boards and negatively associ...

We often use delegation as a commitment device if a government faces problems of timeinconsistency. McCallum (1995, AER P&P) challenged this practice, claiming that delegation merely relocates the commitment problem but does not solve it. In a model where delegation and specific policies are subject to the same commitment technology it is shown that McCallum’s conjecture holds if optimal ex-ant...

Recent papers show that imperfect property rights to a natural resource–a sector-specific factor– can be a source of comparative advantage. In these models, weaker property rights attract labor–the only mobile factor– to the resource sector, increasing the country’s comparative advantage for that sector. If capital in addition to labor is mobile, and if the benefits of capital are non-excludabl...

This paper considers the impact of community participation on outcomes of development projects. It Ž rst offers a theoretical framework for participation by using the property rights literature to model how participation in an activity, in addition to involving information exchange, also results in greater in uence in the activity. The model predicts that community participationmay not always ...

We explore the dynamic evolution of property rights regimes in R&D alliances using the incomplete contract approach pioneered by Grossman, Hart, and Moore. In contrast to the standard analysis, the productive asset is an excludable public good such as a patent. Moreover, both firms can decide whether to disclose their know-how and invest effort. Know-how that has once been released cannot be co...