The paper is a study of barriers to communication in terms of agents' incentives to search for and communicate complementary information. In particular, I look at the value of commitment by comparing game forms in which a contract is negotiated prior to, versus after, search and communication. I will use the names "firms" and "markets", respectively, for these two game forms. The comparison depends on three effects. (1) The bargaining power effect: Since the decision to communicate reveals information about preferences, it implies a loss of bargaining power when the players negotiate ex post. This hurts the incentives to communicate and therefore the incentives to search. (2) The incentive transfer effect: If the gains from adjustment accrue unevenly, ex ante negotiation may leave one of the players without incentives to communicate and search. With ex post negotiation, that player can bargain for a share of the gains. (3) The bargaining efficiency effect: The negotiation process itself may be more efficient ex post because more information has been revealed. The net effect depends on the magnitude of the gains and their accrual. If negotiation normally leads to agreement, it is better done ex ante in cases where adjustments yield smaller, more evenly accruing gains. When gains are larger and accrue less evenly, ex post negotiation implements more communication and search

We look at a principal-agent model in which the agent has to perform an action, the difficulty of which is better known ex interim than ex ante. We compare two contracting regimes; one with commitment to an ex ante negotiated contract, and one with an ex interim negotiated contract. The ex ante contract can not be too steep, but attempts to negotiate a steeper ex interim contract may result in bargaining failure. We find that the relative efficiency of the two contracting regimes depends on the nature of the differences between tasks. In a dynamic version of the analysis, we further find that the comparison depends on the frequency with which new tasks are needed. The argument can be interpreted as an analysis of the tradeoff between weak incentives in the firm and the possibility of unsuccessful negotiations in the market

This paper discusses the formation of organizational knowledge of boundedly rational Economic agents and studies the necessity of hierarchical coordination of economic agents. We consider a firm that consists of a management and N subordinated shops. The problem of the firm is to observe a signal from the environment, forecast future demands and distribute the correct amount of a good to each of the shops. There are two uncertainties involved: The aggregate demand follows a Brownian motion and the distribution of the aggregate demand to the shops varies stochastically. At the beginning of the simulation the agents are ignorant about their actions. They learn how to choose their actions by probabilistic update. We study the importance of the organizational structure as a function of the uncertainties the agents are facing. It turns out that there is no need for a management iftheenvironment is purely deterministic or if only the aggregate demand varies stochastically. However, if the disaggregate environment is stochastic, the management as a coordinator for the shops becomes important. / Series: Working Papers SFB "Adaptive Information Systems and Modelling in Economics and Management Science"

Using a novel deal/patent dataset from 1986 through 2005, this paper explores the role of knowledge flow on the firm boundary decision. I use patent self-citations and cross-citations from the United States patent database as a proxy to measure knowledge flow between and within firms. When analyzing partnerships (strategic alliances and joint ventures), I find that firms with a higher percentage of patent self-citations are more likely to choose a more integrative boundary. Additionally, the level of integration chosen is positively related to the frequency of cross-citations between firms following the formation of the partnership. Firms in partnerships also see higher abnormal returns around the partnership announcement date when their partnering firm has a higher percentage of self-citations. I find weak to no evidence that these results hold for mergers/acquisitions. Overall, the evidence suggests that knowledge assets do play a pivotal role in the firm boundary choice.

My thesis contributes to the firms and trade literature, both theoretically and empirically, focusing on the export participation strategy by firms in one particular market, introducing products sequentially. I illustrate differences in export dynamics between firms according to their experience in that destination, and move further in my analysis by exploring how fast that experimentation is. I am particularly interested in the influence of trade liberalisation, as well as differences between products in terms of production effciency. Chapters 3 and 4 present a two-period analysis on firms' sequential exporting strategy to a single destination. Chapter 3 shows theoretically, inspired by Albornoz et al. (2012), that new exporters in a market tend to grow faster in that destination than expert exporters, both at the intensive and extensive margin, across products; but those newcomers are also more prone to exit that business, while trade liberalisation, as well as the focus on \core competence" products, helps new exporters to remain in the market and continue experimenting. With a rich dataset of Peruvian export transactions to the USA market, Chapter 4 backs most predictions from the theory empirically. In Chapter 5, I go deeper into the sequential exporting strategy with a theoretical framework, based on Nguyen (2012), to explain how quickly exporters in one market move from one product to another. I find, supported by empirical evidence, that trade liberalisation accelerates firms' experimentation in that destination.

This thesis examines the impact of CEO compensation, analysts' characteristics, earnings management and country governability on the accuracy of analysts' earnings forecasts. In summary, the thesis includes the following chapters: Firstly, Chapter 2 examines the interplay between CEO compensation and analysts' forecast errors over different forecasting horizons. A unique analyst-level sample for U.S. firms covering the period between 1992 and 2015 has been employed. Evidence obtained from this analysis suggests that CEO compensation, measured by various forms such as restricted stock holdings and stock ownership would correct for optimism in analysts' earnings forecasts, whereas CEO bonus and sensitivity to changes in firm's value would exacerbate analysts' optimism. Results also show that CEO compensation would augment the effect of earnings management on analysts' forecasts with CEO bonus being of importance. The findings of this chapter also indicate that analysts' characteristics and regulation can affect earnings forecasts. Next, Chapter 3 investigates the effect of governance on analysts' earnings forecasts. By employing a comprehensive dataset of 911 U.S. firms for the period 2000 – 2014, this chapter demonstrates a strong positive association between the government effectiveness and analysts' earnings forecasts. We extend this analysis employing corporate governance variables such as CEO equity incentives and CEO power, whilst a possible cross-term association between governability and the former has also been examined. This chapter explores further the effects of earnings management on analysts' forecasts accuracy documenting a negative impact of the former on the latter. Lastly, underlying causality strands and endogeneity issues are addressed opting for a flexible panel VAR model. Finally, Chapter 4 presents evidence of the effects of corruption on the accuracy of analysts' forecasts. Using a global sample, this chapter reveals that analysts face greater difficulty in forecasting earnings in advanced and emerging countries due to the detrimental effect of corruption. Interestingly, findings suggest that for firms located in developing countries, corruption enhances analysts' accuracy. This chapter also shows that the effect of earnings manipulation on the accuracy of forecasts is aggravated in the presence of corruption, whilst greater country freedom would enhance analysts' accuracy when corruption is present.

This paper provides an overview on the evolutionary theory of the firm. The specific feature of the evolutionary approach is that it explains the adaptive behaviors of firms through the tension between innovation and selection. It is suggested that the evolutionary theory can provide a useful basis for a theory of the firm which is concerned with change over time and development. (author's abstract) / Series: Working Papers Series "Growth and Employment in Europe: Sustainability and Competitiveness"

Research on the organization of systems industries generally takes the boundaries of platforms to be exogenously-determined artifacts, given by the nature of technology. This paper studies whether platform boundaries are responsive to economic incentives by studying variation in platform boundaries in competing systems in mobile computing. Using detailed descriptive evidence and systematically collected databases of integration patterns, I find that platform boundaries in this industry could be understood as established in response to three primary goals: 1) to consolidate control around assets that conferred the power to regulate production in the system as a whole; 2) to integrate economic activities that risked coordination problems; 3) to open platform boundaries in response to interactions with market competition.

The purpose of this dissertation is to challenge the predominant theories of the firm in economics by demonstrating that the firm can only be properly understood if the importance of cooperation based on trust and loyalty, and the ability of the firm to achieve that cooperation by influencing the social foundations of behaviour, is appreciated. Chapter 1 demonstrates that neglecting this ‘social nature’ of the firm renders the predominant theories incomplete and incompatible, with contract-based theories clinging to a rigid model of behaviour and competence-based theories failing to develop the social foundations of knowledge. The second chapter constructs a theory of the firm that rectifies these shortcomings by maintaining that the firm fulfils its purpose of developing and applying productive knowledge by achieving cooperation, which, along with the dual function of achieving coordination, involves a combination of organisational structures and organisational culture. In Chapter 3, this theory reveals that, contrary to deterministic views on organisation and economic development, a range of organisational forms are possible for any given technology or culture, and that organisation in fact shapes technology and culture. In Chapter 4, the dissertation shows that, contrary to the predominant theories of the firm, cooperative firms may have an inherent advantage in achieving cooperation based on trust and loyalty, and in maintaining that cooperation while also achieving the coordination required for advanced technologies. Although this ability may be suppressed by the prevailing institutional environment, the case of Mondragón, discussed in Chapter 5, demonstrates that it can be activated by innovations such as cooperative groups and ‘second-tier coops’. Although Mondragón’s success has been attributed to the uniquely cooperative traits of Basque culture (as opposed to its structural innovations), Chapter 6 demonstrates through primary and secondary research that Mondragón has in fact been used as model across the globe.

Este trabalho analisa o papel dos contratos relacionais na decisão entre a subcontratação e a integração vertical e as condições que tornam estes contratos factíveis. As proposições de Baker, Gibbons e Murphy (2002 – a partir daqui apenas BGM) e de Dixit (2004) são testadas e os resultados confirmam as principais hipóteses. Empresas podem operar através do mercado ou com um alto grau de integração vertical. No segundo caso as empresas evitam o que se chama de problemas de hold up – isto é, quando defrontada com a ocasião de cumprir os termos acertados no início da operação, a outra parte pode exigir termos de negociação mais onerosos, mas não tão onerosos a ponto de a primeira parte preferir abandonar os investimentos específicos que fez e negociar com terceiros. Se todos os ativos pertencerem a uma única empresa, tais problemas não existiriam, e isto explicaria a segunda opção, a operação em um alto grau de integração vertical (Williamson, 1985). Esta explicação, entretanto, não esclarece por que algumas empresas operam em redes, arranjos onde as partes permanecem como entidades economicamente separadas, mas com relações de longo prazo. A Toyota e outras empresas japonesas de automóveis são o exemplo típico desta situação (Holmström, Ronerts, 1998). Os contratos relacionais ajudam a contornar as dificuldades das contratações formais, independentes de essas advirem de problemas de holdup ou de outra fonte. Um contrato relacional permite que as partes utilizem o conhecimento detalhado que possuem de sua situação específica e que se adaptem também às novas informações quando essas se tornam disponíveis (MacNeil, 1978). Existe uma ressalva, entretanto: os contratos não poderão ser garantidos por uma terceira parte e por isso devem ser auto-executáveis, isto é, o valor das relações futuras deve ser o suficiente para que nenhuma das partes renegue o contrato (BGM, 2002, Dixit, 2004). Mas o que faz alguns contratos falharem enquanto outros são bem sucedidos? BGM examinam o problema à luz da teoria de contatos relacionais e da teoria de direitos de propriedade. De acordo com esses autores, a integração vertical afeta a tentação das partes de renegar um dado contrato relacional. Então, em um dado ambiente econômico e institucional, um contrato relacional pode ser factível sob integração vertical e não sê-lo para transações através do mercado – e isso será particularmente verdade quando encontrarmos uma grande variação dos preços alternativos dos ativos transacionados nestes contratos. Esses ativos não estão restritos apenas aos físicos, e podem ser o direito à propriedade de um bem ou a discricionariedade que um trabalhador subcontratado tem sobre como alocar o seu tempo na execução do trabalho contratado (Hart, 1992). Dixit (2004) discute o papel da sinalização e dos contratos formais na manutenção desses contratos relacionais. Partindo dessas hipóteses e com base na literatura de incentivos, as proposições de BGM e de Dixit são testadas. A decisão das empresas entre contratar serviços legais através do mercado ou manter um departamento jurídico próprio podem ser explicadas principalmente pela variação dos preços dos ativos (nesse caso, o valor dos serviços legais, que pode ser expresso pela maior ou menor competição no mercado de trabalho – Bertrand, 2004), mas também pelo ambiente institucional, particularmente pelo tempo necessário para se obter uma decisão da justiça e a variação do resultado esperado. Os resultados dos testes empíricos apontam para a confirmação da hipótese principal e sugere algumas linhas de pesquisa. / This work analyzes the role of relational contracts in the decision between subcontracting or vertical integration and the conditions that make these contracts feasible. The propositions of Baker, Gibbons and Murphy (2002 – since now, just BGM) and Dixit (2004) are tested and the results are supportive to the main propositions. Firms can conduct their operations through the market or can operate in a high degree of vertical integration. In the second case firms avoid what we call “holdup" problems - that is, when it comes time to work out the terms of the deal left open at the outset, the other side might demand terms of trade that are onerous but not so onerous that the first part would willingly forfeit the value of those transaction-specific assets by taking its business elsewhere. If all this assets belongs to one firm, there is no problem at all, and that explain this second choice, the vertical integration (Williamson, 1985). This rationale, however, don’t explain why some companies operate through networks, arrangements where the parties stay economically separate entities but having long-term relationship. Toyota and others Japanese Automobile Companies are the typical example (Holmström, Roberts, 1998). Relational contracts help circumvent difficulties in formal contracting no matter if these difficulties come from holdup problems or from another source. A relational contract allows the parties to utilize their detailed knowledge of their specific situation and to adapt to new information as it becomes available (MacNeil, 1978). There is a caveat, however: they cannot be enforced by a third party and must be self-enforcing, that means, the value of the future relationship must be sufficiently large that neither party wishes to renege (BGM, 2002, Dixit, 2004). But what makes some contracts to breakdown until others goes well? BGM examine the problem in the light of relational contracts and property rights theory. According to them, integration affects the parties’ temptation to renege a given relational contract. Thus, in a given environment, a desirable relational contract might be feasible under integration but not under nonintegration – and this will be particularly true when we face a wide varying alternative prices of an asset. These assets are not restricted to physical ones, and can be even a legal title to a good or the discretion that a outsourced worker have about how to allocate his time doing the job (Hart, 1992). Dixit (2004) discuss the role of signalization and formal contracts in the maintenance of these relational contracts. Departing from these hypotheses and with ground on the incentive literature, the BGM’s and Dixit’s propositions were tested. The companies’ decision between to contract law services in the market or to employ an internal legal department can be explained mainly by the variation on assets value (in the case, the value of legal services, expressed by a greater competition degree – Bertrand, 2004), but also by the institutional environment, particularly the time to reach a decision and the variability of the expected result. The results of the empirical research confirm the main assumption and point some lines of research in the relational contracts field.