“The Boundaries of the Firms for Human Capital Intensive Industries” by Eric CHOU
Chinese University of Hong Kong
This paper explores the role of firm boundaries in human capital intensive industries, an issue that can not be addressed by the existing property rights approach of the theory of the firm. We argue that firm boundaries can work as information barriers that blurs employee's individual outside identity. We show that having multiple persons work as one firm is more efficient than having them work as independent firms when there exists substantial externality in their actions.