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Two new theoretical approaches to measuring industry and firm performance
Author(s) -
Caswell Julie A.,
Cotterill Ronald W.
Publication year - 1988
Publication title -
agribusiness
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.57
H-Index - 43
eISSN - 1520-6297
pISSN - 0742-4477
DOI - 10.1002/1520-6297(198811)4:6<511::aid-agr2720040602>3.0.co;2-2
Subject(s) - competitor analysis , industrial organization , control (management) , principal–agent problem , agency (philosophy) , firm offer , theory of the firm , business , yield (engineering) , microeconomics , economics , market for corporate control , marketing , corporate governance , management , philosophy , materials science , epistemology , metallurgy , shareholder
This article discusses two leading theoretical approaches to understanding how firms operate in markets and the functioning of their internal organizations. Game theory is a microanalytic approach that offers a useful framework for organizing thinking about the factors that influence firm strategic conduct vis‐a‐vis its competitors. Agency theory is mainly concerned with market mechanisms, such as an executive labor market or market for corporate control, that may discipline firm management in the absence of ownership control. Both approaches can yield useful hypotheses for empirical testing of factors affecting industry and firm performance.