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Property rights theory, transaction costs theory, and agency theory: an organizational economics approach to strategic management
Author(s) -
Kim Jongwook,
Mahoney Joseph T.
Publication year - 2005
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.1218
Subject(s) - transaction cost , theory of the firm , property rights , principal–agent problem , agency (philosophy) , economics , resource dependence theory , field (mathematics) , organizational theory , organizational field , internalization theory , database transaction , agency cost , microeconomics , property (philosophy) , industrial organization , business , institutional theory , sociology , management , computer science , corporate governance , social science , shareholder , philosophy , mathematics , epistemology , pure mathematics , programming language
Abstract Property rights theory has common antecedents with contractual theories of the firm such as transaction costs and agency theories, and is yet distinct from these theories. We illustrate fundamental theoretical principles derived from these three theories by analyzing the business case of oil field unitization. Theoretical principles and application of theory to oil field unitization are each summarized. From this, it is possible to see how property rights theory is well suited to explain business situations where inefficient economic outcomes persist. Additionally, property rights theory forges new theoretical connections with other branches of organizational economics, in particular, resource‐based theory. Copyright © 2005 John Wiley & Sons, Ltd.