[maxlybbert]

Ronald Coase’s paper, “The Nature of the Firm,” compares companies with the alternative of everybody being an independent contractor cooperating with other independent contractors on individual projects. I think it’s an interesting thought experiment, and it focuses on why companies operate in a authoritarian way internally.

Occasionally, companies try to organize with market principles internally, with divisions charging each other for services performed. Sometimes it works. Sometimes it turns into Sears.