ARC Internal Seminar with Xin Li

The nature of the firm: A relationship-based theory

Torsdag, 26 november, 2009 - 12:30 to 14:00

The nature of the firm: A relationship-based theory

by PhD student Xin Li, Asia Research Centre

This paper is intended to propose a relationship-based theory of the firm (R'BT), an alternative to the transaction cost theory. The R'BT takes relationship disharmony (rather than transaction costs) as its basic unit of analysis of the nature of the firm, and argues relationship disharmony derives from conflict of interests, a problem faced by any human organizations; to reduce the conflict of interests, the best way is to harmonize relationships by mutually accommodating or internalizing the other party's interests into its own consideration; the degree of harmony or disharmony in the relationships will in turn determine the performance of the organization in question. This paper provides a completely different explanation from the transaction cost economics when addressing issues such like the existence, boundary and internal organization of the firm. Also discussed are its implications for organizational management and economy.

Keywords: theory of the firm, transaction cost, relationship, harmony, Confucian

Paper attached below.

 The Asia Research Centre Internal Seminars is a series of seminars to share knowledge among members. To build up a lively and commited research community, members of the ARC network and other interested scholars will present and discuss their current research at the seminars.

The ARC Internal Seminars are mainly for researchers affiliated with the Asia Research Centre, but other interested scholars are most welcome to attend.

 Please note: As the centre will host a small lunch for the participants, should you wish to attend please inform us about your attendance no later than two days before the seminar at

Sidst opdateret: Communications // 17/10/2012