The­ory of the Firm

Course content

The course provides an introduction to the theories of the firm, including the modern microeconomics of firm organization and the theory and design of organizations. The particular focus is on the internal organization (rewards, the internal division of labor, internal communication, the allocation of authority, etc.) and the boundaries (contracts, ownership positions, alliances, etc.) of firms. The course surveys key ideas that are essential for understanding the internal and external organization of firms, such as asymmetric information, efficiency, incentive conflicts, property rights, specific assets, organizational structures and, organizational decision-making.  The course relates to a number of other courses at the FSM Program, perhaps particularly Strategic Management and Corporate Governance and Finance, and provides part of the foundation for these courses (e.g., transaction cost economics and principal-agent theory are important in both).

In terms of pedagogics, while the teaching is lecture-based, it is interactive, and interspersed with within-lecture exercises and between-lectures exercise classes.  Blended learning will be included to assist, for example, within-lectures exercises (e.g., students will be asked to access beforehand relevant case material, brief prepared tutorials, etc.). To reach continuous feedback aims, there will be a number of short within-lectures multiple choice tests to help students improve their comprehension of the material.