The Law and Economics of the Modern Firm : A New Governance Structure of Power Relationships

This paper aims to analyze the impact of recent industrial changes on the governance structure of power relationships. To achieve this goal, three insights are discussed. First, the definition of what a firm is in both economic theory and in corporate law is clarified. Second, the four core features of the modern firm — financialized industry, specific human capital, intangible assets and vertically networked activities — are all presented and dissected. Third, the paper analyzes the ways in which institutional changes have influenced power relationships in both the internal and external governance of firms. In conclusion, some policy implications and research orientations are presented