The Vertical Network Organization as a Specific Governance Structure : What are the Challenges for Incomplete Contracts Theories and What are the Theoretical Implications for the Boundaries of the (Hub-) Firm?

Departing from the seminal question that Coase raised in his 1937 work, this article discusses and assesses incomplete contracts theories' analyses of the firm's boundaries - notably transaction cost theory and the modern theory of property rights - by investigating the case of the vertical network organization (VNO). We perform a theoretical characterization and analysis of the functioning rules of the VNO to shed light on intra-network incentive provisions and coordination mechanisms. Our findings cast doubt on the role that hold-up considerations on the firm's boundaries play and allow us to question forms of power within the VNO. Finally, we focus on the theoretical implications of the emergence of the VNO. The legal nature of the firm does not match the economic definition of the VNO, which tends to treat the firm as a specific governance structure