When should expertise be shared in markets and when in …firms? Knowl-edge exchanges in the market involve less information about the quality ofthe provider's expertise, but facilitate good utilization of experts knowledge.In a …rm, management holds soft information about individuals...

The most striking difference in corporate-governance arrangements between rich andpoor countries is that the latter rely much more heavily on the dynastic family firm,where ownership and control are passed on from one generation to the other. We arguethat if the heir to the family firm has no...