A Relationship-based Theory of the Firm: A Chinese Perspective

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    Abstract

    In this paper, I argue that all the existing theories of the firm, i.e., the transaction cost, knowledge-based, and entrepreneurial theories, are insightful yet partial since they only deal with one or another possible situation in which the first ever firm came to exist. In addition, all of them have a common problem of buyer/entrepreneur/firm-centrism because they all ignore the role of employees in the formation of the firm. I argue, since they are complementary to each other, a new, comprehensive and integrative theory of the firm must be able to unify them with a consideration of employees. I propose a relationship-based theory of the firm (R’BT) as such a candidate theory. The R’BT places the employer-employee (or broader, firm-stakeholder) relationships at the centre of its whole theoretical framework and argues that the notion of relationship harmony is fundamental in explaining the nature of the firm.
    Original languageEnglish
    Place of PublicationFrederiksberg
    PublisherDepartment of International Economics and Management, Copenhagen Business School
    Number of pages20
    Publication statusPublished - 2010
    SeriesWorking Paper / Department of International Economics and Management, Copenhagen Business School
    Number1-2010

    Keywords

    • Theory of the Firm
    • Relationship
    • Harmony
    • Transaction cost
    • Entrepreneurship
    • Knowledge

    Cite this

    Li, X. (2010). A Relationship-based Theory of the Firm: A Chinese Perspective. Department of International Economics and Management, Copenhagen Business School. Working Paper / Department of International Economics and Management, Copenhagen Business School, No. 1-2010