Web Exclusive: Read More About Contracting for Innovation
Read the full story: Connecting the Circuits
"No matter how sharp the intuitions of experienced judges, courts unguided by a theoretical framework are prone to err."
—Professors Gilson, Sabel, and Scott in Rules for Growth
"Rapidly innovating industries are not behaving the way theory expects."
—Professors Gilson, Sabel, and Scott in their first article on contracting for innovation
The errant theory to which [the professors] referred, based on research by Ronald Coase, says that transaction costs—annoyances like attorney and accountant fees and time-wasting negotiation—determine how companies organize work.
Read the full text of Nobel prize–winner Ronald Coase's 1937 article "The Nature of the Firm."
As recently as 2006, [Coase] wrote an article rebutting latter-day interpretations of his much-cited 1937 paper "The Nature of the Firm," which helped win him the Nobel Prize in economics in 1991.
Read Coase's 2006 article, "The Conduct of Economics: The Example of Fisher Body and General Motors," from the Journal of Economics & Management Strategy here.
[T]he professors wrote a second article for the Columbia Law Review in October 2010 that instructed judges on how to enforce contracts for innovation. Their advice: Not too hard; not too soft.