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Theory of the Firm from the view of New Institutional Economics and some Aspects of Institutional Framework Quality in the Czech Republic
Vitík, Robert ; Sirůček, Pavel (advisor) ; Soukup, Jindřich (referee) ; Žák, Milan (referee) ; Mlčoch, Lubomír (referee)
This doctoral thesis presents the basic and the main developments of the theories of the firm rooted in Transaction Cost Theory (TCT). Since the article of Coase on the nature of the firm, this question has been elaborated by number of economists. In my point of view, I would like to introduce the last theory developed by the representative of the school called New Institutional Economics. The theory concentrates on the role of institutions. We distinguish institutions formal and informal. The formal are laws, constitution, regulations, contracts and other written rules. The informal don't require a written form and they represent informal restrictions such as rules of behaviour, conventions, traditions and habits. The main purpose of the institutions in their various forms is mainly to protect property rights, enforce voluntary contracts and establish the physical and regulatory infrastructure to facilitate economic activity. Generally, we can call them the rules of the game. They inform us about possible economic behaviour and give us basic restrictions in this sense. First -- the theoretical part of this thesis, we can find a simple model with human asset specificity based on TCT. The main proposition is that transactions with a high level of asset specificity are more probably internalised because the firm handles better such transactions compared to the market, even if asset specificity increases the cost of coordination in the firm. If the hierarchy, for example through the formation of routines, may enhance the efficiency compared to the market, we can modify the previous model. The model developed according to a Knowledge-based view assumes that asset specificity reduces transaction costs inside the firm and increases transaction costs on the market. In the conclusion of the theoretical part is discussed the reply on first formulate hypothesis if the TCT is still compatible with a newer Capability and Knowledge based view. In my opinion based on the presented arguments and views, both theories are compatible, they can answer more questions and explain more issues. The last step links the aforementioned theories into one Theory of firm boundaries. In the practical part of the thesis, I bring basic arguments about the institutional framework quality in the Czech Republic. These arguments rely on the latest studies of the international institutions such The Transparency International, The Heritage Foundation, The Kurtzman Group and mainly The World Bank. Studies reveal certain weak arrangements concerning for example the number of procedures when starting a business, complicated construction permits, rigidity of working hours, time-consuming and administrative demanding tax system, duration of judicial process which results in ineffective contract enforcement and mainly poor protection of property rights. Taking these disclosures into account we have to say that emergent transaction costs are enormous. These transaction costs influence negatively the competitiveness of the firms and the whole Czech economy. Therefore a negative response to the second hypothesis relating to the quality of the institutional framework in the Czech Republic.
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