ABSTRACT
The discussion in the previous chapter suggests that firms derive their rationale from the fact that the organization of production matters for its results. By the same token, as the economy changes, and the production structure changes along with it, the advantages of different types of organization will also change. Still, with all the far-reaching economic changes that have occurred, the firm as a category (the modern business corporation) has remained a dominant form of economic organization. It is an institution that is unique to a market (“capitalist”) economy. In an important way the market economy owes its success to the business firm.
