TY - JOUR
T1 - On the expansion of the market and the decline of the family
AU - Guttman, Joel M.
AU - Yacouel, Nira
PY - 2007/3
Y1 - 2007/3
N2 - Over the past two hundred years, large, modern firms have tended to replace small, family businesses. In parallel, the family has declined as a social institution. We suggest that these developments are interrelated. Because information of cheating in market transactions spreads only gradually in large markets, the reputation of the family firm could support contractual performance only in small, traditional markets. As markets grew in size, this reputational mechanism could no longer operate. The small, family firm was then replaced by the large, modern firm. This transition led to a decrease in the importance of the family.
AB - Over the past two hundred years, large, modern firms have tended to replace small, family businesses. In parallel, the family has declined as a social institution. We suggest that these developments are interrelated. Because information of cheating in market transactions spreads only gradually in large markets, the reputation of the family firm could support contractual performance only in small, traditional markets. As markets grew in size, this reputational mechanism could no longer operate. The small, family firm was then replaced by the large, modern firm. This transition led to a decrease in the importance of the family.
KW - Family
KW - Reputation
KW - Theory of the firm
UR - http://www.scopus.com/inward/record.url?scp=33947367728&partnerID=8YFLogxK
U2 - 10.1007/s11150-007-9003-4
DO - 10.1007/s11150-007-9003-4
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SN - 1569-5239
VL - 5
SP - 1
EP - 13
JO - Review of Economics of the Household
JF - Review of Economics of the Household
IS - 1
ER -