This preview shows page 1. Sign up to view the full content.
Unformatted text preview: d create a system in which:
instead of facing perfectly competitive markets for factors
of production—labour, capital, and intermediate products—the firm is related to other agents—the worker, the
investor, and the supplier—through long-term relational
contracting, and agents on both sides of various relationships reciprocate economic benefits on a long-term basis.
(ibid., p. 27) In other words, the firm becomes a ‘nexus of
In the field of resource management, a system of
seniority wages and promotions based on the outcome
of rank tournaments provides incentives for workers
to invest in firm-specific learning and to exert effort.14
This internal labour system is also supported by an
underdeveloped external labour market which reduces the possibilities for able workers to leave
early. This kind of labour system is closely linked to
the team-based production method which Aoki
(1988) claims gives Japanese firms strength in the
horizontal exchange of information, rather than the
vertical exchange of...
View Full Document
This note was uploaded on 02/03/2014 for the course ECON 204 taught by Professor Devero during the Summer '13 term at American University of Sharjah.
- Summer '13