
Theories of the Firm
Code: 104676Credits: 6
| Degree programme | Type | Course |
|---|---|---|
| Business Administration | OB | 2 |
Contact lecturer
- Name :
- Miguel Ángel Garcia Cestona
- Email :
- miguel.garcia.cestona@uab.cat
Teaching staff
- Elisa del Sordo
- Pere Ortin Angel
- Damian Tojeiro Rivero
- Carles Gispert Pellicer
- Yulia Ponomareva Minchenko
Group languages
You can consult this information at the end of the document.
Prerequisites
There are no specific prerequisites, but it is recommended to have previously taken "Economia de l'Empresa I" or similar.
Objectives
This course presents the vision that economists have about the organizations and, in particular, the main theories related to the firm and normally identified in English under the term "theories of the firm" and that in the course we will denominate "Teories de l'empresa". The course initially develops an analytical framework, as simple as possible, which allows to present the research question(s) for each theory concerning the firms. Later, we compare the main ideas contained in the different theories presented during the course. The analysis of different investments, the contracts between the various participants and their effects on the creation of value will be detailed throughout the course, also including numerous examples from real companies and contained in the media.
Learning outcomes
- CM70 (Design organisational solutions within the framework of the company that contribute to social welfare.) Design organisational solutions within the framework of the company that contribute to social welfare.
- CM71 (Design efficient motivation policies within the framework of the company.) Design efficient motivation policies within the framework of the company.
- CM72 (Propose integrating projects with a social and environmental impact.) Propose integrating projects with a social and environmental impact.
- CM73 (Create multidisciplinary and multicultural teams, implementing new business projects.) Create multidisciplinary and multicultural teams, implementing new business projects.
- KM66 (Describe the main motivation systems available in companies.) Describe the main motivation systems available in companies.
- KM67 (Recognise market structures by identifying the possible competitors of companies and their way of competing with each other.) Recognise market structures by identifying the possible competitors of companies and their way of competing with each other.
- KM68 (Identify leadership styles conducive to adaptation to changing environments.) Identify leadership styles conducive to adaptation to changing environments.
- KM69 (Identify problems of economic efficiency and distribution of the wealth generated by companies.) Identify problems of economic efficiency and distribution of the wealth generated by companies.
- SM74 (Assess the potential impact of difficulties, prejudices and discrimination in short or long term actions or projects in relation to certain people or groups.) Assess the potential impact of difficulties, prejudices and discrimination in short or long term actions or projects in relation to certain people or groups.
- SM75 (Assess the interaction between the strategic formulation and the internal organisation of companies.) Assess the interaction between the strategic formulation and the internal organisation of companies.
Contents
Unit 1. Theories of the Firm: Investments, contracts and value.
1. Motivation. The problem of the Organization.
2. Firm versus Market
Advantages and costs of the market solution
3. Economic theories of the firm
• The firm as a nexus of contracts
• The Agency theory
• The Firm according to the Theory of Transaction Costs
• Property Rights
• Other Theories
4. Cases and examples
Unit 2: The presence of Specific Investments.
1. Specific investments and the related problems
2. Consequences of specific investments and possible solutions
Vertical integration, long-term contracts, outsourcing
3. The GM-Fisher Body case
4. The Iberdrola and BASF cases
5. Some numerical exercises and examples.
Unit 3: The presence of uncertainty in the firm, and risk assessment.
1. Motivation
2. Basic concepts and tools
Risk and lotteries
Variance, covariance, certainty equivalent
3. Examples of insurance contracts
4. Diversification of risk and the entrepreneur
5. Wealth, ownership structure and risk distribution.
6. Numerical exercises.
Unit 4: The presence of Information Asymmetries.
1. The concept of adverse selection, moral hazard and contracts.
2. Some common cases and the relevance of the problem.
3. Solutions to the adverse selection and moral hazard problem.
4. Numerical exercises.
Unit 5. The company, the entrepreneur and strategic decisions.
1. The founding entrepreneur(s) and the challenges.
2. Women, firm creation and management.
3. Ownership and financing: Entrepreneurial view, worker view and new organizational forms
Learning activities and methodology
| Title | Hours | ECTS | Learning outcomes |
|---|---|---|---|
| Case discussions and problem sets solving | 17 | 0.68 | CM70, CM71, CM72, CM73, KM66, KM67, KM68, KM69, SM74, SM75 |
| Lectures | 32.5 | 1.3 | CM70, CM71, CM72, KM66, KM67, KM68, KM69, SM74, SM75 |
| Tutorials and planned Activities | 6 | 0.24 | CM70, CM71, CM72, KM66, KM67, KM68, KM69, SM74, SM75 |
| Study course material, readings, exercises and suggested questions | 88 | 3.52 | CM70, CM71, CM72, CM73, KM66, KM67, KM68, KM69, SM74, SM75 |
The type of teaching planned for this course is a face-to-face teaching. Throughout the course the different sections of the program will be developed. There are materials and activities that students should work prior to the lecture sessions. They will serve to motivate and improve the student's understanding. Also for each topic a series of exercises and activities is proposed to reinforce the contents. A few hours per week (tutorials) will be offered to meet students on an individual basis and answer the questions and doubts students may have. For this course, the use of Artificial Intelligence (AI) technologies is permitted exclusively for support tasks, such as bibliographic or information searches, proofreading texts or translations, and preparing debates. For activities with exercises, two documents will be required: one without AI intervention and one with the help of AI. Students must clearly identify which parts were generated with this technology, specify the tools used, and include a critical reflection on how they influenced the process and the final result of the activity. Lack of transparency in the use of AI in this assessable activity will be considered a lack of academic honesty and may result in a partial or total penalty in the activity grade, or greater sanctions in serious cases.
In the second part of the course, flipped classes may occasionally be used as an innovative teaching methodology. The proposed teaching methodology may undergo some modifications according to the restrictions imposed by the health authorities on on-campus courses.
Assessment
Continuous assessment activities
| Title | Weight | Hours | ECTS | Learning outcomes |
|---|---|---|---|---|
| Final exam | 45% | 2 | 0.08 | CM70, KM67, KM69, SM74, SM75 |
| Midterm exam | 30% | 2 | 0.08 | CM70, KM67, KM69, SM74, SM75 |
| Problem sets delivery, case presentations, in-class debates | 25% | 2.5 | 0.1 | CM70, CM71, CM72, CM73, KM66, KM68, KM69, SM74 |
This subject/module does not offer the option for comprehensive evaluation.
There will be two elements in the final grade:
1) A continuous assessment of the activities suggested during the course. This ongoing evaluation will include a midterm exam (with a weight of 30%), delivery and discussion in class of problem sets and group activities, and an active participation in class discussions with the individual solving of cases and exercises (25% of the grade). Regular class attendance is required. The student must have participated/delivered/performed a minimum of 70% of the activities scheduled during the course to be able to average participation with the other components of the assessment.
2) A final exam (individual assessment and 45% of the grade). The exam will consist of both a practical part (problems) and a theoretical part. The student needs a minimum grade of, at least, 3/10 in the final exam. If the mark in the final exam is lower than 3, the maximum grade for the course will be 3.4.
All students are required to perform the evaluation activities. If the student's grade is 5 or higher, the student passes the course and it cannot be subject to further evaluation. If the student grade is less than 3.5, the student will have to repeat the course the following year. Students who have obtained a grade that is equal to or greater than 3.5 and less than 5 can take a retake exam. The lecturers will decide the type of the retake exam. When the retake exam's grade is greater than 5, the final grade will be a PASS with a maximum numerical grade of 5. When the retake exam's grade is less than 5, the final grade will be a FAIL with a numerical grade equal to the grade achieved in the course grade (not the retake exam's grade).
A student who does not perform any evaluative task is considered “not evaluable”. Therefore, a student who undertakes a continuous assessment component can no longer be qualified with a "not evaluable".
Calendar of evaluation activities: The datesof the evaluation activities (midterm exams, exercises in the classroom, assignments, ...) will be announced well in advance during the semester. The date of the final exam is scheduled in the assessment calendar of the School. "The dates of evaluation activities cannot be modified, unless there is an exceptional and duly justified reason why an evaluation activity cannot be carried out. In this case, the degree coordinator will contact both the teaching staff and the affected student, and a new date will be scheduled within the same academic period to make up for the missed evaluation activity." Section 1 of Article 115. Calendar of evaluation activities (Academic Regulations UAB). Students of the Faculty of Economics and Business, who in accordance with the previous paragraph need to change an evaluation activity date must process the request by filling out an Application for exams' reschedule
https://eformularis.uab.cat/group/deganat_feie/nou-reprogramacio-de-proves
Grade revision process: After all grading activities have ended, students will be informed of the date and way in which the course grades will be published. Students will be also be informed of the procedure, place, date and time of grade revision following University regulations.
Retake Process: "To be eligible to participate in the retake process, it is required for students to have been previously been evaluated for at least two thirds of the total evaluation activities of the subject." Section 3 of Article 112 ter. The recovery (UAB Academic Regulations). Additionally,it is required that the student to have achieved anaverage gradeof the subject between 3.5 and 4.9. The date of the retake exam will be posted in the calendar of evaluation activities of the Faculty. Students who take this exam and pass, will get a grade of 5 for the subject. If the student does not pass the retake, the grade will remain unchanged, and hence, student will fail the course.
The completion of assessment activities is subject to the provisions set out in this course guide and in the "Policy of the School of Economics and Business on the Detection of Irregularities during Assessment Activities", which regulates the conditions under which assessment tasks are conducted and the procedures applicable in cases where indications of irregularities are detected. Students are encouraged to consult the policy.
Irregularities in evaluation activities: In spite of other disciplinary measures deemed appropriate, and in accordance with current academic regulations, "in the case that the student makes any irregularity that could lead to a significant variation in the grade of an evaluation activity, it will be graded with a 0, regardless of the disciplinary process that can be instructed. In case of various irregularities occur in the evaluation of the same subject, the final grade of this subject will be 0". Section 10 of Article 116. Results of the evaluation. (UAB Academic Regulations).
The proposed evaluation activities may undergo some changes according to the restrictions imposed by the health authorities on on-campus courses.
Bibliography
The teaching team has prepared some materials for each unit. They will be available on "campus virtual". These notes also contain additional exercises and activities for each unit. In addition the following books will be used:
BIBLIOGRAPHY: (revised June 2026, editions updated to the latest availability)
DOUMA, Sytse and Hein SCHROUDER (2017): Economic Approaches to Organizations. Ed. Pearson, 6th edition.
FURTHER READING:
GIBBONS, Bob (2006): Four Formal(izable) Theories of the Firm, JEBO, 2005.
https://www.sciencedirect.com/science/journal/01672681
MILGROM, Paul y John ROBERTS (1993): Economía, Organización y Gestión de la Empresa. Ed. Ariel.
SALAS, Vicente (2007): El siglo de la empresa. Fundación BBVA.
https://elibro.net/es/lc/uab/titulos/60301
SERRA, Antoni (2003): Mercados, contratos y empresa. 2ª edición Servei de Publicacions de la UAB.
Software
No special software is needed to follow the course. It is sufficient to have a basic package that includes a spreadsheet, a text editor and a program for presentations.
Course groups and languages
The information provided is provisional until November 30. After this date, you will be able to consult the language of each group through this link. To access the information, you will need to enter the course CODE
| Type of teaching | Group | Language | Semester | Shift |
|---|---|---|---|---|
| (TE) Theory | 2 | Catalan | second semester | morning-mixed |
| (PAUL) Classroom practices | 2 | Catalan | second semester | morning-mixed |
| (TE) Theory | 4 | English | second semester | morning-mixed |
| (PAUL) Classroom practices | 4 | English | second semester | morning-mixed |
| (TE) Theory | 52 | Catalan | second semester | afternoon |
| (PAUL) Classroom practices | 52 | Catalan | second semester | afternoon |
| (TE) Theory | 60 | Spanish | second semester | morning-mixed |
| (PAUL) Classroom practices | 60 | Spanish | second semester | morning-mixed |