Investing in resources and dynamic bilateral contracting in an institutional context

This paper further develops a theory of the firm that conceptualizes firms in resource-investment terms. Drawing on the human capital literature and property rights and agency theories, it devises an approach for examining how as a consequence of investing and working, including making resources available to firms, underpinned by combinations of explicit and implicit contractual agreements, capital-owners and resource-owners enable firms. The benefit of this approach is that scholars are given the means to understand how isomorphic explicit and implicit contracting forms able to facilitate firms’ various activities emerge over time. They are also given greater scope to better understand how firms contribute to economic growth and economic and social development as a result of engaging in resource-investment activities.