Partnership firms, reputation and human capital
In human capital intensive industries where it is difficult to contract upon the training effort of skilled agents a socially suboptimal level of training may occur. We show how partnership organisations can overcome this problem by tying human and financial capital. Partnerships are opaque so that...
| Main Authors: | , |
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| Format: | Working paper |
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University of Oxford
2003
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| _version_ | 1797094036746534912 |
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| author | Morrison, A Wilhelm, W |
| author_facet | Morrison, A Wilhelm, W |
| author_sort | Morrison, A |
| collection | OXFORD |
| description | In human capital intensive industries where it is difficult to contract upon the training effort of skilled agents a socially suboptimal level of training may occur. We show how partnership organisations can overcome this problem by tying human and financial capital. Partnerships are opaque so that the willingness of clients to pay depends upon reputation. Partnerships are illiquid and partners must stay with the firm until clients discover their type and update the firm's reputation. This renders unskilled agents, who will aversely affect reputation, unwilling to accept partnerships. Skilled agents therefore train the next generation so as to ensure that there is an adequate market for their own shares. We comment upon the salient differences between partnerships and joint stock firms. |
| first_indexed | 2024-03-07T04:08:33Z |
| format | Working paper |
| id | oxford-uuid:c707b0d4-a1b8-42a0-9236-720d7c37b1d2 |
| institution | University of Oxford |
| last_indexed | 2024-03-07T04:08:33Z |
| publishDate | 2003 |
| publisher | University of Oxford |
| record_format | dspace |
| spelling | oxford-uuid:c707b0d4-a1b8-42a0-9236-720d7c37b1d22022-03-27T06:42:11ZPartnership firms, reputation and human capitalWorking paperhttp://purl.org/coar/resource_type/c_8042uuid:c707b0d4-a1b8-42a0-9236-720d7c37b1d2Bulk import via SwordSymplectic ElementsUniversity of Oxford2003Morrison, AWilhelm, WIn human capital intensive industries where it is difficult to contract upon the training effort of skilled agents a socially suboptimal level of training may occur. We show how partnership organisations can overcome this problem by tying human and financial capital. Partnerships are opaque so that the willingness of clients to pay depends upon reputation. Partnerships are illiquid and partners must stay with the firm until clients discover their type and update the firm's reputation. This renders unskilled agents, who will aversely affect reputation, unwilling to accept partnerships. Skilled agents therefore train the next generation so as to ensure that there is an adequate market for their own shares. We comment upon the salient differences between partnerships and joint stock firms. |
| spellingShingle | Morrison, A Wilhelm, W Partnership firms, reputation and human capital |
| title | Partnership firms, reputation and human capital |
| title_full | Partnership firms, reputation and human capital |
| title_fullStr | Partnership firms, reputation and human capital |
| title_full_unstemmed | Partnership firms, reputation and human capital |
| title_short | Partnership firms, reputation and human capital |
| title_sort | partnership firms reputation and human capital |
| work_keys_str_mv | AT morrisona partnershipfirmsreputationandhumancapital AT wilhelmw partnershipfirmsreputationandhumancapital |