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Article
Publication date: 8 July 2014

Demetri Kantarelis

– The purpose of this paper is to attempt a justification as to why a profit-making firm may be viewed as a function of its nucleus expertise and a risky portfolio of deals.

209

Abstract

Purpose

The purpose of this paper is to attempt a justification as to why a profit-making firm may be viewed as a function of its nucleus expertise and a risky portfolio of deals.

Design/methodology/approach

This is a theoretical paper relying on mathematics, graphs and verbal arguments to describe concepts.

Findings

A profit-making firm can gain even more if it reduces the risk of its portfolio of deals. In its effort to reduce such a risk, the firm needs to know each deal’s profit share and be able to estimate each dealing partner’s reliability (a random variable).

Research limitations/implications

The proposed hypotheses are not empirically tested, an exercise left to future work.

Practical implications

Pragmatically, a profit-making firm may be viewed as a function of its strategic nucleus and its strategic federation. The firm may increase its gains by minimizing deals’ risk through a portfolio of deals diversification. The more the firm considers factors such as mediation, optimal commitments and the like, the more effective and efficient becomes the management of the portfolio of deals.

Social implications

As explained through examples and illustrations, viewing the firm as a function of deals benefits the parties in such deals as well as other stakeholders (community, region, nation, etc), e.g. less costly deals contribute to more profit and more growth.

Originality/value

A profit-making firm is viewed as an entity that manages a risky portfolio of promisor- and promisee-type deals. The ideas in this paper may be of value to today’s global, knowledge-based, outsourcing/insourcing firms which may find it increasingly difficult to rely on conventional contracts.

Details

International Journal of Law and Management, vol. 56 no. 4
Type: Research Article
ISSN: 1754-243X

Keywords

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Article
Publication date: 14 November 2008

Demetri Kantarelis

The purpose of this paper is to discuss incentive mechanisms and procedures for cost internalization by both potential defendants and plaintiffs.

1912

Abstract

Purpose

The purpose of this paper is to discuss incentive mechanisms and procedures for cost internalization by both potential defendants and plaintiffs.

Design/methodology/approach

The approach taken is to rely on the concepts of liability, negligence, precaution and methodologies for estimation of compensatory damages in conjunction with the Coase theorem.

Findings

The paper finds that the decision to internalize and minimize cost depends upon marginal precautionary costs and marginal expected harms.

Research limitations/implications

Research needs to be conducted from a law and economic perspective on developing procedures for estimating precautionary costs and expected harms.

Practical implications

This paper calls upon business firms and their stakeholders (primarily employees and customers) to use and pro‐actively manage their precautionary responsibilities and further refine the existing formulas. More specifically, it aims to help law and economics students as well as practitioners in law and regulation to better understand the implications of marginal precautionary costs and marginal expected harms in the process of cost internalization.

Originality/value

In exploring the precautionary responsibilities of firms and their stakeholders, this paper contributes to a better understanding of liability and negligence issues and, as a result, to the important intersection of law and microeconomics.

Details

International Journal of Law and Management, vol. 50 no. 6
Type: Research Article
ISSN: 1754-243X

Keywords

Available. Content available
Article
Publication date: 14 November 2008

James Kirkbride and Geraint Howells

394

Abstract

Details

International Journal of Law and Management, vol. 50 no. 6
Type: Research Article
ISSN: 1754-243X

Available. Content available
Article
Publication date: 8 July 2014

Chris Gale and Alexandra Dobson

82

Abstract

Details

International Journal of Law and Management, vol. 56 no. 4
Type: Research Article
ISSN: 1754-243X

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