Ronald Coase Theory of the Firm

Wikipedia entry covers the entire concept of company formation and performance:

The theory of the firm consists of a number of economic theories that explain and predict the nature of the firm, company, or corporation, including its existence, behaviour, structure, and relationship to the market.[1]

Ronald Coase has specific theories around companies and transaction costs.

The model shows institutions and market as a possible form of organization to coordinate economic transactions. When the external transaction costs are higher than the internal transaction costs, the company will grow. If the external transaction costs are lower than the internal transaction costs the company will be downsized by outsourcing, for example.

Today, as communication tools and ways of working remotely become easier and easier, this supports the rise of freelancers and groups of people forming to get work done, because use of these new tools make communication / information / transaction lower, without having to form a company.

Nice link @boris! This is a trend I believe to my core.

I think we’re still very much in the infancy in distributed work. It’s becoming more common but what I’m looking forward to is what happens when standard operating procedure is distributed? What will that do to business processes and conventions? and by extension what will the technology be that enables these new processes?