Michael E. Porter quote: “Quasi-integration is to use debt or equity investments and other means to create alliances between vertically related f…”

“This paper integrates elements from the theory of agency, the theory of property rights and the theory of finance to develop a theory of the ownership structure of the firm. We define the concept of agency costs, show its relationship to the 'separation and control' issue, investigate the nature of the agency costs generated by the existence of debt and outside equity, demonstrate who bears the costs and why, and investigate the Pareto optimality of their existence. We also provide a new definition of the firm, and show how our analysis of the factors influencing the creation and issuance of debt and equity claims is a special case of the supply side of the completeness of markets problem.”

Michael Jensen (1939) American economist

Source: "Theory of the firm: Managerial behavior, agency costs and ownership structure", 1976, p. 305 Abstract

“Organizational and not financial or ownership embeddedness is likely to be a more important cause of actions of firms than anything else in the case of United States. This means efforts should concentrate on specifying models of relations between firms that focus on intra- and interorganizational processes, such as the construction of strategic action and the cultural frames by which such a construction makes sense.”

Neil Fligstein (1951) American sociologist

Source: The architecture of markets, 2001, p. 145

“I mean, they are the other half of the sky, and without them there is nothing. And without us there’s nothing. There’s only the two together creating children, creating society.”

John Lennon (1940–1980) English singer and songwriter

Last interview (1980)
Context: I’m 40, I wanna talk to the people my age. I’m happy if the young people like it, and I’m happy if the old people like it, I’m talkin’ to guys and gals that have been through what we went through, together — the sixties group that has survived. Survived the war, the drugs, the politics, the violence on the street – the whole she-bang – that we’ve survived it and we’re here. And I’m talkin’ to them. And the "Woman" song is to Yoko, but it’s to all women. And, because my role in society – or any artist or poet’s role – is to try to express what we all feel. Not to tell people how to feel, not as a preacher, not as a leader, but as a reflection of us all. And it’s like that’s the job of the artist in society, not to... they’re not some alienated being living on the outskirts of town. It’s fine to live on the outskirts of town, but artists must reflect what we all are. That’s what it’s about – artists, or poets or whatever you wanna call it. And that’s what I’m tryin’ to express on behalf of all the men to all the women, through my own feelings about women – when it dawned on me, "God! It is the other half of the sky" as the late-great Chairman MacDougal said, right? I mean, they are the other half of the sky, and without them there is nothing. And without us there’s nothing. There’s only the two together creating children, creating society. So what’s all this B. S. about, you know, "women are this" and "men are that" – we’re all human, man. We’re all human. And, I am tryin’ to say it to Yoko, but to all women, you know? On behalf of all men, in a way. If that’s taken it too much on meself, I feel that artists are that – they’re reflections of society... Mirrors.

“All large organizations have an internal power struggle over the goals and resources of the organization…. In the largest firms, there are two bases of control : formal ownership and authority. Those who own the firm control by virtue of ownership. Authority relations embedded in the organizational structure legitimate how managers can control organizations.”

Neil Fligstein (1951) American sociologist

Source: The transformation of corporate control, 1993, p. 10 ; As cited in: François L'Italien, BÉHÉMOTH CAPITAL. Contribution à une théorie dialectique de la financiarisation de la grande corporation. Université Laval, 2012. p. 147 (Many of the following quotes came from this source)

“Most of the time when these things go public… private-equity firms want to get the hell out of there. They want to monetize their investment and get their guys off the board, because they don't want to be caught in a conflict of interest.”

Jay W. Lorsch (1932) American organizational theorist

Jay W. Lorsch, quoted in: "[http://www.bloomberg.com/news/articles/2006-02-26/going-private Going Private: Hotshot managers are fleeing public companies for the money, freedom, and glamour of private equity," in bloomberg.com, February 27, 2006

“Tenderness between people is nothing other than awareness of the possibility of relations without purpose.”

Theodor W. Adorno book Minima Moralia

Zartheit zwischen Menschen ist nichts anderes als das Bewußtsein von der Möglichkeit zweckfreier Beziehungen.
E. Jephcott, trans. (1974), § 20
Minima Moralia (1951)

“All the alleged key causes of SOE [State-Owned Enterprise] inefficiency—the principal-agent problem, the free-rider problem and the soft budget constraint—are, while real, not unique to state-owned enterprises. Large private-sector firms with dispersed ownership also suffer from the principal-agent problem and the free-rider problem. So, in these two areas, forms of ownership do matter, but the critical divide is not between state and private ownership—it is between concentrated and dispersed ownerships.”

Ha-Joon Chang book Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism

Source: Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism (2008), Ch. 5: 'Man exploits man; Private enterprise good, public enterprise bad?', The pitfalls of privatization, p. 116

“Like it or not, giant, vertically integrated corporate enterprises were the most efficient means of organizing the production and distribution of mass produced goods and services. Bringing together supply chains, production processes, and distribution channels in vertically integrated companies under centralized management dramatically reduced transaction costs, increased efficiencies and productivity, lowered the marginal cost of production and distribution, and, for the most part, lowered the price of goods and services to consumers, allowing the economy to flourish. While those at the top of the corporate pyramid disproportionately benefited from the increasing returns on investment, it’s only fair to acknowledge that the lives of millions of consumers also improved appreciably in industrialized nations.”

Jeremy Rifkin (1945) American economist

The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism (2014)

“What is the "cost of capital" to a, firm in a world in which funds are used to acquire assets whose yields are uncertain; and in which capital can be obtained by many different media, ranging from pure debt instruments, representing money-fixed claims, to pure equity issues, giving holders only the right to a pro-rata share in the uncertain venture? This question has vexed at least three classes of economists: (1) the corporation finance specialist concerned with the techniques of financing firms so as to ensure their survival and growth; (2) the managerial economist concerned with capital budgeting; and (3) the economic theorist concerned with explaining investment behavior at both the micro and macro levels.”

Merton Miller (1923–2000) American economist

Franco Modigliani and Merton H. Miller. "The cost of capital, corporation finance and the theory of investment." The American economic review (1958): 261-297.

“What is the "cost of capital" to a, firm in a world in which funds are used to acquire assets whose yields are uncertain; and in which capital can be obtained by many different media, ranging from pure debt instruments, representing money-fixed claims, to pure equity issues, giving holders only the right to a pro-rata share in the uncertain venture? This question has vexed at least three classes of economists: (1) the corporation finance specialist concerned with the techniques of financing firms so as to ensure their survival and growth; (2) the managerial economist concerned with capital budgeting; and (3) the economic theorist concerned with explaining investment behavior at both the micro and macro levels.”

Franco Modigliani (1918–2003) Italian-American economist

Franco Modigliani and Merton H. Miller. "The cost of capital, corporation finance and the theory of investment." The American economic review (1958): 261-297.

“Quasi-integration is to use debt or equity investments and other means to create alliances between vertically related firms without full ownership.”

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