ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Inter-firm Relationship and Governance Structure

The paper analyses inter-firm relationship in the analytical framework of institutional economics, in particular transaction cost theory. It studies the governance structure of inter-firm relationship as an interaction between various agents, including the role of policy. Based on a case study of Bhilai Steel Plant and its ancillaries, it is argued that the governance structure evolves in the process of interaction, determined by the responses of agents to policy. Further, the realisation of policy objectives depends on the decisionmaking process and responses of agents. The paper emphasises on the shift of policy approach of treating the responses of economic agents as given and 'passive' to that of treating them as active.

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