1 Coase, R H (1937) ‘The Nature of the Firm’, Economica, pp 386–405 CrossRefGoogle Scholar.

2 Alchian and Demsetz (1972) ‘Production, Information Costs and Economic Organization’, 65 American Economic Review, 777, in which Coase's use of authority is questioned.

3 Jensen and Meckling (1976) ‘Theory of the Firm: Managerial Behaviour, Agency Costs and Ownership Structure’, 3 Journal of Financial Economics, 305.

4 This progression is set out in Hart, O (1989) ‘An Economist's Perspective on the Theory of the Firm’, 89 Columbia Law Review, pp 1757–1774 CrossRefGoogle Scholar.

5 Ibid p 1763/64.

6 Ibid. 1764.

7 Anderman, SD Labour Law: Management Decisions and Workers' Rights (Butterworths, 2nd edn, 1993).Google Scholar

8 It may be of interest that Coase formulated the ideas for ‘The Nature of the Firm’ in the summer of 1932, in October 1932 he was appointed assisstant lecturer at the Dundee School of Economics and Commerce and he expounded the main points of his theory in lectures given that month. The author wrote this paper in the spring of 1995, presented it to the Department of Law at the University of Dundee in August 1995 and is now senior lecturer in that department. For more background on Coase's work see Winter, S and Williamson, OE (eds) The Nature of the Firm: Origins, Evolution and Development (New York: OUP, 1991)Google Scholar

9 Knight, F Risk Uncertainty and Profit (New York: Houghton Mifflin & Co, 1921).Google Scholar

10 M L Weitzman (1982) ‘Increasing Returns and the Foundations of unemployment Theory’, Economic Journal, 92, and (1985) ‘Increasing Returns and the Foundations of Unemployment Theory: An Explanation’, Journal of Post Keynesian Economics, p 7.

11 Op cit(1937).

12 Coase (1937), op cit p 403.

13 Ibid p 403, n 3.

14 See below.

15 F Knight (1921) op cit.

16 McKenna, C J (1986) The Economics of Uncertainty (Wheatsheaf) p 9.Google Scholar

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18 Ibid p 232.

19 For more on this view of capital markets see Hughes, and Singh, (1987) ‘Takeovers and the Stock Market’, Contributions to Political Economy, p 6 Google Scholar.

20 Davidson, P (1985) ‘Introduction’, Journal of Post Keynesian Economics, 7, p 350 CrossRefGoogle Scholar described the attention given to Weitzman's paper as ‘wide and rapid’.

21 Weitzman, (1982) op cit, p 791.

22 Weitzman makes the important point that, if workers are generalists in consumption, unemployed workers have no way of communicating their effective demand to existing firms and this results in a vicious circle of self-sustaining involuntary unemployment, ibid PP 787–8.

23 The lack of money in the model is pursued at some length by Davidson, P ‘Liquidity and not Increasing Returns as the Ultimate Source of Unemployment Equilibrium’, (1985) Journal of Post Keynesian Economics, 7, p 376 CrossRefGoogle Scholar.

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25 For instance in Alchian and Demsetz's where the concept of authority to control or direct employees is heavily criticised and replaced by the idea of the firm as a method of achieving team production. However, production is monitored by a ‘centralised contractual agent’ who, it later emerges, earns a reward'… through the reduction in shirking that he (sic) brings about, not only by the prices that he agrees to pay the owners of the inputs, but also by observing and directing the actions or uses of these inputs'; Alchian and Demsetz (1972) op cit, p 782.

26 Hart, (1989) op cit, p 1761 Google Scholar.

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28 A monopsonist is the only buyer or potential buyer of the good in a particular industry.

29 The relationship between the board of directors and the shareholders in general meeting is a contractual one based on the articles, however, shareholders take the terms of these contracts on a take it or leave it basis much as employees take their terms of employment.

30 Article 70 of Table A provides that: ‘Subject to the provisions of the Act, the memorandum and the articles and to any directions given by special resolution, the business of the company shall be managed by the directors who may exercise all the powers of the company’.

31 Manne, H C ‘Mergers and the Market for Corporate Control’, (1965) Journal of Political Economy, p 73 Google Scholar.

32 Jensen, M C and Ruback, R S (1983) ‘The Market for Corporate Control’, Journal of Financial Economics, 11, 5–50 CrossRefGoogle Scholar is a comprehensive review. Later work has not upset the general results of this substantial body of earlier work. Limmack, R J Corporate Mergers and Shareholder Wealth Effects 1977–1986’, (1991) Accounting and Business Research, 21, 239–251 CrossRefGoogle Scholar, is a recent UK study.

33 Bradley, C (1990), ‘Corporate Control: Markets and Rules’, (1990) MLR, pp 53, 170–186.Google Scholar

34 Ibid, pp 174–175.

35 Roll, R (1986) ‘The Hubris Hypothesis of Corporate Takeovers’, Journal of Business, 59, (2), pp 197–216 CrossRefGoogle Scholar.

36 Ibid, pp 199–200.

37 The directors themselves will usually propose any new directors with the shareholders simply ‘rubber stamping’ such decisions.

38 Choices of whole teams are restricted to either the existing team or one or two rival teams, choices of individual directors will also be restricted by the scope of the search and the ability of potential candidates to demonstrate their abilities (or connections) convincingly.

39 [1983] QB 54, [1982] ICR 626.

40 It should be noted that these may be express or implied. In Howmnn & Son v Blyth [1983] ICR 416 the payment of sick pay for a reasonable time (determined by reference to a collective agreement) was implied.

41 Payable for the first 28 weeks of abscence through sickness.

42 There is also a Small Employers Relief (SER) which provides for 100% recovery for small employers in certain circumstances.

43 In Grimaldi v Fonds des Maladies Professionnelles: C-322/88 [19891 ECR 4407, [19901 IRLR 400, the ECJ held that national courts are bound to take recommendations into account when determining disputes which are referred to them.

44 These regulations replace section 7 of the Factories Act 1961 and various attendant sanitary accommation regulations with full effect from 1 January 1996.

45 For instance the Factory Acts Extension Act 1867 defines a factory in terms of use of steam, water or other mechanical power used for manufacture, but also as premises where 50 or more persons are employed in any manufacturing process. There was a change made by the Factory and Workshops Act 1878 which distinguished factories from workshops solely on the basis of whether power was used rather than the number of employees.

46 The Employment Acts of 1980, 1982, 1988 and 1990 and the Trade Union Act 1984 were the main pieces of Thatcherite legislation.

47 The assumption that all other things are held constant.

48 There are also those who have argued that‘… the most striking features of the 1980s were the continuity and stability of industrial relations’, see Kelly, J British Trade Unionism 1979–89: Change, Continuity and Contradictions’, (1990) Work, Employment and Society, Special Issue, 29 MayCrossRefGoogle Scholar.

49 Brown, R and Morris, L (1990) ‘A Decade of Change?’ (1990) Work, Employment and Society, Special Issue, 1 MayCrossRefGoogle Scholar.

50 Hill, S (1991) ‘How Do You Manage a Flexible Firm? the Quality Model’, Work, Employment and Society, 5, (3), p 397 CrossRefGoogle Scholar.

51 Pollert, A Farewell to Flexibility? (Oxford: Blackwell, 1991).Google Scholar

52 Piore, M and Sabel, C The Second Industrial Divide: Possibilities for Prosperity (New York: Basic Books, 1984)Google Scholar.

53 See J Atkinson (1984) ‘Manpower Strategies for Flexible Organisations’, Personnel Management, 28–31 August; and (1987) ‘Flexibility or Fragmentation? The Uk Labour Market in the Eighties’, Labour and Society, 12, (1) pp 87–105 Google Scholar.

54 Flexibility in the model was of three kinds: functional, numerical and financial. As part of these moves the workforce was being divided between a ‘core’ -members of which would be expected to display functional flexibility in retum for stability of employment - and a ‘periphery’-where members would be expected to provide the necessary numerical flexibility. The role of financial flexibility was to provide the means by which the development of functional and numerical flexibility might be encouraged, see Procter, S J, Rowlinson, M, McArdle, L, Hassard, J and Forrester, P (1994) ‘Flexibility, Politics & Strategy: in Defence of the Model of the Flexible Firm’, Work, Employment and society, 8, pp 221–2CrossRefGoogle Scholar.

55 This duty has its origins in the Master-Servant Acts of the nineteenth century, but it has been ‘… carefully preserved in the modem contractual relationship as an implied fundamental term’ Anderman, op cit, p 33.

56 [1991] 2 All ER 293, [1992] QB 333.

57 [1999] 1 All ER 737.

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59 [1989] IRLR 507.

60 Above.

61 Anderman, (1992) op cit, p 56 Google Scholar.

62 Bruegel, I and Hegewisch, A ‘Flexibilization and part-time work in Europe’ in Brown, P and Crompton, R (eds) Economic Restructuring and Social Exclusion (UCL Press, 1994).Google Scholar

63 Hakim suggests that perceptions of the advantages of employing part-timers may diverge from reality, see Hakim, C (1991) ‘Cross-national Comparative Research on the European Community: the Ec Labour Force Surveys’, Work, Employment and Society, 5, pp 101–77CrossRefGoogle Scholar. Also the Employment Protection (Part-time Employees) Regulations 1995 remove those provisions of the Employment Protection (Consolidation) Act 1978 and the Trade Union and Labour Relations (Consolidation) Act 1992 which exclude part-time workers from rights under those Acts and provide that periods of part-time employment will count in the computation of periods of employment under the 1978 Act.

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65 Morris, G (1991) ‘The Employment Act 1990’, (1991) Journal of Business Law, 426–446 Google Scholar, the statutes being the Employment Acts 1980 and 1982, the Trade Union Act 1984 and the Employment Acts of 1988 and 1989.

66 The Trade Union Reform and Employment Rights Act 1993, continues this challenge with far-reaching measures concerning the regulation of union finances.

67 For instance Kelly (1990) op cit.

68 Ibid p 42.

69 Ibid p 48.

70 See also Edwards, PK Munuging the Fuctory (Oxford Blackwell, 1987)Google Scholar. Certainly the TUC appears to have been forced into adopting a new rhetoric. Reviewing trends in the economy and industrial relations in 1994 Moms states that ‘[t]he new project for the union movement seems to be to establish more co-operative and longer-tern relationships with employers buttressed by legal rights to representation’ and this oooperation has been proposed as a ‘social partnership between employers and unions’ by the TUC. Monis, T Annual Review Article 1994’, (1995) Britkh Journal of Indusfrial Relutions, 33, (l), pp 117–118 and 125 Google Scholar.

71 This is the approach of Anderman (1992) op cit, see particularly chapter 2.

72 Ibid p 17.

73 Most employment law texts provide a description of Europe's impact on UK employment law, see for instance Anderman op cit, chapter 2 or N M Selwyn, (8th edn, 1993) Selwyn's Law of Employment, paras 1, 50–1, 75.

74 See Anderman, op cit p 19.

75 Ibid p 20.

76 Ibid pp 22–23.

77 Ibid p 27.

78 Kelly (1990) op cit p 52.

79 L Hunter and J McInnes ‘Employers and Labour Flexibility: The Evidence from Case Studies’, Employment Gazette, June 1992, 314.

80 Procter, Rowlinson, McArdle, Hassard and Forrester (1994) op cit.

81 Hakim, C (1990) ‘Core and Periphery in Employers' Workforce Strategies: Evidence from the 1987 Elus Survey’, (1990) Work, Employment and Society, 4, pp 157–88CrossRefGoogle Scholar.

82 Brown and Morris (1990) op cit, 2; C Hakim (1987) ‘Trends in the Flexible Workforce’Employment Gazette, November, pp 549–560; and Hakim, C Self-employment in Britain: Recent Trends and Current Issues’, (1988) Work, Employment and Society, 2, pp 421–450 CrossRefGoogle Scholar.

83 Bruegel, and Hegewisch, (1994) op cit, p 35 Google Scholar.

84 Ibid p 47.

85 Recent developments which limit employer flexibility regarding part-timers and in the area of health and safety work against the general trend towards flexibility.

86 Bruegel and Hegewisch (1994) op cit, 49 figure 2.11 demonstrates these increases very clearly.

87 See Procter et al (1994) op cit. See Brown and Moms (1990) op cit, Hakim (1987) op cit and Hakim (1988) op cit.

88 See Brown and Morris (1990) op cit and Hakim (1988) op cit.