Corporations Exist Corporations and Organizations Term Paper

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4% and 3.6% in the total number of jobs from 1985 to 2001. The trend is increasing for most types of transportation modes (see fig. 5).


Source: Bureau of Transportation Statistics

Automotive transportation is flexible, comfortable and is probably the most suitable means of transportation given the increasing distances between workplaces and residential areas. The social studies point to the fact that the urban agglomerations determine workers to live further away from the workplace than they used to live a few decades ago.

The social phenomena that took place in the 2nd half of the 20th century and the beginning of the 21st century led to an increase in the number of workers as more women started to work and the access to education was facilitated. The need for transportation increased as more workers needed to move from one location (e.g. home) to another (e.g. work).


Source: Bureau of Transportation Statistics

Fig. 6 reflects the number of workers that use different means of transportation to move from home to work. The red line indicates the number of workers that use automobile transportation as the main means of transportation to work.

A closer examination of the automobile usage as the most popular means of transportation used by workers indicates that around 15% of those use a different kind of transportation (see fig. 7)


Source: Bureau of Transportation Statistics

Why do corporations and organizations exist?

This paper argues that corporations, like automobiles, exist to move people and goods and fuel the economy. However, these two are now equal as corporations are those that create automobiles. The relation between these two is similar to that between the whole and a part of it. Corporations create automobiles to fuel the economy, but they also create other "tools" to reach the same goal, such as professionals and financial products.

Like the automobile, the organization is built from different parts: top, middle and low management. Automobiles are built from parts as well: engine, wheels, carburetor and each part has its function. For instance low management is covering the operational work, just like wheels, whereas the engine is moving the car, just like top management.

Corporations exist because they deliver better results by being more efficient in moving the people and the goods involved in the value creating process. They are also the most suitable ownership type given the diversity of investing options nowadays.

Reference List

Alchian, a.A. And Demsetz, H. 1972, 'Production, Information Costs, and Economic Organization', American Economic Review, vol.62: pp. 772-795.

Baker, G., Gibbons, R. And Murphy, K.J. 1997, Implicit Contracts and the Theory of the Firm, Working Paper.

Berle, a.A., Jr. And Means, G.C. 1932, the Modern Corporation and Private Property, New York, Macmillan.

Bureau of Transportation Statistics, 2007,

Casson, M. 1997, Information and Organization, Oxford, Oxford University Press.

Cremer, J. 1990, 'Common Knowledge and the Coordination of Economic Activities', in Aoki, M., Williamson, O.E. And Gustafsson, B. (eds), the Firm as a Nexus of Treaties, London, Sage.

Fama, E.F. 1980, 'Agency Problems and the Theory of the Firm', Journal of PoliticalEconomy, vol. 88: pp. 288-307.

Hess, K.L. 1996, 'The Growth of Automotive Transportation',

Holmstrm, B. And Milgrom, P. 1994, 'The Firm as an Incentive System', American Economic Review, vol. 84: pp. 972-991.

Litman, T. And Laube, F. 2002, 'Automobile Dependency and Economic Growth', Institute for Science and Technology Policy,

Radner, R. 1992, 'Hierarchy: The Economics of Managing', Journal of Economic Literature, vol. 30: pp. 1382-1415.

Ross, S.A. 1973, 'The Economic Theory of Agency: The Principal's Problem', American Economic Review, vol. 63: pp. 134-139.

Talukadar, D. 1997, 'Economic Growth and Automobile Dependence', Thesis, MIT, cited in Gakenheimer, R. 1999, 'Urban Mobility in the Developing World', Transport Research a, vol. 33: p. 680.

Wernerfelt, B. 1997, 'On the Nature and Scope of the Firm: An Adjustment-Cost Story', Journal of Business vol.70: pp. 489-514.

Williamson, O.E. 1975, Markets and Hierarchies: Analysis and Antitrust Implication: A Study in the Economics of Internal Organization, New York, Free Press, 286

WorldMapper, 2002.



The first column shows the countries with the highest concentration of cars per capita and the second column displays


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