Comparative economic organization of support services: shared services versus government agencies

Abstract

The internal structure of the firm does not play a significant role in neoclassical theory. In the theory’s core model, perfect competition, firms are the places in which production occurs. The firm is considered a mere production function that transforms inputs, such as raw materials and labor into output, such as goods and (back office) services. The production function is a technological relation. Institutional arrangements or internal organizational form bear no relevance to the output.