Consider the two versions of the contractual theory of the firm. In the nexus of contracts view, one finds maximising managers who face moral hazard. Therefore, firms result from the incentive problems that arise when team-production is combined with opportunism (Jensen and Meckling 1976). In the incomplete contracting view, one finds boundedly rational managers who face opportunism. Therefore, firms arise from efforts to secure the rents that flow from transaction-specific assets (e.g., Williamson 1985). As Foss (1993) points out, however, both contractual perspectives imply a static analysis in which ‘technology-as well as the menu of inputs and outputs more generally-is given through some process that is historically and logically prior to the issue of the organisation of economic activities’ (p. 131). Indeed, he notes that taking the transaction as the analytical unit and viewing ‘the firm’ as nothing more than shorthand for a set of contracts among transacting individuals result in the firm’s strategy as a meaningless concept and ‘it comes as no big surprise that…nexus of contracts theorists…call for the abandonment of the concepts of “the entrepreneur�? and “the firm�?, respectively’ (p. 130).