Hierarchies, unlike markets, institutionalize long-term mutual commitments that make it easy to trade off social acceptance and esteem against wealth.#
Although, in principle, a newly integrated firm should be able to operate at least as efficiently as the two independent firms from which it was formed simply by allowing each division of the combined firm to operate independently as it had before and only intervening where net benefits were likely to be realized, the management of the combined enterprise will be unable, given the law governing internal transactions, to commit to intervening only in such a selective fashion#