Authors:
  • A firm, therefore, consists of the system of relationships which comes into existence when the direction of resources is dependent on an entrepreneur... As a firm gets larger, there may be decreasing returns to the entrepreneur function, that is, the costs of organising additional transactions within the firm may rise.

    "The nature of the firm" by Ronald Coase in Economica, Volume 4, No. 16 (p. 393), onlinelibrary.wiley.com. November 1937.