Theory of the firmy talki abot ye was written by elchin demsets in 19 72. The idea that a firm is team production, and firms that do well are going to be ones that do that well. But it's very hard to figure out what any one player contributes to the team, or any one colleague contributes to the work project. And so if you have a residual claimant, that residual claimant has very good incentives to monitor the workers for shirking.