Hart and Moore (1990) analyze the conditions under which transactions should occur within a firm rather than through the market. They argue that the key difference between integration (owning a firm) and nonintegration (contracting for services) lies in the ability of the firm's owner to selectively fire workers, including the contractor, under integration, whereas under nonintegration, the owner can only stop dealing with the entire firm. This distinction affects the incentives of both employees and owner-managers. The paper builds on the ideas of Williamson and Klein et al., emphasizing the role of specific investments and the inefficiencies of long-term contracts. It introduces the concept of residual control rights, where the owner of an asset has the right to exclude others from using it. This control can indirectly influence human assets, as seen in the example where the owner's ability to exclude workers affects their behavior. The paper uses a model to show how ownership affects investment decisions and bargaining power. It concludes that assets should be owned by those who are indispensable or whose actions are idiosyncratic, and that complementary assets should be controlled together. The analysis also highlights the importance of control structures in determining firm boundaries and efficient resource allocation.Hart and Moore (1990) analyze the conditions under which transactions should occur within a firm rather than through the market. They argue that the key difference between integration (owning a firm) and nonintegration (contracting for services) lies in the ability of the firm's owner to selectively fire workers, including the contractor, under integration, whereas under nonintegration, the owner can only stop dealing with the entire firm. This distinction affects the incentives of both employees and owner-managers. The paper builds on the ideas of Williamson and Klein et al., emphasizing the role of specific investments and the inefficiencies of long-term contracts. It introduces the concept of residual control rights, where the owner of an asset has the right to exclude others from using it. This control can indirectly influence human assets, as seen in the example where the owner's ability to exclude workers affects their behavior. The paper uses a model to show how ownership affects investment decisions and bargaining power. It concludes that assets should be owned by those who are indispensable or whose actions are idiosyncratic, and that complementary assets should be controlled together. The analysis also highlights the importance of control structures in determining firm boundaries and efficient resource allocation.