New model revolutionizes profit allocation in multinational companies for fairer pricing.
The article introduces a new way to decide how much money should be paid to family members working in a business. By using a scoring model based on Transaction Cost Economics, the researchers can measure the work done by these family members in the company. This model helps to value the coordination efforts of each family member involved in the business. Compared to the usual method of pricing transactions within a company, this new model better reflects the economics of doing business with family members in a big company. It can also help companies follow the rules for pricing transactions set by tax authorities.