Virtual Currencies and Intrapreneurial Coordination

Managers of conglomerates or companies with multiple business units are, like central planners in socialist countries, unable to perform economic calculation. These units exchange goods and services internally based on transfer prices, not market prices, and it is hard to ascertain the value contributed by management, which is often hired and rewarded based on political considerations. Innovation is also often unwelcome, as it may challenge privileges of executive management. Until 2016, conglomerates lacked the technology to benefit from economic calculation. In this paper, I propose that a blockchain platform supporting an internal virtual currency enables economic calculation inside conglomerates, unlocking productivity and supporting intrapreneurship.