choice of firms either to contract

choice of firms either to contract out silvicultural
activities or perform them in-house. Neither study
examined the relationship between organizational
form and the method used to compensate work-
ers for performing silvicultural activities when

these are conducted in-house (and not by contractors ). In-house performance of silvicultural
operations by forest companies and their woodland divisions is not uncommon. Since firms are
assumed to pick contractual arrangements to
economize on transaction costs in every aspect of
organizational management, it is worthwhile to
examine the conditions under which firms use
different payment schemes. Research findings indicate that, notwithstanding other differences,
contractual arrangements can be reduced to the
choice and design of payment schemes, because
appropriate reward systems induce optimal effort
. from workers (Datta et al., 1986) .