Sometimes the moment a renowned economist passes away is the day when somebody brings your attention to a particular aspect of his writings, and this happened to me about Prof. Demsetz and his paper (1) “Production, information costs and economic organization”, (written with Alchian in 1973).
They pose two questions:
- What drives nongovernmental organizations to do their specialized activities within the firm or across markets, and
- How do they structure their internal gears.
Thinking of fiat, authority or disciplinary action as a mechanism is a delusion for them. Firms don`t have these assets more than people may have in a contract relationship. Internally and externally they can punish others withholding additional business or seeking compensation in courts; long-term relationships don´t make firms either, as they exist between different players.
Let`s follow their proposals step by step.
1.- Why does the firm exist.
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Utopia, you are standing in it! 
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