Abstract: The transaction-cost economics approach to governance is outlined, and it is explained how this helps to inform the study of the institutional environment at the level of the firm, and especially the corporate hierarchy. Three core governance concepts—credible commitment, bureaucracy/bureaucratization, and remediableness—are then described. The lessons of each, for understanding the institutional environment (mainly the polity) and economic development and reform are then developed.

Keywords: economic development, firms, governance, institutions, transaction cost economics,