Level of productivity from the study exhibited that overall, producitivty increased along with the firm size quite linearly. Despite this, as the firm size approached the 50 employee range, the level of productivity showed fluctuations and a rather consequential decline in productivity from the 49th to 50th employee. Additionally, he data from this study suggests that employee numbers of 50 or above, cause sudden increases in costs. While the total fixed costs was relatively stable up until the 49th employee, once an extra worker was hired, the total fixed costs spiked and increased along with the total variable costs. Possible reasons for this increase in fixed costs could be due to positive "spillovers", where total fixed costs could escalate due to the additional monthly reports done on the employees or tax etc. Moreover, it is evident from the study that flexible wages encourage employment and promotes employee welfare. However, it is worth noting that firms with employee numbers above 50 become rigid on their wage allocation for each worker. All in all, this study shows that smaller firm sizes experience a better output in terms of cost to benefit ratio and foster a hard-working, incentive-focused work environment. While, the number of employees will vary from firm to firm, examining exisiting firms, allows for discrimination in setting boundaries for the firm and are crucial. Economic theory of outsourcing In economic theory, the pros and cons of outsourcing have been discussed since Ronald Coase (1937) asked the famous question: Why is not all production carried on by one big firm? An informal answer has been provided by Oliver Williamson (1979), who has emphasized the importance of different transaction costs within and between firms. The boundaries of the firm (i.e., the distinction between transactions taking place within a firm and transactions between different firms) have been formally studied by Oliver Hart (1995) and his coauthors. According to the property rights approach to the theory of the firm based on incomplete contracting, the ownership structure (i.e., integration or non-integration) determines how the returns to non-contractible investments will be divided in future negotiations. Hence, whether or not outsourcing an activity to a different firm is optimal depends on the relative importance of the investments that the trading partners have to make. For instance, if only one party has to make an important non-contractible investment decision, then this party should be owner. However, the conclusions of