The new institutional economics took its roots in the transaction cost theory of the firm as an economic organization rather than purely a production function. This idea has been developed further by scholars such as Oliver Williamson, Douglas North and their followers, which has led to the rich and growing field of the new institutional economics. This branch of economics stresses the importance of institutions in the functioning of free markets, which include elaborately defined and effectively enforced property rights in the presence of transaction costs, large corporate organizations with agency and hierarchical controls, formal contracts, bankruptcy laws, and regulatory institutions.