Employees Exist Because They Have More to Lose

The reason firms have employees rather than relying entirely on contractors is not efficiency but risk management: an employee has skin in the game—more to lose than a single job (their reputation and ability to be re-hired)—so they will not let you down in an emergency, whereas a contractor who gets a better offer can simply walk away and find another client. This is a footnote to Coase: corporations exist partly to 'own' reliable people and avoid the fragility of contracts.