This article examines the medieval abbey of the Canons Regular in Żagań as a mission-bound economic institution rather than as a profit-maximizing firm. It asks how the abbey’s institutional arrangements structured the abbot’s authority, reduced transaction and agency costs, protected property rights, and supported organizational continuity between the community’s relocation to Żagań in 1284 and the crisis associated with Abbot Paul II’s resignation in 1525. The study applies a qualitative historical-institutional analysis to a monastic chronicle, statutes and customary regulations, property records, charters, and rent registers, interpreted alongside research on the economic history of Silesian monasteries. The findings show that economic governance depended on complementary mechanisms: collective deliberation in the conventual chapter, specialization through a differentiated system of offices, periodic reporting and sanctions, documentary preservation of rights, flexible use of direct management and leasing, and diversification across rural and urban revenues. The abbot was the central strategic actor and external representative of the community, but his discretion was constrained by rules, oaths, consultation, and reputational expectations. Papal, episcopal, and ducal confirmations strengthened enforcement, while simultaneously exposing the abbey to political dependence and expropriation risk. The case demonstrates that institutional durability resulted neither from formal rules alone nor from exceptional leadership alone, but from their interaction. It also shows the value of institutional economics for explaining how premodern, non-profit organizations governed complex asset portfolios and preserved a long-time horizon under conditions of weak and fragmented public enforcement.

Keywords: institutional economics, transaction costs, monastic economy, governance, Canons Regular, Żagań.