1991 - 1999
1999
“Research in the Strategic Theory of the Firm: “Integrationism” and “Isolationism”, Journal of Management Studies 36: 725-755 (November).
It has been increasingly often argued that strategy research should aim for a 'strategic theory of the firm', that is, a theory explains the existence, boundaries, organization and competitive advantage of the firm within a unified theoretical framework. This paper discusses two archetypal strategies in research in the strategic theory of the firm, namely 'isolationism' and 'integrationism'. While the former is representative of the positions that either the knowledge-based view or the modern economics of organization can develop into full-blown strategic theories of the firm, the integrationist strategy stresses that progress is more likely to emerge from a combination of insights and research procedures from both the knowledge-based view and the modern economics of organization. The paper argues in favour of integrationism. In addition, the paper presents some novel criticisms of both the knowledge-based view and the modern economics of organization.
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”The Use of Knowledge in Firms”, Journal of Institutional and Theoretical Economics 155: 458-486.
Reprinted in Sandye Gloria-Palermo, Peter Boettke and Stephan Boehm, Modern Austrian Economics, London: Pickering and Chatto, 2002).
Austrian economics allows us to identify a number of weak spots in the modern economics of organization that all relate to the treatment of knowledge. Specifically, this body of theory is open to the same kind of objections that HAYEK [1937, 1945] raised against economics, namely that it does not incorporate truly dispersed knowledge, and therefore significantly understates the nature and severity of the coordination problems that confront social systems. However, rather than rejecting the modern economics of organization and opting for an alternative research program, this paper suggests that a combined research effort may be worthwhile.
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”Edith Penrose, Economics, and Strategic Management,” Perspectives in Political Economy 18: 87-104.
Reprinted in Christos Pitelis, ed. 2001. The Growth of the Firm: The Legacy of Edith Penrose. Oxford: Oxford University Press).
(abstract not available)
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“The Challenge of Business Systems and the Challenge to Business Systems”, International Studies of Management and Organization 29: 9-24.
As the title indicates, this article discusses two connected issues that are, however, of different scope and are accordingly discussed separately. Thus, in the first instance this article offers a review and discussion of the business-systems perspective. The discussion concentrates on the challenge to the business-systems perspective from economics. This in turn leads into the opposite challenge, namely, the challenge of the business-systems perspective to economics, which finally leads into a broad consideration of the links and differences between economics and sociology as these relate to the study of organization. This design has been suggested by the following observations.
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”Perspectives on Business Systems”, International Studies of Management and Organization 29: 3-8.
All of the contributions to this issue of International Studies of Management & Organization discuss various aspects of a new and largely sociological approach to the study of economic organization, namely, the business-systems perspective. This framework has been designed to compare and contrast the different ways of organizing economic activities that have become established in different institutional contexts, typically in different nations. The pioneering work here is that of British sociologist Richard Whitley (1992a), who coined the concept of business systems. Whitley's work is truly magisterial and has become increasingly influential lately, particularly in Europe,(1) as an approach to understanding, first, the "stamp" in terms of the modes of organizing and managing that belonging to a certain country leaves on firms, and second, how firms interact and compete.
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(with Richard N. Langlois)“Capabilities and Governance: the Rebirth of Production in the Theory of Economic Organization” (. KYKLOS 52: 201-218. Reprinted in Richard N Langlois, Tony Fu-Lai Yu and Paul L Robertson, eds., Alternative Theories of the Firm, Cheltenham: Edward Elgar, 2003; John C. Wood and Michael C. Wood, eds. Alfred Chandler: Critical Evaluations, London: Routledge. 2007).
This paper argues that, since Coase's seminal 1937 paper on `The Nature of the Firm', the economics of organization has focused too exclusively on issues of incentive alignment abd has ignored issues of imperfect knowledge in production. However, there is now emerging an approach to economic organization - which we call `the capabilities approach'- that places production center-stage in the explanation of economic organization. We argue that the capibilities approach complements incentive-based theory (1) by considering the problems of oimperfect knowledge in production as well as in governance and (2) by considering issues not only of incentive alignment but also of qualitative coordination among holders of specialized, distributed, and often tacit knowledge.
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(with Torben Pedersen and Mats Forsgren) “Accounting for the Strengths of MNC Subsidiaries: The Case of Foreign-Owned Firms in Denmark”, International Business Review 8: 181-196.
This paper links up with recent work on the role of subsidiaries in multinational corporations as well as with recent work in the strategy and business network literature. We discuss the sources of organizational strengths of subsidiaries in the larger multinational corporation, and argue that organizational strength can to some extent be proxied by strength in the market place. Based on analysis of data on foreign-owned production firms in Denmark, we test three hypotheses: 1) that internal factors (capabilities, patents....) are positively related to the organizational strengths of MNC subsidiaries, 2) business network factors (network relations) are positively related to the organizational strengths of MNC subsidiaries, and 3) there is an interaction effect between internal factors and business network factors when explaining the organizational strengths of MNC subsidiaries. Hypothesis 1 but not Hypothesis 2 is supported. But the testing also supports Hypothesis 3, that is there seems to be an interaction effect between the two factors.
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“Edith Penrose and the Penrosians - Or, Why There is Still so Much to Learn From The Theory of the Growth of the Firm”, Economies et Sociétés 29: 143-164.
It is a commonplace that the great works of social science have been subject to a number of rivalrous interpretations. Thus, in economics, one often sees a received, and typically neoclassical, interpretation being up for attack from the perspective of heterodox interpretations (and I shall follow this established practice in the present paper). This is the case of the works of, notably, Marshall, and Keynes. Experts in hermeneutics may lecture us at length about the reasons why the great works are interpreted differently, and about the perplexities of textual interpretation. For example, when considering alternative interpretations, a basic dilemma is that what the “facts” of the text mean and their significance in the context of the whole text, is dependent upon their interpretation, so that there really is no external, “objective” arbiter outside of the interpretive schema for purposes of arbitration. Of course, this does not mean that we cannot engage in a reasoned discussion of the merits of alternative interpretations (Popper 1994); merely that there is no interpretation- independent standards that we may appeal to.
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“Networks, Capabilities, and Competitive Advantage”, Scandinavian Journal of Management 155: 1-15.
This conceptual paper joins network theories of firm interaction with the recent resource-based perspective in strategic management. This suggests a more satisfactory underpinning for the analysis of competitive advantage within the network approach. In other words, application of the resource-based approach suggests one way to uncover the sources of competitive advantage of the network firm. The paper also makes the related point that network theorists stand to benefit from the Marshallian tradition in industrial economics, a point that has sometimes been made by network theorists, but has never or seldom been elaborated.
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”Pandoras æske, sorte æsker og den økonomiske virksomhedsteori”, Nordiske Organisationsstudier 1:3-31.
(no abstract available)
1998
“The New Growth Theory: Some Intellectual Growth Accounting”, Journal of Economic Methodology 5: 223-246.
This paper discusses the reasons for the success of the new growth theory. Given that the NGT does not appear to say much new about empirical reality, that its essential ideas have been known for a long time, and that it does not really make contact with a large literature on institutions and economic change, its strong success may arguably be seen as surprising. Or, at least, its success may appear peculiar to Lakatosian methodologists, and others who emphasize notions such as 'novel facts'. The reason for the success of the NGT is argued to lie in its constituting a case of strong heuristic progress: it brought growth through knowledge accumulation within the confines of neoclassical economics, and thus demonstrated the continued viability of this research tradition.
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“The Competence-Based Approach: Veblenian Ideas in the Modern Theory of the Firm”, Cambridge Journal of Economics 22: 479-496.
I argue that a contemporary stronghold of a number of Thorstein Veblen's crucial ideas can be found in the emerging competence-based approach to the firm (e.g., Penrose, Chandler, Winter). For example, the emphasis in this literature on firms as path-dependent entities characterised by their heterogeneous and group-based knowledge bases can be linked with key themes in Veblen's work. Thus, the paper presents the competence-based approach as a modern Veblenian approach. Moreover, the Veblenian aspects of the competence-based approach are also those aspects that most differentiate it from the other dominant economic approach to the firm, the contractual approach (e.g., Alchian and Demsetz, Williamson, Grossman and Hart). The aim of the paper is both to make this historical point and to present a contemporary body of theory that may with some justice be called Veblenian.
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“The Resource-Based Perspective: An Assessment and Diagnosis of Problems”, Scandinavian Journal of Management 14: 133-149.
The resource-based approach to strategy, which reaches back to the contributions of Penrose, Selznick and Chandler, has gradually become the dominant perspective in strategy (content) research, arguably because it combines realism with relative rigour. The present paper presents the main themes of the contemporary version of the resource-based perspective (Wernerfelt, Rumelt, Barney....) and diagnoses a number of problems, such as the lack of a clear terminology, unclarity as to what really is the unit of analysis, the role of the environment, and the seemingly different versions that exist of the perspective. The perhaps deepest problem, however, is the lack of theorizing with respect to the creation of new resources, which tends to give the perspective a retrospective character and makes its application to managerial practice. It is suggested that resource-based scholars may draw upon work relating to real options, complementarities and organizational learning if they wish to remedy this deficiency.
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(with Mikael Iversen) “Promoting Synergies in Multiproduct Firms”, Finnish Journal of Business 2: 135-158.
This article address the issue of how to pro-mote synergies in divisionalized, diversified firms from the perspectives of the resource-based view and recent work on corporate headquarters, thus connecting the analysis of sustained competitive advantage with organizational issues. The article suggests three questions for future research, namely 1): How should we theoretically understand synergies? 2): How, and by whom, are they promoted?, and 3): May we utilize insights developed under 1) and 2) when seeking a rationale for the existence and functions of the corporate headquarters? The article then
provides some tentative answers to these questions, arguing that the concept of complementarity is particularly likely to capture most meanings of synergy. Furthermore, it is proposed that the CHQ promotes synergies through four different influence activities, and that these activities provide the raison d'etre of the corporate headquarters by creating value unobtainable for specialized firms. The reasoning is illustrated with examples from Danish corporations, specifically Danfoss and Bang & Olufsen.
1997
“Evolutionary and Contractual Theories of the Firm: How do They Relate?”, Rivista Internazionale di Scienze Sociali 29: 63-91.
(no abstract available)
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Reprinted in Nicolai J Foss, ed. 2000. The Theory of the Firm: Critical Perspectives in Economic Organization. (4 vols.). London. Routledge.
(no abstract available)
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“Austrian Insights and the Theory of the Firm”, Advances in Austrian Economics 4: 175-198.
The theory of the firm, and more broadly of economic organization, has been one of the most rapidly expanding areas of research in economics in the last decade. It has also been one of the most prestigious to work in, and most of the younger, top theorists in mainstream economics have contributed to it. "A theory of the firm" is now generally understood as a theory that addresses at least one (and preferably all three) of the following issues (cf. Holmstr6m and Tirole 1989):
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“On the Rationales of Corporate Headquarters”, Industrial and Corporate Change 6: 313-339
This paper addresses the rationales of corporate headquarters (CHQ). In organizational economics, the role of the CHQ is mostly seen to be limited to monitoring and incentive issues. However, it has also long been recognized that the CHQ may assist in exploiting economies of scope and other synergies and in building up internal capital markets—that is to say, it may 'create the positive' rather than merely 'avoid the negative'. This paper links up with the 'positive' view of the CHQ, but expands substantially on it. Starting from the capabilities view of the firm, I suggest that an important part of the rationales of the CHQ lies in its ability to (i) perform 'knowledge-direction' (i.e. use, blend and direct the initial knowledge endowments of input owners) and (ii) exploit the flexibility of incomplete contracts, particularly with respect to growing capabilities through coordinated organizational learning. While these functions of the CHQ are recognized within the business history and strategy literature, they are neglected within the literature on organizational economics. The novelty of the paper lies in giving an economically oriented treatment of these value creating capabilities of the CHQ.
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“The Classical Theory of Production and the Capabilities View of the Firm”, Journal of Economic Studies 24: 307-323.
Makes the case that the classical theory of production, as developed primarily by Adam Smith, should be seen as a precursor of the modern capabilities view of the firm (Penrose, Richardson, Nelson and Winter, Teece, Langlois and others). Furthermore, based on an empiricist epistemology, Smith developed ideas that are close to modern notions such as routines and bounded rationality. Shows that his emphasis on knowledge, specialization and learning is characteristic of the capabilities view, but not of the contractual view. Discusses the intellectual link from Smith to other classicals, such as Babbage and Marx, to Marshall and such post-Marshallians as McGregor, Andrews, Downie, Penrose, and Richardson. Argues that the classical-capabilities view of the firm can be seen as a theory of firm boundaries. States that the make-or-buy decision may in fact hinge on production-cost considerations, contrary to the spirit of standard transaction-cost economics.
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“Ethics, Discovery, and Strategy”. Journal of Business Ethics 16: 1131-1142.
I address the issue of justifiable profits from distinct perspectives in economics, strategy research and ethics. Combining insights from Austrian economics, the resource-based perspective, and finders, keepers ethics, I argue that strategy is about the discovery of hitherto unexploited possibilities for exchange. To the extent that strategy is about the discovery/creation ex nihilo of products, ways of producing products, etc., the resulting profits are argued to be justifiable from a finders, keepers perspective.
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“Economics, Institutions, and Ludwig von Mises”. Cultural Dynamics 9: 77-96.
I argue that what made the Austrian School distinct from other economic traditions was not only a thoroughgoing subjectivism and a rationalistic methodology, but just as much an emphasis that real institutions should be approached using choice-theoretic tools. Using the work of Ludwig von Mises as the prime reference, I argue that the Austrians anticipated a number of the concerns of contemporary neo-institutionalists, particularly work on property rights. However, with respect to the institution theme, Mises was much more than simply a precursor; he suggested blending institutional and process analysis in a way that is still to be achieved by modern neo-institutionalists.
1996
“More Critical Comments on Knowledge-Based Theories of the firm”. Organization Science 7: 519-523.
This paper continues the critique of knowledge-based theories of the firm that was undertaken in Foss (Foss, N. J. 1996a. Knowledge-based approaches to the theory of the firm: Some critical comments. Organ. Sci. 7(5) 470–476.), specifically criticizing the reasoning in Kogut and Zander (Kogut, B., U. Zander. 1996. What firms do? Coordination, identity, and learning. Organ. Sci. 7(5) 502–518.) and Conner and Prahalad (Conner, K. R., C. K. Prahalad. 1996. A resource-based theory of the firm: Knowledge versus opportunism. Organ. Sci. 7(5) 477–501.). I argue that Kogut and Zander (Kogut, B., U. Zander. 1996. What firms do? Coordination, identity, and learning. Organ. Sci. 7(5) 502–518.) attempt to explain firm organization in terms of a preference for such organization—a distinctly non-economic mode of explanation—and that Conner and Prahalad fail to sufficiently characterize the nature of the firm, because they identify firm organization with the employment contract and neglect asset-ownership.
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“Knowledge-Based Approaches to the Theory of the Firm: Some Critical Comments”. Organization Science 7: 470-476.
It is argued that Kogut and Zander (Kogut, B., U. Zander. 1992. Knowledge of the firm, combinative capabilities, and the replication of technology. Organ. Sci. 3 383–397.) and Conner (Conner, K. R. 1991. A historical comparison of resource-based theory and five schools of thought within industrial organization economics: Do we have a new theory of the firm? J. Management 17 121–154.) erred in the specific way in which they claimed that a distinct theory of the multi-person firm can be constructed on the basis of a theory of organizational knowledge or from resource-based insights. It is not possible to tell very much of a story about why there should be firms in lieu of notions such as "opportunism" or "moral hazard." However, properly interpreted, knowledge-based theories may help shed light on issues relating to the boundaries and internal organization of the firm.
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“Strategy, Economics, and Michael Porter”. Journal of Management Studies 33: 1-24. Reprinted in David Faulkner, ed. Strategy: Critical Perspectives, London: Routledge, forthcoming).
To be reprinted in a volume on Michael Porter, edited by Hiro Isuzhi and Robert Huggins.
This article links up with recent discussions of the strategy/economics nexus. In contrast to most of the proponents and opponents of economics in strategy thinking, a balanced pluralist perspective is adopted. According to this, a discipline should strike a balance between the generation of new theoretical alternatives and the selection among them. Applying this general idea, I argue that the strategy field is too pluralistic, and that the unfortunate consequences of excessive pluralism and eclecticism may be remedied by economics playing a larger role in the conversation of strategy researchers. This does not necessarily mean standard neoclassical economics or new industrial organization economics; evolutionary economics, for example, is a serious contender, too. the evolution of Michael Porter's thinking is used as a case for demonstrating some of the advantages and some of the dangers of economics in the strategy field, and for illustrating points about eclecticism and pluralism.
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“Harold Malmgren's Analysis of the Firm: Lessons for Modern Theorists?”. Review of Political Economy 8: 349-366.
This paper analyses Harald B. Malmgren's neglected 1961 paper 'Information, expectations, and the theory of the firm', which provided the first extensive elaboration of Coase's 1937 analysis in 'The nature of the firm'. Malmgren's primary sources of inspiration were Coase, Hayek, Richardson and Penrose. Combining these sources in a creative way allowed Malmgren to anticipate themes that have only recently been addressed in the theory of economic organization. However, there is still much to be learned from Malmgren's discussion, particularly the way in which he combined contractual and knowledge-based approaches to the firm. Moreover, Malmgren suggested that it is possible to construct an opportunism-independent approach to economic organization.
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“Capabilities and the Theory of the Firm”, Revue d’Economie Industrielle 77: 7-28 Reprinted in Richard N Langlois, Tony Fu-Lai Yu and Paul L Robertson, eds., Alternative Theories of the Firm, Cheltenham: Edward Elgar).
The recent decade has witnessed a strong expansion of work on the firm, both from a capabilities perspective and from a contractual perspective. These two bodies of theories are often thought to be fundamentally different, because their domains of applications are different (knowledge-accumulation vs contracts and incentives). However, we need to integrate propositions from capabilities perspectives with ideas about economic organization (markets, hybrids, firms). This is because only a more unified theory will allow us to understand such issues as the dynamics of the modern corporation, and, more topically, the costs and benefits of outsourcing. I discuss the relations between these two bodies of theories. It is possible to argue in favor of a relation of complementarity between the two and pursue a research strategy on this basis. However, it is also possible two claim that they are rivals. Along this line, it is argued that the capabilities perspective contains propositions about economic organization that are not to be found within the modern Coasian approach to economic organization, and thus may be seen as a distinct emerging perspective on economic organization.
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“Higher-Order Industrial Capabilities and Competitive Advantage”. Industry and Innovation 3: 1-20.
This paper makes some analytical suggestions to help explain the advantages that firms derive from clustering or networking. The concept of 'higher-order capabilities' is introduced to identify the assets which may give firms in such clusters or networks some competitive advantages over firms that are not members of such clusters. Higher-order capabilities are non-traded interdependencies among firms, and may be approached in terms of the resource-based view of recent strategic thinking.
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(with Carsten A. Koch) “Opportunism, Organizational Economics, and the Network Approach” Scandinavian Journal of Management 12: 189-205.
This article discusses the concept of opportunism, familiar from Williamsonian transaction cost economics, and its role in business studies. Various arguments for the importance and centrality of the concept are presented. The transaction cost framework is compared to the Swedish network approach. Specifically, opportunistic behavior seems to be implicitly present in the claims of network theory. The overall conclusion is that many network arguments are not in substantial conflict with transaction cost economics. And by joining forces, the approaches may provide a more comprehensive and dynamic theory of economic relationships. A number of new arguments are brought to bear on these issues.
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“Firms, Incomplete Contracts, and Organizational Learning”. Human Systems Management 15: 17-26.
Argues that organizations can adapt to unforeseen contingencies if they accept that all contingencies cannot be covered by a contract, and that incomplete contracts are a necessary feature of a sound economic approach to the organization. Believes that organizations can deal with the uncertainty that this involves by seeing these incomplete contracts as being structures for problem solving. Links the need for effective problem solving to the use of knowledge within the organization and the development of organizational learning. Concludes that the incompleteness of contracts is not a problem but a virtue, allowing the firm to function as an adaptive cognitive system.
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“The “Alternative” Theories of Knight and Coase, and the Modern Theory of the Firm”. Journal of the History of Economic Thought, vol. 18, no.1, pp. 76-95
In his contribution to the 1987 conference that celebrated the fiftieth anniversary of Ronald Coase's “The Nature of the Firm” (1937), Harold Demsetz noted that from the birth of modern economics to 1970, “only two works seem to have been written about the theory of the firm that have altered the perspectives of the profession: Knight's Risk, Uncertainty, and Profit (1921) and Coase's ‘The Nature of the Firm’” (Demsetz 1993, in Williamson and Winter 1993, p. 159). It is easy to feel uncomfortable with this observation. First, Coase's article was ignored for decades. Second, Knight's book did not receive much attention because of its theory of economic organization, but because of its statement of the theory of perfect competition (Stigler 1957; Machovec 1995), its distinction between risk and uncertainty, and its theory of profits (see, e.g., Boulding 1942 and Papandreou 1952).'
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“Post-Marshallian and Austrian Economics: Towards a Fruitful Liaison? Advances in Austrian Economics 3: 213-221.
(No abstract available)
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“Spontaneous Social Order: Economics and Schützian Sociology”. American Journal of Economics and Sociology 55: 73-86.
This paper relates to the emerging economics/sociology-nexus, in arguing that economists may have a lesson to learn from the work of the sociologist Alfred Schütz. The problem of coordination, which is the problem of theoretically demonstrating the possibility of spontaneous order in society, is discussed. While conventional economics and classical game-theory have not solved or even convincingly addressed this problem, it is explicitly addressed by Austrian and neo-institutional economics. It is argued that these two traditions in some important aspects dovetail with Schützian insights, in that the Schützian analysis of the structures of the life-world contains a number of pertinent insights into the coordination problem.
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“The Coordination of Investments in a Market Economy: Comments on a Revitalized Marxian Theme”. Studies in Political Economy 49: 149-161.
(no abstract available)
1995
“Types of Price Theory”. Rivista Internazionale di Scienze Sociali 53: 253-276.
(no abstract available)
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“More on “Hayek's Transformation”. History of Political Economy 27 (2): 345-364.
(no abstract available)
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“Information and the Market Economy: A Note on a Common Marxist Fallacy”. Review of Austrian Economics 8: 127-134.
(no abstract available)
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“The Economic Thought of an Austrian Marshallian: George Barclay Richardson”. Journal of Economic Studies 22: 23-44.
Discusses the economic contributions of George Barclay Richardson. Detailing the Austrian and Marshallian aspects of his work, argues that all his contributions – on industrial organization, welfare economics, history of thought, etc. – are united in their concern with the co-ordination problem, that is, the problem of theoretically demonstrating how order may be achieved in decentralized market economies. Furthermore, argues that Richardson's work from 1953 to 1972 in the answers it gave to this problem anticipated a number of themes that have only recently acquired prominence in economic theory, specifically in neo-institutionalist thought. The pioneering originality of his work also partly accounts for the relative neglect with which it was originally received.
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1994
“Cooperation is Competition: George Richardson on Coordination and Interfirm Arrangements”. British Review of Economic Issues 16: 25-49.
(no abstract available)
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“The Biological Analogy and the Theory of the Firm,” Journal of Economic Issues 18: 1115-1136
Reprinted in Geoff Hodgson, ed. The Foundations of Evolutionary Economics, Aldershot: Edward Elgar, 1998.
Although the application of analogies from biological evolutionary thought to economics is an old pastime, it is well known that economists were among the early sources of inspiration for the emerging theory of natural selection. Charles Darwin is said to have been strongly inspired by the work of Thomas Malthus on population as well as by the broadly evolutionary theorizing of the Scottish Enlightment [Schweber 1977; Jones 1980; Jones 1989]. Given this, one would perhaps have expected economists to enthusiastically adopt results from evolutionary biology and to endorse evolutionary modes of thought. However, in the mainstream tradition - on almost any level - one seeks in vain for anything that can properly be said to constitute an evolutionary model.
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“Why Transaction Cost Economics Needs Evolutionary Economics”. Revue d'Economie Industrielle No. 68: 7-26
L'article propose de combiner les théories néo-institutionalistes du type coûts de transaction avec les théories évolutionnistes des marchés et organisations de manière à obtenir un néo-institutionalisme dynamique. L'argumentation s'appuie sur l'existence d'un certain nombre de réalités qui ne peuvent être expliquées de manière satisfaisante que pour une telle théorie, en insistant sur la nécessité de changement dans le néo-institutionalisme. Une sorte de programme minimum pour une théorie néo-institutionaliste dynamique est ensuite présentée.
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“Realism and Evolutionary Economics”. Journal of Social and Biological Systems 17 (1) 21-40.
This article provides a discussion of the foundational aspects of evolutionary economics. Using the framework developed by British realist philosopher Roy Bhaskar, I argue that what sets evolutionary economics apart from neoclassical economics is fundamentally a difference that may best be called “ontological.” Whereas evolutionary economics theorizes on the basis of an economic universe that is open, in the sense that the emergence of novelties is allowed, neoclassical economics suppresses novelty. Employing Bhaskarian concepts such as “powers,” “generative mechanism,” and “closure,” I identify further differences—in the domains of explanatory approach, for example, and trace them to the underlying ontological difference.
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“The Two Coasian Traditions”. Review of Political Economy 6: 35-61
Starting from the observation that the modern theory of the firm is branching out in at least two directions, this article argues that the existing differences lie in their underlying ontology. On the basis of the discussion of Bhaskar (1978) it is argued that underneath the neoclassical 'nexus of contracts'- approach to the firm is an ontology that differs from that of the more heterodox Williamsonian transaction-cost economics. From the difference in terms of ontology flows differences in terms of conceptualizations of behaviour, mode of explanation etc. It is furthermore argued that the historical root of these differences is traceable is Coase's 1937-paper, 'The nature of the firm'.
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“The Theory of the Firm: The Austrians as Precursors and Critics of Contemporary Theory”. Review of Austrian Economics 7 (1): 31-65. Published in Spanish in Libertas 1997).
More than one commentator has observed that a distinct theory of the firm is conspicuously missing from the main body of Austrian economics (e.g., Langlois 1991, p. 2; Minkler 1991, p. 8). As two Austrian economists observed some years ago: "there is no subjectivist or Austrian theory of the firm" (O'Dris- coll and Rizzo 1985, p. 123). That is still the situation. With the term "theory of the firm," I shall set forth a theory that has something to say about the existence, the boundaries and the internal organization of the institution known as the business firm. And with the term "firm," I shall describe an organization that is planned with the express purpose of earning profit. In Hayekian terms (Hayek 1973), the firm is a "planned order," an aspect of "taxis." That social institutions have always occupied center stage in Austrian economics is a proposition that commands widespread agreement today (Hodgson 1988; Langlois 1986,1991). Many econo- mists recognize the distinctiveness of, for example, the Mengerian theory of the origin of a medium of exchange (Menger 1871, chap. 8), and probably even more economists are familiar with the Hayekian account of the information providing function of the price system (Hayek 1945).
1993
“Notes on the Socialist Calculation Debate”. Rivista inter¬nazionale di Scienze sociali 51: 147-168.
(no abstract available)
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“More on Knight and the Theory of the Firm”. Managerial and Decision Economics 14: 269-276.
This article argues that Boudreaux and Holcombe (1989) misrepresented at least some contemporary theories of the firm when they claimed that these theories were constructed on a rigid general equilibrium basis, and contrasted them unfavorably with Frank Knight's theory of the firm. While nexus of contract theories may partially fit this description, this is not the case with the theorizing represented by the work of Oliver Williamson. Boudreaux and Holcombe are also criticized for failing to see that Knight's theory of the firm is in fact consistent with much contemporary theorizing on the firm.
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“Theories of the Firm: Contractual and Competence Perspectives” (1993). Journal of Evolutionary Economics 3 (2): 127-144. Reprinted in Nicolai J Foss, ed. 2000. The Theory of the Firm: Critical Perspectives in Economic Organization. (4 vols.). London. Routledge. Martin Ricketts, ed. The Economics of Modern Business Enterprise, 3 Vols. Cheltenham: Edward Elgar, 2007.
The article compares alternative approaches to the theory of the firm. The two main approaches confronted are the contractual (Coasian) perspective and the competence (evolutionary) perspective. Whereas the firm as a repository of tacit knowledge is neglected in the contractual perspectives, it occupies center stage in the competence perspective. It is argued that the competence perspective is not only applicable an understanding of the sources of firms' competitive advantage, but may also be applied to the issues of the existence and the boundaries of the firm. This means that a distinct theory of the firm can be constructed on the basis of evolutionary theory.
1991
“The Suppression of Evolutionary Approaches in Economics: The Case of Marshall and Monopolistic Competition”. Methodus 3: 65-72. (December 1991).
Reprinted in Geoff Hodgson (ed.) (1995) : Economics and Biology. Aldershot: Edward Elgar).
(no abstract available), but paper can be retrieved from the link above.