Ever since its emergence in the 1970s the modern economic or Coasian theory of the firm has been discussed and challenged by sociologists, heterodox economists, management scholars, and other critics. This chapter reviews and assesses these critiques, focusing on behavioral issues (bounded rationality and motivation), process (including path dependence and the selection argument), entrepreneurship, and the challenge from knowledge-based theories of the firm.
{"title":"The Theory of the Firm and its Critics: A Stocktaking and Assessment","authors":"Nicolai J. Foss, Peter G. Klein","doi":"10.2139/ssrn.695484","DOIUrl":"https://doi.org/10.2139/ssrn.695484","url":null,"abstract":"Ever since its emergence in the 1970s the modern economic or Coasian theory of the firm has been discussed and challenged by sociologists, heterodox economists, management scholars, and other critics. This chapter reviews and assesses these critiques, focusing on behavioral issues (bounded rationality and motivation), process (including path dependence and the selection argument), entrepreneurship, and the challenge from knowledge-based theories of the firm.","PeriodicalId":101736,"journal":{"name":"CORI: Contracting & Organizations Research Institute","volume":"18 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2005-03-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130051289","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Although they have developed very much in isolation from each other, we argue the theory of entrepreneurship and the economic theory of the firm are closely related, and each has much to learn from the other. In particular, the notion of entrepreneurship as judgment associated with Frank Knight and some Austrian school economists aligns naturally with the theory of the firm. In this perspective, the entrepreneur needs a firm, that is, a set of alienable assets he controls, to carry out his function. We further show how this notion of judgment adds to the key themes in the modern theory of the firm (i.e., the existence, boundaries, and internal organization). In our approach, resource uses are not data, but are created as entrepreneurs envision new ways of using assets to produce goods. The entrepreneur’s decision problem is aggravated by the fact that capital assets are heterogeneous. Asset ownership facilitates experimenting entrepreneurship: Acquiring a bundle of property rights is a low cost means of carrying out commercial experimentation. In this approach, the existence of the firm may be understood in terms of limits to the market for judgment relating to novel uses of heterogeneous assets; and the boundaries of the firm, as well as aspects of internal organization, may be understood as being responsive to entrepreneurial processes of experimentation.
{"title":"Entrepreneurship and the Economic Theory of the Firm: Any Gains from Trade?","authors":"Nicolai J. Foss, Peter G. Klein","doi":"10.2139/ssrn.596226","DOIUrl":"https://doi.org/10.2139/ssrn.596226","url":null,"abstract":"Although they have developed very much in isolation from each other, we argue the theory of entrepreneurship and the economic theory of the firm are closely related, and each has much to learn from the other. In particular, the notion of entrepreneurship as judgment associated with Frank Knight and some Austrian school economists aligns naturally with the theory of the firm. In this perspective, the entrepreneur needs a firm, that is, a set of alienable assets he controls, to carry out his function. We further show how this notion of judgment adds to the key themes in the modern theory of the firm (i.e., the existence, boundaries, and internal organization). In our approach, resource uses are not data, but are created as entrepreneurs envision new ways of using assets to produce goods. The entrepreneur’s decision problem is aggravated by the fact that capital assets are heterogeneous. Asset ownership facilitates experimenting entrepreneurship: Acquiring a bundle of property rights is a low cost means of carrying out commercial experimentation. In this approach, the existence of the firm may be understood in terms of limits to the market for judgment relating to novel uses of heterogeneous assets; and the boundaries of the firm, as well as aspects of internal organization, may be understood as being responsive to entrepreneurial processes of experimentation.","PeriodicalId":101736,"journal":{"name":"CORI: Contracting & Organizations Research Institute","volume":"26 6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2004-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133851811","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Should a firm make its own inputs, buy them on the spot market, or maintain an ongo- ing relationship with a particular supplier? The emergence of the transaction cost approach to vertical integration in the 1970s and 1980s generated a substantial body of empirical research on vertical firm boundaries and related issues in contracting and organizational design. This chapter reviews the empirical literature on the make-or-buy decision, focusing on the transaction cost approach. After reviewing the Coasian or "contractual" approach to vertical integration I summa- rize the most common empirical strategies, highlighting current controversies over data and methods, sample selection, and related issues. I next provide a sampler of evidence on compo- nent procurement, forward integration into marketing and distribution, contractual design, and the use of informal agreements. Finally, I discuss outstanding challenges and directions for fu- ture research, focusing on the measurement and definition of key variables, the role of asset specificity, the comparison of rival explanations, causality, and the effects of the legal and regu- latory environment.
{"title":"The Make-or-Buy Decision: Lessons from Empirical Studies","authors":"Peter G. Klein","doi":"10.2139/ssrn.529962","DOIUrl":"https://doi.org/10.2139/ssrn.529962","url":null,"abstract":"Should a firm make its own inputs, buy them on the spot market, or maintain an ongo- ing relationship with a particular supplier? The emergence of the transaction cost approach to vertical integration in the 1970s and 1980s generated a substantial body of empirical research on vertical firm boundaries and related issues in contracting and organizational design. This chapter reviews the empirical literature on the make-or-buy decision, focusing on the transaction cost approach. After reviewing the Coasian or \"contractual\" approach to vertical integration I summa- rize the most common empirical strategies, highlighting current controversies over data and methods, sample selection, and related issues. I next provide a sampler of evidence on compo- nent procurement, forward integration into marketing and distribution, contractual design, and the use of informal agreements. Finally, I discuss outstanding challenges and directions for fu- ture research, focusing on the measurement and definition of key variables, the role of asset specificity, the comparison of rival explanations, causality, and the effects of the legal and regu- latory environment.","PeriodicalId":101736,"journal":{"name":"CORI: Contracting & Organizations Research Institute","volume":"23 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2004-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127265341","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper outlines a research program comparing the economic organization of agriculture in the United States and European Union. Both have highly developed agricultural sectors but their organizational arrangements vary widely. Comparative analysis not only provides a broad set of firms and industries to compare, but also highlights the interaction between the institutional environment and the arrangements established to govern agricultural transactions. We first assess the common trend toward consolidation and vertical integration, turning next to the economic organization of formal and informal networks. While history and path dependence explain some of the variety among U.S. and European practices, other local conditions are important as well. We conclude by assessing the policy implications of recent changes in economic organization.
{"title":"Organizational Issues in the Agri-Food Sector: Toward a Comparative Approach","authors":"C. Ménard, Peter G. Klein","doi":"10.2139/ssrn.509007","DOIUrl":"https://doi.org/10.2139/ssrn.509007","url":null,"abstract":"This paper outlines a research program comparing the economic organization of agriculture in the United States and European Union. Both have highly developed agricultural sectors but their organizational arrangements vary widely. Comparative analysis not only provides a broad set of firms and industries to compare, but also highlights the interaction between the institutional environment and the arrangements established to govern agricultural transactions. We first assess the common trend toward consolidation and vertical integration, turning next to the economic organization of formal and informal networks. While history and path dependence explain some of the variety among U.S. and European practices, other local conditions are important as well. We conclude by assessing the policy implications of recent changes in economic organization.","PeriodicalId":101736,"journal":{"name":"CORI: Contracting & Organizations Research Institute","volume":"57 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2004-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128399860","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We examine how organizational characteristics of producer-owned firms affect the level of perceived trust among cooperative members, using survey data from a sample of U.S. agricultural cooperatives. Our results indicate trust is correlated with property right and organizational structures previously identified in the literature as significant for cooperative performance. We find that the norm of equality and the homogeneity of member interests are key antecedents of organizational trust in producer-owned firms. We also find that some property right structures that improve organizational trust are counterproductive for member investment incentives.
{"title":"Organizational Antecedents of Trust in Producer-Owned Firms","authors":"Harvey S. James, Jr., M. Sykuta","doi":"10.2139/ssrn.481783","DOIUrl":"https://doi.org/10.2139/ssrn.481783","url":null,"abstract":"We examine how organizational characteristics of producer-owned firms affect the level of perceived trust among cooperative members, using survey data from a sample of U.S. agricultural cooperatives. Our results indicate trust is correlated with property right and organizational structures previously identified in the literature as significant for cooperative performance. We find that the norm of equality and the homogeneity of member interests are key antecedents of organizational trust in producer-owned firms. We also find that some property right structures that improve organizational trust are counterproductive for member investment incentives.","PeriodicalId":101736,"journal":{"name":"CORI: Contracting & Organizations Research Institute","volume":"18 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2003-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115332991","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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