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'Coase vs Hayek': Economic Organization and the Knowledge Economy

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Author Info
Nicolai J. Foss

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Abstract

Many writers argue that economic organization is undergoing major transformation in the emerging knowledge economy; authority relations are withering; legal and ownership-based definitions of the boundaries of firms are becoming irrelevant and there are increasingly few constraints on the set of feasible combinations of coordination mechanisms. The present paper critically deals with these claims, beginning from the basic idea that they may be analysed as turning on the implications for the Coasian firm of the Hayekian notion that the distributed knowledge is a strong constraint on the use of planned coordination. It argues that there are efficiency reasons for the existence of authority under Hayekian distributed knowledge; that the increasing importance of knowledge in production does not render legal and ownership-based notions of the boundaries of the firm irrelevant; and that coordination mechanisms will also cluster in certain, predictable combinations in the emerging knowledge economy. Thus, Coasian firm organization is consistent with Hayekian knowledge conditions.

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Publisher Info
Article provided by Taylor and Francis Journals in its journal International Journal of the Economics of Business.

Volume (Year): 9 (2002)
Issue (Month): 1 (February)
Pages: 9-35
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Handle: RePEc:taf:ijecbs:v:9:y:2002:i:1:p:9-35

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Related research
Keywords: The Knowledge Economy; Authority; Firms' Boundaries; Internal Organization;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
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  12. Mendelson, Haim & Pillai, Ravindran R., 1999. "Information Age organizations, dynamics and performance," Journal of Economic Behavior & Organization, Elsevier, vol. 38(3), pages 253-281, March. [Downloadable!] (restricted)
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    Other versions:
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    Other versions:
  34. Milgrom, Paul R, 1988. "Employment Contracts, Influence Activities, and Efficient Organization Design," Journal of Political Economy, University of Chicago Press, vol. 96(1), pages 42-60, February. [Downloadable!] (restricted)
    Other versions:
  35. Todd R. Zenger, 2002. "Crafting Internal Hybrids: Complementarities, Common Change Initiatives, and the Team-Based Organization," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 9(1), pages 79-95, February. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Vitor Braga, 2004. "Business networking for SMEs as a means to promote regional competitiveness: A Theoretical Framework," ERSA conference papers ersa04p455, European Regional Science Association. [Downloadable!]
  2. Kirsten Foss & Nicolai J. Foss, 2003. "Authority in the Context of Distributed Knowledge," DRUID Working Papers 03-08, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies. [Downloadable!]
  3. Geoffrey M. Hodgson, 2002. "The Legal Nature of the Firm and the Myth of the Firm-Market Hybrid," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 9(1), pages 37-60, February. [Downloadable!] (restricted)
  4. Paul N. Gooderham & Svein Ulset, 2002. "'Beyond the M-form': Towards a Critical Test of the New Form," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 9(1), pages 117-138, February. [Downloadable!] (restricted)
  5. Lars Lindkvist, 2004. "Governing Project-based Firms: Promoting Market-like Processes within Hierarchies," Journal of Management and Governance, Springer, vol. 8(1), pages 3-25, March. [Downloadable!] (restricted)
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