IDEAS home Printed from https://ideas.repec.org/a/bla/kyklos/v52y1999i2p201-218.html
   My bibliography  Save this article

Capabilities and Governance: The Rebirth of Production in the Theory of Economic Organization

Author

Listed:
  • Richard N. Langlois
  • Nicolai J. Foss

Abstract

We argue that since Coase’s seminal 1937 paper on “The Nature of the Firm,” there has been an odd and unjustified separation between price theory and the economics of organization. For example, matters of production has been the domain of the former exclusively. However, a new approach to economic organization, here called “the capabilities approach,” that places production center-stage in the explanation of economic organization, is now emerging. We discuss the sources of this approach and its relation to the mainstream economics of organization.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Richard N. Langlois & Nicolai J. Foss, 1999. "Capabilities and Governance: The Rebirth of Production in the Theory of Economic Organization," Kyklos, Wiley Blackwell, vol. 52(2), pages 201-218, May.
  • Handle: RePEc:bla:kyklos:v:52:y:1999:i:2:p:201-218
    DOI: 10.1111/j.1467-6435.1999.tb01442.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1467-6435.1999.tb01442.x
    Download Restriction: no

    File URL: https://libkey.io/10.1111/j.1467-6435.1999.tb01442.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Rotemberg, Julio J & Saloner, Garth, 1994. "Benefits of Narrow Business Strategies," American Economic Review, American Economic Association, vol. 84(5), pages 1330-1349, December.
    2. Bruce Kogut & Udo Zander, 1992. "Knowledge of the Firm, Combinative Capabilities, and the Replication of Technology," Organization Science, INFORMS, vol. 3(3), pages 383-397, August.
    3. David J. TEECE, 2008. "Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy," World Scientific Book Chapters, in: The Transfer And Licensing Of Know-How And Intellectual Property Understanding the Multinational Enterprise in the Modern World, chapter 5, pages 67-87, World Scientific Publishing Co. Pte. Ltd..
    4. Oliver E. Williamson, 1991. "Strategizing, economizing, and economic organization," Strategic Management Journal, Wiley Blackwell, vol. 12(S2), pages 75-94, December.
    5. Nicolai J. Foss, 1996. "Capabilities and the Theory of the Firm," Revue d'Économie Industrielle, Programme National Persée, vol. 77(1), pages 7-28.
    6. Patrick Bolton & Mathias Dewatripont, 1994. "The Firm as a Communication Network," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 809-839.
    7. Radner, Roy, 1996. "Bounded Rationality, Indeterminacy, and the Theory of the Firm," Economic Journal, Royal Economic Society, vol. 106(438), pages 1360-1373, September.
    8. Alchian, Armen A & Woodward, Susan L, 1988. "The Firm is Dead; Long Live the Firm: A Review of Oliver E. Williamson's The Economic Institutions of Capitalism," Journal of Economic Literature, American Economic Association, vol. 26(1), pages 65-79, March.
    9. Williamson, Oliver E., 1988. "Technology and transaction cost economics : A reply," Journal of Economic Behavior & Organization, Elsevier, vol. 10(3), pages 355-363, October.
    10. Coase, R H, 1988. "The Nature of the Firm: Influence," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 4(1), pages 33-47, Spring.
    11. Brian J. Loasby, 1989. "The Mind and Method of the Economist," Books, Edward Elgar Publishing, number 288.
    12. Coase, R H, 1988. "The Nature of the Firm: Meaning," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 4(1), pages 19-32, Spring.
    13. Moore, John, 1992. "The firm as a collection of assets," European Economic Review, Elsevier, vol. 36(2-3), pages 493-507, April.
    14. Demsetz, Harold, 1988. "The Theory of the Firm Revisited," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 4(1), pages 141-161, Spring.
    15. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, February.
    16. David J. Teece, 2003. "Towards an Economic Theory of the Multiproduct Firm," World Scientific Book Chapters, in: Essays In Technology Management And Policy Selected Papers of David J Teece, chapter 15, pages 419-446, World Scientific Publishing Co. Pte. Ltd..
    17. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-795, December.
    18. Arrow, Kenneth J, 1985. "Informational Structure of the Firm," American Economic Review, American Economic Association, vol. 75(2), pages 303-307, May.
    19. Flaherty, M Therese, 1980. "Industry Structure and Cost-Reducing Investment," Econometrica, Econometric Society, vol. 48(5), pages 1187-1209, July.
    20. Holland, John H & Miller, John H, 1991. "Artificial Adaptive Agents in Economic Theory," American Economic Review, American Economic Association, vol. 81(2), pages 365-371, May.
    21. S.A. Lippman & R.P. Rumelt, 1982. "Uncertain Imitability: An Analysis of Interfirm Differences in Efficiency under Competition," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 418-438, Autumn.
    22. Aghion, Philippe & Tirole, Jean, 1995. "Some implications of growth for organizational form and ownership structure," European Economic Review, Elsevier, vol. 39(3-4), pages 440-455, April.
    23. Williamson, Oliver E, 1971. "The Vertical Integration of Production: Market Failure Considerations," American Economic Review, American Economic Association, vol. 61(2), pages 112-123, May.
    24. Klein, Benjamin, 1988. "Vertical Integration as Organizational Ownership: The Fisher Body-General Motors Relationship Revisited," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 4(1), pages 199-213, Spring.
    25. Foss, Nicolai J., 1996. "The “Alternative†Theories of Knight and Coase, and the Modern Theory of the Firm," Journal of the History of Economic Thought, Cambridge University Press, vol. 18(1), pages 76-95, April.
    26. Lewis, Tracy R & Sappington, David E M, 1991. "Technological Change and the Boundaries of the Firm," American Economic Review, American Economic Association, vol. 81(4), pages 887-900, September.
    27. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 1, number 1, December.
    28. Coase, Ronald H., 1990. "Accounting and the theory of the firm," Journal of Accounting and Economics, Elsevier, vol. 12(1-3), pages 3-13, January.
    29. Richard R. Nelson, 1991. "Why do firms differ, and how does it matter?," Strategic Management Journal, Wiley Blackwell, vol. 12(S2), pages 61-74, December.
    30. Paul Milgrom & John Roberts, 1988. "Economic Theories of the Firm: Past, Present, and Future," Canadian Journal of Economics, Canadian Economics Association, vol. 21(3), pages 444-458, August.
    31. Foss, Nicolai Juul, 1993. "Theories of the Firm: Contractual and Competence Perspectives," Journal of Evolutionary Economics, Springer, vol. 3(2), pages 127-144, May.
    32. Holmstrom, Bengt R. & Tirole, Jean, 1989. "The theory of the firm," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 2, pages 61-133, Elsevier.
    33. Barzel, Yoram, 1987. "The Entrepreneur's Reward for Self-policing," Economic Inquiry, Western Economic Association International, vol. 25(1), pages 103-116, January.
    34. Hart, Oliver, 1995. "Firms, Contracts, and Financial Structure," OUP Catalogue, Oxford University Press, number 9780198288817, November.
    35. Coase, R H, 1988. "The Nature of the Firm: Origin," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 4(1), pages 3-17, Spring.
    36. Klein, Benjamin & Crawford, Robert G & Alchian, Armen A, 1978. "Vertical Integration, Appropriable Rents, and the Competitive Contracting Process," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 297-326, October.
    37. Riordan, Michael H. & Williamson, Oliver E., 1985. "Asset specificity and economic organization," International Journal of Industrial Organization, Elsevier, vol. 3(4), pages 365-378, December.
    38. Richardson, G B, 1972. "The Organisation of Industry," Economic Journal, Royal Economic Society, vol. 82(327), pages 883-896, September.
    39. Milgrom, Paul & Roberts, John, 1990. "The Economics of Modern Manufacturing: Technology, Strategy, and Organization," American Economic Review, American Economic Association, vol. 80(3), pages 511-528, June.
    40. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 2, number 2, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gibbons, Robert, 2005. "Four forma(lizable) theories of the firm?," Journal of Economic Behavior & Organization, Elsevier, vol. 58(2), pages 200-245, October.
    2. Kim, Jongwook & Mahoney, Joseph T., 2008. "A Strategic Theory of the Firm as a Nexus of Incomplete Contracts: A Property Rights Approach," Working Papers 08-0108, University of Illinois at Urbana-Champaign, College of Business.
    3. Jain, Amit, 2011. "Connaissance, ressources, concurrence et les frontières de l'entreprise," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/6403 edited by Thiétart, Raymond-Alain, August.
    4. Hamed Tajedin & Hamed Tajedin & Mohammad Keyhani, 2019. "A Theory of Digital Firm-Designed Markets: Defying Knowledge Constraints with Crowds and Marketplaces," Strategy Science, INFORMS, vol. 4(4), pages 323-342, December.
    5. Nicolai J. Foss, 1997. "Incomplete Contracts and Economic Organization Brian Loasby and the Theory of the Firm," DRUID Working Papers 97-11, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    6. Nicolai J. Foss, 1996. "Capabilities and the Theory of the Firm," Revue d'Économie Industrielle, Programme National Persée, vol. 77(1), pages 7-28.
    7. James Jr., Harvey S., 1998. "Are employment and managerial control equivalent? Evidence from an electronics producer," Journal of Economic Behavior & Organization, Elsevier, vol. 36(4), pages 447-471, September.
    8. Nicholas S. Argyres & Teppo Felin & Nicolai Foss & Todd Zenger, 2012. "Organizational Economics of Capability and Heterogeneity," Organization Science, INFORMS, vol. 23(5), pages 1213-1226, October.
    9. Michael G. Jacobides, 2008. "How Capability Differences, Transaction Costs, and Learning Curves Interact to Shape Vertical Scope," Organization Science, INFORMS, vol. 19(2), pages 306-326, April.
    10. Kirsten Foss & Nicolai J. Foss, 2004. "The Next Step in the Evolution of the RBV: Integration with Transaction Cost Economics," management revue - Socio-Economic Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 15(1), pages 107-121.
    11. Argandoña, Antonio, 2010. "From action theory to the theory of the firm," IESE Research Papers D/855, IESE Business School.
    12. Stoelhorst, J. W. & van Raaij, Erik M., 2004. "On explaining performance differentials: Marketing and the managerial theory of the firm," Journal of Business Research, Elsevier, vol. 57(5), pages 462-477, May.
    13. Nicholas S. Argyres & Todd R. Zenger, 2012. "Capabilities, Transaction Costs, and Firm Boundaries," Organization Science, INFORMS, vol. 23(6), pages 1643-1657, December.
    14. Pitelis, Christos & Teece, David, 2009. "The (new) nature and essence of the firm," MPRA Paper 24317, University Library of Munich, Germany.
    15. Kapás, Judit, 1999. "Szükséges-e többdimenziós vállalatelmélet?. Az evolúciós vállalatelmélet kritikai összefoglalása [Is a multi-dimensional theory of the firm necessary?. A critical summary of the evolutionary theory," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(9), pages 823-841.
    16. John Finch & Nicola Dinnei, 2001. "Capturing Knightian Advantages of Large Business Organisations Through Group Decision-making Processes," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 8(3), pages 379-403.
    17. Margit Osterloh & Jetta Frost & Bruno Frey, 2002. "The Dynamics of Motivation in New Organizational Forms," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 9(1), pages 61-77.
    18. Carolin Haeussler & Matthew J. Higgins, 2012. "Explaining Preferences for Control Rights in Strategic Alliances: A Property Rights and Capabilities Perspective Approach," NBER Working Papers 18364, National Bureau of Economic Research, Inc.
    19. Teece, David J., 2010. "Technological Innovation and the Theory of the Firm," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 679-730, Elsevier.
    20. Aseem Kaul, 2013. "Entrepreneurial Action, Unique Assets, and Appropriation Risk: Firms as a Means of Appropriating Profit from Capability Creation," Organization Science, INFORMS, vol. 24(6), pages 1765-1781, December.

    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:kyklos:v:52:y:1999:i:2:p:201-218. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0023-5962 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0023-5962 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.