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The Use of Knowledge in Firms


  • Nicolai J. Foss


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.

Suggested Citation

  • Nicolai J. Foss, 1999. "The Use of Knowledge in Firms," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 155(3), pages 458-458, September.
  • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(199909)155:3_458:tuokif_2.0.tx_2-6

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    References listed on IDEAS

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    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Nicolai J. Foss & Peter G. Klein, 2010. "Austrian Economics and the Theory of the Firm," Chapters,in: The Elgar Companion to Transaction Cost Economics, chapter 27 Edward Elgar Publishing.
    2. Michael Steiner, 2004. "The Role of Clusters in Knowledge Creation and Diffusion – an Institutional Perspective," ERSA conference papers ersa04p612, European Regional Science Association.
    3. 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.
    4. Wink, Ruediger, 2002. "The transregional dimension of territorial knowledge management. An evolutionary perspective on the role of universities," ERSA conference papers ersa02p496, European Regional Science Association.
    5. K. Foss & Nicolai Foss, 2006. "The limits to designed orders: Authority under “distributed knowledge” conditions," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 19(4), pages 261-274, December.
    6. Nigel Wadeson, 2013. "The Division of Labour under Uncertainty," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 169(2), pages 253-274, June.
    7. Silviya Draganinska & Rudiger Wink, 2006. "Formal Knowledge Examination Institutions: Chance Or Threat to European Medium Tech-Nology SMEs? A Cognitive and Institutional Perspective," ERSA conference papers ersa06p404, European Regional Science Association.
    8. David Cayla, 2006. "Ex Post and Ex Ante Coordination: Principles of Coherence in Organizations and Markets," Post-Print halshs-00110810, HAL.
    9. Thierry BURGER-HELMCHEN, 2004. "How do real options come into existence? A step toward an option- based theory of the firm," Finance 0409054, EconWPA.
    10. Henk L.M. Kox, 2003. "Business services and the Baumol disease," Development and Comp Systems 0309007, EconWPA.
    11. Henk L.M. Kox, 2004. "The contribution of business services to aggregate productivity growth," Industrial Organization 0402005, EconWPA.
    12. Silviya Draganinska & Ruediger Wink, 2005. "Interregional and international knowledge flows in medium technology sectors - The role of formal and informal institutions," ERSA conference papers ersa05p381, European Regional Science Association.
    13. Nicolai Foss, 2002. "'Coase vs Hayek': Economic Organization and the Knowledge Economy," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 9(1), pages 9-35.
    14. Cappellin, Riccardo & Steiner, Michael, 2002. "Enlarging the scale of knowledge in innovation networks: theoretical perspectives and policy issues," ERSA conference papers ersa02p506, European Regional Science Association.

    More about this item

    JEL classification:

    • B15 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Historical; Institutional; Evolutionary
    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty


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