IDEAS home Printed from https://ideas.repec.org/a/taf/ijecbs/v9y2002i1p9-35.html
   My bibliography  Save this article

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

Author

Listed:
  • Nicolai Foss

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.

Suggested Citation

  • 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.
  • Handle: RePEc:taf:ijecbs:v:9:y:2002:i:1:p:9-35 DOI: 10.1080/13571510110102958
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/10.1080/13571510110102958
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. 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, pages 61-77.
    2. Raghuram G. Rajan & Luigi Zingales, 1998. "Power in a Theory of the Firm," The Quarterly Journal of Economics, Oxford University Press, vol. 113(2), pages 387-432.
    3. Hart, Oliver & Moore, John, 1990. "Property Rights and the Nature of the Firm," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1119-1158, December.
    4. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-325, June.
    5. Milgrom, Paul, 1987. "Adverse Selection Without Hidden Information," Department of Economics, Working Paper Series qt62t1w8hf, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    6. Bengt Holmstrom & John Roberts, 1998. "The Boundaries of the Firm Revisited," Journal of Economic Perspectives, American Economic Association, pages 73-94.
    7. Erik Brynjolfsson, 1994. "Information Assets, Technology and Organization," Management Science, INFORMS, pages 1645-1662.
    8. Jack A. Nickerson & Todd R. Zenger, 2002. "Being Efficiently Fickle: A Dynamic Theory of Organizational Choice," Organization Science, INFORMS, vol. 13(5), pages 547-566, October.
    9. Keld Laursen, 2002. "The Importance of Sectoral Differences in the Application of Complementary HRM Practices for Innovation Performance," International Journal of the Economics of Business, Taylor & Francis Journals, pages 139-156.
    10. Milgrom, Paul R, 1988. "Employment Contracts, Influence Activities, and Efficient Organization Design," Journal of Political Economy, University of Chicago Press, pages 42-60.
    11. Wernerfelt, Birger, 1997. "On the Nature and Scope of the Firm: An Adjustment-Cost Theory," The Journal of Business, University of Chicago Press, vol. 70(4), pages 489-514, October.
    12. 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.
    13. 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.
    14. Baker, George & Gibbons, Robert & Murphy, Kevin J, 1999. "Informal Authority in Organizations," Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(1), pages 56-73, April.
    15. Israel M. Kirzner, 1997. "Entrepreneurial Discovery and the Competitive Market Process: An Austrian Approach," Journal of Economic Literature, American Economic Association, pages 60-85.
    16. Bolton, Patrick & Farrell, Joseph, 1990. "Decentralization, Duplication, and Delay," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 803-826, August.
    17. Rabin, Matthew, 1993. "Information and the Control of Productive Assets," Journal of Law, Economics, and Organization, Oxford University Press, pages 51-76.
    18. Kirsten Foss & Nicolai Foss, 2001. "Assets, Attributes and Ownership," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 8(1), pages 19-37.
    19. Holmstrom, Bengt & Milgrom, Paul, 1994. "The Firm as an Incentive System," American Economic Review, American Economic Association, pages 972-991.
    20. Geoffrey Hodgson, 2002. "The Legal Nature of the Firm and the Myth of the Firm-Market Hybrid," International Journal of the Economics of Business, Taylor & Francis Journals, pages 37-60.
    21. Todd Zenger, 2002. "Crafting Internal Hybrids: Complementarities, Common Change Initiatives, and the Team-Based Organization," International Journal of the Economics of Business, Taylor & Francis Journals, pages 79-95.
    22. Kirk Monteverde, 1995. "Technical Dialog as an Incentive for Vertical Integration in the Semiconductor Industry," Management Science, INFORMS, pages 1624-1638.
    23. Milgrom, Paul & Roberts, John, 1990. "The Economics of Modern Manufacturing: Technology, Strategy, and Organization," American Economic Review, American Economic Association, pages 511-528.
    24. Cheung, Steven N S, 1983. "The Contractual Nature of the Firm," Journal of Law and Economics, University of Chicago Press, vol. 26(1), pages 1-21, April.
    25. Liebeskind, Julia Porter, 1997. "Keeping Organizational Secrets: Protective Institutional Mechanisms and Their Costs," Industrial and Corporate Change, Oxford University Press, vol. 6(3), pages 623-663, September.
    26. Mark Casson, 1994. "Why are Firms Hierarchical?," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 1(1), pages 47-76.
    27. Anna Grandori, 1997. "Governance Structures, Coordination Mechanisms and Cognitive Models," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 1(1), pages 29-47, March.
    28. Minkler, Alanson P., 1993. "Knowledge and internal organization," Journal of Economic Behavior & Organization, Elsevier, vol. 21(1), pages 17-30, May.
    29. Masten, Scott E, 1988. "A Legal Basis for the Firm," Journal of Law, Economics, and Organization, Oxford University Press, vol. 4(1), pages 181-198, Spring.
    30. Demsetz, Harold, 1988. "The Theory of the Firm Revisited," Journal of Law, Economics, and Organization, Oxford University Press, vol. 4(1), pages 141-161, Spring.
    31. Helper, Susan & MacDuffie, John Paul & Sabel, Charles, 2000. "Pragmatic Collaborations: Advancing Knowledge While Controlling Opportunism," Industrial and Corporate Change, Oxford University Press, vol. 9(3), pages 443-487, September.
    32. Putterman, Louis, 1995. "Markets, hierarchies, and information: On a paradox in the economics of organization," Journal of Economic Behavior & Organization, Elsevier, vol. 26(3), pages 373-390, May.
    33. Herbert A. Simon, 1991. "Organizations and Markets," Journal of Economic Perspectives, American Economic Association, pages 25-44.
    34. Kochan, Thomas A., 1996. "What works at work : overview and assessment," Working papers 3886-96., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    35. Foss, Kirsten, 2001. "Organizing Technological Interdependencies: A Coordination Perspective on the Firm," Industrial and Corporate Change, Oxford University Press, vol. 10(1), pages 151-178, March.
    36. Hermalin, Benjamin E, 1999. "The Firm as a Noneconomy: Some Comments on Holmstrom," Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(1), pages 103-106, April.
    37. Mark Tomlinson, 1999. "The learning economy and embodied knowledge flows in Great Britain," Journal of Evolutionary Economics, Springer, pages 431-451.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Utz Schäffer & Matthias D. Mahlendorf & Jochen Rehring, 2014. "Does the Interactive Use of Headquarter Performance Measurement Systems in Foreign Subsidiaries Endanger the Potential to Profit from Local Relationships?," Australian Accounting Review, CPA Australia, vol. 24(1), pages 21-38, March.
    2. 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.
    3. Andrea Szalavetz, 2003. "Peripheral participants in global production networks - changing dynamics in the transformation from industrial to intellectual capitalism," IWE Working Papers 142, Institute for World Economics - Centre for Economic and Regional Studies- Hungarian Academy of Sciences.
    4. Lars Lindkvist, 2004. "Governing Project-based Firms: Promoting Market-like Processes within Hierarchies," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 8(1), pages 3-25, March.
    5. 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.
    6. Ciabuschi, Francesco & Dellestrand, Henrik & Kappen, Philip, 2012. "The good, the bad, and the ugly: Technology transfer competence, rent-seeking, and bargaining power," Journal of World Business, Elsevier, vol. 47(4), pages 664-674.
    7. Ciabuschi, Francesco & Forsgren, Mats & Martín Martín, Oscar, 2012. "Headquarters involvement and efficiency of innovation development and transfer in multinationals: A matter of sheer ignorance?," International Business Review, Elsevier, pages 130-144.

    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:taf:ijecbs:v:9:y:2002:i:1:p:9-35. 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: (Chris Longhurst). General contact details of provider: http://www.tandfonline.com/CIJB20 .

    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 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.

    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.