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Economic Organization in the Knowledge Economy Some Austrian Insights

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  • Nicolai J. Foss

Abstract

I critically discuss recent claims about economic organization in the emerging “knowledge economy,” specifically that authority relations will tend to disappear (or at least become radically transformed), the boundaries of the firm will blur, and coordination mechanisms will be much more malleable than assumed in organizational economics, resulting in various “new organizational forms.” In particular, the price mechanism will be used inside hierarchies to a much greater extent. In order to obtain an analytical focus on the knowledge economy, I assume that it may be approximated by “Hayekian settings” (after Hayek 1945), that is, settings in which knowledge is distributed and where knowledge inputs are relatively more important in production than physical capital inputs. I then argue, drawing on organizational economics as well as Mises’ insights in property rights and comparative systems, that the presence of Hayekian settings does not mean that authority will disappear, etc., although economic organization will in fact be affected by the emergence of the knowledge economy. This suggests that Austrian economics has an important contribution to make to the study of economic organization.

Suggested Citation

  • Nicolai J. Foss, 2001. "Economic Organization in the Knowledge Economy Some Austrian Insights," DRUID Working Papers 01-07, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  • Handle: RePEc:aal:abbswp:01-07
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    File URL: http://www3.druid.dk/wp/20010007.pdf
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    References listed on IDEAS

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    1. Nicolai J. Foss, 1996. "Firms, Incomplete Contracts and Organizational Learning," DRUID Working Papers 96-2, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    2. Peter Maskell, 1996. "Localised Low-tech Learning in the Furniture Industry," DRUID Working Papers 96-11, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
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    Cited by:

    1. Saripalle, Madhuri, 2006. "Learning across policy regimes: The impact of protection vis-à-vis competition in the Indian automotive industry," MPRA Paper 1701, University Library of Munich, Germany.

    More about this item

    Keywords

    Economic organizations; Austrian economics;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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