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The Theory of the Firm and Its Critics A Stocktaking and Assessment


  • Nicolai J. Foss
  • Peter G. Klein


Ever since its emergence in the 1970s the modern economic or Coasian theory of the firm has been discussed and challenged by sociologists, heterodox economists, management scholars, and other critics. This chapter reviews and assesses these critiques, focusing on behavioral issues (bounded rationality and motivation), process (including path dependence and the selection argument), entrepreneurship, and the challenge from knowledge-based theories of the firm.

Suggested Citation

  • Nicolai J. Foss & Peter G. Klein, 2005. "The Theory of the Firm and Its Critics A Stocktaking and Assessment," DRUID Working Papers 05-03, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  • Handle: RePEc:aal:abbswp:05-03

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    References listed on IDEAS

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    Cited by:

    1. Mazumdar, Surajit, 2008. "Crony Capitalism: Caricature or Category?," MPRA Paper 19626, University Library of Munich, Germany.
    2. Raffaele Fiume & Tiziano Onesti & Mauro Romano & Marco Taliento, 2015. "Dialogue with standard setters. Business Combinations under Common Control: Concerns, Criticisms and Strides," FINANCIAL REPORTING, FrancoAngeli Editore, vol. 2015(1), pages 107-126.
    3. Carías Vega, Dora E. & Keenan, Rodney J., 2016. "Situating community forestry enterprises within New Institutional Economic theory: What are the implications for their organization?," Journal of Forest Economics, Elsevier, vol. 25(C), pages 1-13.
    4. Argandoña, Antonio, 2010. "From action theory to the theory of the firm," IESE Research Papers D/855, IESE Business School.

    More about this item

    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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