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Capabilities and the Theory of the Firm

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  • Nicolai J. Foss

Abstract

The recent decade has witnessed a strong expansion of work on the firm, both from a capabilities perspective and from a contractual perspective. These two bodies of theories are often thought to be fundamentally different, because their domains of applications are different (knowledge-accumulation vs contracts and incentives). However, we need to integrate propositions from capabilities perspectives with ideas about economic organization (markets, hybrids, firms). This is because only a more unified theory will allow us to understand such issues as the dynamics of the modern corporation, and, more topically, the costs and benefits of outsourcing. I discuss the relations between these two bodies of theories. It is possible to argue in favor of a relation of complementarity between the two and pursue a research strategy on this basis. However, it is also possible two claim that they are rivals. Along this line, it is argued that the capabilities perspective contains propositions about economic organization that are not to be found within the modern Coasian approach to economic organization, and thus may be seen as a distinct emerging perspective on economic organization.

Suggested Citation

  • Nicolai J. Foss, 1996. "Capabilities and the Theory of the Firm," DRUID Working Papers 96-8, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  • Handle: RePEc:aal:abbswp:96-8
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    Cited by:

    1. Jukka Kaisla, 1998. "The Market Process and the Emergence of the Firm Some Indications of Entrepreneurship Under Genuine uncertainty," DRUID Working Papers 98-17, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    2. repec:dau:papers:123456789/2809 is not listed on IDEAS
    3. Gamal Atallah, 2002. "Production Technology, Information Technology, and Vertical Integration Under Asymmetric Information," Working Papers 0203EClassification-JEL: , University of Ottawa, Department of Economics.
    4. Dieter Ernst, 1999. "Responses to the Crisis Constraints to a Rapid Trade Adjustment in East Asia´s Electronics Industry," DRUID Working Papers 99-2, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    5. Bengt-Åke Lundvall & Frank Skov Kristensen, 1997. "Organisational Change, Innovation and Human Resource Development as a Response to Increased Competition," DRUID Working Papers 97-16, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    6. Frederic Bougrain, 1998. "Impact of regional technology policy on local economic development," ERSA conference papers ersa98p211, European Regional Science Association.
    7. M. Saorín-Iborra & Ana Redondo-Cano & Lorenzo Revuelto-Taboada & Éric Vogler, 2015. "Negotiating behavior in service outsourcing. An exploratory case study analysis," Service Business, Springer;Pan-Pacific Business Association, vol. 9(4), pages 771-801, December.
    8. Bougrain, Frederic & Haudeville, Bernard, 2002. "Innovation, collaboration and SMEs internal research capacities," Research Policy, Elsevier, vol. 31(5), pages 735-747, July.
    9. Bull, Lyndall & Ferguson, Ian, 2006. "Factors influencing the success of wood product innovations in Australia and New Zealand," Forest Policy and Economics, Elsevier, vol. 8(7), pages 742-750, October.
    10. Keld Laursen, 1998. "Do Export and Technological Specialisation Patterns Co-evolve in Terms of Convergence or Divergence? Evidence From 19 OECD Countries, 1971-1991," DRUID Working Papers 98-18, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    11. Gérard Charreaux, 2002. "Variation sur le thème:"À la recherche de nouvelles fondations pour la finance et la gouvernance d'entreprise"," Revue Finance Contrôle Stratégie, revues.org, vol. 5(3), pages 5-68, September.
    12. 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.
    13. Langlois, Richard N & Foss, Nicolai J, 1999. "Capabilities and Governance: The Rebirth of Production in the Theory of Economic Organization," Kyklos, Wiley Blackwell, vol. 52(2), pages 201-218.
    14. Nassreddine Garoui & Anis Jarboui, 2012. "Cognitive Approach of Corporate Governance A Visualization Test of Mental models with Cognitive Mapping Technique," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 15(43), pages 61-96, March.
    15. Santangelo, Grazia D., 2001. "The impact of the information and communications technology revolution on the internationalisation of corporate technology," International Business Review, Elsevier, vol. 10(6), pages 701-726, December.
    16. Kirsten Foss & Nicolai J. Foss, 1999. "Organizing Economic Experiments The Role of Firms," DRUID Working Papers 99-5, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    17. Fikret Adaman & Pat Devine, 2002. "A Reconsideration of the Theory of Entrepreneurship: A participatory approach," Review of Political Economy, Taylor & Francis Journals, vol. 14(3), pages 329-355.
    18. Frédéric MAZAUD (LEREPS-GRES) & Marie LAGASSE (AIRBUS-FRANCE), 2007. "Vertical sub-contracting relationships strategy, the Airbus First-tier suppliers\' coordination," Cahiers du GRES (2002-2009) 2007-02, Groupement de Recherches Economiques et Sociales.

    More about this item

    Keywords

    Economic organization; capability; tacit knowledge;

    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

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