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Capabilities and Governance the Rebirth of Production in the Theory of Economic Organization

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  • Richard N. Langlois
  • Nicolai J. Foss

Abstract

We argue that since Coase’s seminal 1937 paper on “The Nature of the Firm,” there has been an odd and unjustified separation between price theory and the economics of organization. For example, matters of production has been the domain of the former exclusively. However, a new approach to economic organization, here called “the capabilities approach,” that places production center-stage in the explanation of economic organization, is now emerging. We discuss the sources of this approach and its relation to the mainstream economics of organization.

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File URL: http://www3.druid.dk/wp/19970002.pdf
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Paper provided by DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies in its series DRUID Working Papers with number 97-2.

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Date of creation: 1997
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Handle: RePEc:aal:abbswp:97-2
Contact details of provider: Web page: http://www.druid.dk/

Keywords: Capability; Theory of the Firm; Price Theory;

Other versions of this item:

Find related papers by 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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  1. 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.
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  24. Paul Milgrom & John Roberts, 1988. "Economic Theories of the Firm: Past, Present, and Future," Canadian Journal of Economics, Canadian Economics Association, vol. 21(3), pages 444-58, August.
  25. Klein, Benjamin & Crawford, Robert G & Alchian, Armen A, 1978. "Vertical Integration, Appropriable Rents, and the Competitive Contracting Process," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 297-326, October.
  26. S.A. Lippman & R.P. Rumelt, 1982. "Uncertain Imitability: An Analysis of Interfirm Differences in Efficiency under Competition," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 418-438, Autumn.
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