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Learning in Firms: Knowledge-Based and Property Rights Perspectives

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  • Kirsten Foss
  • Nicolai Foss

Abstract

Proponents of the knowledge-based approach to the firm argue that organizational economics put all the burden on the allocation of incentives and property rights in the explanation of organizational phenomena, and neglects firm-specific knowledge and processes of learning. We argue that there is no inherent reason why organizational economics should be cut off from treating learning and exploring its organizational implications. More specifically, we demonstrate that it is possible to adopt an approach to learning that is consistent with rational choice methodology and stresses economizing, puts the emphasis on learning as a means of realizing efficiencies, is micro-analytic, and contains implications for economic organization. We concentrate on the role of experimentation as a means of finding solutions to coordination problems in complex production systems (e.g., finding the optimal sequence of activities) and the transaction costs learning-by-experimenting may create. Such transaction costs help determine the existence, boundaries and internal organization of the firm, and has implications for the understanding of competitive advantage.

Suggested Citation

  • Kirsten Foss & Nicolai Foss, "undated". "Learning in Firms: Knowledge-Based and Property Rights Perspectives," IVS/CBS Working Papers 00-2, Department of Industrial Economics and Strategy, Copenhagen Business School.
  • Handle: RePEc:ivs:iivswp:00-2
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    File URL: http://ep.lib.cbs.dk/download/ISBN/8778690528.pdf
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    More about this item

    Keywords

    learning; governance; transaction costs;

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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