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The Organizational Approach of Capability Theory: A Review Essay

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  • Garzarelli, Giampaolo

Abstract

Richard Langlois, Tony Yu & Paul Robertson have assembled a collection of previously published papers that move beyond textbook production theory. This essay discusses work by Frank Knight and Hendrik Houthakker not reproduced in LYR in relation to the capability theory of economic organization. Knight identified the problem of organization as the search for and the coordination of different dispersed capabilities. Houthakker helps us to see more clearly that the benefits of specialization are not brought at zero cost; whatever is the governance structure employed, there will inevitably be coordination costs due to differences in capabilities.

Suggested Citation

  • Garzarelli, Giampaolo, 2006. "The Organizational Approach of Capability Theory: A Review Essay," MPRA Paper 4362, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:4362
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    File URL: https://mpra.ub.uni-muenchen.de/4362/1/MPRA_paper_4362.pdf
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    References listed on IDEAS

    as
    1. Richard Langlois, 1995. "Do firms plan?," Constitutional Political Economy, Springer, vol. 6(3), pages 247-261, October.
    2. Dietrich, Michael, 1991. "Firms, Markets and Transaction Cost Economics," Scottish Journal of Political Economy, Scottish Economic Society, vol. 38(1), pages 41-57, February.
    3. 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.
    4. Heiner, Ronald A, 1983. "The Origin of Predictable Behavior," American Economic Review, American Economic Association, vol. 73(4), pages 560-595, September.
    5. Bengt Holmstrom & John Roberts, 1998. "The Boundaries of the Firm Revisited," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 73-94, Fall.
    6. Young, Allyn A., 1928. "Increasing Returns and Economic Progress," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 38, pages 527-542.
    7. Teece, David J., 1980. "Economies of scope and the scope of the enterprise," Journal of Economic Behavior & Organization, Elsevier, vol. 1(3), pages 223-247, September.
    8. Giampaolo Garzarelli, 2005. "Cognition, Incentives, and Public Governance:Laboratory Federalism from the Organizational Viewpoint," Public Economics 0512013, EconWPA.
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    Cited by:

    1. Garzarelli, Giampaolo & Limam, Yasmina Reem & Thomassen, Bjørn, 2007. "Open Source Software and Economic Growth: A Classical Division of Labor Perspective," MPRA Paper 3849, University Library of Munich, Germany.

    More about this item

    Keywords

    Capabilities; Coordination Costs; Division of Labor; Economic Organization; Extent of the Market;

    JEL classification:

    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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