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Project Work Uncertainties and the Boundaries of the Firm

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  • Nigel Wadeson

    () (Department of Economics, University of Reading)

Abstract

The effective use of resources in an economy requires both that they are available where and when most needed and that they are kept employed as fully and effectively as possible. A lack of certainty over future resource needs within firms brings these two requirements into conflict. It is argued that the firm and the market offer alternative means of handling this trade-off. The market switches resource services between customers to keep specialist resources employed. However, this does not guarantee the firm that a resource will always be available when needed. The firm may therefore internalise resources, switching them between different tasks to keep them employed and to make their specialist capabilities available where most needed. Idiosyncratic advantages form an important part of the theory, often severely exacerbating resource availability issues. A model of resource planning in a project with uncertain task durations is presented to illustrate the problem faced by the firm.

Suggested Citation

  • Nigel Wadeson, 2008. "Project Work Uncertainties and the Boundaries of the Firm," Economics & Management Discussion Papers em-dp2008-57, Henley Business School, Reading University.
  • Handle: RePEc:rdg:emxxdp:em-dp2008-57
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    Keywords

    Project; Organisation; Uncertainty; Resources; Scheduling; Internalisation;

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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