Langlois Paper on the Theory of the Firm and Austrian Economics

19 April 2008 at 1:42 pm 3 comments

| Nicolai Foss |

Former O&M guest blogger Dick Langlois is IMHO one of the most original thinkers in the field of economic organization. He is also one of the best writers in management and in economics. So I try to keep track of his writings and usually succeed. However, this paper, “The Austrian Theory of the Firm: Retrospect and Prospect,” written for a conference at the George Mason Law School last May, had escaped my attention until today.

Dick develops a number of related arguments. One is that Hayek (of the 1945 essay, “The Use of Knowledge in Society”) developed richer insights in economic organization than Coase.  Moreover, by pointing out the importance of dispersed knowledge, the coordination problem this raises, and the importance of “change” for “economic problems,” Hayek anticipated the capabilities theory of the firm. In a parallel argument, Dick links his own work on the capabilities theory of the firm to Austrian capital theory (see also here and here). He ends by speculating on the future of Austrian arguments in the theory of the firm, noting various manifestations, particularly in strategic management, of these arguments (he notes that “Some work in this literature is close in spirit to my own, in some cases extremely close (Jacobides and Winter 2005)” — one agrees).  Definitely worth a read!

Entry filed under: Austrian Economics, Papers, Theory of the Firm.

Ethical Standards for Business Professors Bacon Weave

3 Comments Add your own

  • 1. Per Bylund  |  19 April 2008 at 2:54 pm

    The link to the paper is corrupt – it has an “http//” (no colon) included in the URL, which means anyone clicking the link ends up on some site with only google ads. Copying the link URL and deleting the second http with slashes and then pasting in your browser address windows will take you to the article.

    Otherwise, the article is here.

  • 2. Peter Klein  |  19 April 2008 at 3:00 pm

    Thanks for the catch. I corrected it in the main post.

  • 3. Rafe Champion  |  19 April 2008 at 7:19 pm

    1945 was not a great year for injecting Austrian indeas into the profession, Human Action fell like a stone four years later. Also at that time Hayek had given up trying to make an impact on economics after Keynes swept the floor, he moved into other things like the pathology of reason project and Law Legislation and Liberty. It is possible that he was not even wanted in Economics at Chicago.

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Nicolai J. Foss and Peter G. Klein, Organizing Entrepreneurial Judgment: A New Approach to the Firm (Cambridge University Press, 2012).
Peter G. Klein and Micheal E. Sykuta, eds., The Elgar Companion to Transaction Cost Economics (Edward Elgar, 2010).
Peter G. Klein, The Capitalist and the Entrepreneur: Essays on Organizations and Markets (Mises Institute, 2010).
Richard N. Langlois, The Dynamics of Industrial Capitalism: Schumpeter, Chandler, and the New Economy (Routledge, 2007).
Nicolai J. Foss, Strategy, Economic Organization, and the Knowledge Economy: The Coordination of Firms and Resources (Oxford University Press, 2005).
Raghu Garud, Arun Kumaraswamy, and Richard N. Langlois, eds., Managing in the Modular Age: Architectures, Networks and Organizations (Blackwell, 2003).
Nicolai J. Foss and Peter G. Klein, eds., Entrepreneurship and the Firm: Austrian Perspectives on Economic Organization (Elgar, 2002).
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