Theories of the Firm

25 August 2014 at 8:24 am 1 comment

| Peter Klein |

At the recent Academy of Management conference in Philadelphia I was pleased to participate in a pre-conference workshop organized by Paul Drnevich, Larry Tribble, and David Croson, “Theories and Their Words: A Cross-Academy Discussion of Perspectives on Value Creation and Capture.” From the blurb:

In this workshop a panel of senior and emerging scholars provides a forum to examine and discuss the roles and implications of several prominent management theories and their differing terminology for creating and capturing value. Our distinguished panelists will provide an overview of the value implications of several well-known foundational theories of the existence and purpose of business organizations: Transaction Cost Economics (TCE), Property Rights Theory (PRT), the Capabilities and Resource-based View (RBV), and Industrial Organization (IO), discuss challenges often encountered in efforts to integrate these theories and their terminology, and explore commonalities and intersections across these perspectives that may yield opportunities for future research. We provide perspectives from the distinguished scholars as a means of clarifying how each theory explains the core concepts of value creation and value capture, without which a sustainable business cannot exist. We then offer a discussion of points of commonality and integration of the theories around value creation and value capture with an open forum Q&A session with the presenters regarding directions for future research. We conclude with round-table breakout discussions, each led by a senior scholar and focused on a specific aspect of the theory they presented for more detailed discussion of future research in that theoretical stream.

The presentations from the workshop are online here. You may find them interesting for for research and for teaching. My own presentation on strategy and transaction cost economics covered the basics of TCE and asked if TCE is really a theory of strategy (short answer: no and yes).

Update: Mike Ryall’s presentation is viewable here.

Entry filed under: - Klein -, New Institutional Economics, Strategic Management, Theory of the Firm.

Debating Microfoundations, Euro-style Entrepreneurship and the Established Firm: A Call to Arms

1 Comment Add your own

  • 1. Niharika  |  13 October 2014 at 12:35 am

    Sir, Help required please!

    I am comparing productivities of two industries.
    APK= Average Productivity of Capital
    MPK= Marginal productivity of capital
    APL= Average productivity of labour
    MPL= marginal productivity of labour. 1 and 2 are the two industries/firms.

    I have got the following results

    1) APK1 >APK2
    2) APL1MPK1
    4)APL1>MPL1
    5)APK2MPL2
    7) MPK1>MPK2
    8) MPL1>MPL2

    What is the interpretation of the above results? Which industry/business is more productive and be promoted? Urgent! Thank you.

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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).
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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).
Nicolai J. Foss and Volker Mahnke, eds., Competence, Governance, and Entrepreneurship: Advances in Economic Strategy Research (Oxford, 2000).
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