Knowledge, Scale and Transactions in the Theory of the Firm

Firms in market economies vary enormously in size, nature and competitiveness. In this important contribution to the literature on the theory of the firm, Mario Morroni provides a fresh analytical framework which improves our understanding of the causes of this diversity in organisational design and performance. The relations between internal and external basic conditions, decision-making mechanisms and organisational co-ordination are addressed, as are the circumstances in which capabilities, transactions and scale-scope considerations interact. With the emergence of the knowledge-based economy and the increasing pressure of global competition, the development of capabilities is acquiring ever greater importance in boosting competitiveness. Morroni shows that long-term relational agreements enhance learning processes and offer powerful tools for improving competitiveness in a context of conflicting interests, incomplete knowledge and uncertainty.

Table of Contents:
Figures; Tables; Acknowledgements; Introduction and summary; 1. Basic conditions; 2. Decision making; 3. Organisational co-ordination; 4. Wrestling with uncertainty; 5. Uncertainty-decreasing strategies within firms; 6. By way of a conclusion: growth of the firm as the interplay between the three aspects of organisational co-ordination; Glossary; References.

About the Author :
Mario Morroni is Professor of Political Economy in the Department of Economics of the University of Pisa, Italy.

Review :
'Mario Morroni's Knowledge, Scale and Transactions in the Theory of the Firm is a veritable tour de force ... In order to begin to understand the complexities of decision-making in conditions of inescapable, fundamental uncertainty and the processes within firms that result, Morroni's book is the obvious starting place.' G. C. Harcourt, Jesus College, Cambridge ' ... provides an essential update of the literature concerning scale, transaction costs, and the evolution of the theory of the firm.' Alfred Chandler, Isador Straus Professor of Business History, Emeritus, at the Harvard Business School 'This ambitious book guides the reader along an interpretative journey inspecting the different functions business organizations perform in changing environments permanently characterized by uncertainty and technological and organizational change. Accompanied by a useful glossary and a thorough bibliography it offers an insightful appreciation of the complementarities and differences between 'Penrosian', transaction-cost, and knowledge-based theories of the firm.' Giovanni Dosi, Sant'Anna School of Advanced Studies, Pisa 'Morroni writes with refreshing analytical clarity on the current status of the theory of the firm. His book provides a masterful re-examination of neo-classical theory at a time when academic economists have been challenged to integrate such intractable forces as internal economies of scale, high transaction costs, and radical uncertainties into their theoretical models. His book is an invaluable guide to all who share these concerns.' Nathan Rosenberg, Fairleigh S. Dickinson, Jr. Professor of Public Policy (Emeritus), Stanford University 'This is a book of ambitious scope, based on a key organising principle: the interaction between individual cognitive limitations and the extraordinary human potential for developing knowledge and skills by differentiation and integration, in combinations adapted to particular circumstances. Thus co-ordination and growth are interdependent; change in some respects requires stability in other respects; every firm is always a work in progress; and every major modern economy is diverse and evolving. Morroni has a message for economists, policymakers and businessmen: principles persist, but their interpretation and application requires particular knowledge.' Brian J. Loasby, University of Stirling ' ... provides a very welcome addition to the discussion on the theory of the firm, one that I can recommend to many a scholar who works in the field of the economics of organizations and firms.' De Economist