On the Firm’s Raison d’Être and Competence-Based Nature of the Firm

22 Pages Posted: 13 Apr 2010

See all articles by Jörg Freiling

Jörg Freiling

University of Bremen - Faculty of Business Studies and Economics

Date Written: February 9, 2010

Abstract

Why do firms exist? The standard answer of economic theory is that firms offer protection against highest levels of uncertainty. The paper employs the competence-based theory of the firm as a branch of market process theory to develop answers that go beyond this traditional viewpoint by emphasizing that firms are institutions that allow for taking the opportunities of the market process different from alternate institutions. Centrepiece of the paper is the notion that firms have an organizational ambiance that protect firms from threats in competition and nurtures the development of resources and competences.

Keywords: Theory of the Firm, Market Process Theory, New Austrian Economics, Competence-based Theory of the Firm, Dynamic Capabilities, Nature of the Firm

JEL Classification: L22, M10

Suggested Citation

Freiling, Jörg, On the Firm’s Raison d’Être and Competence-Based Nature of the Firm (February 9, 2010). Available at SSRN: https://ssrn.com/abstract=1550002 or http://dx.doi.org/10.2139/ssrn.1550002

Jörg Freiling (Contact Author)

University of Bremen - Faculty of Business Studies and Economics ( email )

Wilhelm-Herbst-Str. 5
Bremen, D-28359
Germany
++49 421 218 66870 (Phone)
++49 421 218 66902 (Fax)

HOME PAGE: http://www.lemex.uni-bremen.de

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