The Division of Labor and the Firm: An Austrian Attempt at Explaining the Firm in the Market

Quarterly Journal of Austrian Economics, Vol. 14, No. 2, pp. 188-215, 2011

16 Pages Posted: 7 Nov 2010 Last revised: 16 Aug 2013

Per L. Bylund

School of Entrepreneurship; Baylor University - Department of Management & Entrepreneurship; Baylor University - John F. Baugh Center for Entrepreneurship; Ratio Institute; Ludwig von Mises Institute

Date Written: October 6, 2010

Abstract

This paper reviews Austrian approaches to the firm and drafts a theory that emphasizes the firm as a market phenomenon. Here the firm is a vehicle for imaginative entrepreneurs to create artificially high factor density, thereby increasing its internal “extent of the market” to support specialization of factors beyond the general level of division of labor in the market. The firm therefore becomes a product of, and prospective catalyst for progressing the market’s overall division of labor, and the firm emerges as an entrepreneur-generated means toward increased efficiency and more roundabout production. It consequently may play a crucial role in the evolution of market structure and, by extension, the development of civilization.

Keywords: Austrian economics, theory of the firm, division of labor, specialization, market structure

JEL Classification: L22, L23, L26

Suggested Citation

Bylund, Per L., The Division of Labor and the Firm: An Austrian Attempt at Explaining the Firm in the Market (October 6, 2010). Quarterly Journal of Austrian Economics, Vol. 14, No. 2, pp. 188-215, 2011. Available at SSRN: https://ssrn.com/abstract=1704191 or http://dx.doi.org/10.2139/ssrn.1704191

Per L. Bylund (Contact Author)

School of Entrepreneurship ( email )

201 Business
Stillwater, OK 74078-0555
United States

HOME PAGE: http://entrepreneurship.okstate.edu

Baylor University - Department of Management & Entrepreneurship ( email )

PO Box 98006
Waco, TX 76798-8006
United States

Baylor University - John F. Baugh Center for Entrepreneurship ( email )

United States

Ratio Institute ( email )

P.O. Box 3203
SE-103 64 Stockholm
Sweden

Ludwig von Mises Institute ( email )

Auburn, AL
United States

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