Explaining Firm Emergence: Specialization, Transaction Costs, and the Integration Process

Managerial and Decision Economics, Forthcoming

Mises Working Paper Series #0004/14

45 Pages Posted: 21 Dec 2013 Last revised: 19 May 2014

See all articles by Per L. Bylund

Per L. Bylund

School of Entrepreneurship; Ratio Institute; Ludwig von Mises Institute

Date Written: December 13, 2013

Abstract

This article explains firm emergence and the role of firms in the market structure using the productive power of specialization. Based on productivity efficiencies through technological specialization, a model for firm emergence is drafted alongside Coasean transaction cost theory. I find that transaction costs cannot explain firm emergence but the entrepreneurial specialization perspective here adopted provides a promising approach to understanding the firm’s function to the entrepreneur and its internal organization and capabilities. It suggests a foundational framework for studying the creation of capabilities and the interplay between markets, firms, and entrepreneurs.

Keywords: firm emergence, resource heterogeneity, specialization, transaction costs

JEL Classification: D23, L22, L23, L26

Suggested Citation

Bylund, Per L., Explaining Firm Emergence: Specialization, Transaction Costs, and the Integration Process (December 13, 2013). Managerial and Decision Economics, Forthcoming, Mises Working Paper Series #0004/14 , Available at SSRN: https://ssrn.com/abstract=2370334

Per L. Bylund (Contact Author)

School of Entrepreneurship ( email )

Oklahoma State University
424 Business building
Stillwater, OK 74078
United States
4057444301 (Phone)

HOME PAGE: http://https://business.okstate.edu/directory/bylund-per-694946.html

Ratio Institute ( email )

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

Ludwig von Mises Institute ( email )

Auburn, AL
United States

HOME PAGE: http://mises.org/bylund

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