Grounding the Theory of a Firm in the Natural Sciences
Presented to the 13th Annual Meeting of the Society for the Advancement of Socio-Economics, University of Amsterdam, Amsterdam, The Netherlands, June 30, 2001
32 Pages Posted: 21 Sep 2001 Last revised: 26 Jun 2008
Date Written: January 6, 2008
This paper uses data rather than costs as the unit of analysis to answer questions raised by Luigi Zingales (2000) searching for "new foundations" in The Theory of the Firm. Any co-ordination between individuals requires communication of data to share information, knowledge and wisdom. Individuals have physiological and neurological limits in transacting data that can be measured in bytes. Transaction Byte Analysis creates a framework for subsuming transaction costs when costs represent a proxy for information. The paper posits that network firms exist and are sustained in "the new economy" by their ability to economize the bytes transacted by individuals.
Keywords: Communication, Control, Coordination, Governance, Information, Regulation, Theory of the firm, Transaction costs.
JEL Classification: B41, D21, D23, D72, D85, G34, L2
Suggested Citation: Suggested Citation