The Theory of the Firm and its Critics: A Stocktaking and Assessment

25 Pages Posted: 31 Mar 2005

See all articles by Nicolai J. Foss

Nicolai J. Foss

Copenhagen Business School - Department of Strategy and Innovation

Peter G. Klein

Baylor University - Hankamer School of Business; Norwegian School of Economics (NHH) - Department of Strategy and Management; Ludwig von Mises Institute

Date Written: March 30, 2005

Abstract

Since its emergence in the 1970s the modern economic or Coasian theory of the firm has been discussed and challenged by sociologists, heterodox economists, management scholars, and other critics. This chapter reviews and assesses these critiques, focusing on behavioral issues (bounded rationality and motivation), process (including path dependence and the selection argument), entrepreneurship, and the challenge from knowledge-based theories of the firm.

Keywords: theory of the firm, cognition, bounded rationality, motivation, capabilities, entrepreneurship, path dependence

JEL Classification: B4, D23, L14, L22

Suggested Citation

Foss, Nicolai J. and Klein, Peter G., The Theory of the Firm and its Critics: A Stocktaking and Assessment (March 30, 2005). CORI Working Paper No. 2005-03. Available at SSRN: https://ssrn.com/abstract=695484 or http://dx.doi.org/10.2139/ssrn.695484

Nicolai J. Foss (Contact Author)

Copenhagen Business School - Department of Strategy and Innovation ( email )

Kilen
Frederiksberg, 2000
Denmark

Peter G. Klein

Baylor University - Hankamer School of Business ( email )

Waco, TX 76798
United States
254-710-4903 (Phone)

Norwegian School of Economics (NHH) - Department of Strategy and Management ( email )

Breiviksveien 40
N-5045 Bergen
Norway

Ludwig von Mises Institute ( email )

Auburn, AL
United States

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