Knowledge, scale and transactions in the theory of the firm: XD-US

Firms in market economies vary enormously in size, nature and competitiveness. In this important contribution to the literature on the theory of the firm, Mario Morroni provides a fresh analytical framework which improves our understanding of the causes of this diversity in organisational design and performance. The relations between internal and external basic conditions, decision-making mechanisms and organisational co-ordination are addressed, as are the circumstances in which capabilities, transactions and scale-scope considerations interact. With the emergence of the knowledge-based economy and the increasing pressure of global competition, the development of capabilities is acquiring ever greater importance in boosting competitiveness. Morroni shows that long-term relational agreements enhance learning processes and offer powerful tools for improving competitiveness in a context of conflicting interests, incomplete knowledge and uncertainty. Contents 7 Figures 9 Tables 10 Acknowledgements 11 Introduction and summary 13 I.1 Purpose and scope 13 I.2 The multifarious nature of the firm 16 I.3 Basic conditions, decision-making and organisational coordination 18 I.4 Constraints and opportunities in the knowledge-based economy 31 I.5 Outline of the box 34 Basic conditions 36 1.1 Information and knowledge 38 1.2 Techniques and equipment 50 1.3 Individual motivations and aims 55 1.4 Individual abilities 59 1.5 Uncertainty 67 1.6 Structural change 82 1.7 Institutional and market conditions 91 Decision-making 101 2.1 Property structures, power and control 102 2.2 Aims of the firm 109 2.3 Incentives and motivations 112 2.4 Ability-based rationality 123 Organisational coordination 141 3.1 Capabilities 146 3.2 Transactions 155 3.3 Scale and scope 175 3.4 Links between the three aspects of organisational coordination 189 Wrestling with uncertainty 200 4.1 Market contracts 201 4.2 Organisations regulating markets 204 4.3 Hybrid forms 209 Uncertainty-decreasing strategies within firms 215 5.1 Reserves and relational agreements 216 5.2 The employment relationship 217 5.3 Routines 223 5.4 Division of labour 227 5.5 Sequential aiming and memory of the future 231 5.6 Learning 236 Conclusion: growth of the firm as the interplay between the three aspects of organisational coordination 250 6.1 The growth of the firm 250 6.2 Diversification and flexible production 252 6.3 Cross-linked effects in the growth of the firm 255 6.4 Strengths and weaknesses 266 Glossary 274 References 297 Author index 351 Subject index 359 Firms In Market Economies Vary Enormously In Size, Nature And Competitiveness. In This Contribution To The Literature On The Theory Of The Firm, Mario Morroni Provides A New Analytical Framework Which Improves Our Understanding Of The Causes Of This Diversity In Organisational Design And Performance. The Relations Between Internal And External Basic Conditions, Decision-making Mechanisms And Organisational Coordination Are Addressed, As Are The Circumstances In Which Capabilities, Transactions And Scale-scope Considerations Interact. With The Emergence Of The Knowledge-based Economy And The Increasing Pressure Of Global Competition, The Development Of Capabilities Is Acquiring Ever Greater Importance In Boosting Competitiveness. Morroni Shows That Long-term Relational Agreements Enhance Learning Processes And Offer Powerful Tools For Improving Competitiveness In A Context Of Conflicting Interests, Incomplete Knowledge, And Uncertainty.--jacket. Basic Conditions -- Decision-making -- Organisational Coordination -- Wrestling With Uncertainty -- Uncertainty-decreasing Strategies Within Firms -- Conclusion: Growth Of The Firm As The Interplay Between The Three Aspects Of Organisational Coordination. Mario Morroni. Includes Bibliographical References (p. 287-340) And Indexes. In this wide-ranging analysis of the functioning and growth of firms, Mario Morroni investigates the main causes of this diversity within business organisations. The book offers a new theoretical framework to examine the conditions under which learning processes, which are ever more important in the knowledge-based economy, interact with the arrangement of transactions and the exploitation of economies of scale and scope in shaping relative performance and organisational boundaries. It is an important and original contribution to the In this important and original contribution to the literature on the theory of the firm, Mario Morroni investigates the main influences on the competitiveness of business organisations. The book examines the key roles played by uncertainty and learning in shaping relative performance and organisational boundaries. An important fresh theoretical framework for examining the key influences on the competitiveness of firms Among the basic conditions, let us start by addressing the characteristics of information and knowledge.