Grounding the Theory of a Firm in the Natural Sciences

This paper uses data rather than costs as the unit of analysis to answer questions raised by Luigi Zingales (2000) searching for quot;new foundationsquot; 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 quot;the new economyquot; by their ability to economize the bytes transacted by individuals