We discuss and empirically examine a firm-level equivalent of the ancient problem of "tying the King<92>s hands", namely how to maximize managerial intervention for "good cause", while avoiding intervention for "bad cause". Managers may opportunistically intervene when such intervention produces...</92>

The paper begins by providing a brief overview and discussion of the modern economics of organization, concentrating in particular on the work of incomplete contract theorists. I then turn to a discussion of Loasby’s view of the firm and incomplete contracts. The point here is that while...

The notion of distributed knowledge is increasingly often invoked in discussions of economic organization. In particular, the claim that authority is inefficient as a means of coordination in the context of distributed knowledge has become widespread. However, very little analysis has been...

This paper makes the point that Thorstein Veblen should be considered one of the important precursors of the emerging competence-based approach to the firm. Thus, the emphasis in this literature on firms as path-dependent entities characterised by their heterogeneous knowledgebases, operating...

The arguably dominant approaches to the study of interfirm relations are the capabilities and organizational economics perspectives. This paper discusses their merits and weaknesses, concentrating on the capabilities perspective, which is argued to rest on rather weak foundations, particularly...

I discuss and compare alternative approaches to integrating bounded rationality with the theory of economic organization, concentrating on the organizational capabilities approach, which is strongly influenced by the works of Nelson and Winter, organizational economics, particularly transaction...

We analyze a key problem in organization theory and design, namely the potential tension between authority (i.e., the power to make decisions which guide the decisions of another person) and the discretion of employees (i.e., the ability of an agent to control resources including his own human...

This paper argues that not only Edith Penrose, but also Harold Demsetz should be seen as a dominant source of inspiration for RBP scholars, that these two crucial influences hold different and even conflicting views of the economic process, and that they helped found different research areas and...

This paper argues that Austrian economics allow us to identify a number of weak spots in the modern economics of organization. Thus, neither the dispersion of tacit and subjectively knowledge in organizations, nor the entrepreneurial discovery process are comprehensively treated in this body of...

Ever 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...