This paper argues that the mainstream approaches to the theory of the firm do not provide a theory of the human capital based or knowledge firm. We examine the neoclassical theory of the firm, the transaction cost model, the incentive-system approach and the Grossman Hart Moore approach and argue that none of them is able to fully capture the changes to the firm that the movement towards a knowledge economy entails. We also consider the effects of knowledge on the organisation of production. Will production take place within a single large factory, or several smaller factories or even within households?For those interested in the "knowledge economy" an interesting paper aimed a pointing out some of the shortcomings of the standard theory of the firm when applied to the human capital based firm.
Friday, 27 February 2009
Great new economics paper
There is an interesting new paper forthcoming the Scottish Journal of Political Economy on "The (non)theory of the knowledge firm" (pdf). The abstract reads