The History of the firm theory in Economics - what is the origin of firm theory -
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We categorize the theories of the firm into two groups : the contractual and the resource-based approach. We retrace their lineages and show Coase to be the originator of the contractual view and Penrose to be the developer of the resource-based view. Knight initiates firm theory by developing its essential elements that then serve as the basis for the work of both Coase and Penrose. Coase both extends and narrows Knight’s work on the mainstream economic paradigms such as marginalism, the dichotomy of the market and firm, and the supremacy of the former over the latter. Penrose extends Knight’s static model by making it dynamic and building in evolutionary theories about firm growth while less emphasizing the boundary between market and firm.
Abstract
We categorize the theories of the firm into two groups : the contractual and the resource-based approach. We retrace their lineages and show Coase to be the originator of the contractual view and Penrose to be the developer of the resource-based view. Knight initiates firm theory by developing its essential elements that then serve as the basis for the work of both Coase and Penrose. Coase both extends and narrows Knight’s work on the mainstream economic paradigms such as marginalism, the dichotomy of the market and firm, and the supremacy of the former over the latter. Penrose extends Knight’s static model by making it dynamic and building in evolutionary theories about firm growth while less emphasizing the boundary between market and firm.
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