More Critical Comments on Knowledge-Based Theories of the Firm

Nicolai J. Foss

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Innovation and Knowledge Management Economic Theory and Institutions Management and Organizational Studies

Abstract

This paper continues the critique of knowledge-based theories of the firm that was undertaken in Foss (Foss, N. J. 1996a. Knowledge-based approaches to the theory of the firm: Some critical comments. Organ. Sci. 7(5) 470–476.), specifically criticizing the reasoning in Kogut and Zander (Kogut, B., U. Zander. 1996. What firms do? Coordination, identity, and learning. Organ. Sci. 7(5) 502–518.) and Conner and Prahalad (Conner, K. R., C. K. Prahalad. 1996. A resource-based theory of the firm: Knowledge versus opportunism. Organ. Sci. 7(5) 477–501.). I argue that Kogut and Zander (Kogut, B., U. Zander. 1996. What firms do? Coordination, identity, and learning. Organ. Sci. 7(5) 502–518.) attempt to explain firm organization in terms of a preference for such organization—a distinctly non-economic mode of explanation—and that Conner and Prahalad fail to sufficiently characterize the nature of the firm, because they identify firm organization with the employment contract and neglect asset-ownership.

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References

1937The Nature of the Firm 1987The Economic Institutions of Capitalism 1996Production, Information Costs and Economic Organization 1986The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration 1996A Resource-Based Theory of the Firm: Knowledge Versus Opportunism 1991A Historical Comparison of Resource-Based Theory and Five Schools of Thought Within Industrial Organization Economics: Do We Have a New Theory of the Firm?1997Economic Analysis of Property Rights 1994The Firm as an Incentive System

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