We respond to Jack Vromen’s critique of our discussion of the missing micro-foundations of work on routines and capabilities in economics and management research. Contrary to Vromen, we argue that inter-level relations can be causal, and that inter-level causal relations may also obtain between routines and actions and interactions; there are no macro-level causal mechanisms; and on certain readings of the notion of routines and capabilities, these may be macro causes.

As the transaction cost theory of the firm was taking shape in the 1970s, another important movement in economics was emerging: a revival of the ‘Austrian’ tradition in economic theory associated with such economists as Ludwig von Mises and F. A. Hayek . As Oliver Williamson has pointed out, Austrian economics is among the diverse sources for transaction cost economics. In particular, Williamson frequently cites Hayek , particularly Hayek’s emphasis on adaptation as a key problem of economic organisation . Following (...) Williamson’s lead, a reference to Hayek’s ‘The Use of Knowledge in Society’ has become almost mandatory in discussions of economic organisation . However, there are many other potential links between Austrian and transaction cost economics that have not been explored closely and exploited.This article argues that characteristically Austrian ideas about property, entrepreneurship, economic calculation, tacit knowledge, and the temporal structure of capital have important implications for theories of economic organisation, transaction cost economics in particular. Austrian economists have not, however, devoted substantial attention to the theory of the firm, preferring to focus on business-cycle theory, welfare economics, political economy, comparative economic systems, and other areas. Until recently the theory of the firm was an almost completely neglected area in Austrian economics, but over the last decade, a small Austrian literature on the firm has emerged. While these works cover a wide variety of theoretical and applied topics, their authors share the view that Austrian insights have something to offer students of firm organisation. (shrink)

The 'Austrian' tradition is well-known for its definitive contributions to economics in the twentieth century. However, Austrian economics also offers an exciting research agenda outside the traditional boundaries of economics, especially in the management disciplines. This Element examines how Austrian ideas play a key role in expanding the understanding of fields like entrepreneurship, strategy, and organization. It focuses especially on the vital role that entrepreneurs play in guiding economic progress by shaping firms and their strategic behavior. In doing so, it (...) explains a wide range of contributions that Austrian economics makes to the understanding of key problems in management, while also highlighting many directions for future work in this inspiring tradition. (shrink)

Economics in general, and the theory of the firm more specifically, places motivation and cognition in very different analytical boxes, in spite of cognitive science evidence that the boundaries between the two are in reality blurred. While this analytical assumption has often served the theory of the firm well, a number of organizational phenomena are better understood if cognition and motivation are allowed to interact, for example, through framing effects, as organizational scholars have long argued. The paper exemplifies by developing (...) the implications of this for Williamson’s notion of the “impossibility of selective intervention.”théorie de la firme en particulier placent la motivation et la connaissance dans des boites analytiques très différentes, en dépit de preuves scientifiques affirmant que les deux se confondent dans la réalité. Même si cette hypothèse analytique a souvent été utile dans la théorie de la firme, certains phénomènes organisationnels sont mieux compris si on permet à la connaissance et à la motivation de réagir réciproquement, par exemple à travers des effets d’“encadrement ” comme les théoriciens des organisations le soutiennent depuis longtemps. Ce papier illustre cette interaction en développant les implications de l’effet d’encadrement pour la notion d’“impossibilité d’intervention sélective” de Williamson. (shrink)

I address the issue of justifiable profits from distinct perspectives in economics, strategy research and ethics. Combining insights from Austrian economics, the resource-based perspective, and finders, keepers ethics, I argue that strategy is about the discovery of hitherto unexploited possibilities for exchange. To the extent that strategy is about the discovery/creation ex nihilo of products, ways of producing products, etc., the resulting profits are argued to be justifiable from a finders, keepers perspective.

The advent of the knowledge economy changes the ways in which firms organize their activities and how they strategize in the market place. This non-technical volume lays the foundations for an analysis of these phenomena. In particular, it shows how 'knowledge-based approaches' in management studies may be complemented by key ideas from the economics of organization. The discussion is both theoretical and empirical.

One of Israel Kirzner’s less wellknown contributions is to the theory of capital. In this paper, we link the Austrian theory of capital and the theory of economic organization. Our starting point is the key Austrian notion of capital heterogeneity which we interpret in terms of attributes. Most capital assets are multi-attribute in nature, and many attributes may not be known to entrepreneurs. This fosters a need for experimenting with capital combinations. Because there are costs of measuring attributes, this process (...) has implications for economic organization. Thus, we argue that novel implications for the understanding of ownership and the existence and boundaries of firms may be teased out of such a perspective.La théorie du capital représente une des contributions les moins connues d’Israel Kirzner. Dans cet article, nous établissons le lien entre la théorie autrichienne du capital et la théorie de l’organisation économique. Notre point de départ est la notion autrichienne fondamentale d’hétérogénéité du capital que nous interprétons en termes d’attributs. De par leur nature, la plupart des biens capitaux possèdent plusieurs attributs qui peuvent demeurer inconnus aux entrepreneurs. Ceci accroît la nécessité d’expérimenter des combinaisons capitalistiques. Etant donné les coûts qu’entraîne la mesure des attributs, ce processus a des implications quant à l’organisation économique. Ainsi, cette perspective permet de tirer de nouvelles implications pour notre compréhension de la propriété, de l’existence et de la taille des firmes. (shrink)

We respond to Jack Vromen’s (this issue) critique of our discussion of the missing micro-foundations of work on routines and capabilities in economics and management research. Contrary to Vromen, we argue that (1) inter-level relations can be causal, and that inter-level causal relations may also obtain between routines and actions and interactions; (2) there are no macro-level causal mechanisms; and (3) on certain readings of the notion of routines and capabilities, these may be macro causes.