Working Paper Series, Department of Industrial Economics & Strategy, Copenhagen Business School
Kirsten Foss and Nicolai Foss
Learning in Firms: Knowledge-Based and Property Rights Perspectives
Abstract: Proponents of the knowledge-based approach to the firm
argue that organizational economics put all the burden on the allocation of
incentives and property rights in the explanation of organizational
phenomena, and neglects firm-specific knowledge and processes of learning.
We argue that there is no inherent reason why organizational economics
should be cut off from treating learning and exploring its organizational
implications. More specifically, we demonstrate that it is possible to
adopt an approach to learning that is consistent with rational choice
methodology and stresses economizing, puts the emphasis on learning as a
means of realizing efficiencies, is micro-analytic, and contains
implications for economic organization. We concentrate on the role of
experimentation as a means of finding solutions to coordination problems in
complex production systems (e.g., finding the optimal sequence of
activities) and the transaction costs learning-by-experimenting may create.
Such transaction costs help determine the existence, boundaries and
internal organization of the firm, and has implications for the
understanding of competitive advantage.
Keywords: learning; governance; transaction costs; (follow links to similar papers)
JEL-Codes: D23; D83; (follow links to similar papers)
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