Working Paper Series, Department of Industrial Economics & Strategy, Copenhagen Business School
Nicolai J. Foss
Understanding Business Systems.
Abstract: This is a discussion from an economist's perspective of
the concept of business systems. This concept has recently been proposed by
Richard Whitley as a means of conceptualizing the close connections between
dominant social institutions and ways of coordinating economic activities
as well as the interrelations between firms and market characteristics. The
paper discusses to which extent economics is helpful for the understanding
of business systems. Moreover, the paper uses this as a catalyst for a
broader discussion of the economics and sociology connection. The main
argument is that while economics is helpful for understanding certain
aspects of business systems, the path-dependent, complementary and
context-dependent features of business systems are hard to grasp with
economic tools to the extent that these features have cognitive and
normative elements. In general, economics has a problem with the cognitive
and normative spects of institutions, which are merely treated as
side-constraints on action. However, these aspects may be crucial for
understanding processes of path-creation and dependence (for example, in
business systems), and therefore ultimate allocations.
Keywords: institutions; the sociology/economics relations; comparative systems; (follow links to similar papers)
JEL-Codes: O5; F14; P5; (follow links to similar papers)
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