The Review of Austrian Economics

, Volume 26, Issue 3, pp 247–258 | Cite as

The Austrian theory of the firm: Retrospect and prospect

  • Richard N. Langlois


Using as a focusing device the famous arguments of Coase (Economica 4(16), 386–405 1937) and Hayek (The American Economic Review 35(4): 519–530 1945), I sketch in bold strokes what an Austrian theory of the firm would look like. Such a theory would pay serious attention to issues of knowledge, uncertainty, change, and complementarity. I describe a literature in which much of this theory has already been constructed; make connections to closely related literatures in economics and management; and suggest directions for future development.


Organization Transaction costs Capabilities Vertical integration Tacit knowledge Uncertainty 


  1. Alchian, A., & Demsetz, H. (1972). Production, information costs, and economic organization. American Economic Review, 62(5), 772–795.Google Scholar
  2. Chandler, A. D., Jr. (1977). The visible hand: The managerial revolution in American business. Cambridge: The Belknap Press.Google Scholar
  3. Chandler, A. D., Jr. (1990). Scale and scope: The dynamics of industrial capitalism. Cambridge: The Belknap Press.Google Scholar
  4. Coase, R. H. (1937). The nature of the firm. Economica, 4(16), 386–405.CrossRefGoogle Scholar
  5. Dulbecco, P., & Garrouste, P. (1999). Towards an Austrian theory of the firm. The Review of Austrian Economics, 12(1), 43–64.CrossRefGoogle Scholar
  6. Foss, N. J. (1994). The theory of the firm: The Austrians as precursors and critics of contemporary theory. The Review of Austrian Economics, 7(1), 31–65.CrossRefGoogle Scholar
  7. Foss, N. J. (1996). Harold Malmgren’s analysis of the firm: Lessons for modern theorists? Review of Political Economy, 8(4), 349–366.CrossRefGoogle Scholar
  8. Foss, K., & Foss, N. J. (2001). Assets, attributes and ownership. International Journal of the Economics of Business, 8(1), 19–37.CrossRefGoogle Scholar
  9. Foss, K., Foss, N. J., Klein, P. G., & Klein, S. K. (2002). Heterogeneous capital, entrepreneurship, and economic organization. Journal des Economistes et des Etudes Humaines, 12(1), 79–96.CrossRefGoogle Scholar
  10. Foss, K., Foss, N. J., Klein, P. G., & Klein, S. K. (2007). The entrepreneurial organization of heterogeneous capital. Journal of Management Studies 44(6) (November).Google Scholar
  11. Garud, R., Kumaraswamy, A., & Langlois, R. N. (Eds.). (2002). Managing in the modular age: Architectures, networks, and organizations. Blackwell Publishing: Oxford.Google Scholar
  12. Gibbons, R. (2005). Four formal(Izable) theories of the firm? Journal of Economic Behavior & Organization, 58(2), 200–245.CrossRefGoogle Scholar
  13. Hart, O. (1989). An economist’s perspective on the theory of the firm. Columbia Law Review, 89(7), 1757–1774.CrossRefGoogle Scholar
  14. Hart, O., & Moore, J. (1990). Property rights and the nature of the firm. The Journal of Political Economy, 98(6), 1119–1158.CrossRefGoogle Scholar
  15. Hayek, F. A. (1945). The use of knowledge in society. The American Economic Review, 35(4), 519–530.Google Scholar
  16. Helpman, E. (Ed.). (1998). General purpose technologies and economic growth. MIT Press: Cambridge.Google Scholar
  17. Jacobides, M. G., & Winter, S. G. (2005). The co-evolution of capabilities and transaction costs: Explaining the institutional structure of production. Strategic Management Journal, 26(5), 395–413.CrossRefGoogle Scholar
  18. Jensen, M. C., & Meckling, W. H. (1992). Specific and general knowledge, and organizational structure. In L. Werin & H. Wijkander (Eds.), Contract economics (pp. 251–274). Oxford: Basil Blackwell.Google Scholar
  19. Kirzner, I. M. (1973). Competition and entrepreneurship. Chicago: University of Chicago Press.Google Scholar
  20. Klein, B., Crawford, R. G., & Alchian, A. A. (1978). Vertical integration, appropriable rents, and the competitive contracting process. Journal of Law and Economics, 21(2), 297–326.CrossRefGoogle Scholar
  21. Lachmann, L. M. (1978). Capital and its structure. Kansas City: Sheed Andrews and McMeel, Inc., by permission of the Institute for Humane Studies.Google Scholar
  22. Langlois, R. N. (1984). Internal organization in a dynamic context: Some theoretical considerations. In M. Jussawalla & H. Ebenfield (Eds.), Communication and information economics: New perspectives (pp. 23–49). Amsterdam: North-Holland.Google Scholar
  23. Langlois, R. N. (1988). Economic change and the boundaries of the firm. Journal of Institutional and Theoretical Economics, 144(4), 635–657.Google Scholar
  24. Langlois, R. N. (1992). Transaction cost economics in real time. Industrial and Corporate Change, 1(1), 99–127.CrossRefGoogle Scholar
  25. Langlois, R. N. (1998). Personal capitalism as charismatic authority: The organizational economics of a Weberian concept. Industrial and Corporate Change, 7, 195–214.CrossRefGoogle Scholar
  26. Langlois, R. N. (2002). Modularity in technology and organization. Journal of Economic Behavior & Organization, 49(1), 19–37.CrossRefGoogle Scholar
  27. Langlois, R. N. (2003). The vanishing hand: The changing dynamics of industrial capitalism. Industrial and Corporate Change, 12(2), 351–385.CrossRefGoogle Scholar
  28. Langlois, R. N. (2006). The secret life of mundane transaction costs. Organization Studies, 27(9), 1389–1410.CrossRefGoogle Scholar
  29. Langlois, R. N. (2007). The entrepreneurial theory of the firm and the theory of the entrepreneurial firm. Journal of Management Studies, 44(6) (November).Google Scholar
  30. Langlois, R. N., & Foss, N. J. (1999). Capabilities and governance: The rebirth of production in the theory of economic organization. Kyklos, 52(2), 201–218.CrossRefGoogle Scholar
  31. Langlois, R. N., & Robertson, P. L. (1992). Networks and innovation in a modular system: Lessons from the microcomputer and stereo component industries. Research Policy, 21(4), 297–313.CrossRefGoogle Scholar
  32. Langlois, R. N., & Robertson, P. L. (1995). Firms, markets, and economic change: A dynamic theory of business institutions. London: Routledge.Google Scholar
  33. Lewin, P., & Baetjer, H. (2011). The capital-based view of the firm. Review of Austrian Economics, 24, 335–354.CrossRefGoogle Scholar
  34. Lewin, P., & Phelan, S. E. (2000). An Austrian theory of the firm. The Review of Austrian Economics, 13(1), 59–79.CrossRefGoogle Scholar
  35. Lipsey, R. G., Carlaw, K. I., & Bekar, C. T. (2005). Economic transformations: General purpose technologies and long term economic growth. Oxford: Oxford University Press.Google Scholar
  36. Loasby, B. J. (1976). Choice, complexity, and ignorance. Cambridge: Cambridge University Press.Google Scholar
  37. Loasby, B. J. (2002). The significance of Penrose’s theory for the development of economics. In C. Pitelis (Ed.), The growth of the firm: The legacy of Edith Penrose (pp. 45–59). Oxford: Oxford University Press.Google Scholar
  38. Mahoney, J. T., & Rajendran Pandian, J. (1992). The resource-based view within the conversation of strategic management. Strategic Management Journal, 13(5), 363–380.CrossRefGoogle Scholar
  39. Malmgren, H. B. (1961). Information, expectations and the theory of the firm. The Quarterly Journal of Economics, 75(3), 399–421.CrossRefGoogle Scholar
  40. Nelson, R. R., & Winter, S. G. (1982). An evolutionary theory of economic change. Cambridge: Harvard University Press.Google Scholar
  41. Noteboom, B. (2003). Elements of a Cognitive Theory of the Firm. Working Paper, Tilburg University.Google Scholar
  42. O’Driscoll, G. P., & Rizzo, M. J. (1985). The economics of time and ignorance. Oxford: Basil Blackwell.Google Scholar
  43. Pagano, U. (2000). Public markets, private orderings and corporate governance. International Review of Law and Economics, 20, 453–477.CrossRefGoogle Scholar
  44. Penrose, E. T. (1959). The theory of the growth of the firm. Oxford: Basil Blackwell.Google Scholar
  45. Polanyi, M. (1958). Personal knowledge. Chicago: University of Chicago Press.Google Scholar
  46. Richardson, G. B. (1972). The organisation of industry. The Economic Journal, 82(327), 883–896.CrossRefGoogle Scholar
  47. Sautet, F. E. (2000). An entrepreneurial theory of the firm. London: Routledge.CrossRefGoogle Scholar
  48. Silver, M. (1984). Enterprise and the scope of the firm. London: Martin Robertson.Google Scholar
  49. Simon, H. A. (1951). A formal theory of the employment relationship. Econometrica, 19(3), 293–305.CrossRefGoogle Scholar
  50. Stigler, G. J. (1951). The division of labor is limited by the extent of the market. The Journal of Political Economy, 59(3), 185–193.CrossRefGoogle Scholar
  51. Tadelis, S. (2002). Complexity, flexibility, and the make-or-buy decision. The American Economic Review, 92(2), 433–437.CrossRefGoogle Scholar
  52. Teece, D. J. (1980). Economies of scope and the scope of the enterprise. Journal of Economic Behavior & Organization, 1(3), 223–247.CrossRefGoogle Scholar
  53. Teece, D. J. (1986). Profiting from technological innovation: Implications for integration, collaboration, licensing, and public policy. Research Policy, 15(6), 285–305.CrossRefGoogle Scholar
  54. Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509–533.CrossRefGoogle Scholar
  55. Tirole, J. (1988). The multicontract organization. The Canadian Journal of Economics, 21(3), 459–466.CrossRefGoogle Scholar
  56. Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5(2), 171–180.CrossRefGoogle Scholar
  57. Wernerfelt, B. (1995). The resource-based view of the firm: ten years after. Strategic Management Journal, 16(3), 171–174.CrossRefGoogle Scholar
  58. Williamson, O. E. (1975). Markets and hierarchies: Analysis and antitrust implications. New York: The Free Press.Google Scholar
  59. Williamson, O. E. (1985). The economic institutions of capitalism. New York: The Free Press.Google Scholar
  60. Witt, U. (1998). Imagination and leadership: The neglected dimension of an evolutionary theory of the firm. Journal of Economic Behavior and Organization, 35, 161–177.CrossRefGoogle Scholar
  61. Yu, T. F.-L. (1999). Toward a praxeological theory of the firm. The Review of Austrian Economics, 12(1), 25–41.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC 2012

Authors and Affiliations

  1. 1.The University of ConnecticutStorrsUSA

Personalised recommendations