Adaptation, Specialization, and the Theory of the Firm
Foundations of the Resource-Based View

An up-to-date analysis of the theory of the firm, including the latest research on the resource-based view.

Birger Wernerfelt (Author)

9781107595781, Cambridge University Press

Paperback / softback, published 27 October 2016

312 pages, 19 b/w illus.
22.8 x 15.2 x 1.8 cm, 0.47 kg

'This important book unifies two strands of Birger Wernerfelt's research that have heretofore been known to mainly separate audiences. His 'Resource-Based View' (1984) is a classic contribution to management. In contrast, Wernerfelt's recent papers on the 'Adaptation-Cost Theory' of the firm contribute to the economics literature launched by Coase and deepened by decades of subsequent research. Remarkably … the ACT not only motivates, develops and applies an important new source of exchange friction, it also provides the first unified account of the scope of firms, the size of markets, and the style of contracting - an impressive achievement and a high bar for future work. Most importantly, however, the RBV and the ACT can now be seen as two sides of the same coin; such dialogues and integrations between the management and economics literatures are enormously welcome. Robert S. Gibbons, Sloan Distinguished Professor of Management, Sloan School of Management, Massachusetts Institute of Technology

This invaluable book provides the foundations for a new theory of the firm, drawing on Birger Wernerfelt's landmark work on economic theory and the resource-based view of the firm. It addresses a vigorous and long-standing academic debate over what exactly a 'firm' is, both in the field of management and economics. Wernerfelt revisits his classic articles, including an extensively revised 'A Resource-Based View of the Firm' (1984), which have been updated and synthesized to provide precise and accessible concepts and predictions. By offering future directions for research and practice, this book will be of interest to students and scholars of management and economics alike.

Preface
Part I. Agenda: 1. Introduction
2. Preview: small forces, high frequencies, and large firms
Part II. The Main Argument: 3. Adaptation costs in one dimension: firms, contracts, and price lists
4. Adaptation costs in three dimensions: firms, markets, and contracts
5. All adaptations are not the same: the scope of firms and the size of markets
6. Resources and the scope of the firm
Part III. Implications: 7. The allocation of asset ownership
8. Communication within and between firms
9. The power of incentives within and between firms
10. Decision-making in large organizations
Part IV. Empirical Tests: 11. Bargaining costs: existence and sub-additivity
12. Adaptation frequency and the boundary of the firm
13. Asset ownership and externalities
Part V. Foundations: 14. Endogenously incomplete contracts
15. Multiple equilibria and firm heterogeneity
16. On the endogenous amplification of small differences
Part VI. Postscript: 17. Summary and final reflections
Index.

Subject Areas: Business strategy [KJC], Business & management [KJ], Economics of industrial organisation [KCD], Microeconomics [KCC]