Technological Interdependencies, Specialization and Coordination: A Property Rights Perspective on The Nature of the Firm

Research output: Working paperResearch

Abstract

This paper develops a property rights perspective on the nature of the firm. The basic idea is that learning by doing in production and coordination stem from experience in production and that user rights over productive assets are necessary in order to accumulate the experience needed to perform improvements in production. Accumulation of skills from learning by doing in production is accelerated by specialization in production. However, specialization introduces greater complexity and new kinds of tools and equipment and this creates uncertainty about the best way of coordinating specialized interdependent activities. The result may be bottlenecks in production and uneven development of components. Experimenting in coordination is necessary in order to eliminate these problems. It is argued that the Coasian notion of firms where coordination is provided by the direction of managers provides a cheap way of conducting the experiments needed to collect information on how best to coordinate interdependent activities.
Original languageEnglish
Place of PublicationFrederiksberg
PublisherDRUID - Danish Research Unit for Industrial Dynamics
Number of pages35
ISBN (Print)8778730465
Publication statusPublished - 1998
SeriesDRUID Working Paper
Number98-10

Cite this

Foss, K. (1998). Technological Interdependencies, Specialization and Coordination: A Property Rights Perspective on The Nature of the Firm. DRUID - Danish Research Unit for Industrial Dynamics. DRUID Working Paper, No. 98-10