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Cited by 3,078Economic Theory and InstitutionsManagement and Organizational StudiesInnovation and Knowledge Management

The DOI matches its Crossref record; 58 of the 59 references it cites were found in a registry or an index.

What Firms Do? Coordination, Identity, and Learning

Kogut, Bruce, Zander, Udo·1996·Organization Science
DOI 10.1287/orsc.7.5.502
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Abstract

Firms are organizations that represent social knowledge of coordination and learning. But why should their boundaries demarcate quantitative shifts in the knowledge and capability of their members? Should not knowledge reside also in a network of interacting firms? This line of questioning presents the challenge to state an alternative view to the “theory of the firm,” a theory that has moved from Coase's early treatment of what firms do to a concern with ownership, incentives, and self-interest. We return to Coase's original insight in understanding the cost and benefits of a firm but based on a view that individuals are characterized by an “unsocial sociality.” Does the perception of opportunism generate the need to integrate market transactions into the firm, or do boundaries of the firm lead to the attribution of opportunism? This basic dichotomy between self-interest and the longing to belong is the behavioral underpinning to the superiority of firms over markets in resolving a fundamental dilemma: productivity grows with the division of labor but specialization increases the costs of communication and coordination. The knowledge of the firm has an economic value over market transactions when identity leads to social knowledge that supports coordination and communication. Through identification, procedural rules are learned, and coordination and communication are facilitated across individuals and groups of diverse specialized competence. A firm is distinct from a market…

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Crossref · 10.1287/orsc.7.5.502

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Metadata

Authors
Kogut, B., & Zander, U.
Affiliations
  • University of Pennsylvania (US)
  • Stockholm School of Economics (SE)
ORCID
Venue
Organization Science
Publisher
Institute for Operations Research and the Management Sciences (INFORMS)
Published
1996-10
Volume
7
Issue
5
Pages
502-518
ISSN
  • 1047-7039 (ISSN-L)
  • 1526-5455
DOI
10.1287/orsc.7.5.502
OpenAlex
W2102435235
Cited by
3,078
References
59
Citations by year
2026: 34 · 2025: 51 · 2024: 53 · 2023: 54 · 2022: 73 · 2021: 79 · 2020: 121 · 2019: 108 · 2018: 118 · 2017: 115 · 2016: 127 · 2015: 134 · 2014: 151 · 2013: 182 · 2012: 178
FWCI
65.42
Type
journal article
Language
en
Open access
closed
Locations
Organization Science (publishedVersion)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic Theory and Institutions
  • Social Sciences › Business, Management and Accounting › Organizational Behavior and Human Resource Management › Management and Organizational Studies
  • Social Sciences › Business, Management and Accounting › Strategy and Management › Innovation and Knowledge Management
Keywords
theory of the firm, firm boundaries, social knowledge, organizational identity, coordination, learning, opportunism, division of labor, market versus firm, procedural justice, prisoner's dilemma, organizational coherence, sociality, communication overhead, creativity and innovation, Ronald Coase, moral consistency, complementarity

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