The Organizational Economics of Organizational Capability and Heterogeneity: A Research Agenda

Transactional hazards, institutional change, and capabilities: Integrating the theories of the firm

“…In parallel, the development of the ‘capabilities’ theory of firm boundaries, which maintains that firms will vertically integrate the transactions for which they have stronger productive capabilities than their suppliers (Argyres, ; Jacobides and Winter, ), suggests that the differential in capabilities across firms may complement the generic prescription derived from the characteristics of the transaction itself , such as its specificity, its institutional setting, and its measurability. As such, the inclusion of capability differentials among firms has the potential to provide a more nuanced and comprehensive account of firm boundaries, permitting the analysis of the heterogeneity of firm boundaries and the evolving relationship between capabilities and transaction costs (Argyres et al ., ).…”

Toward an Organizational Economics of Heterogeneous Capabilities

“…While contract theory and transaction cost insights are surely capable of contributing to the understanding of firm heterogeneity (cf. Argyres et al, 2012), explaining such heterogeneity per se has never been a central explanatory task of these approaches (Legros and Newman, 2013).…”

“…Thus, while management research has done much to advance the notion of intra-industry heterogeneity, it may have been less forthcoming with respect to theorizing the antecedents of such heterogeneity, at least in ways that would be appealing to an economist (Argyres et al, 2012). Most work on such antecedents has highlighted cognitive variables, such as managerial cognition and absorptive capacity, and variables related to skill levels and the efficiency of routines.…”

“…Organizational economists have made significant strides forward in the understanding of the optimal governance of such investments (Williamson, 1996), which suggests that economists may usefully turn the tools of contracts economics and related fields to the study of capabilities (Argyres et al, 2012).…”

Organizations and Markets

“…There have been several attempts at integrating transaction cost and capabilities approaches to the firm (surveyed in Argyres, Felin, Foss and Zenger, 2012) Argyres and Zenger (2012) argue, for example, that transaction costs and property rights govern how capabilities are 7 There are important connections between capabilities and knowledge-based views and Austrian ideas about tacit knowledge. Not surprisingly, several Austrian writers have been particularly attracted to the knowledge-based view as it appears to take seriously the Hayekian notions of tacit, dispersed knowledge and rule-following behavior (Malmgren 1961;O'Driscoll and Rizzo 1985;Loasby 1991;Langlois 1992Langlois , 1995Langlois , 1998Foss 1997, Foss andChristensen 2001;Dulbecco and Garrouste 1999).…”