This stimulating research review analyses how the theory of the
firm evolved from several core concepts and building blocks that
underpin this important area of economics. It discusses a variety
of perspectives from leading scholars in the field, including the
basic elements of: risk and uncertainty; information and knowledge;
bounded rationality and decision making; motives and incentives;
resources and capabilities; and transactions. The review goes on to
examine how the various elements are integrated into the modern
Theory of the Firm with the notion of organization coming
increasingly to the fore. It focuses on norms; rules and routines;
the entrepreneur; governance; hierarchies; co-operation, teams and
networks; innovation and appropriability. This comprehensive review
will be an invaluable reference tool for all researchers and
students with an interest in the modern theory of the firm,
highlighting how it needs to evolve further to address the
important management and policy issues of our time.
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