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Towards a Learning-Based Theory of the Firm

By Ard Huizing

Abstract

This paper takes tentative steps towards a new learning-based theory of the firm. Itsobjective is to advance a separate and empirically relevant answer to the question: why do firms exist?Sometimes learning across the market will be preferred, while in other situations the firm will enjoy theadvantage. A predictive theory of the firm needs to unfold these differences between both modes oforganization. As in transaction cost economics, therefore, the strategy for deriving propositions iscomparative institutional analysis. Given a choice between the market and the firm, which is better? Thehypothesis is that learning economies will be achieved when the attributes of learning, informationexchange, and the alternative modes of organization are properly attuned to each other. On this basis,several propositions are advanced identifying factors responsible for market or firm advantage. Finally,the steps taken toward a learning-based theory of the firm are captured in three implications for economictheory and for a wider theory of performance differences between firms, which is a major concern in bothstrategic management and resource-based thinking. Some consequences of these implications arehighlighted, indicating the future research agenda

Topics: none, Management Information Systems
Publisher: AIS Electronic Library (AISeL)
Year: 2008
OAI identifier: oai:aisel.aisnet.org:sprouts_all-1022

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