The Market Process and the Emergence of the Firm Some Indications of Entrepreneurship Under Genuine uncertainty

Abstract

This paper examines the nature of genuine uncertainty and rule-following behaviour and suggests some implications for the theory of the firm. The firm is seen here as emerging as a means to manage some of the experienced uncertainty. The nature of the firm is perceived as an evolving institution creating predictability both inside the firm and in the market. But because of the spontaneous nature of life-world, social processes remain open-ended. This subjectivist perspective cannot assign any particular premeditated purpose to the spontaneous order which emerges through the market process. The process is not kaleidic but nor is it considered to be moving toward increasing efficiency either. Rules and institutions provide predictability to the extent that novelties can be introduced to the process. Discoveries do not, however, only introduce new outcomes in the market process, they also change the rules of the game.Uncertainly, institutions, transaction costs