Knowledge, Scale and Transactions in the Theory of the Firm

Knowledge, scale and transactions

Figures and tables of the book

Knowledge, Scale and Transactions in the Theory of the Firm
Mario Morroni
Hardback (ISBN-10: 0521862434 | ISBN-13: 9780521862431)
Cambridge University Press, Cambridge, 2006, pp. i-xii and 1-358.
Published May 2006
Paperback (ISBN 978-0-521-12318-1)
Paperback Re-issue, digitally printed version, 2009.

The coexistence of firms of noticeably different nature, size and competitiveness is a common feature of market economies. Knowledge, Scale and Transactions in the Theory of the Firm provides a new analytical framework that improves our understanding of the causes underlying different growth paths which lead to heterogeneity in organisational design and performance of firms. The book addresses the relations between basic conditions, decision-making mechanisms and organisational coordination. This allows an examination of the circumstances whereby capabilities, transactions and scale-scope considerations interact in shaping organisational boundaries and performance. With the emergence of the knowledge-based economy and the increasing pressure of global competition, the development of capabilities is acquiring ever greater importance in boosting the competitiveness of enterprises. It is shown in the book that long-term relational agreements, within and among firms, enhance learning processes and offer powerful tools for improving competitiveness under conflicting interests and informational asymmetries. Dissimilar performances among firms derive from different opportunities and abilities to exploit the combined advantages provided by the development of knowledge, the modes of governance of transactions and the design of the scale and scope of processes.

Figures; Tables; Acknowledgements; Introduction and summary; 1. Basic conditions; 2. Decision making; 3. Organisational coordination; 4. Wrestling with uncertainty; 5. Uncertainty-decreasing strategies within firms; 6. By way of a conclusion: growth of the firm as the interplay between the three aspects of organisational coordination; Glossary; References.


"Morroni writes with refreshing analytical clarity on the current status of the theory of the firm. His book provides a masterful re-examination of neo-classical theory at a time when academic economists have been challenged to integrate such intractable forces as internal economies of scale, high transaction costs, and radical uncertainties into their theoretical models. His book is an invaluable guide to all who share these concerns."
Nathan Rosenberg, Stanford University

This is a book of ambitious scope, based on a key organising principle: the interaction between individual cognitive limitations and the extraordinary human potential for developing knowledge and skills by differentiation and integration, in combinations adapted to particular circumstances. Thus co-ordination and growth are interdependent; change in some respects requires stability in other respects; every firm is always a work in progress; and every major modern economy is diverse and evolving. Morroni has a message for economists, policymakers and businessmen: principles persist, but their interpretation and application requires particular knowledge.
Brian J Loasby, University of Stirling

'Mario Morroni’s Knowledge, Scale and Transactions in the Theory of the Firm is a veritable tour de force … In order to begin to understand the complexities of decision-making in conditions of inescapable, fundamental uncertainty and the processes within firms that result, Morroni’s book is the obvious starting place.' G. C. Harcourt, Jesus College, Cambridge

'This ambitious book guides the reader along an interpretative journey inspecting the different functions business organizations perform in changing environments permanently characterized by uncertainty and technological and organizational change. Accompanied by a useful glossary and a thorough bibliography it offers an insightful appreciation of the complementarities and differences between 'Penrosian', transaction-cost, and knowledge-based theories of the firm.' Giovanni Dosi, Sant'Anna School of Advanced Studies, Pisa.

' … provides an essential update of the literature concerning scale, transaction costs, and the evolution of the theory of the firm.' Alfred Chandler, Isador Straus Professor of Business History, Emeritus, at the Harvard Business School


Book review by Jackie Krafft, EAEPE Newsletter, no. 37, February 2007 (pdf)

Book review by Jackie Krafft, Journal of Evolutionary Economics, 17, no. 4, August, 2007, pp. 517-520 (pdf )

Book review by Wilfred Dolfsma, De Economist, 155, no. 1, 2007 (pdf)

Book review by Gavin C. Reid, Economica, no. 305, January 2010, pp. 209-210 (pdf)