On the tangled discourse between transaction costs economics and mpetence - based views of the firms : Some comments

The views presented here have greatly benefited from discussions with the participants at the The insightful and thorough (albeit, in our view, somehow "imperialist") comparative discussion by Oliver Williamson of the governance and competence views of economic organisations (Williamson, 1999a) as well as the daring "counter-reformation manifesto" by Foss and Foss, trying to re-interpret most views on organisation in terms of property rights (Foss and Foss, 1999) provide a unique opportunity for an overall assessment of similarities, convergence, controversies and unexplored issues in one of the most lively fields of current socioeconomic theory. It is in this spirit that we contribute the rather sketchy remarks that follow: we begin by briefly recalling some basic elements of the competence perspective (CP henceforth), as we see it (section 2). Next, we offer a quick comparison with equally basic tenets of the "orthodox" view-which for brevity we equate to the "orthodox" agency theory (OA henceforth)-and the transaction costs economics 2 (TCE henceforth) (section 3). Finally, in section 4 we try to mimic some of the "moves" suggested by Williamson, stressing possible convergence but also potential controversy between TCE and CP. 2. The competence view of organisations: a telegraphic overview Given the growing number of detailed and rich accounts of CP and germane views 1 – such as "resource-based" theories – of organisations, we can afford to be particularly brief and refer the reader to the other works for details (e. The phenomena the theory addresses include first of all heterogeneity among firms and the sources of persistent competitive advantage. For this primary purpose, it elaborates a theory of the nature of the firm whose perspective departs quite significantly from the Coasian one. First of all, firms are not seen exclusively as loci of coordination, but also and more importantly as loci of creation, implementation, storage and diffusion of productive knowledge (cf. Winter, 1982). Second, an relatedly, the very existence of firms is not considered in terms of a departure from the original state of nature in which coordination is carried out entirely by competitive markets, but in terms of their being the primary loci of the process of division of labour, i.e. of the creation of those separable units which competitive markets might (or might not) coordinate efficiently. Equivalence between markets and organisations might well hold (lacking transaction and bureaucratic costs) for a given state of division of knowledge and labour, but it …