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An Austrian Theory of the Firm

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  • Lewin, Peter
  • Phelan, Steven E

Abstract

The modern Theory of the Firm uses the concept of rent and makes implicit assumptions about equilibrium. An Austrian (Market Process) Theory of the Firm should have something to say about each of these. Two strategic perspectives are analyzed, the neoclassical microeconomic perspective (using the Ricardo-Marshall approach to rent) and the Market Process perspective (using the Fetter approach to rent). In a neoclassical world, rents indicate "unsolved" or unexploited "inefficiencies" as every hypothetical outcome is viewed against the standard of perfect competition. By contrast, in the Market Process world there is no single ideal standard by which to measure any particular outcome. All action takes place in an open-ended universe in which the future is continually being created, in which competition is a "discovery process." Copyright 2000 by Kluwer Academic Publishers

Suggested Citation

  • Lewin, Peter & Phelan, Steven E, 2000. "An Austrian Theory of the Firm," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 13(1), pages 59-79, February.
    • Handle: RePEc:kap:revaec:v:13:y:2000:i:1:p:59-79
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    Cited by:

    1. Michael I.C. Nwogugu, 2019. "Complex Systems, Multi-Sided Incentives and Risk Perception in Companies," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-137-44704-3, October.
    2. Nicolai J. Foss & Peter G. Klein, 2010. "Austrian Economics and the Theory of the Firm," Chapters, in: Peter G. Klein & Michael E. Sykuta (ed.), The Elgar Companion to Transaction Cost Economics, chapter 27, Edward Elgar Publishing.
    3. Hallensleben, Tobias & Jain, Anil K. & Manger, Daniela & Moldaschl, Manfred, 2011. "Innovationskompetenz und Performanz," Papers and Preprints of the Department of Innovation Research and Sustainable Resource Management 3/2011, Chemnitz University of Technology, Faculty of Economics and Business Administration.
    4. Siegfried K. Berninghaus & Werner Güth, 2009. "Buying Versus Hiring—An Indirect Evolutionary Approach," Metroeconomica, Wiley Blackwell, vol. 60(4), pages 619-637, November.
    5. Randall G. Holcombe, 2013. "Firms as knowledge repositories," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 26(3), pages 259-275, September.
    6. Pierre Garrouste, 2008. "The Austrian roots of the economics of institutions," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 21(4), pages 251-269, December.
    7. Steven E. Phelan, 2016. "Austrian theories of entrepreneurship: Insights from complexity theory," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 29(3), pages 277-297, September.
    8. Peter Lewin, 2023. "How should an Austrian economist teach the theory of the firm? Do the equi-marginal conditions still apply?," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 36(1), pages 81-89, March.
    9. Nicolai J. Foss, 2002. "The Strategy and Transaction Cost Nexus Past Debates, Central Questions, and Future Research Possibilities," DRUID Working Papers 02-04, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    10. Richard N. Langlois, 2013. "The Austrian theory of the firm: Retrospect and prospect," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 26(3), pages 247-258, September.
    11. Moldaschl, Manfred, 2011. "Warum Gazellen nachts nicht leuchten: Evolutorische Theorie der Unternehmung," Papers and Preprints of the Department of Innovation Research and Sustainable Resource Management 1/2011, Chemnitz University of Technology, Faculty of Economics and Business Administration.
    12. Sylvia Maxfield, 2008. "Reconciling Corporate Citizenship and Competitive Strategy: Insights from Economic Theory," Journal of Business Ethics, Springer, vol. 80(2), pages 367-377, June.
    13. Peter J. Boettke & Rosolino A. Candela, 2023. "Monitoring, metering and Menger: A conciliatory basis for a genuine institutional economics," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 36(2), pages 183-203, June.
    14. Argandoña, Antonio, 2010. "From action theory to the theory of the firm," IESE Research Papers D/855, IESE Business School.
    15. Robert Mulligan, 2006. "Accounting for the business cycle: Nominal rigidities, factor heterogeneity, and Austrian capital theory," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 19(4), pages 311-336, December.
    16. Nick Harkiolakis, 2023. "The Cycle of Value The Cycle of Value -- A Conservationist Approach to Economics," Papers 2308.07185, arXiv.org.
    17. Sierdjan Koster, 2009. "Taking The First Hurdle In New Firm Formation. The Effects Of Industry-Specific Skills And Support On Survival During The Founding Process," Romanian Journal of Regional Science, Romanian Regional Science Association, vol. 3(1), pages 36-62, JUNE.
    18. Sierdjan Koster & Nardo de Vries, 2011. "The networks of the solo self-employed and their success," Scales Research Reports H201111, EIM Business and Policy Research.
    19. Saras D. Sarasvathy & Nicholas Dew, 2013. "Without judgment: An empirically-based entrepreneurial theory of the firm," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 26(3), pages 277-296, September.

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