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This text explores the theory of the firm produced through an exchange between management theory and economics. In the process, economics is seen to provide a foundational element for strategy research whilst developing a more realistic theory of the firm with a greater emphasis on its internal features. The success of competence theories of the firm also reflects their ability to explain significant trends in the business world, notably the declining importance of conglomerates and critical features in the success of Asian and Japanese business.

Neo-classical economics, with its emphasis on general equilibrium, has developed a tightly-knit group of theories of great rigour. However, it lacks a conceptualization of organization, institutions, structure and change and has virtually nothing to say about the role of norms and rules in economic behaviour.

Explores a theory of the firm produced through an exchange between management theory and economics. This books attempts to show that, in the process, economics provides a foundational element for strategy research whilst developing a more realistic theory of the firm with a greater emphasis on its internal features.