Can Organizing A Firm Create New Economic Value?

This is an early draft. Please do not quote or cite without written permission of the authors. Comments are welcome. Can Organizing a Firm Create New Economic Value? A theory of the firm as a way to create new economic value is proposed. This theory suggests that new value creation is only possible under conditions of high market uncertainty, and that high market uncertainty creates transactions difficulties that will often be most efficiently managed through the creation of hierarchical governance. This conclusion does not depend on the threat of opportunism in an exchange, although the theory developed here recognizes that both opportunism (or behavioral uncertainty) and market uncertainty may be important determinants of governance. Among other implications, the theory developed here can be used as the basis for developing a strategic and entrepreneurial theory of the firm. Can Organizing a Firm Create New Economic Value