Information, Knowledge, Vision, and Theories of the Firm

Economists have, of course, always recognized the dominant role that increasing knowledge plays in economic processes but have, for the most part, found the whole subject of knowledge too slippery too handle... (p. 77). A 'firm ' is by no means an unambiguous clear-cut entity; it is not an observable object physically separable from other objects, and it is difficult to define except with reference to what it does or what is done within it. Hence each analyst is free to choose any characteristics of firms that he is interested in, to define firms in terms of those characteristics, and to proceed thereafter to call the construction so defined a 'firm'. Herein lies a potential source of confusion... (p. 10). Edith Penrose, The Theory of I he Growth of the Firm, 1959 Where is the wisdom we have lost in knowledge5 Where is the knowledge we have lost in information? T. S. Eliot, 'Choruses from "The Rock " ' 1. Purposes This paper has the following purposes. The first purpose is to demonstrate that many of the best-known approaches to the firm in economics have in common a starting-point which sees the firm as a response to information-related problems. The second purpose is to review critically some of these approaches on the basis of the internal structure of their arguments. Th