Reconceptualizing the Corporation and Competition

Abstract

Two somewhat independent shifts are causing academics, businessmen, and policy makers to rethink fundamental ideas about the corporation and competition. The first is the increased level of international competition, particularly from the Japanese and other developmental states which have relentlessly been challenging American and European corporations in the global marketplace. These competitive pressures are leading, at least in some circles, to a re-evaluation of American institutions and policies. The second and more subtle shift is occurring within economics and is driven by a dissatisfaction with orthodox theory. Textbook views of the corporation as a black box, or production function, are giving way to views of the corporation as an institution for economizing on transaction costs, for housing organizational learning, and for capturing value from technological innovation. In addition, some fundamental rethinking is occurring with respect to how corporations ought to cooperate and compete. This latter issue has not gone very far to date, but it will probably become an increasingly important consideration in the years ahead.