Knowledge Coordination and Development via Market, Hierarchy and Gift Exchange

Abstract

From hunter-gatherer societies onwards people living in communities have understood the need to cooperate. This need, wherein individuals become dependent on one another, has grown over time as a result of continually increasing division of labour and growing specialization. Indeed, as Adam Smith (1981 [1776]) claims, division of labour and specialization have been important drivers of economic development. As individuals are no longer able to master the totality of available knowledge and skills so the need for exchange of resources and cooperation has increased. This is broadly acknowledged in economics (Hayek 1945; Schumpeter 1978 [1934]; Nahapiet and Ghosal 1998), but remains ill-understood (Lopes and Caldas 2008). As individuals have only partially overlapping goals and interests, exchange and cooperation needs coordination of some sort (Barnard 1968). By necessity, coordination of cooperation — be it through the market or a hierarchy or by some other means — requires that not only self-interest is relied on, but that shared goals and moral convictions are assumed to exist and to play a role (Akerlof 1982; Dolfsma 1998; Le Grand 2003; Lopes and Caldas 2008).

With Rene van der Eijk.