Organizational Economics of Capability and Heterogeneity

Authors:
Nicholas S. Argyres;Teppo Felin;Nicolai Foss;Todd Zenger
Affiliations:
Olin Business School, Washington University in St. Louis, St. Louis, Missouri 63130;Organizational Leadership and Strategy, Marriott School, Brigham Young University, Provo, Utah 84602;Department of Strategic Management and Globalization, Copenhagen Business School, 2000 Frederiksberg, Denmark/ and Department of Strategy and Management, Norwegian School of Economics and Business ...;Olin Business School, Washington University in St. Louis, St. Louis, Missouri 63130
Venue:
Organization Science
Year:
2012

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Abstract

For decades, the literatures on firm capabilities and organizational economics have been at odds with each other, specifically relative to explaining organizational boundaries and heterogeneity. We briefly trace the history of the relationship between the capabilities literature and organizational economics, and we point to the dominance of a “capabilities first” logic in this relationship. We argue that capabilities considerations are inherently intertwined with questions about organizational boundaries and internal organization, and we use this point to respond to the prevalent capabilities first logic. We offer an integrative research agenda that focuses first on the governance of capabilities and then on the capability of governance.