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How technology is redrawing the boundaries of the firm

3 pointsby antiviralover 2 years ago

2 comments

antiviralover 2 years ago
A useful lens for understanding these changes was offered by Ronald Coase in his ground-breaking paper from 1937 entitled “The nature of the firm”. Stay small and you forgo the efficiency afforded by scale. Grow too big and a business is too unwieldy to manage—think of Soviet-style command-and-control economies. Most commerce happens in between those extremes. But where on the continuum? Coase, whose insights earned him a Nobel prize in economics, argued that firms’ boundaries—in other words, what to do and what not to do yourself—are determined by how transaction and information costs differ within firms and between them. Some things are done most efficiently in house. The market takes care of the rest.
antiviralover 2 years ago
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