The new economy and the Austrian theory of the firm

Austrian economics focuses on markets but has much to say about organizations. In particular, Austrian insights on the structure of production, the heterogeneity and subjectivity of resources, the nature of uncertainty, the role of monetary calculation, and the function of the entrepreneur provide solid foundations for a distinctly Austrian theory of organizations. This chapter reviews these insights, discusses recent literature on Austrian economics and the theory of the firm, and suggests new directions for developing and extending an Austrian approach to organizations. In doing so it answers the following questions: Why, do organizations, large and small, emerge and persist? How do they avoid the problem of economic calculation faced by socialist economies? Why do organizations take the shapes they do, why do their characteristics vary over time and across industries, and why do they succeed or fail? Are most organizations stable over time, or do organizations, like markets, adapt and learn? and How do entrepreneurs arrange assets and manage individuals within organizations?

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The Firm as Observer: Data Resources and Firm Longevity in Bylund’s Austrian Theory of the Firm

The Review of Austrian Economics ◽

10.1007/s11138-021-00567-4 ◽

2022 ◽

Author(s):

Mark A. DeWeaver

Keyword(s):

Theory Of The Firm ◽

Austrian Theory

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Intra-Firm Coordination through Rule-Following and the Emergence of Hierarchy

The Quarterly Journal of Austrian Economics ◽

10.35297/qjae.010026 ◽

2019 ◽

Vol 22 (3) ◽

pp. 357-382

Author(s):

Aidan Walsh ◽

Malcolm Brady

Keyword(s):

Decision Making ◽

Theory Of The Firm ◽

Spontaneous Order ◽

Coordination Mechanisms ◽

Rule Following ◽

Rule Based ◽

Austrian Theory ◽

Conventional View

Rules and rule-following are becoming better understood as decision-making and coordination mechanisms. Further, that hierarchy is an under-appreciated element of natural spontaneous, rule-based, orders has caused confusion. The article argues firstly that the ability to meld rule-following and hierarchy in one theory of the firm presents an opportunity for a possible consistent Austrian theory of the firm. The paper then proceeds to discuss how rule-following is embedded in conventional theories of the firm and how a rule-based firm can create value in the larger spontaneous order of the extended market. The paper concludes by arguing that even though conventional views around hierarchy and the giving of orders within a firm may have a role, the conventional view may be under-privileging the role of rules, rule-following and the consequent natural emergence of hierarchy.

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