Firms as knowledge repositories

Firms as knowledge repositories One reason firms exist is to serve as knowledge repositories. Firms compete against other firms and need profits to survive. Firms must be entrepreneurial to discover and act on profit opportunities. Knowledge required to spot profit opportunities is disbursed among economic actors and often is tacit knowledge that can only be obtained by those in close proximity. This gives rise to agglomeration economies, which can be leveraged within firms. In a competitive economy people have an incentive to keep knowledge from people in other firms, but to share it with those in their firm. One role of the firm is to act as a repository of knowledge for those within the firm’s boundaries, and to lower the cost of obtaining knowledge about profit opportunities. Entrepreneurs need firms to contain and capture the profits from their innovations. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Review of Austrian Economics Springer Journals

Firms as knowledge repositories

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Publisher
Springer Journals
Copyright
Copyright © 2011 by Springer Science+Business Media, LLC
Subject
Economics / Management Science; Public Finance & Economics; Political Science, general; Methodology and the History of Economic Thought
ISSN
0889-3047
eISSN
1573-7128
D.O.I.
10.1007/s11138-011-0165-1
Publisher site
See Article on Publisher Site

Abstract

One reason firms exist is to serve as knowledge repositories. Firms compete against other firms and need profits to survive. Firms must be entrepreneurial to discover and act on profit opportunities. Knowledge required to spot profit opportunities is disbursed among economic actors and often is tacit knowledge that can only be obtained by those in close proximity. This gives rise to agglomeration economies, which can be leveraged within firms. In a competitive economy people have an incentive to keep knowledge from people in other firms, but to share it with those in their firm. One role of the firm is to act as a repository of knowledge for those within the firm’s boundaries, and to lower the cost of obtaining knowledge about profit opportunities. Entrepreneurs need firms to contain and capture the profits from their innovations.

Journal

The Review of Austrian EconomicsSpringer Journals

Published: Aug 13, 2011

References

  • The nature of the firm
    Coase, RH
  • Geographic proximity and the transmission of tacit knowledge
    Desrochers, P
  • Towards an Austrian theory of the firm
    Dulbecco, P; Garrouste, P

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