Economia Politica. Rivista di teoria e analisi Economia Politica. Rivista di teoria e analisi
Non-Technical Abstract
During the last three decades the theory of firms and industrial organization has been developed mainly according to two analytical approaches: the first based on production costs, the second based on transaction costs. The theory has gone a long way since the 1937, when Coase defined the choice between market and hierarchies as alternative methods for organizing production. In the recent years the problem of boundaries of the firm has arisen and a growing interest has been attached to the analysis of knowledge formation and diffusion.
Relating to these themes, this essay faces three questions: 1) how does the coordination among economic unities, whithin the one or among different firms, comes out? In other terms, what factors affect the aggregation and decomposition processes of economic unities? 2) Do definite mechanims exist which explain techno-economic dynamics and at the same time the persistence of given properties for firms or groups of them? 3) Can unambiguous criteria be defined for evaluating firm performancex? This problem will be treated as evolutionary fitness of organizational models.
In this essay the three questions are studied as "the coordination problem in the evolutionary environment", centered around knowledge formation and distribution. The following analysis aims at studying information processing mechanims from a definite analytical point of view: the production process as an abstract sequence of discrete units, of which three general properties are examined (algorithmic compressibility, recursiveness, self-containment). Basic unity of analysis is the concept of routine, here are conceived as variable set of operations, while the production cycle analysis is developed according to the dynamics of aggregation and decomposition of routines. Subsequently principles explaining sequence architecture are defined, mainly by searching for how the basic parameters for different production phases are determined. The analysis leads us to conceive two models of adaptation processes among the production phases: selective systems, based on evolutionary emergence of parameters; top-down systems, whithin which the sequence of production phases are predetermined from the top by the assignment of constraints.
Following this research line firms and systens of firms are defined as evolutionary hierarchies of routines, whose organization models can be explained in relation to different factors: coordination requirement, adaptation costs, evolutionary fitness. Referring to studies about innovation dynamics, these factors are connected to the characteristcs of environment (stable, variable), identified by different aspects of a cyclical techno-economic evolution: phases with technological discontinuities; eras of ferment, during which there are competing technologies; periods characterised by dominant design, where fundamental concepts and models of product are prevalent; eras of incremental changes, where problem- and puzzle-solving activities prevail.
Given the techno-economic cycle, two fundamental mechanims work inside different hierarchies of routines: specific variants, i.e. introduction of incremental knowledge inside a given set of operations; rearrangements of routines, i.e. mixing and combining the existing routines, from which new operation contexts can arise.
These mechanims allow to single out two evolutionary patterns, whose fitness is analized in relation to different environments: integrated hierarchies are connected with stable environments, and less integrated hierarchies are connected with variable environments.
The conclusion of analysis is then compared with both the results of empirical studies concerning Japanese and USA-firms and industrial districts: the approach adopted in this essay seems to explain these different organization patterns of production processes.
MAURO LOMBARDI is researcher in economics at the Università degli Studi di Firenze, Dipartimento di Scienze Economiche, Via Montebello 7, 50128 Firenze
lombardi_m@cesit1.unifi.it
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