Co-ordination and Spontaneity in Non-Hierarchical Business Organizations
New Thinking in Political Economy series
Chapter 1: Introduction
We live in a global economy . . . To have a ﬁghting chance, companies need to get every employee with every idea in their heads and every morsel of energy in their bodies, into the game. (Jack Welch, ‘The “But” Economy’, Wall Street Journal, October 30, 2003) It is commonly accepted that the existence and survival of ﬁrms rest on their ability to generate new market knowledge in the form of innovations more eﬀectively than (or at least as eﬀectively as) their competitors. Yet economics has so far not explained very well how ﬁrms create and introduce innovations, and why some are more successful at it than others. Joseph Schumpeter deﬁned the function of entrepreneurship as introducing novelty (as in something new) and initiating change, but there has been little economic examination of either the process of change or the introduction of novelty within ﬁrms and even fewer systematic inquiries into how entrepreneurship works within a ﬁrm.1 In modern economic theory ﬁrms either have nothing to do with innovation, or else are but vessels for carrying out the vision of a great, charismatic leader/entrepreneur (for example, Casson 1982; Nelson and Winter 1982). Circumstances where employees act in creative and entrepreneurial ways are not often considered. But in order to explain many of the most vibrant of today’s businesses and industries, we must not only incorporate entrepreneurship into the theory of the ﬁrm but do it in a way that will also explain employee creativity. That is the goal of...