Handbook on the Economics and Theory of the Firm
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Handbook on the Economics and Theory of the Firm

Edited by Michael Dietrich and Jackie Krafft

This unique Handbook explores both the economics of the firm and the theory of the firm, two areas which are traditionally treated separately in the literature. On the one hand, the former refers to the structure, organization and boundaries of the firm, while the latter is devoted to the analysis of behaviours and strategies in particular market contexts. The novel concept underpinning this authoritative volume is that these two areas closely interact, and that a framework must be articulated in order to illustrate how linkages can be created.
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Chapter 6: Schumpeter

Gerhard Hanappi


Gerhard Hanappi 6.1 INTRODUCTION Till today Joseph Alois Schumpeter remains an enfant terrible in the arena of wellrespected economists. Despite his often systematic-sounding style he never produced a consistent theory concerning any of the numerous subjects of investigations he set out to describe. At least, this is how many of his contemporaries perceived his contributions. A well-defined theory of the firm thus cannot be found in Schumpeter’s oeuvres. What can be found there is a patchwork of interconnected ideas, of reflections and meditations, concerning capitalist firms. And as the reader of Schumpeter’s texts tries to discover patterns and main themes in this mosaic it often proves to be more fascinating (and actually reveals more knowledge) than any elegant, self-contained and consistent treatment of the subject possibly could be. In other words, Schumpeter’s theory of the firm is itself evolutionary in the sense that (1) it revolves around a small diversity of theoretical aspects of capitalist firms, (2) selects this set of characteristics as dominant and thus characteristic for an economic epoch, and (3) expresses the transitory status of his suggestions by immediately adding caveats and even contradictions. Instead of arriving at a finally adequate theory of the firm, rather Schumpeter accompanies important features of firms in their historical development, with one eye always on their emergence at a certain point in history and the other eye on their foreseeable redundancy in the future. Three of his favorite topics will be discussed in what follows. 6.2 THE CAPITALIST FIRM AS MOTOR...

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