“Austrian” determinants of economic organization in the knowledge economy

There is evidence that firm organization is currently undergoing profound change as a result of the emergence of the knowledge economy, not only with respect to the firm’s vertical and horizontal boundaries (Helper et al. 2000), but also with respect to internal organization (Gittleman et al. 1998; Ichniowski et al. 1996; Mendelsson and Pillai 1999; OECD 1999; Osterman 2000). Factors such as increased differentiation of tastes on the demand side (e.g. Milgrom and Roberts 1990), acceleration of innovation and technological development on the supply side (D’Aveni 1994), and changes in the composition of labor on the input side (Tomlinson 1999) are argued to be important drivers behind the current dynamics of economic organization.