ABSTRACT
With its quest for explaining the ‘nature’ of the firm, the transaction costs oriented theory of the firm (Coase 1988; Williamson 1979) has successfully shaped the agenda of the research program of New Institutional Economics and, thus, a substantial part of economic theorizing about institutions. As is well known, the ‘nature’ of the firm is explained by putting it in perspective with market exchange and by showing that it is a distinct way of inducing and coordinating the division of labour. However, like much of the theorizing in New Institutional Economics, the Coasian and postCoasian reflections on the firm apply a version of economic analysis which is cast entirely in static and comparative static terms. This makes sense when the purpose is to explain the existence and the limits of an institution by demonstrating that it serves a certain function or functions. On the other hand, the genesis and (endogenous) change of an institution cannot easily be dealt with on the basis of a static mode of reasoning. To borrow a term from Menger ([1883] 1963), who may be considered one of the forerunners of New Institutional Economics (see Vanberg 1998), the processes of genesis and change require a ‘causal-genetic’ explanation.
