ABSTRACT
This chapter focuses on the influence and criticism of neo-classical economic thinking on the development of inter-firm network theory, from the point of view of differing economic theories of the firm. It discusses the influence of sociological models of interaction and exchange that attempt to explain the importance of social and non-economic factors within economic activity, with a discussion of constructs such as ‘embeddedness’, ‘structural holes’ and ‘brokerage’. Sociological approaches to the firm and networks have injected an important progression away from efficiency-maximising principles towards a more diffuse set of cultural and political explanations. Despite ceding a more institutional approach to economic action, transaction costs theory has been extensively debated and widely criticised in both economics and sociology. The emergence of schools of thought on the ‘strategic management of firms’ within economics has had the effect of spawning new contributions to the theory of the firm, building primarily on transaction costs theory and integrating ‘organisational approaches’.
