ABSTRACT
In recent years there has been a remarkable flowering of ideas on the theory of the firm, the principal purpose of which is to break open the black box which normally constitutes the firm and to seek to understand its behaviour in terms of its internal properties, that is to say its capabilities. History matters because history shapes the knowledge which is extracted from particular items of information. In a fundamental sense all the activities of the firm are premised upon a certain state of knowledge, which immediately suggests a connection between the capabilities perspective and the way in which recent scholars have come to view the accumulation of practical knowledge. Several recent contributions to the management literature have focused upon the differences in the resources commanded by different firms. One of the central themes of the capabilities literature is that differences between firms in their behaviours are a basis for generating differential and quasi-sustainable rents.
