ABSTRACT
In the first half of the twentieth century both Knight and Coase suggested that without uncertainty there would be little need for the firm or, for that matter, the strategic control of production. However, Coase largely dismissed Knight’s account of entrepreneurship and the firm and a major opportunity to integrate the study of uncertainty into the theory of the firm was lost. More recently, Cowling and Sugden (1987, 1993, 1998) have returned to the notion of strategy while reflecting on developments in the theory of the firm stemming from Coase. They have concentrated on Coase’s original starting point, the notion of economic planning, and provide an alternative approach and definition of the firm, as a ‘means of coordinating production from one centre of strategic decision making’. However, they fail to appreciate the key insight, recognised by Knight and Shackle (1955, p. 82), that ‘uncertainty is inherent in production’ and to examine the implications for coordinating decision-making.
