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The Nature & Property of the Firm and the Theory of the Growth of the Firm

Author: DongJunWu
Tutor: WanJunKang
School: Wuhan University of Technology
Course: Management Science and Engineering
Keywords: Growth of the firm Nature Heterogeneity Core knowledge and capability Product-oriented innovation
CLC: F270
Type: PhD thesis
Year: 2004
Downloads: 2396
Quote: 14
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Abstract


The firm is another necessary mechanism of allocating resources, which integrates with market but different from market. The growth of the firm is the foundation of a country’s economy development and has high researching value. This paper thinks that researching the growth of the firm should begin from the firm itself, mainly including the nature and the property of the firm.Beginning from the nature of the firm, this paper reviews and analyzes the viewpoints of neo-classical, new institutional, evolution economics etc. and Marx et al. Then it is concluded that the nature of the firm is a productive organization with high efficiency. There are three aspects of meanings. Firstly, the nature of the firm is firstly productive, which is what the firm differs from the market. Secondly, production is an organized production by the firm rather than a dispersed production. That is because firm can produce in a high efficiency. Finally, the firm is a kind of organization. Only through organizing, the firm can carry though production, a high efficient production taking advantage of the work division and collaboration.Based on the nature of the firm, the firm’s property are discussed. Through the review and comparison, it is thought that the property of the firm is heterogeneity. It includes two aspects of meanings. On one hand, the firm is an organism of historically and continuously endogenous growth and evolution. In this growth process, the core knowledge and capabilities accumulated are special and valuable. On the other hand, core knowledge and capabilities are noncompetitive, inimitable and no-substitutable. They can’t be priced and achieved through the public market, but also are a cost restriction for other firms to imitate. Moreover, this paper thinks that the growth of the firm rooted from the accumulation of the core knowledge and capabilities, and sustained knowledge innovation, which is an endogenous growth process. At last, a firm growth model from knowledge structure perspective is presented.According with the firm heterogeneity, the significance of the nature of the firm to the firm growth is that product-oriented innovation is a basic means for the firm’s growth. Hereinto, the productiveness of the firm decides the competition based on product. And the high efficiency decides the competition based on innovation. Based on this, the firm growth pattern of product-oriented innovation and the choice of it are discussed. Then, the correlation and influence between product innovation and firm growth is analyzed. And the empirical research achievements abroad are introduced.

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CLC: > Economic > Economic planning and management > Enterprise economy > Economic theory and methods
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