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Knowledge CapitalismBusiness, Work, and Learning in the New Economy$
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Alan Burton-Jones

Print publication date: 1999

Print ISBN-13: 9780198296225

Published to Oxford Scholarship Online: October 2011

DOI: 10.1093/acprof:oso/9780198296225.001.0001

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Knowledge, the Firm, and the Market

Knowledge, the Firm, and the Market

(p.25) Chapter 2 Knowledge, the Firm, and the Market
Knowledge Capitalism

Alan Burton-Jones

Oxford University Press

Adam Smith's notion of the ‘invisible hand’ is countered with Chandler's notion of a ‘visible hand’ that replaces market mechanisms in coordination and allocation of resources. Firms continued to grow through the internalization and centralization of their processes until developments in computing and communications offered opportunities for decentralization, cost cutting, and less administrative complexity. Soon after that, the application of IT allowed improved coordination and production. Firms continue to grow and shrink simultaneously. This chapter discusses the types of transactions a firm will make, trends in employment, patterns of ownership, and control in a knowledge economy.

Keywords:   invisible hand, visible hand, allocation, market mechanisms, internalization, centralization, decentralization, IT, knowledge economy

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