Institutional Economics, Management Science and the Historical School

Abstract

This paper is dedicated to interconnections between three scientific communities. For methodological reasons each of them, institutional economics as well as management science and the historical school, has to be divided into three subsets at least: a) Institutional economics may be arranged into 1. older or American institutionalism from Veblen via Commons to Mitchell and his associates, 2. neo-classical) institutionalism or rather institutional microeconomics, because the transaction costs approach and the property-rights approach or the principal-agent models are variations of a utility maximization under constraints, which itself is a modification of the partial or general equilibrium theory in economics, 3. anti-equilibrium institutionalism. This includes the explanations of institutions by the dichotomy: originated either by human design or by repeated human action in the sense of invisible hand-explanations1. During the last two decades several authors interpreted and worked on these explanations. In this context Modem Austrian Economics emphasizes the role of entrepreneurs in competition2, but it still ignores the firm as an institution. Though this institution is one form for coordinating the individual’s plans to gain and to secure income, i.e. to reduce its uncertainty. The gap in research activities is obvious: the explanation of the firm as an economic institution by entrepreneurial functions. In attempting to deal with such a research program one has to tackle the problem of looking for invisible hand explanations of firms itself and the rules governing the behaviour of the firm’s members in markets and inside the firm3.