Introduction: The Changing Organization of Industry

Abstract

In his seminal 1972 essay on the “organization of industry,”G. B. Richardson argued that economists had generally viewed firms as “islands of planned co-ordination in a sea of market relations.” Business historians, too, had focused predominantly on the firm (or entrepreneur) and the market. In drawing attention when he did to the “dense networks of co-operation and affiliation by which firms are inter-related,” Richardson was on the forefront of what would become a noticeable shift in the analysis of business organization. There were many reasons for this transition. In particular, the comparative success of the “Japanese model,” with its “intermarket”keiretsudisturbed standard assumptions. (Richardson himself pointed to Japanese firms as thriving examples of interfirm relations.) Furthermore, it was becoming clear that in many emerging industries networked relations of industrial clusters were increasingly important. Comparative research suggested that new-technology firms with tightly drawn boundaries were at a competitive disadvantage compared to firms that had developed cooperative links not only to suppliers but even to competitors. To explain such developments, economists, organizational theorists, and business historians alike looked beyond not only the conventional boundaries of the firm but also the conventional boundaries of their disciplines. In particular, they turned to theories of networks, the topic of this special issue.