Planning in firms as an interactive process

Abstract

This paper discusses the possible uses of economic analysis for strategic planning decisions in firms. It proposes an approach which emphasizes the role of common knowledge for decentralized parallel decision processes. Planning is interpreted as an interactive process among a set of agents who use a plan to formalize a theory of action and an invalidating procedure. In the course of action the agents are supposed to cope with uncertainty as long as the chosen theory remains justified. This approach has strong connections with some recent trends in managerial economics and in particular with the current work in the production sphere which similarly illuminates the role of common knowledge through objective physical flows to promote global efficiency of the firm.