By Erik Arnold (auth.)
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Additional info for Competition and Technological Change in the Television Industry: An Empirical Evaluation of Theories of the Firm
While there is an economic mechanism leading from changed relative factor prices and new techniques to technical change on the part of the firm, there is none leading in the opposite direction: from the activities of the firm to technical change. Technical change is assumed to take place smoothly and without adjustment costs in the long run when plant are variable. In the short 18 Economic Theory of the Firm run, changes in factor prices alter firms' costs, but since plant are assumed to be fixed, firms cannot respond.
In behavioural theory, 'Recognition of the separation of ownership and control in a modern corporation requires that the managers of such a firm be viewed collectively as an organisation' (Cyert and Kamien, 1972, p. 92) Simon's Administrative Behaviour (1976) is a cornerstone of this tradition, from which more explicity firm-oriented work such as that of Cyert and March (1963) and Nelson and Winter (1974) proceeds. Unlike the managerial stream, behavioural work does not involve a conception of stages in the development of the control of firms, but takes the present form of a firm as given, viewing it as a 'coalition' (Cyert and March, 1963, p.
Galbraith also stresses uncertainty avoidance as a reason for planning and implies that the technostructure seeks control over inputs. Vertical integration is an important tactic here, which has the added benefit that it contributes to growth. As far as possible, internally generated capital is used to prevent the owners of capital from influencing the firm's behaviour and usurping the role of the technostructure (1974, chs 3-4). Galbraith sees the technostructure as a cohesive group, while the behavioural tradition views the composition of the ruling coalition as shifting.
Competition and Technological Change in the Television Industry: An Empirical Evaluation of Theories of the Firm by Erik Arnold (auth.)