Incentive-based and knowledge-based theories of the firm: some recent developments

The article presents a critical review of the advances made in incentive-based and knowledge-based theories of the firm. In particular, the authors explore some developments in the incentive-based approach regarding relational contracts and contracts as "reference points", while the evolution of knowledge-based theories has led us to focus on the interesting implications of the concept of dynamic capabilities. Finally, we investigate some recent attempts to bridge these two main research streams, which have long been considered to clash with rather than complement each other.