The continual expansion of rational choice theory to a greater range of social phenomena—from markets to politics and institutions—is a testament to its success. Each further application, however, simultaneously forecloses a potential source of inefficiency in economic systems. Abdicating...

The capability-based view of the firm is based on the assumption that firms know how to do things. Assuming the existence of a thing called 'organizational knowledge', in the first part of the paper we identify its main building blocks and we provide a description of its inner structure. This...