Cyert and March’s 1963 seminal book is one of the two major economics-based theories of the firm that goes inside the ‘black box’ (the firm) – the other being the contribution of Edith Penrose. The two theories have differences, but also similarities, and substantial scope for...

This is an earlier draft for the introduction to the book "The theory of the growth of the firm" published by Oxford Press, 4th edition, 2009.

Extant explanations of the nature and scope of firms, such as transaction costs, property rights, metering and “resources” can be integrated into a more general (capability based) theory of the nature and essence of the firm that recognizes the importance to the firm of creating (and...