The nature of the firm - Static versus developmental interpretations

Different from the prevailing static perspective in the theory of the firm, a developmental approach focuses on processes of change in firm organizations (rather than on states and their properties). Although business history provides ample evidence for systematic organizational change, few contributions in the literature take a developmental viewpoint and offer explanations for the endogenous processes of change. To contrast static and developmental interpretations, the paper identifies three paradigmatic questions for each of them. Their comparison sheds some new light on the theory of the firm and draws attention to the neglected entrepreneurial role in organizational change. © 2001 Kluwer Academic Publishers.