Thursday, July 12, 2012

Understand Firms - A Manager's Model of the Firm

My book "Understanding Firms - A Manager's Model of the Firm has been launched.

Generations ago, the firm was conceived in the image of the army. Since then the army has moved on, but the firm hasn’t. Naturally, we experience severe difficulty while working with firms. Employees are dissatisfied, mergers fail, innovation is impossible, cost cutting is never enough and growth is not always profitable. May be we don’t understand the firm so well. 

The book presents a unique model at intersection of economic and managerial theory. The model uses five elements - the concept of transaction chains, Coase transaction cost hypothesis, Porter’s bargaining power theory, a new way of profiling transaction and new types of roles undertaken by employees. 

This model provides insights into which mergers will work, how to make them work, how to promote disruptive innovation, how to manage knowledge oriented teams etc. It explains why sometimes our strategy fails, why we are blind to competition and inefficiency. This model provides a new framework for thinking about firms. This framework will help us make firms better.