Cognition, capabilities and cooperation
by Brian J. Loasby
International Journal of Management and Decision Making (IJMDM), Vol. 2, No. 1, 2001

Abstract: In standard economics, coordination is a problem of efficient allocation of known resources to known ends, with an increasing emphasis on incentive-compatability. However, Adam Smith founded an alternative tradition, which was continued by Marshall and Penrose (among others), centred on coordinating processes of developing productive capabilities and decision making skills through the division of labour and the tendency to variation within each specialism. Underlying this tradition is the recognition of uncertainty and the limitations and potential of human cognition, which is a product of evolution. Economic organisation, management and entrepreneurship are responses to cognitive as well as incentive problems.

Online publication date: Tue, 01-Jul-2003

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