Neither Modularity nor Relational Contracting: Inter-Firm Collaboration in the New Economy

• Published in: Enterprise & society 2004-09, Vol.5 (3), p.388-403
• Main Authors: Sabel, Charles F., Zeitlin, Jonathan
• Format: Article
• Language: English
• ISSN: 1467-2227; 1467-2235
• DOI: 10.1093/es/khh057

In a series of recent essays, including their contributions to this symposium, Richard N. Langlois and Naomi R. Lamoreaux, Daniel M. G. Raff, and Peter Temin (hereafter LRT) present interesting but contradictory views of the decentralized or vertically disintegrated post-Chandlerian economy from whose vantage point they seek to reconceptualize business history. Starting from an orientation that uneasily combines Adam Smith’s ideas about the division of labor with organizational learning, Langlois sees the current situation as dominated by the modularization of production. This modularization and the arm’s-length transactions it facilitates create a world reminiscent of the antebellum United States, although today’s highthroughput differentiated exchanges are underpinned by a set of market-supporting institutions, notably standard interfaces or design rules. Starting from an orientation toward Oliver Williamson and the minimization of coordination costs, LRT in contrast see a world of collaborators joined by long-term, largely informal relations of a distinct type reducible neither to markets nor hierarchies.