Table Of ContentROUTLEDGE STUDIES IN GLOBAL COMPETITION
Epistemic Economics and
Organization
Forms of rationality and governance for
a wiser economy
Anna Grandori
Epistemic Economics and
Organization
This book proposes a new approach to economics, management and organization
that should help in making economic organization ‘wise’, ‘innovative’ and
‘robust’ in an uncertain and risky world. Although the modern economy and
society is ‘knowledge intensive’, Anna Grandori argues that the dominant eco-
nomic, organizational and behavioural models neglect to a large extent the
problem of valid knowledge construction and effective knowledge governance.
The book integrates inputs from economics and behavioural science with
insights from the philosophy of knowledge to define new micro-foundations:
neither a calculative, deductive and omniscient ‘rational actor’; nor an experien-
tial, adaptive and biased ‘behavioural actor’; but a knowledgeable and imagina-
tive ‘epistemic actor’.
The implications for contracts and organizations, sustained also by insights
from law, are shown to be far reaching, including a new view of the nature of the
firm as an entity-establishing agreement under which to discover uses of
resources under uncertainty, and as a democratic institution.
Anna Grandori is Professor of Business Organization at Bocconi University,
Milan, Italy.
Routledge studies in global competition
Edited by
John Cantwell
Rutgers, State University of New Jersey, USA
and
David Mowery
University of California, Berkeley, USA
1 Japanese Firms in Europe 9 Going Multinational
Edited by Frédérique Sachwald The Korean experience of direct
investment
2 Technological Innovation,
Edited by Frédérique Sachwald
Multinational Corporations and
New International
Competitiveness 10 Multinational Firms and
The case of intermediate countries Impacts on Employment, Trade
Edited by José Molero and Technology
New perspectives for a new
3 Global Competition and the century
Labour Market Edited by Robert E. Lipsey and
Nigel Driffield Jean-Louis Mucchielli
4 The Source of Capital Goods
Innovation 11 Multinational Firms
The role of user firms in Japan and The global–local dilemma
Korea Edited by John H. Dunning and
Kong-Rae Lee Jean-Louis Mucchielli
5 Climates of Global Competition
Maria Bengtsson 12 MIT and the Rise of
Entrepreneurial Science
6 Multinational Enterprises and
Henry Etzkowitz
Technological Spillovers
Tommaso Perez
13 Technological Resources and the
7 Governance of International Logic of Corporate
Strategic Alliances Diversification
Technology and transaction costs Brian Silverman
Joanne E. Oxley
8 Strategy in Emerging Markets 14 The Economics of Innovation,
Telecommunications New Technologies and
establishments in Europe Structural Change
Anders Pehrsson Cristiano Antonelli
15 European Union Direct 24 Location and Competition
Investment in China Edited by Steven Brakman and
Characteristics, challenges and Harry Garretsen
perspectives
Daniel Van Den Bulcke, 25 Entrepreneurship and Dynamics
Haiyan Zhang and in the Knowledge Economy
Maria do Céu Esteves Edited by Charlie Karlsson,
Börje Johansson and
16 Biotechnology in Comparative
Roger R. Stough
Perspective
Edited by Gerhard Fuchs
26 Evolution and Design of
17 Technological Change and Institutions
Economic Performance Edited by Christian Schubert and
Albert L. Link and Georg von Wangenheim
Donald S. Siegel
27 The Changing Economic
18 Multinational Corporations and Geography of Globalization
European Regional Systems of Reinventing space
Innovation Edited by Giovanna Vertova
John Cantwell and
Simona Iammarino 28 Economics of the Firm
Analysis, evolution and history
19 Knowledge and Innovation in
Edited by Michael Dietrich
Regional Industry
An entrepreneurial coalition
29 Innovation, Technology and
Roel Rutten
Hypercompetition
20 Local Industrial Clusters Hans Gottinger
Existence, emergence and evolution
Thomas Brenner 30 Mergers and Acquisitions in
Asia
21 The Emerging Industrial
A global perspective
Structure of the Wider Europe
Roger Y.W. Tang and
Edited by Francis McGowen,
Ali M. Metwalli
Slavo Radosevic and
Nick Von Tunzelmann
31 Competitiveness of New
Industries
22 Entrepreneurship
Institutional framework and
A new perspective
learning in information technology
Thomas Grebel
in Japan, the US and Germany
23 Evaluating Public Research Edited Cornelia Storz and
Institutions Andreas Moerke
The US Advanced Technology
Program’s Intramural Research 32 Entry and Post-entry
Initiative Performance of Newborn Firms
Albert N. Link and John T. Scott Marco Vivarelli
33 Changes in Regional Firm 42 Evolutionary Economic
Founding Activities Geography
A theoretical explanation and Location of production and the
empirical evidence European Union
Dirk Fornahl Miroslav Jovanovic
34 Risk Appraisal and Venture 43 Broadband Economics
Capital in High Technology New Lessons from Japan
Ventures Takanori Ida
Gavin C. Reid and Julia A. Smith
44 Targeting Regional Economic
35 Competing for Knowledge Development
Creating, connecting and growing Edited by Stephan J. Goetz,
Robert Huggins and Hiro Izushi Steven C. Deller and
Thomas R. Harris
36 Corporate Governance, Finance
and the Technological 45 Innovation, Knowledge and
Advantage of Nations Power in Organizations
Andrew Tylecote and Theodora Asimakou
Francesca Visintin
46 Creativity, Innovation and the
37 Dynamic Capabilities between
Cultural Economy
Firm Organisation and Local
Edited by Andy C. Pratt and
Systems of Production
Paul Jeffcutt
Edited by Riccardo Leoncini and
Sandro Montresor
47 Coopetition Strategy
Giovanni Battista Dagnino and
38 Localised Technological Change Elena Rocco
Towards the economics of
complexity
48 Knowledge Intensive
Cristiano Antonelli
Entrepreneurship and
Innovation Systems
39 Knowledge Economies Evidence from Europe
Innovation, organization and Edited by Franco Malerba
location
Wilfred Dolfsma 49 Innovation in Complex Social
Systems
40 Governance and Innovation Edited by Petra Ahrweiler
Maria Brouwer
50 Internationalization,
41 Public Policy for Regional Technological Change and the
Development Theory of the Firm
Edited by Jorge Martinez-Vazquez Edited by Nicola De Liso and
and François Vaillancourt Riccardo Leoncini
51 Territory, Specialization and 56 Evolution of Competition Laws
Globalization in European and their Enforcement
Manufacturing Pradeep S. Mehta
Helena Marques and
57 The Economics of Structural
Francisco Puig
Change in Knowledge
Francesco Quatraro
52 Institutional Diversity and
Innovation 58 Economic Geography and the
Continuing and emerging patterns Unequal Development of Regions
in Japan and China Jean-Claude Prager and
Cornelia Storz and Jacques-François Thisse
Sebastian Schäfer
59 Social Networks, Innovation and
the Knowledge Economy
53 Innovation and Economic Crisis Edited by Isabel Salavisa and
Daniele Archibugi and Margarida Fontes
Andrea Filippetti
60 The Economics of Creativity
Ideas, firms and markets
54 The Communications Industries
Edited by
in the Era of Convergence
Thierry Burger-Helmchen
Catherine Mulligan
61 Epistemic Economics and
55 Innovation, Technology and Organization
Knowledge Forms of rationality and
Charlie Karlsson, governance for a wiser economy
Börje Johansson and Anna Grandori
Roger R. Stough
Epistemic Economics and
Organization
Forms of rationality and governance for a
wiser economy
Anna Grandori
First published 2013
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
Simultaneously published in the USA and Canada
by Routledge
711 Third Avenue, New York, NY 10017
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2013 Anna Grandori
The right of Anna Grandori to be identified as author of this work has been
asserted by her in accordance with the Copyright, Designs and Patent Act
1988.
All rights reserved. No part of this book may be reprinted or reproduced or
utilized in any form or by any electronic, mechanical, or other means, now
known or hereafter invented, including photocopying and recording, or in
any information storage or retrieval system, without permission in writing
from the publishers.
Trademark notice: Product or corporate names may be trademarks or
registered trademarks, and are used only for identification and explanation
without intent to infringe.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging in Publication Data
Grandori, Anna.
Epistemic economics and organization: forms of rationality and
governance for a wiser economy/Anna Grandori.
p. cm.
1. Knowledge management–Economic aspects. 2. Epistemics.
3. Organizational learning–Economic aspects. I. Title.
HD30.2.G723 2013
302.3′5–dc23 012035526
ISBN: 978-0-415-57565-2 (hbk)
ISBN: 978-0-203-78677-2 (ebk)
Typeset in Times New Roman
by Wearset Ltd, Boldon, Tyne and Wear
Contents
List of tables xi
List of abbreviations xii
Introduction 1
PART I
Micro foundations: from bounded to epistemic rationality 7
1 ‘Models of man’ and the ‘rationality divide’ 9
2 Savage and Simon revisited: how both ‘maximizing’ and
‘satisficing’ simplify problems 13
3 Endogenizing assumptions: contingent rationality 19
4 The ‘psychology’ versus the ‘logic’ of judgement and
discovery 22
5 The logic of economic discovery: an epistemic decision
model 25
6 Conclusions 40
7 Summary 40
PART II
Contracts and the firm beyond transactions: the
governance of knowledge and association 43
1 Contract incompleteness and the rationality divide 44
2 How both relational contracting and authority relations have
limited capacity of governing uncertainty 47
3 Contracting without knowing 52
4 Ten theses on the nature of the firm 63
5 Relations with extant views of the firm 73
6 Summary 77
