Why Do Firms Differ, and How Does it Matter?
Author(s): Richard R. Nelson
Source: Strategic Management Journal, Vol. 12, Special Issue: Fundamental Research Issues in
Strategy and Economics, (Winter, 1991), pp. 61-74
Published by: John Wiley & Sons
Stable URL:http://www.jstor.org/stable/2486434
Accessed: 17/06/2008 14:27

JSTOR is a not-for-profit organization founded in 1995 to build trusted digital archives for scholarship. We enable the
scholarly community to preserve their work and the materials they rely upon, and to build a common research platform that
promotes the discovery and use of these resources. For more information about JSTOR, please contact support@jstor.org.

argue thatth e m o st im p o r ta n td iffe r e in c e is th a t econom ists tend to see firm s a s p la y e r si n a m u lti actor econom ic

v a r io u sd iim en sio in s, a n dn o ti n G eneral M otorso r T o y o ta per se,b u t o n ly in so fa r a s th ep a r tic u L la r itie so f th e sefirm s in flu en ceth e

th e work of scholars offir m m a n a g e m e n it who have p e r s u a s iv e ly

in t e r e s t so feconom ists, alm ost no attention has beenp a idt oth e in d u str y o r econom y

m a n a g e m e n it lite r a tu r e provides a start fo rm yvargum ent, there is m uch th a tI n e e d

e c o n o m ic s , p a r tic u la r lyin th e o r e tic a l e c o n o m ic s , th a td o w n p la y s o re v e n d e n ie sth e im p o r ta n ic eo f s u c h differences. Theargum enti n econom ics

te x tilefirm s,a n d inb o thin d u stries, G erm an firm s alm ost certainly differ fromT aiw anese firm s. R ather, the positioni isth a t th e

d iffe r e n ic e s a r e n 'td i s c r e t i o n a r y ,b u t r a th e r reflect differenicesi n thec o n te x ts inw h ic h firm s operate:

o re c o n io m y w id eperform - ance. Itr e f l e c t s , as w e ll,som ies t r o n gt h e o r e t i c a l v ie w sh e ld

a b o u t th er o le a n d nature of firm s ine c o n o m ic a c tiv ity . M yargum entth a td i s c r e t i o n a r y firmd i f f e r e n c e s w ith ina n in d u stry existand do m atter s ig n ific a n tly isp la r t a n dp a r c e lo fm ybroader argum enitthat n e o c la s s ic a le c o n o m ic

I dom ean that to som e e x te n tth e se differences are th er e s u l to f d i f f e r e n t s tr a te g ie s that are u s e dt og u id e d e c is io nm a k in g a tv a r io u s le v e lsin firm s. O nth e o th e r h a n d . I d o

firm sthem selves, a lth o u g ht h e r ew e llm ay b e a n a r tic u la te dp o in t o f v ie w

s c h o la r s tr a in e d o rin c lin e d to seed i s c r e t i o n a r y firmle v e l v a r iia b le s a sim p o r ta in t,ande c o n io m is ts w hos e e f ir m

differenices asd e te r m in ie dla r g e ly b ym ore a g g r e g a tiv e econlom ic forces. T h en I focus onth e b a s ic

A m e r ic a n i firm s, particularly i'is-i-visJ a p a n e s e ones, inin d u s tr ie s w h ere

sum m ary, of the form er line ofr e s e a r c h . W h ile th es t a f fo fth eC om m issionu n c d e r t o o kc o n is id e r - a b le

d ia g n o s isi tp r e s e n l t s i sq u itec o n s i s t e n t w ith that p r e s e n te di n a num ber of p r io r studies concerned w ith w h yA m e r ic a lnfir m s h a v eb e e n

fle x ib le m iia n u fa c tu r in gh a sbecom ea ( m o r e effective m ode o f

a r ein fe r io r . A m e r ic a n fir m sa r em y o p ic , b o t hi n the sense of th e irfa ilu r e to lo o k a tw o r ldr a th e r th a n n a tio n a l

la t t e rp a r tlyh a s t od o w ith theh ig h c o s to f c a p ita l inth eU n itedS t a t e s ,b u t a ls o w ith th e

C om paredx x ith th eJ a p a n e s ea in d G erm ains, o u r b lu ec o lla r w o r k force com es to the workp la c e p o o r ly