66RR. Nelson in innovation. Thus nowhere in the models moved to adapt a very different view of the Reinganum describes is the fundamental uncer- economic problem. Within this view, which I tainty, the differences of opinion, the differences will call evolutionary, firm differences play an in perceptions about the feasible paths, that tend essential role to stand out in any detailed study of technical advance, even recognized, much less analyzed in any detail. Williamsons own work on the INNOVATION AND FIRMS IN determinants of firm organization has been much EVOLUTIONARY THEORY influenced by Chandler, and he dedicates a certain space in his chapter to a transactions cost The models of technological innovation surveyed interpretation of Chandler's account of the rise by Reinganum show economists interested in the of the modern corporation, But nowhere does theory of the firm struggling to break away from he recognize explicitly the halting, trial and the orientation of general librium theory, feedback, often reactive rather than thought- which sees the economic problem as allocating through, process that led to the new ways of resources efficiently, given technologies. So too o put compactly, the treatment of technological Here economists seem to be basically interested organizing that Chandler describes the new literature on organizational innovation and organizational"innovation described in these in how new ways of doing things--technologies chapters simply takes the given 'choice set and and ways of organizing and governing work-are maximizing over it' presumptions of standard introduced, winnowed, and where proven useful neoclassical theory and applies them to inno- spread, as contrasted with how familiar technol vation. That is, innovation is treated as basically ogies and organizational modes are employed like any other choice, Investment costs may need Many years ago Schumpeter insisted that the to be incurred before the new product or focus of general equilibrium theory was on organizational design is ready to be employed, questions that, over the long run, were of minor but in neoclassical theory this is true of other importance compared with the question of how apital goods like a bridge or a machine. There Capitalist economies develop, screen, and selec- may be high risks involved in doing something tively adopt new and better ways of doing things new, in a formal sense of that term, but this is Many of the writers surveyed by Reinganum call treated as statistical uncertainty with the correct themselves 'neo Schumpeterian probability distribution known to all as is standard However, the dynamic processes Schumpeter in micro economic theory. TI InnovatIo n may described are not captured by the new neoclassical yield a new latent or manifest public good, and models. As he put it ' in dealing with Capitalism this raises theoretical problems of 'market failure, you are dealing with an evolutionary process but this is no different than investment in, say, He clearly had in mind a context in which people and organizations, had quite different views about ut what if effective treatment of innovation what kinds of innovations would be possible, and (and perhaps other activities) requires breaking desirable, and would lay their bets differently away from the assumptions of clear and obvious There are winners and losers in Schumpeter's choice sets and correct understanding of the process of creative destruction, and these are consequences of making various choices? Does not determined mainly in ex-ante calculation, but it really make sense to work with a model that largely in ex-post actual contest presumes that the transistor, or the M form of In his 1911 Theory of Economic Development organization, were always possible choices out Schumpeter saw the key innovative actors as there and known to all relevant parties, and that 'entrepreneurs. His 'firms' were basically the hey simply were chosen and thus came into vessels used by entrepreneurs, and other decision existence and use when conditions made profit- makers forced to adapt to the changes wrougl able the relevant investments? Does the assump- by entrepreneurial innovators or to go under. By tion that 'actors maximize, help one to analyze the time(1942) he wrote Capitalism, Socialism, situations where some actors are not even aware and Democracy, Schumpeter's view of the sources of a possibility being considered by others? of innovation had changed, or rather it might be If one reflects on these issues, one may be better to say that there had been a transformation