Technology,teams and Theories of the Firm

This article discusses new forms of technology-driven business organization, such as Business Process Re-engineering, Just-in-Time and so on, which focus on horizontal rather than vertical structures in firms. We consider theories of the firm to assess the effects of process specialization on the firm's ‘objective function’ and ask whether it represents a new paradigm for economic activity. We conclude that the number of firms that can be successfully organized on process lines will inevitably be small, that where likely process organization will bring competitive advantage for successful implementers, but that firms organized as a hierarchy of teams will retain pockets of functionally organized activities.