The organizational history of the firm

Abstract

The emergence of the factory system has been linked to the transaction cost disabilities of the putting-out form of organization that preceded the factory. In an attempt to explain why putting-out survived into the twentieth century, this article examines some of the transaction cost properties of a number of putting-out industries in Denmark. The conclusion reached is that organizational modes such as the factory system and putting-out do not have intrinsic transaction cost properties but are, in fact, quite adaptive. It was by a process of adaptation that the Danish putting-out industries were able to survive.