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This interview was conducted in Hatfield in England, near to the campus of the University of Hertfordshire, on 20 October 2006. The interviewers were Geoffrey Hodgson of the University of Hertfordshire and David Gindis of the University of Lyon II. The transcript was edited extensively and the final text was approved by Professor Williamson.
GH: In several recent essays you have reflected on the achievements of transaction cost economics. What in your view is the current state of play with the various types of theory of the firm, including transaction cost, property rights, and competence-based approaches?
OW: I regard the economics of organizations as a pluralist enterprise: there are lots of different ways of approaching this subject and we are a long way from of having an adequate understanding of complex economic organization. I think it useful to have many candidate approaches and see what headway these can make, individually and collectively, to move beyond the older view of the firm as a production function or black box. We need to open the box and examine the mechanisms inside to get a better understanding of what is going on and why. Among other things, better theories will lead to better informed public policy.
My Ph.D. training at the Graduate School of Industrial Administration at Carnegie Tech had a huge influence on me in this respect. It was a very interdisciplinary place, especially as it combined economics and organization theory. Also instructive was the year that I spent with the Antitrust Division of the US Department of Justice in Washington DC in 1966-67. Rather than be assigned to the economics division, which was mainly thought of as a litigation support group, my assignment was to fill a new position as Special Economic Assistant to the Head of Division.
Rather than provide litigation support for ongoing cases, I focused instead on the analysis of prospective cases. Also, I felt less constrained to view the neoclassical theory of the firm as an all-purpose construction. Too often, a black box theory of the firm made a tenuous and, sometimes, convoluted connection with key issues.
Vertical integration issues came up in this connection, including the design of the vertical integration guidelines. I was...