I’m fascinated by what AI is doing to firm boundaries from a Chandlerian perspective: if the advent of telegraphy changed transaction costs in ways that favoured the emergence of Big Business (a claim made by Al Chandler), then AI tools may accelerate its decline.
That’s a really interesting Chandlerian perspective! I agree with you directionally. Though, I’m still working through some countervailing forces that I mentioned in the piece—especially the possibility that proprietary AI systems inside firms could recreate firm-specific investments and pull things back toward larger organizations.
Thank you! That’s exactly the intuition I was trying to surface. The minimum efficient scale point is doing a lot of work here, and consulting is a great example of where you can see it play out in real time. Once that scale falls, it does seem to introduce a sorting margin you pointed out where some high-performing independent workers can outproduce firm-based teams, at least for certain types of work! Will be interesting to see how this continues to play out.
I’m fascinated by what AI is doing to firm boundaries from a Chandlerian perspective: if the advent of telegraphy changed transaction costs in ways that favoured the emergence of Big Business (a claim made by Al Chandler), then AI tools may accelerate its decline.
That’s a really interesting Chandlerian perspective! I agree with you directionally. Though, I’m still working through some countervailing forces that I mentioned in the piece—especially the possibility that proprietary AI systems inside firms could recreate firm-specific investments and pull things back toward larger organizations.
That's true. It will be interesting to see what happens.
Thank you! That’s exactly the intuition I was trying to surface. The minimum efficient scale point is doing a lot of work here, and consulting is a great example of where you can see it play out in real time. Once that scale falls, it does seem to introduce a sorting margin you pointed out where some high-performing independent workers can outproduce firm-based teams, at least for certain types of work! Will be interesting to see how this continues to play out.