The development of specific capabilities, the arrangement of transactions and the design of the operational scale of different processes are understood as the three main aspects of the firm's organisational coordination. The framework proposed in this book enables us to assess the effects of basic conditions and decision-making mechanisms on the possible interactions among these three aspects that are listed and emphasised in the large triangle in figure 3.1. Capability, transaction and scale–scope considerations interact in shaping the organisational performance and boundaries whenever perfectly rational individuals have to face costly transactional, organisational, technical and productive information and knowledge, and some specific characteristics of production elements, such as indivisibility and complementarities. The interplay and weight of these three single aspects of organisational coordination of the firm are strongly amplified if – in the presence of the above conditions concerning the characteristics of information, knowledge, production elements and processes – individuals have to cope with substantial or procedural radical uncertainty and consequently if individuals are cognitively rational instead of perfectly rational.

Sections 3.1–3.3 of this chapter are dedicated to the analysis of the capability, transaction and scale–scope aspects. This paves the way for section 3.4 that addresses the crucial point concerning the conditions under which these three aspects interact (for this reason section 3.4 is indicated in the core triangle in figure 3.1).