Why AI Will Not Dissolve Companies, But Redefine What They Are For
This thought-provoking paper by Salim Ismail and Ted Shelton reexamines Ronald Coase's classic theory of the firm through the lens of AI, digital platforms, and institutional accountability. The authors argue that while advances in AI dramatically reduce the cost of coordination both inside and outside organizations, they do not eliminate the need for companies. Instead, they fundamentally redefine the role of the firm.
The paper introduces the concept of the firm as a container for trusted agency rather than simply a mechanism for coordinating human labor. It explores how AI enables organizations to expand operational scope without proportional increases in headcount, why trust becomes the key determinant of what activities remain inside the company, and how accountability, governance, and liability increasingly shape organizational boundaries.
Readers will gain insights into emerging organizational models, including the Elastic Enterprise, Trusted-Core Enterprise, and Accountability Enterprise, along with practical frameworks for evaluating which activities should be automated, outsourced, internalized, or governed more closely in the AI era.
An essential read for executives, strategists, innovators, and organizational leaders seeking to understand how AI is reshaping corporate structure, competitive advantage, and the future of enterprise design.
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