The Programmable Firm: From Coordination to Coherent Evolution

As coordination costs decline, specialization deepens and the speed of change accelerates. This shifts the economic role of the firm from coordinating activities to maintaining coherence amid continuously evolving specialization. Building on transaction cost economics, dynamic capabilities theory, and modularity research, this article proposes the programmable firm as a cumulative extension of the theory of the firm. It argues that as coordination becomes less constraining, coherence becomes the primary economic challenge. Structural optionality enables firms to evolve without repeated structural redesign, increasing the adaptive potential of both organizations and committed capital. AI is an amplifier of this transition.