The recent decade has witnessed a strong expansion of work on the firm, both from a capabilities perspective and from a contractual perspective. These two bodies of theories are often thought to be fundamentally different, because their domains of applications are different (knowledge-accumulation vs contracts and incentives). However, we need to integrate propositions from both perspectives, because only a more unified theory will allow us to understand such issues as the dynamics of the modern corporation. I discuss the relations between these two bodies of theories. It is possible to argue in favor of a relation of complementarity between the two. However, it is also possible two daim that they are rivals. The capabilities perspective contains propositions that are not to be found within the modern Coasian approach and may be seen as a distinct emerging perspective on economic organization.