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Toward a Social Ontology of the Firm: Reconstitution, Organizing Entity, Institution, Social Emergence and Power

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Abstract

In the past half century, the theory of the firm has become a specific and prolific research field. However, the social ontology of this central institution of capitalism has never truly been the subject of investigation. I consider this negligence harmful for organizational economics and management and, more broadly, for the social sciences, notably because the first and central question raised by the theory of the firm relates to its nature: What is a firm? For this reason, I propose some novel considerations for a social ontology of the firm by focusing on social emergence, reconstitution, the two-level institutional logic of the firm, complex organizational dynamics and interacting mechanisms, and power.

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Notes

  1. Cooperation, which refers both to the ability to act for a common goal and the cohesiveness that is created to achieve this goal, is the firm’s social organization.

  2. For Simon (1962, p. 468), a complex system is “one made up of a large number of parts that interact in a nonsimple way” so that “the whole is more than the sum of the parts in the important pragmatic sense that, given the properties of the parts and the laws of their interaction, it is not a trivial matter to infer the properties of the whole” (ibid.).

  3. Hodgson (2013, p. 33) writes in this spirit, “Statements about what exists, or concerning the nature of reality, are very different in character from statements on how one should explain phenomena.”

  4. For Edler-Vass (2008b, p. 463), “In the structural moment, individual action is influenced by the causal powers of social structures—though not fully determined by it, since other interacting causal powers, including those of the individual concerned, interact in determining individual action. In the agential moment, individual actions contribute to reproducing and/or transforming the structure concerned (again interacting with other causal powers).”

  5. Hodgson and Knudsen (2010, p. 171) argue that “routines exist because structured interactions of individuals give rise to emergent properties that (by definition) are not properties of individuals taken severally.”

  6. Zucker (1983, p. 37) writes: “organizations are institutions—indeed, the central defining institution of modern cultural systems.”

  7. See also the correspondence between North and Hodgson on this point and presented in a 2006 paper by Hodgson.

  8. Zucker (1983, p. 4) argues that “the external institutional environment constrains the organization, determining its internal structure, its growth or decline, and often even its survival.”

  9. Tuomela (1989, p. 471) argues that “if collectives are construed as real entities, it must be admitted that they are entities clearly different from single human persons—to which action concepts and other mental concepts apply in the first place.”

  10. Hofstader (1935, p. 6) writes: “the best synonym for power is ability. It readily suggests that what is signified is not absolute possession, but a possibility”.

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Acknowledgments

I acknowledge the two anonymous referees and the editors of the Journal of Business Ethics, Richard Adelstein, Bernard Baudry, Olivier Brette, Benjamin Dubrion, Geoffrey Hodgson, Tony Lawson, and Claude Parthenay, for their helpful comments on earlier versions of this essay.

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  1. ESDES School of Management, Catholic University of Lyon, 23, place Carnot, 69286, Lyon Cedex 02, France

    Virgile Chassagnon

  2. GREDEG (CNRS, UMR 7321), University of Nice Sophia Antipolis, Nice, France

    Virgile Chassagnon

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Correspondence to Virgile Chassagnon.

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Chassagnon, V. Toward a Social Ontology of the Firm: Reconstitution, Organizing Entity, Institution, Social Emergence and Power. J Bus Ethics 124, 197–208 (2014). https://doi.org/10.1007/s10551-013-1849-1

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