From Fictions and Aggregates to Real Entities in the Theory of the Firm

This document is the Accepted Manuscript version of the following article: David Gindis, 'From fictions and aggregates to real entities in the theory of the firm', Journal of Institutional Economics (2009), 5: 1, 25–46, doi:10.1017/S1744137408001203. COPYRIGHT: © The JOIE Foundation 2009.According to the dominant ‘nexus of contracts’ and ‘collection of assets’ views of the firm, the firm is a either a fiction or an aggregate. Although legal personality is important in both accounts, everything is said to be achieved by private contract alone and the law’s role in creating legal entity status is dismissed. The paper challenges both these aspects by reconsidering an alternative ‘real entity theory’ that dominated debates at the turn of the twentieth century. This forgotten view holds that the firm is neither a fiction nor an aggregate but a real entity, and underlines the creation of legal entity status as a fundamental role of the law. The paper discusses this view’s ontological and legal insights, clarifies the proposition that the firm is a real entity, and proposes it as a starting point for a theory of the firm.Peer reviewe

Institutions and Evolution of Capitalism in Geoff Hodgson’s Work

This article is the introductory chapter to a festschrift in honour of Geoff Hodgson. In work spanning four decades, Geoff Hodgson has made many path-breaking contributions to institutional economics, evolutionary economics, economic methodology, the history of economic thought and social theory more broadly. Hodgson’s reputation as a prolific and important writer, whose work transcends traditional disciplinary boundaries, is matched by his credentials as an academic entrepreneur, whose involvement in the formation of two international scholarly societies and the foundation of the Journal of Institutional Economics has expanded the opportunities for constructive dialogue among social scientists. To celebrate Hodgon’s fantastic career, this volume brings together 19 original contributions by world-leading scholars in specific areas that have played a significant role in influencing Hodgson’s thinking or represent key debates to which he has contributed. The chapter introduces these contributions, and summarizes a conversation with Hodgson that is also included in the volume

On the Origins, Meaning and Influence of Jensen and Meckling's Definition of the Firm

Jensen and Meckling’s 1976 definition of the firm as a legal fiction which serves as a nexus for contracts between individuals sits well with the Coasean narrative on the firm while at the same time being at odds with it. Available interviews with Jensen shed little light on the origins and meaning of this unusual definition. The paper shows how the definition captured, and was a response to, the American socio-political context of the early and mid-1970s, and traces how Jensen and Meckling employed it once they themselves got immersed in the public debate about corporate responsibility and regulation in the late 1970s and early 1980s. It also considers Jensen and Meckling’s place in the literature on the economics of corporate law developed mostly in the 1980s

On the Origins, Meaning and Influence of Jensen and Meckling's Definition of the Firm

© Oxford University Press 2020. This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted reuse, distribution, and reproduction in any medium, provided the original work is properly cited.Jensen and Meckling’s 1976 definition of the firm as a legal fiction which serves as a nexus of contracts between individuals sits well with the Coasean narrative on the firm while at the same time being at odds with it. Available interviews with Jensen shed little light on the origins and meaning of this unusual definition. The article shows how the definition captured, and was a response to, the American socio-political context of the first half of the 1970s, and traces how Jensen and Meckling employed it once they themselves got immersed in the public debate about corporate regulation in the late 1970s. It also briefly considers Jensen and Meckling’s place in the literature on the economics of corporate law developed in the 1980s.Peer reviewe

What is a Firm? A Reply to Jean-Philippe Robé

© The Author(s), 2021. Published by Cambridge University Press on behalf of Millennium Economics Ltd. This is the accepted manuscript version of an article which has been published in final form at https://doi.org/10.1017/S1744137421000369In his recent book on 'Property, Power and Politics', Jean-Philippe Robé makes a strong case for the need to understand the legal foundations of modern capitalism. He also insists that it is important to distinguish between firms and corporations. We agree. But Robé criticizes our definition of firms in terms of legally recognized capacities on the grounds that it does not take the distinction seriously enough. He argues that firms are not legally recognized as such, as the law only knows corporations. This argument, which is capable of different interpretations, leads to the bizarre result that corporations are not firms. Using etymological and other evidence, we show that firms are treated as legally constituted business entities in both common parlance and legal discourse. The way the law defines firms and corporations, while the product of a discourse which is in many ways distinct from everyday language, has such profound implications for the way firms operate in practice that no institutional theory of the firm worthy of the name can afford to ignore it.Peer reviewe

Convergent and divergent trajectories of corporate governance

This Special Issue revisits the classic question of comparative corporate governance research, namely whether national corporate governance systems are converging. More specifically, it focuses on several ‘convergence vectors’ which comprise the political, legal, economic and social arrangements that influence or drive the international trajectories of governance systems towards a common denominator. Taken together, the contributors to this Special Issue invite us to think critically about the functional explanations commonly mobilized in favour of convergence and consider instead the convergence debate from a broader and more interdisciplinary point of view

Conceptualizing the Business Corporation: Insights from History

© 2020 Cambridge University Press. This paper has been accepted for publication and will appear in a revised form, subsequent to peer-review and/or editorial input by Cambridge University Press. This manuscript is made available under the terms of the Creative Commons Non-Commercial No-Derivatives License (CC-BY-NC-ND). For further information please see: https://creativecommons.org/licenses/by-nc-nd/4.0/The purpose of this symposium is to shed light on the genealogy of the idea of a business corporation, an economic institution which has long been regarded with a mixture of awe and apprehension. Each of the four original contributions addresses the history of some of its key features. In the process, each contributor reveals some of the insights that history has to teach us regarding the central concepts that inform contemporary debates about the nature of the corporation, the contours of the corporation’s purpose, the sources of corporate power, the functions of corporate law, the duties of directors, the status of shareholders, and the legitimacy of corporate rights.Peer reviewe

Whose Imagination Are We Living In?: An Examination of Feminist Utopia through the Lens of Pragmatism

Pragmatic feminism is a philosophy which utilizes and merges the fundamental concepts of pragmatism, such as its emphasis on pluralism and lived experience, with feminist theory in hopes of inciting social change. The main goals of pragmatic feminism are to recover the work of women who were influential in the popularization of American pragmatism but were also excluded from the history of philosophy, to analyze the “canon” of lauded pragmatist philosophers through a feminist lens, and to yield pragmatist philosophies as a weapon for contemporary feminist activism. In my study, I argue that feminist utopian literature can be a serviceable asset to the philosophy of pragmatic feminism. I analyze a range of works spanning centuries, from early feminist utopias such as City of Ladies by Christine de Pizan and Herland by Charlotte Perkins Gilman, to more contemporary novels such as The Female Man by Joanna Russ and A Woman on the Edge of Time by Marge Piercy. Through a careful, analytical exploration of Gilman’s imaginary universe, I derive a plethora of critiques of modern society, with an eye to how the text reconciles with the subjects of language, motherhood, and race. I then utilize these critiques as anchors in the process of analyzing a variety of works by contemporary authors of varying perspectives and backgrounds, so as to create a comprehensible roadmap of the pro-women movement through the lens of utopian feminist literature. Through analysis of feminist texts spanning decades, I show that the utopian genre can be a practical asset to social change by providing a vision for a society ailing from social systems that disadvantage women

Legal Institutionalism: Capitalism and the Constitutive Role of Law

Social scientists have paid insufficient attention to the role of law in constituting the economic institutions of capitalism. Part of this neglect emanates from inadequate conceptions of the nature of law itself. Spontaneous conceptions of law and property rights that downplay the role of the state are criticized here, because they typically assume relatively small numbers of agents and underplay the complexity and uncertainty in developed capitalist systems. In developed capitalist economies, law is sustained through interaction between private agents, courts and the legislative apparatus. Law is also a key institution for overcoming contracting uncertainties. It is furthermore a part of the power structure of society, and a major means by which power is exercised. This argument is illustrated by considering institutions such as property and the firm. Complex systems of law have played a crucial role in capitalist development and are also vital for developing economies