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What is a firm? A reply to Jean-Philippe Robé

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journal contribution
posted on 15.06.2021, 15:42 authored by Simon Deakin, David Gindis, Geoff Hodgson
In 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.

History

School

  • Loughborough University London

Published in

Journal of Institutional Economics

Volume

17

Issue

5

Pages

861-871

Publisher

Cambridge University Press (CUP)

Version

AM (Accepted Manuscript)

Rights holder

© The Authors

Publisher statement

This article has been published in a revised form in Journal of Institutional Economics https://doi.org/10.1017/S1744137421000369. This version is published under a Creative Commons CC-BY-NC-ND. No commercial re-distribution or re-use allowed. Derivative works cannot be distributed. © The Authors.

Acceptance date

26/04/2021

Publication date

2021-06-03

Copyright date

2021

ISSN

1744-1374

eISSN

1744-1382

Language

en

Depositor

Prof Geoff Hodgson. Deposit date: 15 June 2021

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