Organizational Persons, Business Firms, and Market Institutions

Abstract This chapter presents an overview of the nature of social organizations and institutions with a specific focus on business firms and economic markets. Business organizations and market institutions are generally understood as aiming to enhance the efficiency and effectiveness of the production of goods, services, and information—and to channel and condition their distribution. In the words of Thomas Hobbes, they should enable “commodious living.” In their operations, however, they can also pose challenges to the underlying sustainability of the natural and social systems on which they rely. An understanding of the nature of business firms and market institutions—that is, their ontology—is helpful to counter their potential for causing trouble and harm, departing from their original social purposes. In other words, we need to understand business firms operating in markets because they can become, like Frankenstein’s monster, unmoored from the reasons for their creation. This chapter is therefore not only descriptive but prescriptive. An understanding of the social ontology of business firms and market institutions is a prerequisite for recommending how to change them when needed. An additional thesis is that reform is needed today.