The Form of the Firm

Abstract

This is an essay in postclassical theory and modelling, and more specifically an attempt to think about organisation and management. Our focus is on cognition and communication, not on objectivity or causality. We look for operations based on distinctions and their contexts, not for identities, forces, causes and effects. We model the organisation of a firm selectively using organisation theory, the historiography of business organisation, economic theories of the firm, and the sociology of the firm. We do not try to integrate a wealth of approaches already present, but instead make a new start by relying on social systems theory combined with social networks theory. We use the mathematical calculus of distinctions to cut through the different approaches to a theory of the firm and begin by looking at the operations that actually make up the organisation of a firm. By doing so, we are able to develop a twofold perspective on the firm, taking in both its internal organisational structure and its external environment. Any one operation of the firm, bringing it forth and reproducing it, must be able to both distinguish it from its environment and re-embed it within that environment. The mathematical calculus of distinctions developed by Spencer-Brown helps us to understand how operations can be simultaneously distinguished and re-embedded. Our approach is a sociological one since the operation that is capable of distinguishing and re-embedding the organisation of a firm is a communication which produces a certain reality of the firm, while selectively taking into account the contexts of that communication.

Keywords: firm, form, management, organization

JEL Classification: D21