Towards Re-theorizing the Firm in Pursuit of Well-Being and Social Justice

Abstract

The recent global financial and economic crisis has prompted calls for more regulation of corporations, even a sort of nationalized capitalism. Moreover, increasing awareness and evidence of climate change caused by human activities also demand eco-sensitive regulation and international protocols. Both these concerns, together with the still ubiquitous poverty in our post-modern society, are challenging the sustainability of global capitalism in pursuit of wealth creation and profit maximization, and questioning the activities and behavior of firms in terms of responsibility, accountability, and the role of leadership. However, opponents of overregulation fear that it may lead to nationalism and protectionism and therefore stunt the innovation, free market enterprise, and competition that are conducive to economic prosperity. Moreover, they claim that overregulation imposes a huge cost of compliance on the state and ultimately on society. Against this background, this chapter attempts to show that we should rethink the purpose of the firm, not only from an economic perspective but also from a sociopolitical perspective to re-theorize the firm for responsible governance. Although the quest to rethink the purpose of the firm and capitalism is not new (see O’Toole and Vogel 2011), this paper attempts to provide some plausible arguments from an interdisciplinary approach to rethink the purpose of the firm and the implications of re-theorizing the firm.