Re-theorizing the firm

Abstract

This paper attempts to re-theorize the firm from a socio-political perspective to show that a firm is not only an economic, but also a social and a political actor. Given the multiple global crises, our traditional understanding of the purpose of the firm – the maximization of shareholder value – is increasingly being challenged. This paper shows that the purpose of the firm is rooted in our social life, and hence a notion of well-being and social justice gains significance rather than wealth creation to underscore the role of responsible governance for sustainability in many dimensions – economic, social and environmental. It concludes that the purpose of the firm should go beyond profit maximization of shareholders in pursuit of well-being of stakeholders and in deliberating global social justice for a sustainable world order.