Institutional Theory of the Firm: Embedded Autonomy

The Institutional Theory of the Firm emphasizes the corporation's embedded autonomy, anchored in corporate legislation and regulatory practices, while granting it significant freedom within this legal-regulatory model. It explores three forms of embedded autonomy: legal entity sui juris, moral economies, and governance, combining them to secure the firm's autonomy based on social practices and resources. This book is relevant to readers interested in organization theory and management studies.

Format: Paperback / softback
Length: 186 pages
Publication date: 31 March 2021
Publisher: Taylor & Francis Ltd

The Institutional Theory of the Firm delves into the intricate relationship between contemporary organization theory and its historical predecessors, seeking to establish a comprehensive understanding of the firm's embedded autonomy and its multifaceted roles within various legal and regulatory frameworks. This theory posits that the firm operates within a complex web of interdependencies, balancing its adherence to corporate legislation and regulatory practices on national, regional (such as within the European Union), and transnational levels while simultaneously enjoying substantial freedom to operate within this legal-regulatory framework.

In this perspective, the concept of embedded autonomy represents a theoretical framework that complements the market-based image of the corporation in economic theory. The Institutional Theory examines three distinct forms of embedded autonomy:

Firstly, the corporation is recognized as a legal entity sui juris, standing as a freestanding legal person in corporate law and within the regulatory framework that enforces legislation in everyday life settings. This form of embedded autonomy ensures that the corporation is treated as a separate and distinct legal entity, with its own rights, responsibilities, and liabilities.

Secondly, the corporation is intricately embedded within what social theorists refer to as moral economies. These moral economies encompass the norms and values that govern the socially acceptable and legitimate means for conducting business. The corporation is bound by these moral economies, which shape its behavior and decision-making processes, ensuring that it operates in a socially responsible and ethical manner.

Thirdly, the corporation is embedded in governance, a multifaceted economic concept that encompasses legal and regulatory control on societal and economic system levels, as well as on the level of the individual corporation. Governance involves the establishment of rules.

By integrating these three forms of embeddedness, sanctioned by law, norms, and governance, the firm secures its embedded autonomy on the basis of a diverse range of social practices and resources. This book serves as a valuable resource, bringing together a diverse literature from management studies, economic sociology, legal theory, finance theory, and mainstream economic theory. By exploring these various disciplines, the book provides a comprehensive examination of the institutional theory of the firm, shedding light on its historical development, theoretical foundations, and practical implications.

In conclusion, the Institutional Theory of the Firm offers a rich and nuanced understanding of the firm's embedded autonomy and its complex roles within legal and regulatory frameworks. By examining the three forms of embedded autonomy, sanctioned by law, norms, and governance, the theory provides a comprehensive framework for analyzing the dynamics and behavior of firms in today's global economy. This book is an essential read for scholars, researchers, and practitioners interested in understanding the complex relationship between organizations, law, and society.

Weight: 363g
Dimension: 229 x 152 (mm)
ISBN-13: 9780367785161