Single-objective versus multi-objective theories of the firm: using a constitutional perspective to resolve an old debate

Pies, Ingo; Schreck, Philipp; Homann, Karl

doi:10.1007/s11846-019-00376-x

Cited by 25 publications

(36 citation statements)

References 69 publications

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“…If "the welfare of society is related not only to the quantity of final goods and services, but also to the conditions under which these goods and services are produced" (ibid, p. 113), then the corporate social responsibility for improving these conditions will ultimately correspond to the direct economic interest of corporations (cf. Pies et al 2019;Ramírez et al 2019).…”

Section: A Processual View Of Business Ethicsmentioning

confidence: 99%

System or Process? A Meta-theoretical Reflection on the Nature of the Firm

Valentinov

2021

Syst Pract Action Res

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The paper revisits the fundamental question of the nature of the firm by contrasting two philosophic worldviews suggested by process philosophy and the Luhmannian systems theory. Whereas the former worldview takes reality to be internally related, the latter ones underscores the tendency of social systems, such as firms, to disregard much of this interrelatedness. The productive tension between these worldviews suggests that the firm provides a context where systemic imperatives meet the rich concrete reality of human life. The role of the firm is to house those aspects of this reality that are too organic to be accommodated by the abstract “language of prices” corresponding, in institutional economics terms, to the reliance on market governance. The major examples of these aspects explored in the paper are dynamic capabilities and business ethics, both of which hold the potential to improve the firm’s sustainability, both economic and social. The proposed contrast between the process-philosophic and systems-theoretic worldviews thus illuminates not only the nature of the firm but also the managerial relevance of corporate sustainability instruments.

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Section: A Processual View Of Business Ethicsmentioning

confidence: 99%

System or Process? A Meta-theoretical Reflection on the Nature of the Firm

Valentinov

2021

Syst Pract Action Res

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“…1. Unspecified or conflicting goals (see, for instance, the discussion of "a multiobjective theory of the firm" by Pies et al (2019)) (prompting a goal defect; as for instance, if an entrepreneur has in mind a particular idea for a venture yet has a strong inclination toward safety that conflicts with making the investments required to transform the idea into action), 2. Limited knowledge about future outcomes of current action (prompting a causality defect; for instance, whenever an entrepreneur launches a new product, whether consumers will appreciate and purchase the product is highly uncertain.…”

Section: Structure Of Decision Problemsmentioning

confidence: 99%

On predictive entrepreneurial action in uncertain, ill-structured conditions

Rapp

Olbrich

2020

Rev Manag Sci

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Decision-making is at the heart of entrepreneurship. Unsurprisingly, entrepreneurship research has engaged with processes of entrepreneurial decision-making resulting, most importantly, in the notions of causation, effectuation, and enactment. Nevertheless, the range of processes delineated to date remains somewhat incomplete. Drawing on crucial insights from the analysis of decision problem structures reveals that entrepreneurship theory has lacked a process that both recognizes the ill-structuredness typically surrounding entrepreneurial decisions and places prognoses center stage. While effectuation implicitly addresses structural defects but denies prognoses a central role, causation emphasizes the importance of predictions while being associated with well-structured, risky environments, and thus, unaffected by structural defects. Theorizing about a combination thereof, that is, a process recognizing and considering the ill-structuredness of entrepreneurial environments yet building on predictions of the future is overdue. This paper, therefore, seeks to foster a more comprehensive yet nuanced understanding of entrepreneurial decision-making processes by outlining the intrinsic features of one such process that we term execution and relating it to existing processes.

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“…The purpose of the present article is to connect this Luhmannian theme to an ongoing debate among management and business ethics scholars, and a debate on the proper goals of the business firm (de los Reyes et al, 2017; Donaldson & Walsh, 2015; Heath, 2014; Jones & Felps, 2013a; Lee, 2018; Mitchell et al, 2016; Pies et al, 2019; Roth et al, 2018; Valentinov et al, 2019; van der Linden & Freeman, 2017). Prominent in the debate are two standpoints known as the single-objective approach and the multiple-objective approach to the theory of the firm (Pies et al, 2019).…”

Section: Introductionmentioning

confidence: 96%

“…As a normative stance, the goal of long-run profit maximization registers in Friedman’s maxim that “the social responsibility of business is to increase its profits,” and can be derived from Smith’s (1776) seminal thesis that “consumption is the sole end and purpose of all production.” In contrast, the multiple-objective approach assumes a much greater variability in the legitimate goals of the firm. According to this approach, these goals may include advancing interests of stakeholders other than shareholders; pursuing general welfare rather than private interests; promote sustainability instead of generating negative side-effects; and assume political responsibilities (Pies et al, 2019, p. 2). The firms guided by this approach are supposed to take a multidimensional view of social welfare (Donaldson & Walsh, 2015; Mitchell et al, 2016; van der Linden & Freeman, 2017) and orient their activities toward the creation of “social value” (e.g., Hall et al, 2015), “collective value” (e.g., Donaldson & Walsh, 2015), “stakeholder happiness” (Jones & Felps, 2013b), or “thick valuation” (van der Linden & Freeman, 2017).…”

Section: Introductionmentioning

confidence: 99%

Social Goals in the Theory of the Firm: A Systems Theory View

Valentinov

Roth

Pies

2020

Administration & Society

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Drawing on Luhmannian social systems theory, this article revisits the single- versus multiple-objective debate on the theory of the firm. Firms are conceptualized as complexity reducing systems structurally coupled with potentially risky environments, and profit maximization is considered as a complexity reduction strategy for making sense of these environments. Whereas single-objective approaches reflect cases when environmental risks do not materialize into corporate sustainability problems, multiple-objective approaches address these problems by increasing the corporation’s environmental responsiveness beyond the profit maximization function. Our systems-theoretic framework therefore identifies the common ground between the two approaches and draws attention to the circumstances under which they can claim validity.

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Single-objective versus multi-objective theories of the firm: using a constitutional perspective to resolve an old debate

Cited by 25 publications

References 69 publications

System or Process? A Meta-theoretical Reflection on the Nature of the Firm

System or Process? A Meta-theoretical Reflection on the Nature of the Firm

On predictive entrepreneurial action in uncertain, ill-structured conditions

Social Goals in the Theory of the Firm: A Systems Theory View

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