The Theory of the Firm Revisited from a Power Perspective

Abstract

Economists have traditionally repudiated power from the theorization of the firm, shedding light on the amorphous and tautological character of this concept. Therefore, power could not contribute to the productive efficiency of an economic organization. Power is supposed to result exclusively from contract failures. On the contrary, we think that economists have to revisit the theory of the firm from a power perspective. In this article, the objective is triple. First of all, an original theoretical framework of power relationships, which takes into account organization theory, is proposed in order to fill the conceptual vacuum left by the theorists of the firm. Then, it is argued that power represents the methodological key needed by economists to analyze the emergence of intra-firm cooperation and collective social identity. Lastly, the focus is on the analysis of inter-firm cooperation to put forward the cohesive role of power in the genesis of the network-firm.