Economics of Identity and Economics of the Firm: Why and How Their Three Central Questions Overlap

Abstract

This paper shows how the literature on identity can enhance the so-far underdeveloped appreciation of social context in the theory of the firm. While taking context into account, I explain why the literatures overlap in significant ways and I propose an analytical map which relies on and matches the three central questions of both literatures. The three central questions on identity – identification, individuation and multiple social identities – are coupled respectively with the three central questions on the firm – the nature of the firm, internal organization and firm boundaries. This identity-based extension of the economics of the firm contributes to the organization of the literature by extending the analysis of identity to questions that go beyond the primary question of identification. In doing so, it identifies two key research agendas: the role of internal organization in enabling individuation and the role of firm boundaries in enabling collective intentions.