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Conventions and Enterprises: Applying Convention Theory to Firms

Olivier Favereau (2024)

In Rainer Diaz-Bone & Guillemette de Larquier (eds.), Handbook of economics and sociology of conventions. Cham: Springer, Online first

Abstract. This chapter introduces the conception of the firm as seen by the approach of economics and sociology of conventions (EC/SC or convention theory). It first differentiates itself from the mainstream by analyzing the enterprise as a coordination dispositive between markets (goods, labor, and finance) rather than as an alternative to the market, knowing that markets are built around quality conventions and that the quality judgment is a normative judgment that can be linked to the justification of inequalities. When financialization raised the question of corporate governance, EC/SC theorized the legal distinction between the legal person of the “corporation,” which involves only shareholders, and the economic organization, where employees work under the authority of managers and which has neither legal status nor imposed denomination (firm or enterprise?). The dispositive appears as a dispositive-of-power of the former over the latter, with coordination (in relation to quality conventions) becoming a dynamic collective creation, where conflicts of power are subject to the interpretation grid of a convention of governmentality. EC/SC sheds light on the hidden dimensions of the great post-war conventions, well known to economists, by integrating the dominated existence of an alternative convention, co-determination, made possible in Europe by the variety of state conventions. The fact that the latent semantic content of conventions can diverge from their manifest content confirms EC/SC’s critical potential.

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