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Abstract

I will problematize the corporate form as a reified social construct. To do this, I will ask two types of questions with regard to the corporate form. The first is a question about its ontological status: what is the corporation? The second is a question about its epistemological status: how can we establish criteria ‘by which we can know what does and does not constitute warranted, or scientific, knowledge’ in relation to the corporate form? To answer these questions I will first show that currently dominant accounts of the corporation and of corporate governance (the theory of how corporation should be governed) assumes that corporations share the same ontological status as all other types of organizations, i.e. that all organizations essentially exist as aggregations of individuals. I will then show how the corporate form provides a construct that in theory and in practice operates on very different ontological assumptions. Finally, this will lead me to a critical analysis of the reified nature of the corporate form and to a number of suggestions about how we can start to demystify this social construct.
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Working Paper Series
The Modern Corporation Project
Jeroen Veldman, Cass Business School, City University
jeroen.Veldman@cass.city.ac.uk
Hugh Willmott, Cass Business School, City University
hugh.willmott.1@city.ac.uk
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Working Paper Version ‘Corporation: Reification"of"the"corporate"form’ 22-8-2015
Corporation: Reification!of!the!corporate!form
This working paper version: August 22, 2015
Published as
Veldman, J., 2016. Corporation: Reification of
the corporate form, in Greenwood, M., Mir, R.,
Willmott, H. (Eds.), Routledge Companion to
Philosophy in Organization Studies.
Routledge, New York.
The Modern Corporation Project
www.themoderncorporation.com
Cass Business School
City University, London, UK
Electronic copy available at: http://ssrn.com/abstract=2731566
The Modern Corporation Project
www.themoderncorporation.com
Corporation
Reication!of!the!corporate!form
Jeroen!!Veldman
Introduction
The!!corporation!!is!!commonly!!perceived!!as!!a!!self-evident!!way!!of!!understanding!!what!!a!!business
is!!and!!how!!it!!operates.!!And!!yet,!!almost!!all!!of!!the!!specic!!properties!!that!!make!!up!!the!!modern
corporation!!would!!have!!been!!unthinkable!!less!!than!!two!!centuries!!ago.!!Until!!the!!start!!of!!the
nineteenth!!century,!!the!!partnership!!form!!remained!!dominant!!for!!private!!ventures!!and!!the!!law
of!!partnerships!!ruled!!the!!ventures!!that!!did!!receive!!a!!corporate!!charter!!(Ireland,!!2010;!!Mclean,
2004).!!Most!!of!!the!!ideas!!that!!dene!!the!!modern!!corporation,!!including!!incorporation!!and
perpetuity!!for!!private!!ventures;!!limited!!liability;!!the!!separate!!legal!!entity;!!attributions!!of
ownership;!!attributions!!of!!(citizenship)!!rights!!and!!(contractual)!!agency!!to!!a!!separate!!legal!!‘entity’;
the!!capacity!!for!!a!!corporate!!entity!!to!!‘own’!!another!!corporate!!entity;!!and!!the!!capacity!!for!!groups
of!!such!!entities!!to!!operate!!over!!jurisdictional!!borders!!are!!concepts!!that!!have!!been!!developed
mostly!!during!!the!!nineteenth!!century.
Arguably,!!the!!development!!and!!application!!of!!these!!ideas!!has!!turned!!the!!corporate!!form!!into
a!!very!!successful!!and!!highly!!dominant!!type!!of!!business!!representation,!!which!!during!!the
twentieth!!century!!replaced!!the!!partnership!!form!!as!!the!!most!!prevalent!!legal!!form!!for!!private
ventures!!in!!the!!US!!(Guinnane!!et!!al.,!!2007).!!However,!!the!!fact!!that!!the!!overall!!success!!of!!the
corporation!!may!!well!!rely!!on!!a!!set!!of!!very!!specic!!concepts!!is!!often!!forgotten.!!In!!a!!remarkable
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article!!Berger!!and!!Pullberg!!argued!!that!!reication!!can!!make!!us!!take!!a!!social!!construct!!for!!granted
(Berger!!and!!Pullberg,!!1965:!!206).!!The!!problem!!with!!reication,!!they!!argued,!!is!!that!!we!!bestow
an!!‘ontological!!status!!on!!social!!roles!!and!!institutions’!!(Berger!!and!!Pullberg,!!1965:!!206),!!but!!that
we!!then!!perceive!!of!!such!!a!!social!!role!!or!!institution!!unconnected!!from!!‘the!!human!!activity!!by
which!!it!!has!!been!!produced’(Berger!!and!!Pullberg,!!1965:!!199).!!If!!this!!happens,!!we!!end!!up!!with
institutions!!that!!‘are!!reied!!by!!mystifying!!their!!true!!character!!as!!human!!objectivations!!and!!by
dening!!them,!!again,!!as!!supra-human!!facticities!!analogous!!to!!the!!facticities!!of!!nature’!!(Berger
and!!Pullberg,!!1965:!!207).!!Such!!reication,!!they!!argue,!!leads!!to!!‘a!!narrow!!empiricism!!oblivious
of!!its!!own!!theoretical!!foundations!!or!!to!!build!!highly!!abstract!!theoretical!!systems!!emptied!!of
empirical!!content’!!(Berger!!and!!Pullberg,!!1965:!!211)!!and!!‘minimizes!!the!!range!!of!!reection!!and
choice,!!automatizes!!conduct!!in!!the!!socially!!prescribed!!channels!!and!!xates!!the!!taken-for-granted
perception!!of!!the!!world’!!(Berger!!and!!Pullberg,!!1965:!!208).
Following!!Berger!!and!!Pullberg,!!I!!will!!problematize!!the!!corporate!!form!!as!!a!!reied!!social
construct.!!To!!do!!this,!!I!!will!!ask!!two!!types!!of!!questions!!with!!regard!!to!!the!!corporate!!form.!!The
rst!!is!!a!!question!!about!!its!!ontological!!status!!(see!!also!!Al-Amoudi!!and!!O’Mahoney,!!Chapter!!1,
this!!volume):!!what!!is!!the!!corporation?!!The!!second!!is!!a!!question!!about!!its!!epistemological!!status
(see!!also!!Duberley!!and!!Johnson,!!Chapter!!4!!this!!volume;!!Scherer!!et!!al.,!!Chapter!!2!!this!!volume):
how!!can!!we!!establish!!criteria!!‘by!!which!!we!!can!!know!!what!!does!!and!!does!!not!!constitute
warranted,!!or!!scientic,!!knowledge’!!(Duberley!!and!!Johnson,!!Chapter!!4!!this!!volume)!!in!!relation
to!!the!!corporate!!form?!!To!!answer!!these!!questions!!I!!will!!rst!!show!!that!!currently!!dominant
accounts!!of!!the!!corporation!!and!!of!!corporate!!governance!!(the!!theory!!of!!how!!corporation!!should
be!!governed)!!assumes!!that!!corporations!!share!!the!!same!!ontological!!status!!as!!all!!other!!types!!of
organizations,!!i.e.!!that!!all!!organizations!!essentially!!exist!!as!!aggregations!!of!!individuals.!!I!!will!!then
show!!how!!the!!corporate!!form!!provides!!a!!construct!!that!!in!!theory!!and!!in!!practice!!operates!!on
very!!different!!ontological!!assumptions.!!Finally,!!this!!will!!lead!!me!!to!!a!!critical!!analysis!!of!!the!!reied
nature!!of!!the!!corporate!!form!!and!!to!!a!!number!!of!!suggestions!!about!!how!!we!!can!!start!!to!!demystify
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this!!social!!construct.
The((corporate((form((as((an((aggregation((of((individuals
In!!the!!2011!!presidential!!campaign,!!Mitt!!Romney!!responded!!to!!a!!heckler!!by!!making!!a!!strong
statement:!!‘Corporations!!are!!people,!!my!!friend!’1!!(www.nytimes.com/2011/08/12/us/politics/
12romney.html?_r=1&).!!Equating!!a!!corporation!!to!!a!!(legal)!!person!!connects!!to!!the!!history!!of
the!!corporate!!form,!!in!!which!!the!!corporation!!was!!increasingly!!projected!!as!!a!!personied!!social
construct!!(see!!next!!section).!!Such!!personied!!approaches!!to!!the!!status!!of!!the!!corporation!!have
been!!countered!!in!!legal!!and!!economic!!scholarship!!by!!those!!who!!argue!!that!!in!!essence,!!the
corporation!!is!!no!!more!!than!!a!!collection!!of!!individuals.!!Lord!!Hoffman!!argued!!in!!the!!Meridian
case!!that!!there!!is!!no!!such!!thing!!as!!a!!company!!‘of!!which!!one!!can!!meaningfully!!say!!that!!it!!can
or!!cannot!!do!!something.!!There!!is!!in!!fact!!no!!such!!thing!!as!!a!!company!!as!!such’!!(Meridian!!Global
Funds!!Management!!Asia!!Ltd!!v.!!Securities!!Commission!![1995]!!2!!AC!!500!!at!!507).!!From!!this
perspective,!!it!!can!!be!!said!!that!!‘Corporations,!!whatever!!they!!are,!!are!!not!!individuals!!and!!do!!not
act!!as!!unitary!!individuals’!!(Wells,!!2005:!!147)!!and!!we!!can!!arrive!!at!!the!!conclusion!!that!!‘despite
its!!long!!history!!of!!entity,!!a!!corporation!!is!!at!!bottom!!but!!an!!association!!of!!individuals!!united!!for
a!!common!!purpose!!and!!permitted!!by!!law!!to!!use!!a!!common!!name’!!(Berle,!!1954:!!352).!!Such
approaches!!that!!focus!!on!!the!!individuals!!that!!constitute!!the!!corporation!!to!!understand!!its
ontological!!status!!as!!a!!social!!and!!legal!!construct!!t!!well!!with!!wider!!pragmatic,!!political!!(Bowman,
1996)!!and!!epistemological!!(Elster,!!2007)!!arguments!!that!!would!!urge!!us!!to!!‘bracket’!!any
imputation!!of!!agency,!!ownership,!!and!!rights!!to!!social!!constructs,!!whether!!organizations,
corporations,!!or!!states.
From!!the!!1950s!!onwards!!the!!Chicago!!schools!!of!!law!!and!!economics!!turned!!this!!view!!into
a!!strong!!ontological!!argument.!!Rather!!than!!‘bracketing’!!the!!ontological!!status!!of!!the!!corporate
form!!for!!the!!sake!!of!!convenience,!!they!!reduced!!the!!status!!of!!the!!corporation!!to!!an!!aggregation
of!!individuals:!!‘It!!nds!!the!!rm’s!!separate!!characteristics!!to!!be!!insignicant!!and!!attaches
determinant!!signicance!!to!!the!!relationship’s!!aggregate!!parts’!!(Bratton,!!1989:!!423).!!As!!a!!result,
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it!!could!!be!!argued!!that!!‘Individuals!!are!!ontologically!!prior!!to!!corporations,!!which,!!as!!ctions,
have!!signicance!!only!!because!!of!!the!!freely!!contracted!!arrangements!!of!!their!!human!!constituents’
(Scruton!!and!!Finnis,!!1989:!!254).!!With!!such!!strong!!ontological!!assumptions!!in!!place!!all!!types!!of
social!!constructs!!!!whether!!corporations,!!organizations,!!or!!states,!!were!!in!!essence!!merely
aggregations!!of!!‘individuals’!!(Jensen!!and!!Meckling,!!1976:!!310–11),!!while!!the!!ontological!!status
of!!the!!corporation!!as!!a!!specic!!kind!!of!!social!!or!!legal!!representation!!was!!reduced!!to!!that!!of!!a
mere!!‘legal!!ction’!!(Friedman,!!1970).!!Any!!imputation!!of!!consciousness!!(Lederman!!in!!Fisse!!and
Braithwaite,!!1993:!!488),!!intent!!(Cressey!!in!!Fisse!!and!!Braithwaite,!!1993:!!490;!!Jensen!!and
Meckling,!!1976:!!310–11),!!agency!!(Fisse!!and!!Braithwaite,!!1993:!!475),!!responsibility!!(Friedman,
1970:!!1),!!or!!liability!!to!!a!!social!!construct!!such!!as!!the!!corporation!!was,!!therefore,!!squarely!!redirected
toward!!the!!individuals!!making!!up!!that!!social!!construct.!!Since!!the!!1970s,!!the!!ontological!!and
epistemological!!assumptions!!of!!this!!seductively!!simple!!theory!!have!!become!!dominant!!in
company!!law,!!economics,!!and!!in!!corporate!!governance!!and!!have!!had!!a!!strong!!inuence!!on
court!!decisions!!and!!regulatory!!changes!!(Becker,!!1974;!!Bratton,!!1989;!!Daily!!et!!al.,!!2003;
Foucault,!!2008[1979];!!Ghoshal,!!2005:!!81;!!Perrow,!!1986:!!15).
Singular((and((multiple
The!!ontological!!approach!!developed!!in!!the!!Chicago!!School!!of!!law!!and!!economics!!seemed!!to
connect!!well!!to!!a!!methodological!!approach!!based!!on!!methodological!!individualism!!(Hodgson,
2007;!!Schrader!!1993:!!159).!!However,!!the!!reduction!!all!!organizational!!forms!!to!!an!!aggregation
of!!individuals!!went!!well!!beyond!!the!!‘bracketing’!!of!!the!!corporate!!form!!as!!a!!social!!construct.!!In
practice,!!this!!approach!!denied!!the!!conceptual!!possibility!!for!!an!!ontological!!status!!for!!the
corporate!!form!!as!!a!!construct!!in!!the!!legal,!!economic,!!and!!political!!imaginaries!!(Veldman!!and
Willmott,!!2013).!!The!!denial!!of!!the!!possibility!!for!!an!!explanation!!of!!this!!separate!!status!!is
problematic!!when!!we!!take!!a!!closer!!look!!at!!the!!historical!!development!!of!!this!!construct.
Until!!the!!end!!of!!the!!eighteenth!!century,!!corporations,!!even!!when!!used!!for!!private!!purposes,
were!!conceptualized!!in!!a!!way!!similar!!to!!other!!business!!ventures:!!corporate!!charters!!were
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conditional,!!and!!limited!!liability!!was!!a!!feature!!that!!was!!only!!sparingly!!attributed!!(Djelic,!!2013;
McLean,!!2004;!!Handlin!!and!!Handlin,!!1945)!!and!!they!!were!!ruled!!by!!the!!partnership!!law!!(Ireland,
2010;!!Perrow,!!2002).!!In!!this!!setting,!!the!!legal!!representation!!produced!!by!!incorporation!!did
not!!convey!!a!!strong!!conception!!of!!an!!‘entity’,!!separate!!from!!the!!aggregation!!of!!individuals.
Without!!a!!strong!!ontological!!status!!for!!the!!corporate!!form!!in!!the!!legal!!imaginary,!!attributions
of!!agency,!!ownership!!or!!rights,!!and,!!by!!extension,!!attributions!!of!!responsibility!!and!!liability,
were!!mostly!!attributed!!directly!!to!!the!!individuals!!within!!the!!corporation!!(see!!Post,!!1934).
This!!perception!!started!!to!!shift!!during!!the!!nineteenth!!century!!when!!the!!pooling!!of!!capital
by!!increasing!!numbers!!of!!shareholders!!created!!a!!growing!!separation!!between!!shareholders!!and
‘the!!company’!!(Veldman!!and!!Willmott,!!2013).!!To!!accommodate!!the!!increasing!!distance!!of
shareholder!!from!!ownership!!functions,!!shareholders!!were!!separated!!from!!the!!assets,!!operations,
and!!risks!!of!!the!!corporation!!by!!shifting!!these!!onto!!the!!separate!!legal!!entity.!!This!!conceptual
shift!!allowed!!for!!the!!protection!!of!!the!!rights!!of!!minority!!shareholders;!!the!!general!!grant!!of!!limited
liability;!!and!!the!!development!!of!!liquid!!shareholding!!and!!thus!!the!!trading!!of!!shares!!in!!a!!share
market.!!However,!!this!!move!!also!!meant!!that!!the!!separate!!legal!!entity!!increasingly!!came!!to
represent!!‘the!!corporation’!!as!!a!!conceptual!!construct!!that!!could!!be!!attributed!!with!!ownership
over!!the!!assets!!and!!liabilities!!of!!the!!corporation!!in!!the!!legal!!and!!economic!!domain.!!The!!exact
status!!of!!this!!‘entity’!!was!!never!!really!!settled!!in!!legal!!scholarship!!(Avi-Yonah!!and!!Sivan,!!2007;
Dewey,!!1926;!!Hallis,!!1978;!!Harris,!!2006).
By!!the!!end!!of!!the!!nineteenth!!century,!!Freund!!related!!to!!the!!idea!!of!!a!!‘corporate!!personality’
as!!a!!convenient!!shortcut!!!!‘in!!most!!cases!!in!!which!!we!!speak!!of!!an!!act!!or!!an!!attribute!!as!!corporate,
it!!is!!not!!corporate!!in!!the!!psychologically!!collective!!sense,!!but!!merely!!representative,!!and
imputed!!to!!the!!corporation!!for!!reasons!!of!!policy!!and!!convenience’!!(Freund,!!1897:!!39).!!Others
however,!!argued!!that!!the!!separate!!legal!!entity!!creates!!‘a!!body,!!which!!by!!no!!ction!!of!!law,!!but
by!!the!!very!!nature!!of!!things,!!differs!!from!!the!!individuals!!of!!whom!!it!!is!!constituted’!!(Dicey,
1894–95!!in!!Maitland,!!2003:!!63).!!Fully!!separate!!from!!the!!aggregation!!of!!individuals,!!this!!‘body’
could!!be!!inserted!!into!!the!!slot!!of!!the!!legal!!‘subject’:!!‘As!!legal!!subjects!!they!!are!!distinct!!and!!in
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kind!!different!!from!!the!!visible!!aggregate!!of!!their!!individual!!members.!!These!!individuals!!do!!not
constitute!!the!!substance!!of!!that!!entity!!to!!which!!the!!law!!ascribes!!personality!!when!!it!!recognizes
a!!corporation!!aggregate!!as!!a!!legal!!subject’!!(Hallis,!!1978:!!xliii).
The!!status!!of!!the!!corporate!!form!!as!!a!!legal!!construct!!thus!!slipped!!to!!that!!of!!singularized!!‘entity’,
existing!!as!!a!!separate!!‘body’,!!apart!!from!!the!!aggregation!!of!!individuals.!!Inserted!!as!!a!!construct
into!!the!!slot!!of!!the!!legal!!‘subject’,!!it!!could!!then!!be!!understood!!as!!a!!‘body!!corporate’,!!‘legal
person’,!!‘legal!!personality’!!or!!‘legal!!subject’!!(Freund,!!1897;!!Horwitz,!!1985;!!Nace,!!2003).
Subsequently,!!the!!use!!of!!all!!kinds!!of!!anthropomorphic!!imagery!!(Nace,!!2003)!!resulted!!in!!a!!rapid
increase!!in!!the!!attribution!!of!!agency,!!ownership,!!and!!rights!!(Bowman,!!1996;!!Harris,!!2006;!!Ireland,
1999;!!McLean,!!2004)!!to!!this!!construct!!that!!was!!increasingly!!depicted!!as!!singular!!legal!!‘subject’
in!!and!!by!!itself.!!By!!the!!end!!of!!the!!nineteenth!!century,!!this!!process!!had!!progressed!!to!!the!!extent
that!!the!!corporate!!form!!allowed!!for!!one!!‘entity’!!holding!!ownership!!over!!another!!‘entity’,!!which
enabled!!the!!holding!!company!!and!!operations!!across!!jurisdictional!!borders!!(Veldman,!!2013).!!As
a!!result!!of!!such!!singularization!!and!!objectication,!!it!!became!!possible!!to!!imagine!!that!!the!!corporate
form!!would!!also!!be!!attributable!!with!!contracting!!agency,!!and!!would!!contract!!as!!a!!‘legal!!subject’,
not!!just!!outside!!the!!corporation!!or!!on!!behalf!!of!!the!!corporation,!!but!!also!!with!!the!!individuals
inside!!the!!corporation!!(Maitland,!!2003).
To!!shift!!the!!corporate!!form!!as!!a!!legal!!construct!!from!!the!!status!!of!!a!!technical!!and!!passive
construct!!that!!would!!‘hold’!!ownership!!in!!lieu!!of!!the!!shareholders,!!to!!a!!legal!!construct!!that!!could
be!!attributed!!with!!agency,!!ownership!!and!!rights!!as!!an!!‘entity’!!that!!would!!exist!!in!!the!!form!!of
a!!singular!!‘legal!!subject’!!apart!!from!!the!!aggregation!!of!!individuals,!!legal!!scholars!!had!!to!!introduce
multiple!!inconsistent!!assumptions!!about!!the!!status!!of!!the!!corporate!!form.!!To!!justify!!the!!wide
variety!!of!!attributions!!made!!to!!this!!construct,!!both!!in!!its!!perceived!!capacity!!as!!an!!‘entity’!!and
in!!its!!perceived!!capacity!!as!!an!!aggregation!!of!!individuals,!!multiple!!assumptions!!about!!the
ontological!!status!!of!!this!!construct!!had!!to!!be!!kept!!in!!play!!at!!the!!same!!time!!(Veldman,!!2010).
By!!the!!1920s,!!it!!was!!generally!!accepted!!in!!US!!and!!British!!legal!!scholarship!!that!!in!!order!!to
maintain!!all!!properties!!and!!functions!!attributed!!to!!the!!corporate!!form,!!it!!was!!necessary!!to
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understand!!the!!corporate!!form!!as!!both!!an!!aggregate!!construct!!(an!!‘aggregation!!of!!individuals’,!!a
‘nexus!!of!!contracts’)!!and!!as!!a!!singular!!construct!!(an!!‘entity’,!!‘subject’,!!‘person’,!!or!!‘agent’)!!(Dewey,
1926;!!Harris,!!2006).!!This!!inherent!!multiplicity!!of!!ontological!!assumptions!!and!!referents!!would
have!!wide!!consequences.
Corporations((and((organizations
Generally!!speaking,!!we!!can!!argue!!that!!the!!corporate!!form!!rests!!on!!multiple,!!mutually!!exclusive,
philosophical!!conceptions!!in!!the!!domains!!of!!law!!and!!economics!!and!!that,!!for!!this!!reason,!!it
functions!!as!!a!!social!!construct!!with!!an!!extremely!!weak!!theoretical!!foundation!!(Berle!!and!!Means,
2007[1932];!!Freund,!!1897;!!Gamble!!et!!al.,!!2000;!!Ireland,!!2003;!!Laufer,!!2006;!!Wel l s ,!!2005).!!Some
have!!argued!!that!!this!!is!!not!!a!!real!!issue,!!because!!we!!can!!develop!!pragmatic!!ways!!of!!dealing!!with
the!!corporate!!form!!(see!!Dan-Cohen,!!1986;!!French,!!1984).!!Others!!have!!argued!!that!!it!!is!!imperative
that!!this!!weak!!theoretical!!status!!is!!treated!!with!!pragmatism,!!because!!of!!the!!perceived!!economic
benets!!the!!corporate!!form!!provides!!(Hessen,!!1979;!!Osborne,!!2007).
There!!are!!three!!main!!reasons!!to!!question!!such!!calls!!for!!pragmatism.
First,!!it!!is!!important!!to!!recognize!!that!!at!!the!!most!!basic!!level,!!the!!contemporary!!corporate
form!!is!!structurally!!built!!on!!two!!competing!!ontological!!assumptions.!!The!!simultaneous!!use!!of
these!!ontological!!assumptions!!means!!that!!the!!corporate!!form!!acquires!!two!!referents!!for!!theorizing
in!!the!!legal!!and!!economic!!domains:!!it!!can!!be!!understood!!as!!a!!reduced!!aggregation!!of!!individuals,
and!!it!!can!!be!!understood!!as!!a!!fully!!reied!!‘entity’.2!!The!!effect!!of!!this!!double!!referent!!is!!that!!the
corporate!!form!!can!!relate!!to!!a!!wide!!set!!of!!possible!!ontological!!positions.!!The!!corporate!!form
can,!!for!!instance,!!be!!understood!!as!!a!!legal!!‘subject’,!!attributable!!with!!citizenship!!rights!!and!!liability
for!!manslaughter;!!as!!an!!ideal-typical!!economic!!‘agent’!!contracting!!with!!employees!!and!!operating
in!!a!!broader!!market;!!as!!an!!object!!of!!property!!that!!can!!be!!bought!!and!!sold!!at!!will;!!or!!as!!a!!‘nexus
of!!contracts’.!!As!!such,!!the!!corporate!!form!!presents!!a!!highly!!problematic!!social!!construct,!!which
escapes!!a!!clear!!and!!dened!!relation!!to!!ontological!!reasoning.!!With!!no!!possibility!!to!!exclude
one!!or!!the!!other!!position,!!it!!becomes!!very!!hard!!to!!establish!!the!!epistemological!!basis!!that!!establishes
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Notwithstanding!!the!!emphatic!!rejection!!of!!an!!ontological!!status!!for!!the!!corporate!!form!!in
contemporary!!law!!and!!economics,!!the!!corporate!!form!!contracts!!with!!individuals!!and!!groups
inside!!and!!outside!!the!!corporation!!as!!a!!separate!!legal!!entity.!!By!!presenting!!a!!separate!!legal!!entity
that!!can!!be!!attributed!!with!!its!!own!!contractual!!agency!!as!!an!!economic!!‘agent’!!in!!the!!economic
domain,!!the!!corporate!!form!!negates!!the!!strong!!ontological!!program!!by!!which!!it!!was!!qualied
as!!a!!‘purely!!conceptual!!artifact’!!(Jensen!!and!!Meckling,!!1994:!!24),!!a!!simple!!technical!!necessity
or!!a!!‘legal!!ction’!!(Friedman,!!1970)!!and!!is!!reconstructed!!in!!the!!economic!!domain!!as!!a!!full-
blown!!‘entity’!!with!!contracting!!agency.!!In!!this!!conceptual!!model!!it!!becomes!!acceptable!!to!!argue
that!!‘the!!corporation’!!can!!be!!afforded!!with!!contractual!!agency!!in!!the!!economic!!domain,!!but
the!!same!!multiplicity!!of!!ontological!!assumptions!!that!!applies!!to!!the!!corporate!!form!!in!!the!!legal
imaginary!!obscures!!the!!answer!!to!!the!!question!!what!!is!!the!!exact!!status!!of!!this!!construct!!that!!is
attributed!!with!!contractual!!agency!!in!!the!!economic!!domain.
Apart!!from!!problems!!with!!the!!identication!!of!!the!!exact!!point!!of!!attribution!!for!!contractual
and!!wider!!agency!!attributed!!to!!the!!corporate!!form!!in!!the!!legal!!and!!economic!!imaginary,!!the
unclear!!status!!of!!the!!corporate!!form!!affects!!the!!category!!of!!the!!‘subject’!!and!!the!!‘agent’!!more
generally!!(see!!also!!Veldman,!!forthcoming).!!Remember!!that!!in!!law!!and!!economics,!!a!!strong
ontological!!program!!restricted!!all!!attributions!!of!!agency!!to!!social!!constructs!!with!!a!!singular!!status,
such!!as!!‘individuals’,!!‘persons’,!!and!!‘agents’!!(see!!Friedman,!!1970;!!Jensen!!and!!Meckling,!!1994).
With!!a!!theory!!of!!organizations!!in!!which!!the!!individual!!agent!!is!!‘the!!elementary!!unit!!of!!analysis’
(Jensen,!!1983:!!15),!!the!!contractual!!agency!!attributed!!to!!the!!corporate!!form!!by!!necessity!!is!!also
attributed!!to!!such!!an!!‘individual’!!or!!‘agent’.!!Projecting!!the!!corporate!!form!!as!!an!!‘individual’!!in
the!!economic!!domain!!for!!purposes!!of!!attributing!!contractual!!agency,!!therefore,!!provides!!a!!concrete
ontology,!!in!!which!!the!!corporate!!form!!engages!!as!!a!!singular!!economic!!‘individual’!!or!!‘agent’
in!!contractual!!relations,!!both!!within!!the!!corporation!!and!!in!!the!!wider!!marketplace!!(Maitland,
2003).!!In!!so!!far!!as!!this!!construct!!is!!attributed!!with!!contractual!!‘agency’!!it!!doesn’t!!contract!!as!!an
ordinary!!‘individual’,!!but!!typically!!answers!!to!!ideal-type!!behavioural!!attributions!!coming!!from
neoclassical!!economics,!!e.g.!!the!!corporate!!form!!projects!!the!!idea!!of!!an!!ideal-type!!‘individual’
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‘agent’!!in!!the!!possession!!of!!full!!knowledge!!and!!an!!indenite!!time!!horizon!!(Bratton,!!1989).
The!!denial!!of!!a!!clear!!ontological!!status!!for!!the!!corporate!!form!!thus!!means!!that,!!a!!s!!construct,
it!!is!!projected!!into!!the!!slot!!of!!the!!singular!!economic!!‘agent’!!as!!an!!‘agent’!!with!!ideal-type!!ontological
properties,!!while!!retaining!!both!!its!!singular!!and!!aggregate!!referents!!and!!the!!attributions!!of!!agency,
ownership,!!and!!rights!!that!!have!!been!!granted!!on!!the!!basis!!of!!the!!use!!of!!this!!duplicitous!!status
(Veldman!!and!!Parker,!!2012).!!This!!is!!a!!problematic!!situation,!!because!!it!!creates!!a!!highly!!elusive
construct!!in!!the!!legal!!and!!economic!!domains;!!because!!it!!restructures!!the!!notion!!of!!contract!!in
such!!a!!way!!that!!ideal-type!!ontology!!and!!ideal-type!!agency!!come!!to!!govern!!that!!relation!!in!!the
economic!!and!!in!!the!!legal!!imaginary!!(Aglietta!!and!!Rebérioux,!!2005;!!Bratton,!!1989;!!Ghoshal,
2005;!!Schrader,!!1993;!!Sen,!!1977;!!Williamson!!and!!Winter,!!1991);!!and!!because!!it!!makes!!the
ontological!!and!!behavioural!!assumptions!!pertaining!!to!!such!!an!!ideal-type!!economic!!‘agent’!!the
default!!for!!the!!ontological!!status!!of!!other!!constructs!!in!!the!!category!!of!!the!!legal!!‘subject’!!and
the!!economic!!‘agent’!!(Veldman,!!forthcoming).
Conclusions:((the((political((economy((of((reication
In!!this!!chapter,!!I!!have!!showed!!how!!an!!engagement!!with!!philosophy!!can!!be!!instructive!!for
interrogating!!the!!ontological!!and!!epistemological!!status!!of!!the!!corporate!!form!!and!!showed!!some
outcomes!!in!!the!!domains!!of!!law!!and!!economics.!!To!!provide!!the!!means!!for!!further!!critical!!inquiry,
I!!will!!connect!!this!!status!!and!!these!!outcomes!!to!!the!!critique!!of!!reication!!provided!!by!!Berger
and!!Pullberg!!in!!this!!section.
Berger!!and!!Pullberg!!argue!!that!!by!!reifying!!a!!social!!construct!!we!!run!!the!!risk!!of!!developing
conceptual!!systems!!in!!which!!we!!end!!up!!with!!‘a!!narrow!!empiricism!!oblivious!!of!!its!!own!!theoretical
foundations!!or!!to!!build!!highly!!abstract!!theoretical!!systems!!emptied!!of!!empirical!!content’!!(Berger
and!!Pullberg,!!1965:!!211).!!We!!saw!!how!!a!!specic!!‘ontological!!status’!!(Berger!!and!!Pullberg,!!1965:
206)!!has!!been!!devised!!for!!the!!corporate!!form!!as!!a!!social!!institution!!in!!law!!and!!in!!economics,
which!!allowed!!to!!endow!!this!!social!!construct!!with!!a!!large!!set!!of!!specic!!properties,!!including
ownership,!!agency,!!and!!rights.!!We!!also!!saw!!how!!the!!contemporary!!idea!!of!!the!!corporate!!form
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in!!law!!and!!economics!!essentially!!negated!!the!!specicity!!of!!the!!corporate!!form!!and!!its!!status.!!As
a!!result,!!we!!have!!an!!ontological!!status!!of!!the!!corporate!!form!!that!!refers!!to!!multiple!!referents
and!!a!!set!!of!!hegemonic!!assumptions!!in!!law!!and!!economics!!that!!negates!!the!!specicity!!of!!the
corporate!!form!!as!!a!!social!!construct.
As!!shown,!!the!!structurally!!inconsistent!!basis!!this!!creates!!for!!theorizing!!about!!the!!corporate
form!!is!!highly!!problematic,!!both!!in!!terms!!of!!the!!development!!of!!a!!coherent!!understanding!!of
the!!corporate!!form!!in!!the!!domains!!of!!law!!and!!economics,!!and!!in!!terms!!of!!coming!!to!!grips!!with
its!!outcomes.!!What’s!!more,!!the!!strong!!ontological!!program!!in!!law!!and!!economics!!as!!well!!as
the!!unclear!!ontological!!and!!epistemological!!status!!of!!the!!corporate!!form!!spill!!over!!into!!adjacent
academic!!domains,!!such!!as!!accounting,!!management,!!and!!politics,!!most!!particularly!!by!!informing
the!!way!!other!!social!!constructs,!!such!!as!!individuals,!!organizations,!!and!!states!!are!!imagined,!!both
by!!themselves,!!and!!in!!relation!!to!!each!!other!!(Bowman,!!1996;!!Nafne,!!2003;!!Lederman,!!2000;
Schrader,!!1993;!!Veldman,!!2013;!!Wilks,!!2013).!!The!!epistemological!!outcome!!of!!the!!reied!!status
of!!the!!corporate!!form!!is,!!therefore,!!that!!it!!‘minimizes!!the!!range!!of!!reection!!and!!choice,
automatizes!!conduct!!in!!the!!socially!!prescribed!!channels!!and!!xates!!the!!taken-for-granted
perception!!of!!the!!world’!!(Berger!!and!!Pullberg,!!1965:!!208).
To!!address!!these!!problems,!!I!!argue!!that!!we!!need!!to!!become!!aware!!again!!that!!the!!corporate
form!!is!!a!!social!!construct!!that!!is!!produced!!by!!human!!beings!!(Berger!!and!!Pullberg,!!1965:!!200,
204).!!From!!this!!perspective,!!it!!becomes!!clear!!that!!the!!strong!!ontological!!assumptions!!underlying
the!!treatment!!of!!the!!corporate!!form!!in!!contemporary!!law!!and!!economics!!and!!in!!corporate
governance!!theory!!obscure!!the!!fact!!that!!the!!corporate!!form!!presents!!a!!social!!construct,!!which
is!!based!!on!!multiple!!referents.!!To!!understand!!the!!status!!of!!this!!corporate!!form,!!we!!need!!to
return!!to!!an!!approach,!!in!!which!!we!!do!!not!!simply!!deny!!and!!obscure!!the!!de!!facto!!status!!of!!the
corporate!!form,!!but!!rather!!‘bracket’!!our!!assumptions!!with!!regard!!to!!the!!corporate!!form!!as!!a
social!!construct.!!By!!bracketing!!our!!assumptions,!!we!!nd!!that!!the!!corporate!!form!!presents!!a!!de
facto!!singularized!!social!!construct!!in!!law!!and!!economics,!!and!!that!!historical!!attributions!!of!!agency,
ownership,!!and!!rights!!to!!this!!social!!construct!!have!!established!!it!!rmly!!as!!a!!construct!!with!!a!!de
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facto!!ontological!!status.!!Acknowledging!!the!!reality!!of!!this!!de!!facto!!social!!construct!!is!!important,
because!!the!!de!!facto!!existence!!of!!this!!construct,!!as!!well!!as!!its!!weak!!theoretical!!underpinnings,
has!!broad!!effects!!in!!relation!!to!!other!!(social)!!constructs,!!such!!as!!individuals,!!organizations,!!and
states.!!In!!this!!sense,!!this!!chapter!!on!!the!!corporate!!form!!presents!!an!!example!!of!!‘ontological
theorizing’,!!which!!‘has!!the!!power!!to!!emancipate!!organization!!studies!!from!!conventional
restrictions!!relative!!to!!the!!research!!questions;!!the!!scope!!of!!analysis;!!the!!methods!!of!!study;!!the
objects!!of!!study!!posited!!and!!the!!doubts!!raised’!!(see!!Chapter!!1,!!this!!volume).
Beyond!!ontological!!theorizing,!!bracketing!!our!!assumptions!!and!!nding!!the!!problematic!!status
of!!the!!corporate!!form!!provides!!the!!basis!!for!!a!!critical!!perspective.!!It!!has!!become!!clear!!in!!this
chapter!!that!!a!!long!!history!!of!!conceptual!!slippages!!in!!law!!and!!economics!!created!!the!!corporate
form!!became!!as!!a!!highly!!specic!!social!!construct.!!I!!showed!!how!!inserting!!the!!corporate!!form
as!!an!!ideal-type!!construct!!in!!contractual!!relations!!has!!turned!!the!!corporate!!form!!into!!a!!central
organizing!!concept!!for!!the!!construction!!of!!an!!economic!!‘grid’!!in!!which!!all!!kinds!!of!!constructs,
including!!individuals,!!organizations,!!and!!states,!!are!!re-conceptualized!!as!!nominally!!equivalent
‘entities’!!with!!nominally!!equivalent!!‘agency’!!(Veldman,!!forthcoming;!!see!!also!!the!!‘individualistic
approaches’!!in!!Chapter!!1,!!this!!volume).!!In!!this!!sense,!!the!!corporate!!form!!has!!been!!central!!to
the!!construction!!of!!an!!overarching!!economic!!‘grid’!!that!!legitimates!!a!!fetishized!!kind!!of
knowledge!!of!!ourselves!!and!!our!!social!!and!!economic!!relations!!with!!other!!social!!constructs!!(see
Berger!!and!!Pullberg,!!1965:!!199).!!More!!to!!the!!point,!!this!!‘grid’!!allows!!for!!a!!broad!!reinterpretation
of!!the!!relative!!ontological!!status!!of!!individuals,!!corporations,!!organizations,!!and!!states,!!which
has!!empowered!!corporations!!vis!!a!!vis!!individuals!!and!!states!!(Veldman,!!forthcoming).!!Also,!!within
this!!grid,!!the!!ontological!!status!!of!!the!!corporate!!remains!!uncontested!!and!!continues!!to!!provide
ample!!possibilities!!to!!enhance!!attributions!!of!!agency,!!ownership!!and!!rights,!!while!!at!!the!!same
time!!obscuring!!possibilities!!for!!the!!attribution!!of!!responsibility!!and!!liability!!in!!the!!legal,
economic,!!and!!political!!domains!!(Veldman!!and!!Parker,!!2012).
This!!analysis!!informs!!a!!critical!!perspective,!!in!!which!!we!!focus!!on!!‘the!!inherent!!connection
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between!!power,!!politics,!!values!!and!!knowledge!!and!!thereby!!provokes!!a!!deeper!!consideration
of!!the!!politics!!and!!values!!which!!underpin!!and!!legitimise!!the!!authority!!of!!scientic!!knowledge’
(Alvesson!!et!!al.,!!2009).!!Taking!!into!!account!!that!!knowledge!!always!!serves!!certain!!purposes!!and
groups!!(Alvesson!!and!!Willmott,!!1992),!!we!!may!!reimagine!!the!!construction!!of!!the!!corporate
form!!as!!a!!set!!of!!discursive!!operations!!(see!!Chapters!!1,!!2!!and!!5,!!this!!volume),!!primarily!!in!!the
domains!!of!!law!!and!!economics,!!that!!create!!‘articial!!social!!constructs!!that!!are!!formulated!!in!!the
context!!of!!social!!relations!!of!!power’!!(Al-Amoudi!!and!!O’Mahoney,!!Chapter!!1!!this!!volume).
From!!this!!perspective,!!it!!becomes!!clear!!that!!further!!reication!!of!!the!!corporate!!form!!will
make!!sure!!that!!it!!will!!remain!!unconnected!!from!!‘the!!human!!activity!!by!!which!!it!!has!!been
produced’!!(Berger!!and!!Pullberg,!!1965:!!199)!!and!!will,!!therefore,!!remain!!being!!taken!!for!!granted
(Berger!!and!!Pullberg,!!1965:!!206)!!as!!a!!construct!!that!!is!!‘analogous!!to!!the!!facticities!!of!!nature’
(Berger!!and!!Pullberg,!!1965:!!207).!!From!!this!!perspective,!!it!!also!!becomes!!clear!!that!!it!!is!!this
reied!!status!!of!!the!!corporate!!form!!as!!a!!social!!construct!!that!!allows!!it!!to!!continue!!to!!function
as!!a!!highly!!evasive!!kind!!of!!social!!construct!!at!!the!!heart!!of!!the!!global!!legal,!!economic,!!and!!political
system,!!which!!shields!!individuals!!with!!managerial!!positions!!and!!(controlling)!!shareholders;!!allows
for!!the!!further!!concentration!!of!!economic!!(Perrow,!!2002),!!legal!!(Buxbaum,!!1984:!!518–19;!!Robé,
1997:!!59)!!and!!political!!power!!(Barley,!!2007:!!201;!!Wilks,!!2013);!!and!!to!!a!!large!!extent!!supports
(Aglietta!!and!!Rebérioux,!!2005)!!the!!current!!worldwide!!division!!of!!wealth!!(Piketty,!!2014)!!on
behalf!!of!!small!!subsets!!of!!individuals!!(Ireland,!!2010).
Combining!!the!!reied!!status!!of!!the!!corporate!!form!!with!!its!!convenience!!for!!the!!perpetuation
of!!a!!particular!!kind!!of!!political!!economy,!!it!!can!!be!!argued!!that!!the!!highly!!problematic!!ontological
and!!epistemological!!status!!of!!the!!corporate!!form!!may!!very!!well!!not!!be!!the!!result!!of!!simple
theoretical!!and!!methodological!!aberration,!!and!!will!!probably!!not!!be!!solved!!by!!better!!theory
formation.!!Instead,!!what!!is!!needed!!is!!a!!more!!critical!!approach,!!in!!which!!the!!ongoing!!reication
of!!the!!corporate!!form!!is!!related!!to!!its!!effects!!for!!global!!political!!economy.
Notes
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1 See!also!www.youtube.com/watch?v=E2h8ujX6T0A.
2 Please note that in the dominant contemporary perspective on corporate governance, such a dualistic notion
of supra-individual ontology is explicitly denied for other types of supra-individual
representation, such as the state (see Veldman, 2013).
3 The!Cheshire!Cat!is!a!gure!from!Lewis!Carroll’s!Alice’s!Adventures!in!Wonderland.!It!can!appear!and
disappear!at!will.!In!the!story,!the!cat!disappears!at!some!point,!leaving!nothing!but!its!grin.!Alice!then
remarks!she!has!seen!a!cat!without!a!grin!before,!but!never!a!grin!without!a!cat.
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Working Paper Version ‘Corporation: Reification"of"the"corporate"form’ 22-8-2015
... The way in which the SLE has been postulated and developed as a legal concept since the start of the nineteenth century provides the basis for the modern public limited liability corporation. By providing a ' reifi ed ' construct that is attributed with ownership and liability in and by itself, the SLE conditions the public corporation ' s architecture, specifi cally by providing the basis for the emergence of the board and of executive management as distinct corporate ' organs ' and by setting the scope and direction of their fi duciary duties (Biondi et al, 2007;Johnson and Millon, 2005;Millon, 2014;Rob é , 2011;Veldman, 2016). A short description of the historical emergence of the modern public limited liability corporate form helps to illustrate the centrality of the SLE as a reifi ed legal construct. ...
... Between the placeholder and the extended conception, the identifi cation of the status of the SLE came to relate to multiple referents, including the SLE as a functional placeholder or a legal ' entity ' , ' subject ' or ' person ' ; the corporation as a whole; a (contractual) aggregation of individuals; particular constituent groups; or as any combination of these positions. As the amount of referents used to explain the status of the SLE and the modern corporation increased, so did the attributions of agency, ownership, rights and protections with regard to all these referents, further complicating the status of this legal construct (Naffi ne, 2003;Veldman, 2016). ...
... The convoluted status of the SLE was problematic because attributions of (contractual) agency, liability, ownership and rights to the SLE or ' the corporation ' could map onto a multiplicity of referents, and even onto multiple referents at the same time. As a result, the status of the SLE as a reifi ed construct and its relation to other legal constructs like citizens and states became conceptually unclear, providing the basis for broad contestation of the developing status of this new legal construct Entity and Architecture (Maitland, 2003;Rob é , 1997;Veldman, 2016). Notwithstanding the ongoing contestation of the status and effects of the SLE, pragmatism was consciously advised with regard to the fundamentally unstable theoretical and philosophical status of this legal construct, in order to preserve its functional outcomes (Dewey, 1926(Dewey, , 1931Foster, 2006;Hallis, 1978;Lawson, 1957). ...
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