Social Norms and the Theory of the Firm
A Foundational Approach

Demonstrates the importance of social norms to firms and markets through historical context and theoretical and empirical evidence.

Douglas E. Stevens (Author)

9781108423328, Cambridge University Press

Hardback, published 18 October 2018

236 pages
23.5 x 15.6 x 1.6 cm, 0.46 kg

'Scarcity of attention to social norms became increasingly difficult to sustain after the recent decades' events, raising uncomfortable questions about the prevailing theories of business, economics, organizations, and finance. Beyond sociology and organization behavior, awareness of the importance of social norms in accounting and law has grown rapidly. Stevens' book will help meet the hunger for new ideas in theory of the firm.' Shyam Sunder, Yale University, Connecticut

For decades, the economic theory of the firm referred to as agency theory has dominated business research and education in the United States. Although agency theory has been influential in accounting, finance, and managerial economics, it lacks informal and nonfinancial controls. Douglas E. Stevens resolves to enhance this theory through the incorporation of social norms. Drawing on historical context related to the firm, the theory of the firm, and social norm theory related to the firm, he demonstrates the importance of social norms in the formation and development of free-market capitalism and the firm. He also describes the latest theoretical, experimental, and archival evidence to exhibit the growing body of research that incorporates social norms into the theory of the firm. These foundations enable Stevens to create a comprehensive roadmap of agency theory that will have strong implications for practice and public policy.

1. The importance of behavioral assumptions in economic theory
Part I. The Foundation: 2. A history of the firm that incorporates social norms
3. The theory of the firm
4. Social norm theory related to the firm
Part II. The Evidence: 5. Formal models incorporating social norms into the theory of the firm
6. Emerging evidence of social norms in experimental research
7. Emerging evidence of social norms in archival research
8. Conclusion: 'where do we go from here?'

Subject Areas: Finance [KFF], Accounting [KFC], Microeconomics [KCC], Economics [KC]