Social Goals in the Theory of the Firm: A Systems Theory View

Drawing on Luhmannian social systems theory, this article revisits the single- versus multiple-objective debate on the theory of the firm. Firms are conceptualized as complexity reducing systems structurally coupled with potentially risky environments, and profit maximization is considered as a complexity reduction strategy for making sense of these environments. Whereas single-objective approaches reflect cases when environmental risks do not materialize into corporate sustainability problems, multiple-objective approaches address these problems by increasing the corporation's environmental responsiveness beyond the profit maximization function. Our systems-theoretic framework therefore identifies the common ground between the two approaches and draws attention to the circumstances under which they can claim validity.

Automated summary

Drawing on Luhmannian social systems theory, this article revisits the debate between single-objective and multiple-objective approaches in firm theory. The single-objective approach and multiple-objective approach each address different scenarios of environmental risks, and the systems-theoretic framework reveals the common ground between the two approaches.