Firms as coalitions of democratic cultures: towards an organizational theory of workplace democracy

ABSTRACT

The theory of the firm initially developed by Ronald Coase has made explicit the political nature of firms by putting hierarchy at the heart of the economic process. Theories of workplace democracy articulate this intuition in the normative terms of the conditions under which this political power can be legitimate. This paper presents an organizational theory of workplace democracy, and contends that the democratization of firms requires that we take their organizational dimension explicitly into account. It thus construes democracy as an organizational principle and juxtaposes it to market, hierarchy, and norm-compliance as rival principles for the organization of economic activities. Attempts to construe democracy as an organizational principle with unique features in the tradition of transaction-cost economics are discussed before proposing an innovative solution based on an updated version of grid/group cultural theory of politics, adjusted to accommodate the basic requirements of democratic theory.

KEYWORDS:

• Workplace democracy
• Ronald Coase
• grid/group theory
• market
• hierarchy
• democratic theory

Acknowledgments

For stimulating and constructive criticism I would like to thank Anna Grandori, the two editors of this special issue, and an anonymous reviewer from this journal.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. This article is the latest in a series of five. Whilst self-standing, some of its key concepts have received a more extensive examination in the other papers. Frega et al. (2019) provides an overview of recent debates on workplace democracy. Frega (2020a) argues against using firm-state analogy arguments to interpret and justify workplace democracy. Frega (2020b) explains at greater length the normative implications of a social theory of democracy for the workplace. Finally, Frega (2020c) makes the case for the democratic potential of a series of management-initiated participatory practices aimed at increasing employee involvement.

2. In economic and organization theory, coordination refers to the effective integration of heterogenous inputs deriving from the division of labor. Firms are social units in which coordination of actions is achieved through authority, managerial coordination being the form coordination takes within firms. As such, coordination does not necessarily require alignment of goals among participants (Demsetz, 1988; Simon, 1991). When such alignment occurs, we speak of cooperation.

3. This is far from being a moot point. For opposed views, see, (Adler, 2001; Williamson, 1975).

4. For a similar typology, see, Fiske (1992).

Additional information

Notes on contributors

Roberto Frega

Roberto Frega holds a PhD in philosophy from the Université Paris 8. He is permanent senior researcher at the CNRS (French National Center for Scientific Research) in Paris. His areas of specialization is political philosophy, with a focus on democratic theory. His latest book is Pragmatism and the wide view of democracy (Palgrave Macmillan 2019). His articles have appeared in international journals such as The European Journal of Political Theory, Constellations, Social Theory and Practice, Democratic Theory, Business Ethics Quarterly.