ABSTRACT
The firm is a real entity and not an imaginary, fictitious or linguistic entity. This
implies that the firm as a whole exhibits a sufficient degree of unity or cohe-
siveness and is durable and persistent through time. The firm is essentially
composed of a particular combination of constituents that are bound together
by something that acts as an ‘‘ontological glue,’’ and is therefore non-reducible
to other more basic entities, i.e., to its parts or its members. From our perspec-
tive, the firm is not simply an aggregate or a collection. It is a real integrated
entity and a dynamic causal system. Institutional and organisational aspects
enter the picture. These assertions stand in sharp contrast with mainstream
theories of the firm whose proponents are more preoccupied with questions of
contractual provisions, vertical integration or opportunism than the general and
more fundamental questions related to what firms really are.
