I.

Firm and Management:

An Ontological Understanding

Prof. Johngseok Bae

johngbae@korea.ac.kr
Korea University Business School
1. Organizations Are
Socially Real Entities
 1.1 Org As An Entity (실체로서의 조직):
Which one is close to the image of an organization?

(1) (2)

(3) (4)

Ontology 3
1.1 Org As An Entity

 Can we touch an organization?

 “An organization is NOT ______.”

 Rock (thing)
 Whale (animal)
 Automobile (machine)

Modern
Times

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 1.1 Org As An Entity : Types of Kind (종의 유형)

Self- Self-
Condition of
Types of Kind Entity organization constitution
Existence
자기조직화 자기구성능력
Mind-
Natural Nonorganic H2O
independent
No No
Kinds
Mind-
자연종 Organic Whale Yes No
independent

Social Nonorganic Car Mind-dependent No No

Kinds
사회종 Organic Firm Mind-dependent Yes Yes

Source: Bae et al. (2016: 166).

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1.2 Types of Kind and Understanding Firms and People

 If we take the view of “Natural Kinds: Nonorganic”,

 Firms are seen as

 Materially real entities (물질적으로 실재적인 존재자)
producing products and services

 People in the firm are seen as

 Things
 Material resources

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1.2 Types of Kind and Understanding Firms and People

 If we take the view of “Natural Kinds: Organic”,

 Firms are seen as

 Biological entities with a view of naturalism passively
responding for survival.

 People in the firm are seen as

 Reduced and limited person without having various
personal and social attributes.

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1.2 Types of Kind and Understanding Firms and People

 If we take the view of “Social Kinds: Nonorganic”,

 Firms are seen as

 Artefactually real entities (인공적으로 실재적인 존재자), like
machines.

 People in the firm are seen as

 An entity without autonomy and reason.
 Parts of a machine.

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1.2 Types of Kind and Understanding Firms and People

 If we take the view of “Social Kinds: Organic”,

 Firms are seen as

 Socially real entities (사회적으로 실재적인 존재자) with
autonomy and relationality.

 People in the firm are seen as

 Complex whole person
 Homo practicus with practical reason.

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1.3 Organizations as Socially Real Entities

 Conceptually mediated (개념에 매개).

 Irreducible to discourse (담론에 환원되지 않음): there is a

remainder and this remainder is non-empty. This
remainder is, however, not materially or artefactually
real.

 Dependent upon (human) activity.

Ontology 10
Exercise: The Paradoxes of Material Constitution
(Ney, 2014: 91-92)

Theseus had a large wooden ship that he sailed from Crete

to Athens. After some time, the ship needed repairs as its
planks started to rot. Gradually the Athenians replaced the
planks of Theseus’s ship with new planks. After many
years, all of the wood of the original ship was replaced
with new planks. By this time, the ship contained not a
single plank of the original wood. But the original planks
were not destroyed. Instead as each was replaced, the
original planks were stored and finally used to assemble
all of the original planks into the form of the original ship.
Soon, two ships stood side by side.

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Exercise (cont.)
S1: the original Ship of Theseus that arrived in Athens from Crete.
S2: the ship that resulted from the gradual replacement of rotten
planks with new planks.
S3: the ship that was assembled from the old, rotten planks.

Which of the two ships resting next to each other on the shore of
Athens is the original Ship of Theseus?
(1) Option 1: S1 = S2 but S1 ≠ S3 s3
(2) Option 2: S1 = S3 but S1 ≠ S2
(3) Option 3: S1 = S2 and S1 = S3
(4) Option 4: S1 ≠ S2 and S1 ≠ S3 s1 s2

Gradual replacement of planks

Time

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Exercise (cont.): Relevant ideas

 Transitivity(이행성): the identity relation is transitive.

 Numerical identity(수적 동일성) (or identity in the strict
sense): Oneness, the sense of ‘a is identical to b’
meaning that a and b are the same object, that they are
one.
 (cf.) Qualitative identity(질적 동일성): The sense of ‘a is
identical to b’ meaning that a and b share all of the same
qualities (the same color, same shape, same size, etc.).
 Leibniz’s law: the Indiscernibility of Identicals (동일자
의 구별불가능성)

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2. Organization ≠ ∑(Individual)
2.1 Organizations (but NOT Individuals) Have …

 Common Purpose

 Leaders (Leadership)

 Social Interaction

 Shared Values

 Differentiation and Integration

 Coordination and Control

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2.2 Organization, a Simple Aggregation?

 Whole ≠ ∑(Parts)

 “Simple” bundles of parts/components of computer,

architecture, and automobile

 What make it a meaningful assembling?

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2.3 Emergence (창발성)

 The Concept of Emergence (Polanyi, 1983)

 First, the comprehensive entity (i.e., the whole) relies on

particulars at lower level (i.e., parts).

 Second, the comprehensive entity generates emerging properties

that cannot be reduced to the particulars at lower level.

 Finally, the law governing the comprehensive entity also

controls the next lower level components.

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 2.3 Emergence: An Example of Town Architecture

Entity: Raw materials Bricks Building Town

Law: Physics & Technology Architecture Urban Planning

Chemistry

Ontology 18
3. Firms vs. Markets
3.1 The Existence of the Firm

 Aspiration for creating something new.

 Aspiration for participating in cooperative endeavors.

 Aspiration for having goods and wealth.

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3.2 Markets and Firms: Economics and Business

 Views on organization and society:

 Methodological individualism vs. Whole entity with emerging
properties

 Focus:
 Market theories vs. Firm theories

 Assumptions about the firm:

 Firm homogeneity assumptions vs. Firm heterogeneity
assumptions

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3.2 Markets and Firms: Economics and Business

 Assumptions about people:

 Self-interest and rationality vs. Mutual interest and legitimacy

 Dominant logic:
 Competition and price vs. Collaboration and trust

Ontology 22
Sum
Summary: FIRMS Are

 Socially real entities.

 More than the sum of individuals.

 Different from markets.

Ontology 24