Harnessing big data for a multifunctional theory of the firm

Abstract

This paper explores the potential of big data, such as those compiled by the Google Books project, to inform the dominant theories of the firm that tend to be grounded on strong assumptions about the capitalist nature of the modern society. Combining the novel methodologies of the digital age with Niklas Luhmann's theory of functional differentiation, we draw on big data-driven abductive reasoning to redirect the attention of management scholars away from the dominant contract-based and competence theories of capitalist firms toward organizations navigating the regime of functional differentiation, which is marked by contingent and historically evolving prominence of individual function systems. We conclude that this navigation requires appropriate strategic management tools which are no longer primarily geared to the economic function system but rather entail a radical reconfiguration of the firm as a multifunctional organization.