The Real Entity Theory and the Primary Interest of the Firm: Equilibrium Theory, Stakeholder Theory and Common Good Theory

Abstract

According to the entity theory, the firm is a real person interested in survival and growth quantitatively and qualitatively. However, the literature is often vague and ambiguous for what concern the conditions to achieve for the survival and growth, as well as the modalities through which find the right compromise between continuity (or long-term profitability) and social function (or sociality) of the firm. This chapter wants to contribute to the theories that consider the firm as a real entity, proposing the concept of ‘primary interest of the firm’, which includes the conditions that allow firms to survive and grow, as well as to serve the common good of their stakeholders and society. The primary interest concept is multidimensional and derives from the intersection of three theories: equilibrium theory, stakeholder theory and common good theory.