INFORMATION SYSTEMS AND THE SOCIAL THEORY OF THE FIRM

Abstract

Researchers in information systems have attempted to tease out the role of IS
in producing inter-firm performance heterogeneities. In this paper, we evaluate
the discussion with special emphasis on “rents”. We make a case that if a firm
achieves performance differentials through efficiency (Ricardian) or innovation
(Schumpeterian) rents, it is compatible with social welfare concerns, but when
it seeks monopoly rents, it has an adverse effect on social welfare. From a
theoretical standpoint, we feel that the incorporation by IS scholars of issues of
social welfare into the theory of the firm will invest it with greater explanatory
power. Such a “social theory of the firm” does not come at the expense of
economic performance, but rather overlays it with issues of social welfare, so as
to prevent theories of the firms from becoming divorced from broader concerns.