Governing firms without domination: the epistemic stakes of organizational design

Abstract

This article argues that firms organized along republican principles may exhibit comparative epistemic advantages in addressing knowledge distortions associated with arbitrary authority. It brings republican concerns to bear on bounded rationality, knowledge use, and institutional design within firms. The article draws on Friedrich Hayek’s argument that freedom is essential for the effective use of knowledge, interpreting freedom in republican terms as the absence of arbitrary power. Although Hayek applied this insight primarily to market relations, the article extends it to the internal organization of the firm. Hayek’s work thereby becomes a guide to institutional design within firms, understood as the structuring of rules, ownership stakes, and governance arrangements. The argument is diagnostic and propositional; it identifies an epistemic problem associated with managerial authority and advances firm republicanism as a response, drawing on institutional features already partially visible in existing organizational practices.