Identity, Cooperation and the Boundaries of the Firm.

Summary This thesis develops identity theory in economics by using the boundaries of the firm to study the effect of firm identification on intrafirm cooperation. We build on John B. Davis' definition of personal identity and propose a theoretical framework that conceptualizes the relationship between identity and cooperation. In this framework, personal identity is the product of the management of social identities that an individual develops and maintains through efforts to invest in these identities. We use the boundaries of the firm to distinguish between social identities that are linked to the firm and those that are not. We test the theoretical predictions with field experiments in real firms and with their employees, and control for the effect of different degrees of firm affiliation, including studying cooperation between individuals in two firms belonging to the same group. Consistent with theory, we find that firm affiliation has a positive and progressive impact on cooperation in a voluntary contribution game. Moreover, greater social distance between individuals implies less cooperation. Our theoretical and experimental strategy overcomes the many criticisms of social identity approaches. It accounts for the heterogeneity of individual strategies in managing social identities, the impact of institutions on individual behavior, and intra-firm cooperation. Personal identity adds to the traditional study of identification with the firm the issues of individuation and the effect of multiple social identities. We identify the structure of this new approach to the link between cognition and motivation in the firm. We explain how the issues of this extended theory of identity are related to the central issues of the nature of the firm, internal organization, and the boundaries of the firm. We analyze the implications of including the analysis of individuation and multiple social identities on the analysis of cooperation. We also study the effects of learning and corporate culture on identity strategies in the firm.