Firm narratives and the formation of persons: ownership structure and moral ecology

Abstract

Abstract We propose a virtue-based theory of ownership and governance that treats “moral ecology”—the interplay of narratives, structures, and practices—as the formative context in which virtue can develop and sustain cooperation. We argue that ownership forms and governance structures are formative ecologies that encode and teach a firm’s ends. By doing so they either cultivate or corrode the dispositions and market virtues (prudence, solidarity, reciprocity, trust) that enable cooperation. Narratives render organizational ends intelligible; structures institutionalize and authorize those ends; and practices habituate firm actors into stable dispositions over time. We develop this argument through a comparative, narrative analysis of Vanguard and Cabela’s, supplemented by comparisons involving mutual and stock insurers and Patagonia. The mutual-insurance comparison provides the institutional context for Vanguard’s mutual ownership structure and its creation of the index fund. Together, the mutual-insurance and Vanguard analyses show how ownership forms that preserve the discoverability of organizational ends can accumulate narrative capital, that is, shared meanings and expectations that stabilize trust, enable surplus-sharing, and support virtues such as stewardship and prudence. Cabela’s, by contrast, illustrates how an initial public offering (IPO) and subsequent activist pressure can fix ends externally in financial terms, accelerate learned economism, and erode authenticity-dependent relational goods. Patagonia provides a positive foil, showing how ownership can be deliberately structured to protect a nonfinancial purpose from being subordinated to financial objectives.