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Institutions are collective responses to collective concerns, with the underlying link between concern and response being the purpose of the institution. With this conceptual lens, we analyze the history of the Aktiengesellschaft (AG), which emerged in Austria and Germany around 1800. While any analysis of the organizational features of the form would have diagnosed marked stability over the past two centuries, our historical study reveals significant shifts of the AG’s purpose and meaning: from a vehicle in the service of the public interest, shareholders, and employees to a persona with legitimate self-interests and the will to survive. We suggest to regard such purpose drifts as distinct variant of institutional change. In addition, we conclude that the AG’s essentially political actorhood institutionalizes the ever fragile and delicate quest for a balance between the different legitimate interests on whose behalf a corporation acts (including those of the self). Such a view, we argue, can offer a future for the corporation as organizational form.

This paper traces how in Britain and Germany, for-profit and non-profit businesses coevolved with political-economic institutions. Starting in the late eighteenth century, Britain embraced the logic of liberal capitalism, although the path was not smooth. Over the same period, German states balanced both liberal and social-welfare ideals. Social-welfare ideals did not gain support in Britain until the start the twentieth century. The market logic embodied by for-profit businesses was more congruent with liberal capitalism than with social-welfare capitalism, so business corporations thrived more in Britain than in Germany. Yet in both countries, the growing number and power of for-profit businesses created problems for farmers, workers, and small producers. They sought to solve their problems by launching non-profit businesses – co-operatives, mutual-aid societies, and credit co-operatives – combining the ideals of community, enterprise, and self-help. British non-profits gained support from authorities by emphasizing their self-help and enterprise ideals, which were congruent with liberal capitalism, over the community idea, which was not. In contrast, German non-profits gained support by emphasizing all three ideals, as two were congruent with liberal capitalism and all three with social-welfare capitalism. Our analysis reveals how the success of different forms of business, embodying different institutional logics, depends on prevailing political-economic logics. It also shows how the existence and technical success of various organizational forms shapes elites’ perceptions and through them, societal-level logics of capitalism.