From Adam Smith to Artificial Intelligence: Reinterpreting the Purpose of the Firm in the Age of Automation

Abstract

This article discussed the examination of the evolution of the firm meaning over the course of time by providing a historical and philosophical sight with outlining periods from Adam Smith's labor-based perspectives to Milton Friedman's shareholder primacy, with an eye to how the development of artificial intelligence (AI) and automation have affected these legacy paradigms. The classical perspectives considered the firm as a generator of wealth maximization through profit splitting, while critiques today, such as stakeholder theory and corporate social responsibility, emphasize accountability, social good, and sustainability. It is generally assuming that the rise of AI and automation chimed under the firm paradigm undermines the role of human labor, modified transaction costs, and shifted stakeholder relationships. Managerial, policy and scholarly implications are also considered, focusing on pathways to inclusive capitalistic growth, and ethical deployment of technology and existential contemplation of corporate philosophy. The paper puts forward a future promise of reframing the firm to account for technological disruption