Towards a Theory of Organizational Jurisprudence

Facebook’s Oversight Board is tasked with deciding which posts contain disinformation and hate speech. Its judgments can have profound impact, shaping whose voices and which messages are heard and whose are silenced in one of the most influential corners of the digital public square. With adversarial hearings; professionalized advocates, and independent judges, the Board’s procedures for arriving at these binding decisions are reminiscent of a law court; in fact, the media calls it Facebook’s Supreme Court. Facebook, however, is not only organization with a privatized court system for deciding matters of public importance. In fact, organizational jurisprudence is considerably more widespread. In this paper, we probe three of the central questions provoked by organizational jurisprudence. First, under what conditions does it arise? Second, how does it develop? Finally, what are the consequences of organizational jurisprudence for stakeholders?

Our answer draws on three sources of data. First, we review theoretical perspectives from economics, sociology, political science, and legal theory that explain what law is, with a goal to understand why private organizations would engage in its crafting. Next, we examine historical laws formed by private organizations, including canon law, military law, and the lex mercatoria of the early modern period. Finally, we review studies of contemporary organizational jurisprudence. We synthesize these bodies to develop propositions and scope conditions. Theoretically, this paper advances our understanding of organizational legitimacy, the development of capabilities, mobilization of cultural resources, the formation of proto-institutions, and firms’ relations with stakeholders. Practically, this paper advances our understanding of how organizations employ court-like mechanisms to allocate social resources, such as rights of speech and participation, resulting in novel forms of organization, and consequently, inequality.