Which theory views a firm as an institutional form of diverse individuals and groups with unified interests?

The correct answer is institutional theory, which views a firm as an organizational entity shaped by the interactions and relationships among a diverse array of individuals and groups, each with their own interests and motivations. This perspective emphasizes how institutions influence the behavior of firms and how firms may adapt to their environments to gain legitimacy and support from various stakeholders.

Institutional theory acknowledges that firms do not operate in isolation but are embedded within a network of social structures and cultural norms. This highlights the importance of understanding organizational behaviors and practices within the context of their broader social frameworks, which often consist of multiple stakeholders. The theory suggests that firms develop certain practices, policies, and norms to align with the expectations and interests of these different groups, thereby fostering cooperation and achieving organizational goals.

The other theories in the context of this question focus more narrowly on specific aspects of business relationships or governance. For example, stakeholder theory emphasizes the importance of considering the interests of various parties that affect or are affected by the firm's actions, but does not encapsulate the institutional framework in which these relationships exist. Legitimacy theory looks at how firms seek to align their operations with societal expectations to gain approval, while shareholder/agency theory concentrates on the relationship between owners and managers, emphasizing profit maximization from a narrower economic