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Difference Between Organization and Firm

February 10, 2011 Posted by Aron

Organization vs Firm

Organization and Firm are two words that are often confused in terms of their connotations. They appear to have similar functions, but strictly speaking they differ in their connotation and functions.

The manner in which an organization and a firm are structured is the basis of difference between them. A firm is said to have more than one partner that go in agreement between them. On the other hand an organization is a social arrangement characterized by collective goals and it looks upon its own performance.

There are varieties of firms such as law firm and business firm. On the other hand there are several types of organizations as well including non-governmental organizations, international organizations, not-for-profit corporations, cooperatives, partnerships, corporations and the like.

The basic difference between organization and firm is that organization focuses on the achievement of the goals of a company. Organization lies in creating value for stockholders, customers, employees, suppliers and community.

Partners work together bound by some kind of agreement between them in a firm. They work together characterized by organizational behavior in order to bring about results and goals of their company.

Firm and organization differ in terms of their leadership too. The leader in a firm is different from the leader in an organization in the sense that a leader in an organization is appointed to a managerial position and has the right to command, enforce obedience and behavior by force of the authority of his position.

On the other hand a leader in a firm is the sole partner or the partners singly. If the number of partners is more than one then it is true that they all share the position in enforcing obedience and behavior. This is one of the main differences between a firm and an organization.

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Filed Under: General, Words Tagged With: collective goals, enterprises, Firm, leader in organization, Leader of firm, operations in firm, operations in organizationn, Organization, partnership agreement, social arrangement, structure of firm, structure of organization, types of firms, types of organizations

About the Author: Aron

Professor in Social Science and a contributing writer for Difference Between

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