Theories of the Firm

For a long time, economists have seen the firm as a black box, arguing that firms maximise profits. Without following this ultimate goal, economists say that organisations would not survive in competitive markets (Makamason, 2004). In order not to be replaced, managers would have to comply with the objective of profit (value) maximisation. Hart (1989) says that this neoclassical”” view of the firm has been challenged considerably over the last three decades due to theoretical developments and increasing empirical evidence that managers may not pursue shareholder interests. The key assumptions of the traditional theory of the firm are maximisation of profit and decision making under conditions of perfect knowledge (Nellis and Parker, 2002). By ignoring many other involved complexities, this neoclassical approach has the ability to predict corporate behaviour in perfectly competitive and monopoly market structures. The maximisation assumption portrays the firm as a ‘single market, single product asset of the owner who adapts a production plan in response to changing market conditions’ (Makamason, 2004). Its prolonged survival is due to the useful analysis of how a firm’s production choices respond to exogenous change in the environment. Such an example being an increase in wages or a sales tax (Loasby, 1989). Seminar paper aus dem Jahr 2004 im Fachbereich Wirtschaft – Volkswirtschaftslehre, Note: 1,6, University of Wales, Newport,, Veranstaltung: Course Title: B.Sc. Business Undergraduate Programme, 15 Quellen im Literaturverzeichnis, Sprache: Englisch.””

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The Theory Of The Firm


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Author by : Paul Walker
Languange Used : en
Release Date : 2016-09-13
Publisher by : Routledge






A Theory Of The Firm


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Author by : Michael C. Jensen
Languange Used : en
Release Date : 2003
Publisher by : Harvard University Press






The Theory Of The Firm


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Author by : Daniel F. Spulber
Languange Used : en
Release Date : 2009-04-13
Publisher by : Cambridge University Press






The Theory Of The Firm


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Author by : Nicolai J. Foss
Languange Used : en
Release Date : 2000
Publisher by : Taylor & Francis






Handbook On The Economics And Theory Of The Firm


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Author by : Michael Dietrich
Languange Used : en
Release Date : 2012-01-01
Publisher by : Edward Elgar Publishing






The Theory Of The Firm


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Author by : Peter J. Curwen
Languange Used : en
Release Date : 1976-04-01
Publisher by : Springer






Towards A Competence Theory Of The Firm


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Author by : Nicolai J. Foss
Languange Used : en
Release Date : 2013-12-02
Publisher by : Routledge






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