The corporation and profits
In this paper I argue that a theory of the firm that takes profit maximizing to be the essential activity and purpose of the firm is seriously inadequate. I argue that firms in the actual economy neither are nor should be maximizers of profit. I argue instead that firms are and must be satisficers,...
| Main Author: | |
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| Format: | Electronic Article |
| Language: | English |
| Check availability: | HBZ Gateway |
| Journals Online & Print: | Drawer...
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| Fernleihe: | Fernleihe für die Fachinformationsdienste |
| Published: |
Springer
1987
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| In: |
Journal of business ethics
Year: 1987, Volume: 6, Issue: 8, Pages: 589-601 |
| Further subjects: | B
Business Operation
B Corporate Revenue B Essential Activity B Actual Economy B Economic Growth |
| Online Access: |
Volltext (JSTOR) Volltext (lizenzpflichtig) |
| Summary: | In this paper I argue that a theory of the firm that takes profit maximizing to be the essential activity and purpose of the firm is seriously inadequate. I argue that firms in the actual economy neither are nor should be maximizers of profit. I argue instead that firms are and must be satisficers, that they must make enough profit to satisfy the various demands which they encounter in their operation. Yet it should be clear that the notion of “satisficing,” while it escapes the major problems encountered by maximization, itself lacks much of any very clear content. In the end I claim that the notion of satisficing can best be understood if we abandon the traditional characterization of profits and replace it with a notion of extended profits, which I define as that part of corporate revenue which is available for distribution among stockholders, management, and labor, and for reinvestment in the corporation's business operation. |
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| ISSN: | 1573-0697 |
| Contains: | Enthalten in: Journal of business ethics
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| Persistent identifiers: | DOI: 10.1007/BF00705775 |