As is known, the company is busy searching for the best conditions in which it can maximize its profits.Clarifies the mechanism study of competition in the market conditions.But what else can you say about the company, except that it will maximize your income?The theory of the firm is seen in the economy on both sides.
On the basis of the views on the processes in neoclassical microeconomics has formed technological approach.It analyzes the behavior of the company and is also called functional.This approach assumes that for any connections of production factors can determine the function that expresses the highest production volume at a certain level of technological development.This so-called production function.You can use it to determine what the proportion between resources lead to the largest volume of production, if we take into account the relationship between input and output.
theory of the firm as part of the technological approach is seen primarily in terms of its borders.This issue is central.Production scale savings directly affect the return or increase.According to this regularity, the best size of the company is the one that does not lead to a sharp increase in variable costs.
Another alternative, look at the behavior of the company is an institutional theory of the firm.This approach prioritizes the study conditions are not improving profits and the phenomenon of the emergence of the company, its development and disappearance.This theory of the firm to explain the structure of the organization and content, not only uses the category of institution, but also concepts such as information asymmetry, opportunistic behavior, transaction costs, contract and specific resources.
firm as an economic phenomenon has a good reason for the occurrence.When a person wants to join with others into a relationship on matters related to metabolic processes, it is obliged to provide for the protection of their own interests.This can be done through the conclusion of appropriate agreements or contracts.
conclusion of all transactions involving the exchange takes place after the talks, during which specifies the procedure for the transfer of something, its price and other aspects.Reduce the size of the transaction costs associated with negotiations, helps to build within the hierarchical firm.That is, when the majority of employees acting within the same organization, there is no need to contract with each separately.Legal relations developing between employers and employees are governed by a single labor laws.
neoinstitutional explores the theory of the firm, and the problem of "principal - agent", in which the principal - is itself the owner of a resource, and the agent - is the subject who is endowed with the rights of the owner to use this type of resource.That is the principal transfers some powers to the agent, and he undertakes for a fee to represent the interests of the principal.Examples of such relationships: the owners of the land and its tenants, authorities and voters legislation, owners of companies and their managers.This theory of the company is directly related to asymmetric information and opportunistic behavior.This means that the information is not equally distributed between the parties: as a rule, the agent knows more than the principal, so that the latter can not completely control the actions of the former.Opportunistic behavior occurs when the function control by significantly different from those of its owner.
From what has been discussed above, we have the following definition: the company - it is the construction activity, which aims at the constant search for the most profitable ways that you can make products even under partial certainty.
