The Firm

WHAT IS FIRM: PREFACE This book does not purport to be a complete treatment of the economics of the firm. It aims only to shift the focus of theorizing about the firm by providing an analytical framework which emphasizes three aspects of business behavior: 1. The planned manipulation of all the variables within the firm's control to achieve a given objective; the budget provides the integrating device for such plans. 2. The firm's preoccupation with the level and composition of its balance of inflows and outflows. These flows are always in some balance, but management is concerned with where and how. This concern with flows subordinates pricing, which has traditionally occupied the economist's principal attention, to the role, simply, of being one of the variables which management manipulates to achieve its objective. 3. The interplay between plan and actuality, between ex ante and ex post. A plan or budget is seldom (it might be said never) realized, and it becomes a critical management decision--really a stream of decisions--whether steps should be taken to conform activity to the original plan, or to maintain the planned objective but modify the means in the light of experience, or to conform plan (both objective and means) to experience.

These three present emphases have not, of course, been wholly absent from prior treatments of the firm, but they have tended to play secondary roles to rules for maximization. A shift from the traditional economizing principle to an empirical approach to the firm accords these three elements the status of major themes rather than minor embroidery. The economizing principle may inform certain managerial actions and decisions, but it is an inadequate basis for a theory of the firm. One further significance of the present approach is worth noting, though it is not demonstrated in the present volume. (An earlier statement of it is given at some length in A General Theory of Economic Process, 1955.) In both its planning and its control activities, management is concerned with -v-

Publication Information: Book Title: The Firm: Micro-Economic Planning and Action. Contributors: Neil W. Chamberlain - author. Publisher: McGraw-Hill. Place of Publication: New York. Publication Year: 1962. Page Number: v.

The Firm: Micro-Economic Planning and Action Book by Neil W. Chamberlain; McGraw-Hill, 1962 Subjects: Industrial Management Collections: Entire Library THE FIRM: MICRO-ECONOMIC PLANNING AND ACTION THE FIRM: MICRO-ECONOMIC PLANNING AND ACTION NEIL W. CHAMBERLAIN...London Toronto McGRAW-HILL BOOK COMPANY, INC. 1962 THE FIRM: MICRO-ECONOMIC PLANNING AND ACTION Copyright 1962 by the... Questia Media America, Inc. www.questia.com Publication Information: Book Title: The Firm: Micro-Economic Planning and Action. Contributors: Neil W. Chamberlain - author. Publisher: McGraw-Hill. Place of Publication: New York. Publication Year: 1962. Page Number: *.