Nature Of Firm Essay

My general idea of the meaning of “firm” is an organization, which organized in order to work properly and all of the actions there are interrelated. All parts of this organization work with helping each other in order to achieve their goal, which can be providing a service or producing a good. Their main concept behind the idea of providing this good or service is to make profit. The firm’s production is exchanged for profit with its consumers. That was my overall idea of the meaning of the firm but after having a few classes I acquired more deep understanding of the term through economic perspective.

The first paper, which we discussed in class regarding this question was the Coase’s “The Nature of the Firm”, which ignores important factors for the meaning of the firm such as relevant costs, uncertainty and risk. In his paper Coase is trying to explain why do they exist and how are they determined in the sense of the scale and scope. The general observation of the firm is that they are assumed to exist and they are characterized by production function, demand and cost curves such as the Neoclassical Model, which main objective is the selling of the products. The firms exist in order to transform inputs into outputs, having their employers and employees. Is it possible to imagine the world of

He criticizes the idea that the separation of ownership and control, which is implemented in today’s business, harms the ability of the profit motive to boost the most efficient use of capitals. It is rarely the case of owner-managed firm that operates as profit-maximizing entity, it is only in the idealized cases. According to Demsetz, value-maximizing ownership depends heavily on monitoring, desired scale of operations and the managerial skills of the firm’s