Why Firms Exist

Topics: Economics, Adam Smith, United Kingdom Pages: 2 (492 words) Published: February 3, 2011
Summary of the Article, ”Why do firms exist”………..

Ronald Coase may not be as famous as other economists due to his non-recognisable status but at the turn of the century , he was able to achieve a recognisable status by applying practical theories on pre- existing economic theories.

Deregulation revolution of 1980s
Re-surfacing the pin factory which was the foundation of division of labour criticism of earlier economics theories of Adam Smith and others. Bureacracy in modern business
The major reasons for the existence of firms, empirical and participatory observational method rather than theoretical approaches of pre-modern economic theorists. Capitalism in China, the growth of neo-capitalist economies influenced by market, demand and supply.

The second article High Pay for business leaders is only ethical if a free market for talent is operating effectively……

The most recent global economic debate on the financial “big cow” rewards and bonus stauts of top Company chief executives across Europe, came under parliamentary debate in the United Kingdom when Bob Diamond, CEO of Barclays bank U.K was under scrutiny, these economic issue of high bonuses accruing to top compnay executives aroused lots of issues relating to skills, professionalism and the financial and econmoic implication of such fat bonuses on the growth of companies.

However, most companies, tend to ignore the successful contribution of workers in various department and segments of the compnay, while attributing the success of a firm to the genius of an individual whose major role in to make decisions under the bureaucratic nature of such firms.

The success of a business enterprise is a collective effort by all workers under the principle of division of labour and financial rewards are expected to be commensurate with the individual contribution of all workers during the process of division of labour.


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