Analyzing the Proposition that coordination and motivation of business activity is achieved predominantly through organizations rather than the market
This paper focuses on the analysis on the measure of contribution to the coordination and motivation of economic activities by organizations and the market. The analyses were based on my perspective of the Nigerian and global economy. The writing was based on personal experience and observation of the Nigerian and global economy. Also data from the Central Bank of Nigerian, some Nigerian websites and personal discussions with some analyst on global economy including Nigeria were quite relevant. The conclusion is the opinion that both segments play important role in coordinating economic activities.
Both markets and firms contribute to the coordination and motivation of economic activities. While the former contributes in an informal way and measuring the level of contribution may be quite difficult. The latter (the firm) contributes in a more organized process and the degree of contribution can be measured and priced into the system. Also firms and markets operate in the same environment, both segments affecting each other in one way or the other. The market is driven by the demand and supply of goods and services and management and employees of firms are part of these economic activities. The proposition put forward by Roberts and Simon that coordination and motivation of business activity is achieved predominantly through organizations rather than market will be analyzed from different perspectives. From my opinion and experience I am totally not convinced because I know that the market contributes a lot to economic activities. I will analyze this proposition from my experience as an employee of an organization for over nine years and also having operated in the Nigerian economy for over two decades. My approach to this proposition will be in two segments, The Nigerian economic environment and the global economic environment. The Nigerian Economic Environment
The markets has a great share in the Nigerian economic environment though there are a good number of multinationals and other firms operating in the country that deal on manufacturing , distribution, selling and purchasing of various goods and services. According to various independent researches and articles from the Central Bank of Nigeria (CBN) the informal sector contributes about 60% to the Gross National Product (GNP) in Nigeria. In Nigeria you find a lot of petty trading, indoor production of goods and services, skilled laborers in the area of hairdressing, baking, restaurants, shoe repairers, textile production, agriculture and so many others which are not fully regulated by the government but are very active in the growth of the economy. The market is a key mechanism of solving issues of coordination and motivation because it creates room for independence and is driven by self-interest which is usually achieved by the observation of market dynamics and opportunities of making profit. It also encourages innovation, investment s and drive to satisfy consumers. Robert,(2004). This simply means that most individuals go into informal trades because of expected gains and drive for independence and they find themselves flowing with the process of the market dynamics which they have observed. They are also motivated by the success of these small businesses run by others and hope to achieve their own. So in the actual sense the market naturally coordinates and motivates economic activities as individuals that participate in this sector exhibit good market behavior and require no formal incentives to work because they are natural motivated by the economic performance of the market. In addition to these the high unemployment rate in Nigeria and the need to eradicate poverty have driven so many Nigerians to self –employment which can be achieved from playing in the informal sector.(market) Based on all these highlighted, I am not convinced that motivation and coordination of economic activity is achieved predominantly through firms as proposed by Robert and Simon looking at it from the Nigeria perspective. The Global Economic Environment
From the global view I will agree with the proposition because the major contributors to the world economy such as the US economy, Europe, Asia operate through organized market structures and are regulated by their governments. Most of their economic activities go through small medium and big organizations and also multinational firms. Most of the citizens are employees and managers of various organizations that perform chains of economic activities that contribute to the Gross National Product and Gross Domestic Product. GNP and GDP so there is great need for motivation and coordination to drive economic activities. Here a better comparison between firms and markets can be done due to the organized structure and availability of data. Also the flaws of market can be highlighted such as monopoly, inefficient selling of public goods, lack of proper negotiations and a number of others. Robert (2004). It is also easy to achieve efficiency in the coordination and motivation of economic activities through firms because the strategic objectives of most firms is to ensure that the right people are employed to do the jobs at the right time taking also into consideration , cost effectiveness. So from the global perspective I quite agree that firms play a bigger role in the motivation and coordination of economic activities than markets owing to its size in the global economy. Conclusion
Having reviewed the proposition I will conclude that both firms and the market coordinate and motivate economic activities, However, as a management student the predominant role of firms in the coordination and motivation of economic activities is highly relevant to me as this will drive me to understand more on human and organizational behavior to enable me contribute to the creation of organizational design and structure of various organization to achieve optimum performance. References
Central Bank of Nigeria’s website www.cenbank.org
Nigeria’s Vanguard Newspaper website www.vanguardngr.com. The Informal Economy and Entrepreneurial Development. Roberts, J (2004). The Modern Firm: Organizational Design for Performance and Growth. Oxford: Oxford University Press