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Essay text:
Firstly, there are further ‘case studies’ of particular categories of business decision. Then there is the result studied by management scientists or consultants in ‘normative microeconomics’ exercises. Lastly are the organisational theory studies on human behaviour in firms. The controversy here was not over the way in which firms actually take decisions rather over methodological question the significance or relevance of this empirical work.
The second objection relates to the assumption of profit maximisation as the firm’s objective in traditional theory. The long run profit maximisation is a survival condition in perfect competition, but once the elements of monopoly power are admitted, firms can still survive in the static long run without maximising profits...
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