Firms and production

Abstract

In a modern society, indispensable roles are played by many different firms. Firms offers a large part of the goods and services which are consumed in the society. The majority of the people live on incomes they receive from firms. Those who run firms and those who are employed by them spend most of their days in offices and factories of the firms and try hard to make their career in the firms. Consumerstaste and industrial technology are much influenced by firmsactivities in advertising, marketing, researches and developments. The study on firms should, therefore, be an inter-disciplinary task among economics, sociology, psychology, business administration, engineering and system analysis. Except for the case of a small private firm, a firm is and organization composed by many decision-makers, with partly common, but partly conflicting interests, controlling different means and basing their decisions on partly different information. Even the economic theory of firms, therefore, should be in general based, not on a simple optimization theory, but on the theory of games or the theory of teams.