6 PagesPosted: 31 Aug 2018
Date Written: August 20, 2018
Abstract
The traditional theory of the firm is based on the assumption of profit maximisation that the firm is a single unit with a single objective. One of the many assumption underlying the profit maximisation theory is all interested parties have one aim that is stakeholders and managers work towards profit maximisation. Information symmetry is also assumed. However, overtime the relationship between ownership and control in firms has changed substantially. This has brought to some the question as to the validity of the profit maximisation assumption of the traditional theory.
Keywords: Profit, Organization, theory
JEL Classification: M31, M39
Suggested Citation:Suggested Citation
Anning, Frederick, An Assessment of the Traditional Theory of Firm Based Assumption of Profit Maximization in an Organization (August 20, 2018). Available at SSRN: https://ssrn.com/abstract=3235066 or http://dx.doi.org/10.2139/ssrn.3235066
Frederick Anning (Contact Author)
Fordham University, School of Law ( email )
New York, NY
United States
