WHAT IS FIRM:

PREFACE
This book does not purport to be a complete treatment of the economics
of the firm. It aims only to shift the focus of theorizing about the firm by
providing an analytical framework which emphasizes three aspects of
business behavior:
1. The planned manipulation of all the variables within the firm's
control to achieve a given objective; the budget provides the integrating device
for such plans.
2. The firm's preoccupation with the level and composition of its balance
of inflows and outflows. These flows are always in some balance, but
management is concerned with where and how. This concern with flows sub-
ordinates pricing, which has traditionally occupied the economist's
principal attention, to the role, simply, of being one of the variables which
management manipulates to achieve its objective.
3. The interplay between plan and actuality, between ex ante and ex post.
A plan or budget is seldom (it might be said never) realized, and it becomes
a critical management decision--really a stream of decisions--whether steps
should be taken to conform activity to the original plan, or to maintain the
planned objective but modify the means in the light of experience, or to
conform plan (both objective and means) to experience.
These three present emphases have not, of course, been wholly absent
from prior treatments of the firm, but they have tended to play secondary
roles to rules for maximization. A shift from the traditional economizing
principle to an empirical approach to the firm accords these three elements
the status of major themes rather than minor embroidery. The economizing
principle may inform certain managerial actions and decisions, but it is
an inadequate basis for a theory of the firm.
One further significance of the present approach is worth noting, though
it is not demonstrated in the present volume. (An earlier statement of it is
given at some length in A General Theory of Economic Process, 1955.)
In both its planning and its control activities, management is concerned with
-v-

Publication Information: Book Title: The Firm: Micro-Economic Planning and Action. Contributors: Neil
W. Chamberlain - author. Publisher: McGraw-Hill. Place of Publication: New York. Publication Year: 1962.
Page Number: v.
The Firm: Micro-Economic Planning and Action
Book by Neil W. Chamberlain; McGraw-Hill, 1962
Subjects:
Industrial Management
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Publication Information: Book Title: The Firm: Micro-Economic Planning and Action. Contributors: Neil
W. Chamberlain - author. Publisher: McGraw-Hill. Place of Publication: New York. Publication Year: 1962.
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