The Influence of Economic, Political, and Social Factors on Firms Essay

The Influence of Economic, Political, and Social Factors on Firms The long controversy exist over the influence of economic , political and social factors on the success of the firms. With many economist believing that economic factors such as management structure contribute to the success of the firm. Karl Marx (1976)[1] and other economist argued that economic factors are not the sole determiner of firm’s success. Marx believes that political, social and economics plays a part in making the firm to be effective. So the following paper will address the question of whether political, economic or social factors contribute to success of the firms. The discussion of economic, political and social factors will be based on the argument between Marglin and Landers. Competition creates a spur for companies to innovate, improve efficiency and drive down prices. Competition is a model of industrial structure in which many firms compete in the supply of a single product in a competitive environment where only the fittest or most affective firm succeeds. Before going further I will like to emphasise the competition I’m referring to is perfect competition where new firms can enter the market if it appears profitable[2]. Because of insignificant barrier to entry firms are faced with challenge to innovate and to improve efficiency. As stated by the neo-classical theory of the firm it is in the interest of the firm to keep the marginal cost as low as possible. The need to lower the average total cost persuaded firms to look for efficient form of production. Competition from rivals forced firms to adopt management systems that will allow them to outperform their rivals .I clearly agree with Landers that the new management system emerged because its effectiveness[3]. Firms adopted the putting out system because it allows them to have edge over other firms The creation of the factories overcome the control that workers had over their work in the early phase of capitalist through the cottage system. Under the cottage system workers were working from home and the domestic craftsmen was master of his time. The lack supervision under the cottage industry meant that workers had no control over how much worker produced per day. Firms were not benefiting because it was easy for workers to steal raw materials. As stated by Karl Marx and the o... ... as mentioned by Marglin both social and economic factors play a part , but they depend on competition .For example in the factory system firms exploited workers because of competition if I wasn’t because of competitions firms wouldn’t have exploited workers. [1] Landers ,†what do bosses really do ?p.591 [2] Landers ,†what do bosses really do ?p.591 [3] Marglin â€Å"What do bosses do ?p.18 [4]Marglin â€Å"what do bosses do ?p.16-17 [5] Marglin what do bosses do? [6] Chandler (1992)managerial enterprise and competitive capabilities, business history .p16 [7] Elger ,T & Fairbrother , P (1992)fordism and flexibility .p.40 REFERENECE LISTS Chandler , A .(1992),†managerial enterprise and competitive capabilities; Business history review , vol.58,no .4. Elger, T & Fairbrother ,P.(1992),’inflexible flexibility ‘ in N. Gilbert et al (eds) Fordism and flexibility :Division and Change(London , Macmillan) Lazonick,w.(1991), Business organization and the myth the economy. Landers, D.(1986), â€Å"What do bosses really do† The journal of economic history Marglin.S.(1976)’What do bosses do ‘ .In A .Gorz (ed),The division of Labour (Brighton , Harvester) The Influence of Economic, Political, and Social Factors on Firms Essay The Influence of Economic, Political, and Social Factors on Firms The long controversy exist over the influence of economic , political and social factors on the success of the firms. With many economist believing that economic factors such as management structure contribute to the success of the firm. Karl Marx (1976)[1] and other economist argued that economic factors are not the sole determiner of firm’s success. Marx believes that political, social and economics plays a part in making the firm to be effective. So the following paper will address the question of whether political, economic or social factors contribute to success of the firms. The discussion of economic, political and social factors will be based on the argument between Marglin and Landers. Competition creates a spur for companies to innovate, improve efficiency and drive down prices. Competition is a model of industrial structure in which many firms compete in the supply of a single product in a competitive environment where only the fittest or most affective firm succeeds. Before going further I will like to emphasise the competition I’m referring to is perfect competition where new firms can enter the market if it appears profitable[2]. Because of insignificant barrier to entry firms are faced with challenge to innovate and to improve efficiency. As stated by the neo-classical theory of the firm it is in the interest of the firm to keep the marginal cost as low as possible. The need to lower the average total cost persuaded firms to look for efficient form of production. Competition from rivals forced firms to adopt management systems that will allow them to outperform their rivals .I clearly agree with Landers that the new management system emerged because its effectiveness[3]. Firms adopted the putting out system because it allows them to have edge over other firms The creation of the factories overcome the control that workers had over their work in the early phase of capitalist through the cottage system. Under the cottage system workers were working from home and the domestic craftsmen was master of his time. The lack supervision under the cottage industry meant that workers had no control over how much worker produced per day. Firms were not benefiting because it was easy for workers to steal raw materials. As stated by Karl Marx and the o... ... as mentioned by Marglin both social and economic factors play a part , but they depend on competition .For example in the factory system firms exploited workers because of competition if I wasn’t because of competitions firms wouldn’t have exploited workers. [1] Landers ,†what do bosses really do ?p.591 [2] Landers ,†what do bosses really do ?p.591 [3] Marglin â€Å"What do bosses do ?p.18 [4]Marglin â€Å"what do bosses do ?p.16-17 [5] Marglin what do bosses do? [6] Chandler (1992)managerial enterprise and competitive capabilities, business history .p16 [7] Elger ,T & Fairbrother , P (1992)fordism and flexibility .p.40 REFERENECE LISTS Chandler , A .(1992),†managerial enterprise and competitive capabilities; Business history review , vol.58,no .4. Elger, T & Fairbrother ,P.(1992),’inflexible flexibility ‘ in N. Gilbert et al (eds) Fordism and flexibility :Division and Change(London , Macmillan) Lazonick,w.(1991), Business organization and the myth the economy. Landers, D.(1986), â€Å"What do bosses really do† The journal of economic history Marglin.S.(1976)’What do bosses do ‘ .In A .Gorz (ed),The division of Labour (Brighton , Harvester)