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- Title
Growth of Firms and Managerial Capitalism.
- Authors
Drane, N. T.
- Abstract
This article attempts to provide a compact interpretation of theory of the firm formulated by Robin Marris. His model is essentially a supply and demand one--consisting of relations for the rate of growth of demand for, and of supply of, capital funds, brought together by an equilibrium condition to ensure that the growth will be balanced. However, to permit the introduction of internal organizational problems, a third major relation is introduced, which may be called the managerial efficiency function. Moreover, Marris is concerned to elucidate the nature of the relations among the variables, and thus to modify the supply-growth function. There is also, as Marris emphasizes, a certain inherent conflict between the conception of a neo-classical owner entrepreneur, and a supply function which admits retentions and share issues. Nevertheless it is not too difficult to imagine the owner issuing shares to himself and obtaining funds for expansion either by retentions out of current earnings of the business or new issues to draw upon other personal resources. It is this aspect of neo-classical growth theory which Marris is particularly concerned to attack. New products are introduced into the firm's catalogue, and the firm does tend to try to create its own markets. This process of new product creation is what Marris calls diversification.
- Subjects
ECONOMICS; MARRIS, Robin; SUPPLY &; demand; ECONOMIC demand; FINANCIAL performance; DIVERSIFICATION in industry
- Publication
Abacus, 1966, Vol 2, Issue 1, p49
- ISSN
0001-3072
- Publication type
Article
- DOI
10.1111/j.1467-6281.1966.tb00327.x