Economic orthodoxy has always recognized the limits or failures of the market in certain contexts in order to achieve a concordance between individual rationality (private profit) and collective rationality (social welfare). But in these situations of divergence, the normative prescription of political economy indicates state intervention as a means of reconciling conflicting interests. Coase warns that market failures or constraints on governance – coordination and motivation – of resource allocation processes are not always resolved by government intervention. To the extent possible – to the extent possible – the law and transaction costs – there will be ways for the private sector to direct the allocation of resources that are not based on market prices and to help overcome market constraints without direct government intervention. Coase sees the company as an example of an institution that emerges from the private sector, when the coordination of resource allocation is more efficient, when it is done by the visible hand of the entrepreneur than by the invisible hand of the market. The enterprise and the market are replaced by each other in order to fulfil the functions of organizing trade, to take advantage of comparative advantages and to offer institutional specialization in terms of relative comparative advantage. The study of the horizontal limits of the enterprise is part of the broader field of neoclassical theory of production, in which productive technology is summarized in a function that represents the most advanced technological knowledge available at the time it relates to transform resources into goods or services of greater value or use. From this representation of technology, as well as resource prices, are derived the unit cost functions and procurement functions to which we have referred above. With careful analysis, production theory explains the size of production units – production facilities – but does not explain the scope of entrepreneur management, which defines the scope of the company according to Coase.
The theory does not explain why some entrepreneurs operate a single production plant and others several. The study of the limits of the enterprise and of internal organization – the theory of the enterprise – involves considerations of a contractual nature, which include the availability and access to information and the ability to process it, as well as the purely technological considerations postulated by the theory of production. In summary, Figure 1 summarizes the main contributions to enterprise theory from a contractual point of view in the broad sense and organizes them over time and in areas. It covers the rest of the topics that have claimed the interest of the economic theory of enterprise. Before companies start setting goals and strategies, they need to conduct a thorough analysis, both internally and externally. In many cases, we focus more on discovering our strengths and weaknesses and therefore focus on internal analysis. But what about external factors? In this article, we want to talk about an external factor of great importance: the socio-economic framework. The key role of prices in coordination – identifying mismatches between supply and demand – and motivating – rewarding those who react to these inadequacies, in the sense of producing more of what has a higher price – in competition with people who form a social collective, transforms economic theory into a theory of prices and markets.
In this theory, for a long time, there was little room for the economic study of the enterprise, apart from the fact that, among other things, it was considered an element of the market, where it performs a function that allows the formation of prices. Prices result from the overlap of supply and demand and, in order to explain prices, it is necessary to determine who are the bidders and applicants competing with each other in a market and, in this interest, a place is found for the company. The mechanistic and instrumental meaning of enterprise in the economy of markets was so great that it was called the “black box”, in accordance with the absolute indifference with which the economy saw its raison d`être and its nature. Equipment technology prevents joint production from being divided as the sum of the individual productions of the people involved in that production. Individual counterparts that encourage participation in collective action and motivate the contribution of resources by each agent involved can only be defined in terms of joint production and resource contributions if they are observable. In principle, there are advantages to offsetting participation in collective action with a share of common output, since only one variable must be measured; However, it has disadvantages known in the form of stowaway behaviour (Holmstrom, 1982). The alternative of measuring the contributions of resources – quantity and quality – requires specializing in this task and answering the question of how to ensure the effectiveness of those who oversee the process. Alchian and Demsetz respond by proposing an organizational solution in which the Monitor concludes bilateral agreements with each participant in the class action, agrees on a counterpart according to the amount of resources contributed, acquires the right to monitor its performance and direct its work, and as its own remuneration the difference between what is produced, and what he had to pay. In short, the theory of enterprise gives economic importance to the capitalist enterprise as we know it, where the entrepreneur centralizes contracts and, in addition to coordination, also assumes supervisory competence in exchange for residual profit. It is analyzed by looking at operational or economic leverage and operational impasse. Operational leverage or economic leverage measures the percentage change that occurs in the BAIT in the face of a change in sales.
The operational leverage effect results from the fixed costs that the company must bear before the start of production. These are all the legal regulations that exist in your country regarding entrepreneurship and business creation. Does your company use imported inputs? If your answer is yes, this external cause will directly affect your business. The international economy can affect your business if the dollar goes up or down, among many other factors in the international environment. The ownership of the assets gives the possibility or authority to decide on their use in anything that has not been contractually agreed in advance, while the authority that Coase assigns to the employer acquires its fullness when the employment contract is incomplete and the employer has the contractual right to direct – command the employees. Simon (1957) was a pioneer in identifying the economic importance of incomplete contracts in company-employee relations, but without linking his findings to the contractual origin authority proposed by Coase. In a world where all relationships between people would be governed by complete contracts – where everything that can happen in any relationship is determined in advance – the ownership of non-human assets and the authority of entrepreneurs would have no relevance, as there would be no remaining decision-making rights that exist when contracts are incomplete (3). On the other hand, the production or technology of the devices refers to the complementarity between the resources belonging to different people involved in production, so that the sharing of the technology creates more potential wealth than separate use. Alchian and Demsetz (1972), who place this property of technology at the origin of the enterprise as we know it, analyze the collective functioning of team production under the opposite assumption of team organization, that is, the people who bring the additional resources to production do so in the hope of receiving a maximum individual net reward without worrying about the collective interest. The technology and organization of the team only leads to coordination problems; Team technology and the overlap of individual interests – also known as coalition – lead to coordination issues and other motivational issues that have generated the greatest academic interest. We start by analyzing the economic situation of the environment in which you visit or have installed the company.
To do this, you need to take into account all the macroeconomic variables that assess the current situation of the economy, as well as the future. Among these variables are some of the most remarkable: economic research has separated the study of the limits or limits of the enterprise from the study of what happens within the enterprise for certain boundaries.