Adam Smith: Managerial Insights from the Father of Economics
AbstractThis paper applies the ideas found in the work of Adam Smith, the preeminent 18th century economist, to the field of management. Adam Smith was the first person to identify specialization and the division of labor as the main drivers of productivity. He also conceptualized the 'invisible hand principle' which explains how, under the proper set of incentives, self-interested individuals are directed to pursue activities that benefit the whole of society. Both ideas are of utmost importance in the field of management. Specifically, successful managers are those who are able to create good 'rules of the game' which align the incentives of labor with the goals of the firm. Smith's contributions provide a foundation for the division of labor and demonstrate the importance of establishing the right 'institutions' within a firm.
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Bibliographic InfoPaper provided by Department of Economics, West Virginia University in its series Working Papers with number 10-13.
Length: 10 pages
Date of creation: 2010
Date of revision:
Adam Smith; Division of labor; Invisible hand;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-10-02 (All new papers)
- NEP-HIS-2010-10-02 (Business, Economic & Financial History)
- NEP-HPE-2010-10-02 (History & Philosophy of Economics)
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