Socioeconomic Decision-Making: Firms

In Chapter 7 of the present study I examined behaviour by an individual acting as a decision-making unit. In Chapter 8 I then turned to the family, a small group of individuals acting as a formal decision-making centre, but only loosely structured. Even within such a small grouping, however, decision-making became a much more complex process. Responsibility for making and implementing decisions was often jointly exercised, or responsibility for different activities alloted to different individuals. A logical progression from the decision-making of the family would have been to go on and examine decision-making in those (often small) non-profit making organisations whose spending also forms part of consumers’ expenditure. A characteristic of these organisations is that they tend to be more formally structured than families, with elected or appointed officials, and often with formal rules governing their activities. We would nonetheless find many of the features already highlighted in our discussions of the individual and the family, or about to be highlighted in the present and subsequent chapters. I will therefore proceed now to an examination of decision-making within the firm, one of the most important units of analysis in economics.