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date: 23 April 2019

Abstract and Keywords

This article has various aims: to demonstrate that the central concept of a ‘firm’ is more complicated than might immediately appear; to examine various explanations that have been put forward for why firms exist at all; to examine the factors which constrain the size and range of activities of firms; to compare the nature of relationships within firms with relationships between firms; and to consider how ownership of assets affects incentives. Any discussion of business strategy inevitably presupposes the existence of a business firm, for which the strategy is intended. Furthermore, the outcome of the strategic discussion will be aimed at changing the nature of the firm in various ways: the products it produces, the ways in which it produces and sells them, and the activities performed by the firm and those performed outside the firm.

Keywords: firm activities, assets ownership, incentives, business strategy, firm's existence, business firm

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