Firms and Governance: 19th Century to Now

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Questions and Answers

What defines a firm as an economic unit?

It must operate solely for non-profit purposes.

It has to produce only goods, not services.

It should employ more than 50 people.

It must engage in market production and seek profit. (correct)

What is a key feature of a firm's decision-making process?

It must follow a standard set of practices across all industries.

It is entirely dictated by external market forces.

It lacks legal autonomy and relies on government approval.

It is governed by a legal framework that varies by country. (correct)

How are microenterprises defined in France?

Enterprises operating in multiple countries.

Enterprises employing fewer than 10 people. (correct)

Enterprises employing between 10 and 49 people.

Enterprises with an annual income exceeding €50 million.

What distinguishes small enterprises from microenterprises in the UK?

Small enterprises have between 10 and 49 employees. Signup and view all the answers

What kind of enterprises do PME refer to in France?

Enterprises not classified as microenterprises, with 10 to 249 employees. Signup and view all the answers

What distinguishes the UK’s classification of firms from France's?

The UK uses international standards, while France does not. Signup and view all the answers

From an economic perspective, what is a primary objective of a firm?

To maximize shareholder value. Signup and view all the answers

What is a characteristic of large enterprises in terms of governance?

They have complex decision-making structures. Signup and view all the answers

What concept is associated with Joseph Alois Schumpeter regarding entrepreneurship?

The Schumpeterian entrepreneur Signup and view all the answers

What economic principle is discussed by Richard Cantillon in his work?

The entrepreneur's role in economic development Signup and view all the answers

Which of the following concepts relates to the role of hierarchy in large enterprises?

Transaction costs Signup and view all the answers

What is a characteristic of scientific management as developed by Frederick Winslow Taylor?

Systematic observation and measurement Signup and view all the answers

Which term describes the division of labor in a large enterprise?

Generalized division of labour Signup and view all the answers

What significant governance aspect differentiates stakeholders from shareholders?

Stakeholders represent wider interests beyond financial investment. Signup and view all the answers

What innovation concept does Schumpeter discuss in relation to the source of economic growth?

Innovation occurring in specific gaps Signup and view all the answers

Which production system is specifically referenced for its emphasis on efficiency?

Toyota Production System Signup and view all the answers

What defines a Large Enterprise according to employee count?

250 employees or more Signup and view all the answers

What is the maximum balance sheet total for Intermediate-Sized Enterprises (ETI)?

€2,000 million Signup and view all the answers

Which Industrial Revolution phase involved 'latecomers'?

Second Industrial Revolution Signup and view all the answers

According to Schumpeter, what is the role of the innovative entrepreneur?

To foster dynamics of capitalism Signup and view all the answers

What aspect does Jacques Turgot emphasize in relation to the entrepreneur?

The impact of social mobility Signup and view all the answers

What is a characteristic of Grandes Entreprises (GE)?

They do not fit into any smaller enterprise category Signup and view all the answers

What historical context links the development of firms?

The Industrial Revolution Signup and view all the answers

What trend is associated with the effects of 'uberisation'?

Disruption in traditional business models Signup and view all the answers

Which type of adaptation has the capacity for coordinated adaptation at its highest level?

Hierarchy Signup and view all the answers

What type of contract is associated with hierarchy?

Subordination Signup and view all the answers

What role does hierarchy play in administrative control compared to market and hybrid structures?

Hierarchy has the highest degree of administrative control. Signup and view all the answers

Which economic phenomenon characterized the Western world during the 1970s?

Stagflation Signup and view all the answers

What significant historical event contributed to the first oil crisis in 1973?

Arab-Israeli War Signup and view all the answers

What does the term 'Trente Glorieuses' refer to?

Thirty glorious years of economic growth in developed countries Signup and view all the answers

What was a consequence of the second oil crisis in 1979?

Significant inflation rates in many countries Signup and view all the answers

In the context of firms and entrepreneurs since 1970, what is noted about small and large enterprises?

There has been a new division of tasks between small and large enterprises. Signup and view all the answers

What characterized the dynamics of the 'Trente Glorieuses'?

Development of the Fordist system Signup and view all the answers

Which initiative was established in 1947 to promote international trade?

GATT Signup and view all the answers

What does the concept of 'economies of agglomeration' refer to?

Economic benefits from business proximity Signup and view all the answers

How did the Taylor-Fordist mode of production affect companies since the 1970s?

It led to a trend of downsizing Signup and view all the answers

What role did small and medium enterprises (SMEs) take on during the third Industrial Revolution?

Innovators and niche market participants Signup and view all the answers

What is a key distinction among companies, sole proprietorships, and micro-entrepreneurs?

Only companies can be legally registered. Signup and view all the answers

Which country examples were highlighted in the context of the dynamics of 'Trente Glorieuses'?

France and Japan Signup and view all the answers

What was one of the key developments in the European production systems post-war?

Adoption of mass production techniques Signup and view all the answers

Study Notes

Definition of a Firm

A firm operates as an economic unit with legal autonomy.
Engages in market production to generate goods/services, aiming for profit.
Decision-making autonomy exists under various legal frameworks depending on the country.

Firm Classification in France and the UK

France categorizes firms into micro, small, medium, intermediate, and large enterprises based on employee count and revenue.
UK's ONS classification aligns with international standards, focusing less on specific firm types.

Evolution of Firms Since the 19th Century

Historical progression linked to the Industrial Revolution, impacting firm structures and governance.
Innovations in corporate forms emerged in response to industrial demands.

The Entrepreneur in the 19th Century

Central role of capitalist entrepreneurs during early industrial development.
Social mobility and innovation are foundational in the evolution of the entrepreneur's role.
Pioneers like Jacques Turgot and Jean-Baptiste Say influenced economic perspectives on entrepreneurship.

Innovative Entrepreneurs as Growth Drivers

Joseph Schumpeter's theories highlight innovation as a key growth factor in capitalism.
Innovations often arise amidst economic pressure, challenging the notion of a steady state in economics.

Development of Large Enterprises

Large enterprises emerged alongside a generalized division of labor.
Managerial capitalism and scientific management revolutionized operational strategies within firms.
Hierarchical organizational structures became essential for coordination and control within large enterprises.

Key Theories and Concepts

Frederick Taylor's scientific management principles emphasized efficiency and productivity in enterprises.
John Kenneth Galbraith examined the changing industrial landscape and managerial roles impacting governance.

Changes Post-1970

Marked by the "Trente Glorieuses," a period of economic growth before subsequent challenges in the 1970s like stagflation.
Global concentration of industries observed from the 19th century to the end of the 20th century, reshaping enterprise roles.
The Fordist system facilitated mass consumption, leading to significant economic interdependencies and international agreements like GATT and EEC.

Small vs. Large Enterprises

A notable shift in task delegation emerged between small and large firms, especially post-1980s.
Emphasis on innovation now characterizes small enterprises, alongside trends of downsizing larger entities.
Concepts from Alfred Marshall regarding economies of agglomeration played a role in understanding the changing landscapes in entrepreneurship and firm structures.

Distinctions between Business Structures

Clear differentiation between companies, sole proprietorships, and micro-entrepreneurs established based on legal existence and operational capacity.

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Description

Explore the evolution of firms from the early 19th century to contemporary governance structures in this quiz based on the first chapter of the course. Understand key concepts regarding entrepreneurship and changing financial frameworks as you assess your knowledge of these vital economic principles.