Nature of the Firm and Theoretical Approaches

Distinct purpose, people, and deliberate structure.

By transforming resources into products and services.

The firm addresses inequality and unemployment in society.

<p>The firm is viewed as a 'black box' that maximizes profit by transforming inputs into outputs.</p> Signup and view all the answers

<p>Firms exist because markets do not function efficiently due to various transaction costs.</p> Signup and view all the answers

<p>It arises when the interests of the principal and the agent differ, reducing the agent's incentive to maximize effort.</p> Signup and view all the answers

<p>It creates value for its stakeholders and contributes to society.</p> Signup and view all the answers

<p>Principals hire agents to act on their behalf, defining responsibilities through contracts.</p> Signup and view all the answers

<p>The RBV sees a firm as a unique bundle of resources and capabilities that provide competitive advantage when effectively accessed and utilized.</p> Signup and view all the answers

<p>Agency costs arise due to the misalignment of interests between the principal and the agent, requiring investment in incentives to align these interests.</p> Signup and view all the answers

<p>Firms can be categorized as state-owned, mixed equity, or privately-owned based on the ownership of capital.</p> Signup and view all the answers

<p>An industrial firm is classified as either an extractive firm or a manufacturing firm, involved in the physical production of goods.</p> Signup and view all the answers

<p>Corporate officers are responsible for managing and running the company, acting on behalf of shareholders.</p> Signup and view all the answers

<p>Successful entrepreneurs often exhibit creativity, proactiveness, determination, and a high tolerance for risk and uncertainty.</p> Signup and view all the answers

<p>A business plan should summarize the business opportunity, outline objectives, and detail aspects such as marketing, production, and funding.</p> Signup and view all the answers

<p>An intrapreneur implements innovative projects within an existing company while managing risks associated with these initiatives.</p> Signup and view all the answers

<p>In larger companies, the roles of management and ownership tend to separate, with shareholders electing representatives to oversee corporate officers.</p> Signup and view all the answers

<p>An innovator entrepreneur focuses on discovering and exploiting business opportunities, while a manager entrepreneur coordinates production factors and manages operations for productivity.</p> Signup and view all the answers

<p>A sustainable competitive advantage arises from resources that are valuable, rare, difficult to imitate, and non-substitutable.</p> Signup and view all the answers

<p>The primary types include industrial, commercial, and service firms, each specializing in different productive activities.</p> Signup and view all the answers

<p>Aligning interests is crucial because it reduces agency costs and improves the efficiency of the firm.</p> Signup and view all the answers

<p>The steps include generating a business idea, developing a business plan, and setting up the business legally.</p> Signup and view all the answers