I think the following are fairly typical aspects of a large corporation:
- Operation of more than one plant.
- Production of more than one product.
- Use of large amounts of capital goods with fixed costs.
- Production and sales in more than one country.
- Provision of stock (also known as shares) that are traded on a specified stock exchange.
I suggest the indicated work of the following economists1 are useful to read2 in attempting to understand such organizations:
- Joe Bain and Paolo Sylos Labini on Industrial Organization3.
- John Maurice Clark, especially Studies in the Economics of Overhead Costs4.
- John Kenneth Galbraith, especially his book The New Industrial State
- Michal Kalecki on mark-up pricing.
- Robin Marris' on managerial theories of the firm.
- Gardiner Means and Adolf Berle, especially their book The Modern Corporation and Private Property5
- Edith Penrose, especially her book The Theory of the Growth of the Firm.
- Herbert Simon on the theory of administration.
- Josef Steindl, who, as I understand it, was a follower of Michal Kalecki and did much work in Industrial Organization.
The theory of the firm, as taught to undergraduates, does not cover modern corporations and these economists. I do not claim that the theory cannot be expanded. Important issues include knowledge, organization, and competencies needed to expand into adjacent products and to expand the number of plants.Footnotes
- Some of these authors or their works I only know of through secondary literature.
- Bruno Rizzi's 1939 book, La Bureaucratisation du Monde, occasioned an internal debate among followers of Trotsky and supposedly foretold some of the themes in some of the following works.
- Franco Modigliani's 1958 paper, "New Developments on the Oligopoly Front", reviews an important book by each member of this pair of authors.
- I do not want to claim Piero Sraffa showed how to correctly account for overhead costs; do corporations have sufficient data to set up his equations in their full generality? Do they not commonly adopt heuristics that sometimes, but not always, deviate from his equations?
- As I understand it, this book deals with, among other issues, the separation of ownership and control.