The Logic of Firm and Market Term Paper Example | Topics and Well Written Essays - 1500 words

The Logic of Firm and Market - Term Paper Example As any business, the firm exists to profit as it performs its function which is to produce products and services through process (Jelen). It is then its responsibility to create goods and services that would meet the consumers’ demands and needs which are quality based. On the basis of value, modern entrepreneurship does not limit his definition to goods alone that would give profit to the firm but the services as well and of course those which are involved in rendering the services, the human being. Thus, skills, intelligence, knowledge and understanding are also considered values as these are used to produce the tangible produce exchanged in the firm. As Coase says, a firm thus is made up of the system of relationships when the direction of resources is dependent on the entrepreneur (393), giving it the responsibility to give value to its good relationship with the service providers. A firm is likely to survive in cases where a very short term contract would be unsatisfactory (Coase, 392) since the goal of the firm is to profit, therefore, it looks into the inclination of minimizing expenses. In contrast, the market is a system of producers, sellers and consumers in an unorganized fashion where services and goods are exchanged as the need arises in an unprecedented manner and where contracts are on a short term, if there are any. The players in this system could find people whom they could exchange goods and services depending on the prices set in the market, ending contracts in an untimely manner. Why did the network, flat structure of production not emerge before the late 20th century? Or did it? And, conversely, why were we dominated by- and infatuated with- the hierarchal (organizations) of productive entities? Flat structures of production I guess were existent even before the late 20th century however, it was not so much noticed and valued as it is today. History would show that