Title: Economics: The Purpose Of Business | Science 2.0
Headings: Economics: The Purpose Of Business
Economics: The Purpose Of Business
Gerhard Adam

Content: Unfortunately too many businesses have fallen into the view that stockholders are more important than customers, so we see companies exploiting the very customers they depend on for their existence. It's as if they haven't realized that, even temporary success in this will inevitably lead to long-term failure. Another consequence to large companies is the sense of entitlement whereby they assume that their historical successes are destined to be future successes. As a result they often lack the vision of entrepreneurship and simply assume that they are part of the natural order of the world. Without naming specific industries, the current economic climate is filled with examples of companies that are clearly thinking of their own survival, rather than considering the longer-term consequences of their role in society. It would be difficult to expect companies to behave altruistically, therefore it is incumbent on the government and society to ensure that it doesn't prop up deficient industries while creating obstacles for their potential future replacements. What is clearly unsustainable is for companies to maintain the level of antagonism that exists between them and their customers. While much of this is currently supported by the government and the laws, it is inevitable that consumers will find ways to avoid subjecting themselves to such abuse, with the result that many companies are setting up an evolutionary path they may be unable to adapt to. Perhaps one explanation can be extended from Oliver Williamson's work on corporations and the cost of market transactions. In effect, the point is that often a business may be more efficient in absorbing outside goods/services to avoid the costs of having to negotiate transaction in the open market.