The Most Remarkable Thing About A Business Company Is That The Armed Forces Are Fighting For Market Hegemony.

The most remarkable thing about a business company is that the armed forces are fighting for market hegemony.

What kind of company can a company profit from and pursue profit? What are the consequences?

Of all human innovations, business companies are the greatest.

The company is a contending army, constantly competing for market hegemony.

Facts have proved that the coexistence of control and competition is effective.

Without the resources and organizational capabilities of the great invention of "limited liability joint stock company", the unprecedented economic development since the middle of nineteenth Century will not be possible.

However, as Oxford, University Sa D Business School, advocated in an excellent and radical new book, "prosperity" (Prosperity), the company is not entirely satisfactory. "University"

The general public is increasingly thinking that the company is anti social. Apart from share prices, companies are indifferent to everything. Leaders of the company, apart from individual rewards, are indifferent to everything.

In terms of real wages and productivity, the company's recent economic performance has been mediocre.

In addition, the company is allowed to corrode competition, which is the view of JonathanTepper and Denise Hearn in another important new book, the The Myth ofCapitalism (The Myth ofCapitalism).

In short, the company is already full of bad ideas, making competition weaker.

Professor Meyer focuses on the point of view of Milton Freedman (MiltonFriedman), that is, the company's goal is to earn profits, subject to legal and (minimum) regulatory constraints.

Today, this view is embodied in the company's obligation to maximize shareholder value.

Behind this can be traced back to Adam's view that the main problem is the "agency problem": the relationship between the owner and the agent (i.e. the company manager). AdamSmith

Professor Meyer firmly believes that the problem of Freedman's view is too naive.

This view is based on the "simple and elegant economic model, which is impossible to establish in reality."

He believes that the company's pursuit of profits and the pursuit of profit alone can only produce bad companies and terrible consequences.

This is for three reasons: people, society and economy.

The first is the most important.

Profit is not the company's goal in itself.

Profit is the condition and result of achieving goals.

The goal may be to make cars, deliver products, disseminate information or many other things.

If a company takes money as a goal, it will neither earn money nor achieve its goal.

Secondly, when legislators allow the establishment of limited liability companies, they consider not profits, but the economic possibilities brought about by the combination of capital and effort and natural resources.

In particular, the long-term commitment that embeds the nature of the company allows the company to focus on Innovation: the most important contribution of the company is to make innovation a convention.

Finally, the core theory of the company is the theory of late Ronald (RonaldCoase). He thinks that due to paction costs, the efficiency of the market in the organization of production may not be as good as the hierarchical organization.

In other words, the market is imperfect, especially when it comes to long-term commitment.

However, it is unreasonable to ignore the fundamental imperfections of the market when deciding how a company should operate.

If the reason for the existence of a company is to replace implicit contracts with explicit contracts and thus to replace trust with force, people can not ignore this when deciding what is the goal of the company and who should be controlled by the company.

Most importantly, if the company reiterates its aim to serve the interests of those who promise the least, and at the same time, the control is entrusted to those who do not know the company's activities and who are most likely to suffer losses due to company failure. How can this long-term trust be maintained? However, it is fair to say that shareholders of the widely dispersed listed companies are in such a position.

Shareholders have the least commitment because they can cut off the relationship with the company immediately because they are different from their employees, suppliers and companies.

Shareholders know the least, because they do not participate in the company's activities.

It is important that, contrary to the accepted view of economics, the shareholders in the real world are not the undertakers of corporate residual risk, except for the bondholders of the company.

The imperfections of the market also pose considerable risks to employees, suppliers and locations.

In addition, the stock market allows shareholders to diversify their risks globally, and for employees, the company's knowledge and connections can not spread risks globally, as shareholders do.

In addition, everyone else may be violated by shareholders' speculation.

This is bound to weaken everyone else's commitment to the company.

In addition, in view of the fact that companies often talk about maximizing shareholder value and shareholders can not supervise and manage, rewards are increasingly not linked to the company's goals and linked to accounting profits and stock prices.

But both can be manipulated.

Some people would say that the result is that managers are overpaid. That is the problem of Deborah Are (DeborahHargreaves Are) CEO Chief Executives Overpaid.

These books believe that capitalism has seriously failed.

Although I was reluctant, I came to a similar conclusion.

This is not for abandoning the market economy, but for improving the company and improving competition.

Professor Mayer's work wants to say that the classic Anglo American corporate governance model, such as equality among shareholders, decentralization of shareholdings, maximization of shareholder value and controlled market, is only one of the possibilities of a company's organizational model.

We have no reason to believe that this model is always the best.

In some cases, it is effective.

In other cases, such as highly leveraged banking, it will not work.

In the mode of governance and control, we should clearly encourage all flowers to bloom.

Let's see which one is effective.

At the same time, this book wants to say that as we are too careless in thinking about the nature and objectives of the company, we are also very careless about the thinking of accommodating the company's market.

The bigger the company scale is, the more fierce the market competition is.

The company is really a great invention.

But the most important factor that has made the company's brilliant contribution is to accommodate the competitive market of the company.

The less competitive, the less profits the company can represent the real economic contribution of the company.

We must be Corrections Corporation and compete at the same time.