Wednesday, May 26, 2010

Are we really economists? The Concept of the Corporation Chapter 2

Are we really economists? Do we really look at every factor under our control and try to make the decsion that produces the greatest return? Drucker seems to suggest that we don’t and hence is anticipating Herbert Simon, who argued that we really don’t. According to Simon, we run companies on heuristics, on simple rules that seem to work most of the time. When they don’t, we have long meetings that analyze the problems and devise a new system to coordinate labor and monitor progress. Often this is a practical solution but it can also be quite far form economics. It’s administrative behavior.

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