Book Series
Theories of the Firm
Fifth Edition
Demetri Kantarelis

Chapter 1: The business environment in the first quarter of the 21st century

1-27Throughout history, profit-making entities (among other) have constructed an ever-more-global economy. In the last 15 years or so, unprecedented changes in communications and computer technologies have given the process new momentum. Multinational corporations manufacture products in many countries and sell to consumers around the world. Money, know-how and raw materials move ever more rapidly across national borders. Along with products and finances, ideas and cultures mingle more unreservedly. As globally mobile capital reorganises business firms, it sweeps away regulation and undermines local and national politics. Globalisation creates new spins of old trading ideas (auctions are becoming increasingly prevalent in buying and selling); it starts new markets and it contributes to wealth, even as it causes extensive distress, chaos, and strife. It is both a source of tyranny and a medium for global movements of social integrity and liberation. Undoubtedly, in the first quarter of the 21st century, the profit-making firm functions in an environment full of global opportunities and threats; and in the wake of recent corporate scandals, the firm, simultaneously, is heavily constrained by ethical self-restraining as well as innovative regulations enforced by domestic and global-governance institutions.
1 Globalisation
1.1 Legal restrictions
1.2 Global concentration
1.3 Excess capacity
1.4 Insourcing and urbanisation in developing economies
1.4.1 Development views: 'romantic', 'parasite' and 'dual economy'
2 The increasing relevance of auctions
2.1 Bidders (or buyers)
2.2 Auctioneers (or sellers)
2.2.1 Risk preference
2.2.2 Information structure
2.3 Other auctions
2.4 Ethical issues
3 Ethical constraints
3.1 Teleological ethics
3.2 Deontological ethics
3.3 Virtue ethics
3.4 System development ethics
3.5 Ethics theories as foundations of other theories that affect business
4 Summary
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