7.8.2—Alternative firm objectives

A firm’s objective is the outcome its decision-makers try to maximise. Possible objectives include profit, sales revenue, growth, market share, survival, satisficing or social and environmental goals.

The objective depends on ownership, competition, finance, managers’ incentives and time horizon. A firm may accept lower current profit to build a customer base or protect liquidity.

A new platform may price low to gain users and network effects, while a family firm may prefer stable income and control rather than maximum sales.

“The firm” is not a single mind: objectives can conflict between owners, managers, workers and communities, and a stated mission does not prove the actual objective.