The Influence of Economic, Political, and Social Factors on Firms

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The Influence of Economic, Political, and Social Factors on Firms The long controversy exist over the influence of economic , political and social factors on the success of the firms. With many economist believing that economic factors such as management structure contribute to the success of the firm. Karl Marx (1976)[1] and other economist argued that economic factors are not the sole determiner of firm’s success. Marx believes that political, social and economics plays a part in making the firm to be effective. So the following paper will address the question of whether political, economic or social factors contribute to success of the firms. The discussion of economic, political and social factors will be based on the…show more content…
Adam smith argued that putting out system facilitated a greater degree of specialisation[4]. Putting all workers under one roof allows workers to specialize .As noted by Adam smith specialisation will mean increase in productivity of workers .Increase in productivity will allows the firms to make more profits in this will give it edge over other firms. I clearly agree with Landers that the firms adopted new management systems because they were affective and they outperform previous management systems.[5] However marglin disagree with Adam Smith and Landers ideas that the putting out-system emerged because of its effectiveness .Maglin argued that the putter out system allowed the capitalist to have control over workers. Because of competition from rivals firms were forced to lower their production cost in order to be affective. Having control of workers allows managers to control owners of the firms control pace of workers. As noted by Landers in a competitive environment the firm need to minimize the cost of production. According to marglin the new management systems emerged because the owner of means of production wanted a large share of profits. [6] Marglin ideas takes us back to issues of class struggle noted by Karl Marx .Following Marx ideas of class struggle we may say that social factors played a role through exploitation of women, children , paupers and
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