The Frank Knight intuited a link between uncertainty and profit. Unfortunately none of today's handful of theories of the firm grasps Knightian uncertainty well enough to say much about how managers might pursue profit rather than equilibrium. Melding Knight's work with Coase's questions and intuitions about the nature of the firm shows that coupling managerial judgment to uncertainty builds a bridge towards the TMF, a theory of the firm in which managerial judgment is crucial to both the creation of the firm and to its ongoing management. Entrepreneurship, strategizing, and leadership of others' judgment are drawn together into a profit seeking practice. Since it is not framed in a positivist epistemology the TMF is not a theory in the positivist sense. Rather it guides the practice of those whose judgments help resolve the entrepreneur's chosen uncertainties - and thereby create the possibility of profi.

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Spender, John-Christopher

Management's role in the theory of the managed firm (TMF)

03/2014
The Frank Knight intuited a link between uncertainty and profit. Unfortunately none of today's handful of theories of the firm grasps Knightian uncertainty well enough to say much about how managers might pursue profit rather than equilibrium. Melding Knight's work with Coase's questions and intuitions about the nature of the firm shows that coupling managerial judgment to uncertainty builds a bridge towards the TMF, a theory of the firm in which managerial judgment is crucial to both the creation of the firm and to its ongoing management. Entrepreneurship, strategizing, and leadership of others' judgment are drawn together into a profit seeking practice. Since it is not framed in a positivist epistemology the TMF is not a theory in the positivist sense. Rather it guides the practice of those whose judgments help resolve the entrepreneur's chosen uncertainties - and thereby create the possibility of profi.
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Management's role in the theory of the managed firm (TMF)
Spender, John-Christopher
Kindai Management Review
Vol. 2, n 1, 03/2014, p. 12 - 13

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