What do firms maximise? The contribution of business history to a controversial topic

With 'shareholder value', the old and controversial theoretical debate about what firms in a market economy maximise has become the subject of public debate. If we could assume perfect competition, such a debate would make no sense at all: if firms failed to maximise profits they would simply disappear. But in effect, firms have some room for manoeuvre, decision-makers are embedded in a social context and their decisions are influenced by social norms. In such a world, the question of what the firm does or should maximise is important. The main objective of this paper is to show that the case study approach to business history can contribute considerably to this important topic if grounded on an appropriate theoretical framework. The case studies highlight ways in which in modern capitalism the firm maximises 'management's value' and that we must look beyond market forces to understand what the top management maximises.