Oligopoly, Intergroup Conflict, and the Growth of the Firm.

The business enterprise has always held a dominant position in economic theory, if for no other reason than that in a capitalist society the process of resource allocation is carried out primarily through private business firms. Accordingly there has developed a rather extensive and detailed body of thought, typically referred to as the theory of the firm, which purports to explain (at least in a theoretical sense) the behaviour of this important economic entity. The major conclusion to be drawn from the discussion of this paper is that the top managment of large‐scale, oligopolistic firms do not and cannot maximize pecuniary profits because of psychological constraints. These constraints can be discussed in terms of variables that are relevant for economic analysis ‐ e.g. growth, survival, and so one. Moreover, the conflict between firms and its resolution can be explained in psychological terms, as can the resolution of the dilemma between the growth and survival norms of the firm. Further, we may infer that there is increasing general concentration, as the large firms grow larger by expanding into different industries. Also, we may infer that there will be a relative stability in the members of the largest two hundred or so corporations. The resulting discussion, however, leads into areas of inquiry that the traditional theory of the firm has thus far avoided. Institute for Behavioural Research, York University. [ABSTRACT FROM AUTHOR]