Business as Usual? Ambitions of Profit Maximization and the Theory of the Firm

What constitutes the ultimate aim of managers of businesses remains a contestable question that has been debated by both economists and management scholars for several decades. We collected and analyzed survey data from 159 managers of UK based companies and explored the latter's overriding ambitions for their businesses. We combined our survey data with detailed financial information contained in the FAME (Financial Analysis Made Easy) database, which allowed us to verify and complement the reported survey results. Irrespective of possible constraints in the market in which they operate, we conclude that managers act "as if" they were the perfectly informed agents of neoclassical economic theory who aim for profit maximization as their overriding business objective, even though - in real life or ex post-their objectives may not necessarily move from this ambition into a reality.