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Firm - Risk Article: Difference between revisions
→Natural limits
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There are limits on these benefits: | There are limits on these benefits: | ||
*'''{{risk|Individual}} self-interest''': Cross-cutting interpersonal relationships, good and bad, between {{risk|individual}}s at the firm relative to respective positions in the firm’s hierarchy, between individuals at different firms etc. | *'''{{risk|Individual}} self-interest''': Cross-cutting interpersonal relationships, good and bad, between {{risk|individual}}s at the firm relative to respective positions in the firm’s hierarchy, between individuals at different firms etc. | ||
*'''{{risk|Scale}} and {{risk|complexity}} - a natural trade-off ''': The larger the firm the greater opportunity to wring economies from its scale, but there are inflection points. As soon as a {{risk|firm}} is justified in deploying resources solely to lever its {{risk|scale}}, greater {{risk|complexity}} is assured. | *'''{{risk|Scale}} and {{risk|complexity}} - a natural trade-off ''': There is a geometric relationship between number of components and their possible configuration. The larger the firm the greater opportunity to wring economies from its scale, but there are inflection points. As soon as a {{risk|firm}} is justified in deploying resources solely to lever its {{risk|scale}}, greater {{risk|complexity}} is assured. This is the {{risk|scale paradox}}: The more configurations the more scope for complexity. The more complexity the more confusion. The more confusion the more scope for fear. The larger a firm gets, the more complex it becomes. A sole trader is salesman, receptionist, janitor, legal and operations. At a point it becomes necessary and desirable to hire dedicated personnel to carry out these roles. Some of these roles are risk-taking, revenue-generating roles. The rest are operational in nature (legal, operations, risk) and they are costs. These roles are incentivised by means of cost reduction not revenue generation. | ||
===Other themes=== | ===Other themes=== | ||
*Firms as the vessel for the gene – an extended phenotype for the individual<br> | *Firms as the vessel for the gene – an extended phenotype for the individual<br> | ||
*Firms as individual responsibility expungers. <br> | *Firms as individual responsibility expungers. <br> | ||