1. What are some theories offered to explain aspects of your field of business? 2. Reflect on your own social network. How are the nodes in your social network linked? What social capital do you gain from your social network? 3. How do propositions and hypotheses differ?
1. What are some theories offered to explain aspects of your field of business?
2. Reflect on your own social network. How are the nodes in your social network linked? What social capital do you gain from your social network?
3. How do propositions and hypotheses differ?
Some important theories in the field of business include:
1. Agency Theory:
Agency theory is a principle that is used to explain and resolve issues in the relationship between business principals and their agents. Most commonly, that relationship is the one between shareholders, as principals, and company executives, as agents.
2. Resource-Based View (RBV):
The Resource-Based View (RBV) is a group of theories proposing that companies are able to establish competitive advantage through internal resources of the firm that are valuable, rare, not imitable, and organized for value capture. Achieving a sustainable competitive advantage lies at the heart of much of the literature in strategic management and strategic marketing. The resource-based view offers strategists a means of evaluating potential factors that can be deployed to confer a competitive edge. A key insight arising from the resource-based view is that not all resources are of equal importance, nor do they possess the potential to become a source of sustainable competitive advantage.
3. Transaction Cost Economics:
Transaction cost economics is understood as alternative modes of organizing transactions (governance structures – such as markets, hybrids, firms, and bureaus) that minimize transaction costs. According to the theory of transaction costs, the ideal organizational structure is one that maximizes economic efficiency while minimizes exchange costs. According to this theory, there are coordination costs associated with tracking, coordinating, and administering transactions for each type of transaction.
4. Institutional Theory:
The establishment of frameworks such as plans, rules, norms, and routines as authoritative standards for social behavior is taken into account by institutional theory.
An approach to comprehending organizations and management practices as the result of social rather than economic constraints is the application of institutional theory to corporate organizations.
Many organizational practices are adopted and maintained more frequently as a result of social constraints for conformity and legitimacy than as a result of technical pressures for economic success.
5. Porter's Five Forces:
The five forces identified by Porter that influence corporate strategy are competition in the industry, Potential of new entrants into the industry, Power of suppliers, Power of customers, and threat of substitute products. Its ultimate purpose is to explain how profits may be sustained in the face of negotiation and direct and indirect competition.
Evaluating the five forces can assist businesses in anticipating competition adjustments, influencing the evolution of industry structure, and identifying more advantageous strategic positions.
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