Maximizing Profits as a Primary Objective Traditional (neoclassical) theory assumes that the primary objective of the firm is to maximize profits. This is the case if the company is controlled by its owner. This hypothesis is based on the fact that companies make production and price decisions. Furthermore, this company takes all necessary measures to make the greatest possible profit. Managerial theory assumes that companies do not necessarily act with the aim of maximizing profits. The basic principle underlying all of this is the separation of ownership and management, the complexity of the organization, and the fact that the manager of the business maximizes his own utility and growth rather than profits. The reason is that managers can be judged on the level of turnover. I will provide arguments for and against this hypothesis "that the primary motivation of the firm is to maximize profits" and draw a conclusion by analyzing the behavior of the firm as well as discussing business theories in more detail . The profit maximization hypothesis is based on two premises, first, that the owner controls the day-to-day management of the business and, second, the owners' main desire is to make a profit greater than the amount they have invested in the business. 'business. Since this hypothesis is based on two assumptions, if these two premises are not verified, it is understandable to believe that the company's objectives are not to maximize profits. Well, it will depend on the motivation of individual companies. If ownership and control of a business is in the hands of a single person or small groups of people, then it is reasonable to assume that the goal of the business owners is to maximize profits. But most of today's companies are owned by shareholders and other large cooperations, but the day-to-day control of the company is under the management. Therefore, the objectives of managers may differ from those of shareholders and conflicts may arise. “For example, Baumal (1959) suggests that the managerially controlled firm is likely to have as its primary objective the maximization of turnover, rather than the profit maximization favored by shareholders” (Applied Economics 7thed). .p54). Furthermore, studies of 177 companies between 1985 and 1990 by Conyon and Gregg (1994) showed that executive pay in large companies in the United Kingdom was primarily linked to sales growth. Other studies have shown that profit is the most important determinant of executive income. For example, "A survey conducted by ManagementToday in 1990, which concluded... in the middle of the article..., argued that, whatever the way in which companies may behave and the constraints of rationality to which they may be submitted, the surviving companies are those which have reached the highest level of rationality. high profits. Because of the strength of these arguments, we tend to accept that profit maximization theories are justifiable. Bibliography Alchian, A (1950), “Uncertainty. Evolution and economic theory”, Journal Of Political Economy. 58(3), 211-221. Buzzel, R and Gale, B. (1987). The PIMPS principles, Strategic Planning Institute. Conyon, M & Gregg, P. (1994). Pay at the top: a study of the sensitivity of top Director compensation to company Specific Shocks, National Institute Economic Review, August. Friedman, Milton (1953), Essay in Positive Economics, Chicago: Chicago University Press. Griffith, Alan & Wall, 2005.