Definition
Within neoclassical economic theory, profit maximization is a necessary behavioral assumption that dictates how firms make output and pricing decisions. The profit-maximizing behavior of firms is believed to drive economic efficiency, which stands for the efficient allocation of resources in the face of relative scarcity. The realization of economic, or allocative, efficiency is assumed to maximize the utility or welfare of both individuals and society. The dual realization of maximum private and social benefit is the foundation of utilitarian thought, which strives for the greatest good for the greatest number of people. The utilitarian logic is embedded culturally and legally in the Anglo-American context, where profit maximization represents the raison d’être of the American corporation and the accepted primary goal in US business activity.
Introduction
Profit...
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
References and Readings
Bakan, J. (2004). The corporation: The pathological pursuit of profit and power. London: Constable & Robinson.
Banerjee, B. S. (2007). Corporate social responsibility: The good, the bad and the ugly. Cheltenham: Edward Elgar.
French, P. A. (1995). Corporate ethics. Fort Worth: Harcourt Brace.
Friedman, M. (1962). Capitalism and freedom. Chicago: University of Chicago Press.
Korten, D. (1995). When corporations rule the world. San Francisco: Barrett-Koehler.
Nozick, R. (1974). Anarchy, state, and Utopia. New York: Basic Books.
Rawls, J. (1971). A theory of justice. Cambridge: Harvard University Press.
Reich, R. (2008). Supercapitalism. The transformation of business, democracy and everyday life. Melbourne: Scribe.
Sen, A. (2009). The idea of justice. Cambridge: The Belknap Press of Harvard University Press.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2013 Springer-Verlag Berlin Heidelberg
About this entry
Cite this entry
Brueckner, M. (2013). Profit Maximization. In: Idowu, S.O., Capaldi, N., Zu, L., Gupta, A.D. (eds) Encyclopedia of Corporate Social Responsibility. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-28036-8_129
Download citation
DOI: https://doi.org/10.1007/978-3-642-28036-8_129
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-28035-1
Online ISBN: 978-3-642-28036-8
eBook Packages: Business and Economics