Microeconomics for MBAs 24. The Economic Way of Thinking for Managers. Microeconomics for MBAs develops the economic way of thinking through problems that MBA students will find relevant to their career goals. Maths is kept simple and the theory is illustrated with real-life scenarios | Chapter 6. Reasons for Firm Incentives 49 the cost will be borne by the employers. Nothing is free in business especially education. No matter what the form someone will pay the piper. Concluding Comments Our message in this chapter and repeated elsewhere in this textbook repeated and reinforced with analysis and anecdotes is simple Incentives are important. They are worthy of serious reflection. But that doesn t mean to suggest that incentives are all that matter. Surely many things matter. As noted earlier leadership product design and customer service as well as company adaptability culture and goals also matter. However we suspect that all of those good things in business might not matter very much or for long if the incentives are not right. In their effort to get incentives right it is altogether understandable why some firms will cover the cost of the MBA degree program for some of their workers and not others . In general firms can be expected to cover the cost of an MBA when they the firms can expect to capture the benefits. On the other hand the workers themselves can be expected to pay for their own degree expenses when they the workers expect to capture the benefits. We hope our discussion of the importance of incentives in understanding the organization and performance of firms serves as an incentive to spend more time thinking and reading about incentives a subject to which we will return later in the book and course. Review Questions 1. Why are some firms large and other firms small Use the concepts of coordinating costs in your answer 2. Suppose firms get smaller. Why might that happen 3. If worker-monitoring costs go down what will happen to the size of the firm 4. What have been the various effects of the computer telecommunication revolution on the sizes of firms 5. Why would a firm hire its own accountants to keep the books but at the same time use outside lawyers to do its legal work 6. If your firm fears being held up by an outside supplier of
