The traditional theory of firm states that the same principles underlie each decision taken within a firm and that the decision is influenced by who takes it, thus the theory abstracts from the peculiarities of the persons taking the decisions and from the organizational structure in which they were.
Therefore according to the traditional theory of firm whenever a firm manager or board of directors of the firm, then as far as the theory takes decisions is concerned that person is the firm for the purposes of that decision. According to devine1985 he reinstated the traditional theory of firm, he viewed participatory economy system as a process in which the value and interest of people in a process of decision making through negotiation and cooperation.
Extra-firm firm is concerned with the implication of generalized participation outside the firm for the process and criteria that determine which of the entrepreneurial or innovation output of firms are successful.
Baumol's sales revenue maximizing model. Williasm Baumol developed the sales maximizing model he argues that firms attempts to maximize the revenue obtained from sales with or without a profit constraint. This is motivated by managers in a firm belief that their salaries are related to the size of the firm.
This approach was developed by cyert and March in 1963. ...