FEASIBILITY ANALYSIS OF THE COMPREHENSIVE PROFIT TARGET

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World Review of Political Economy

Volume 1, Issue 4

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FEASIBILITY ANALYSIS OF THE COMPREHENSIVE PROFIT TARGET

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Author(s): Xiaoliang Zhou , Xianliu Da

Publication date (Print): 1 December 2010

Journal: World Review of Political Economy

Publisher: Pluto Journals

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Abstract

The theoretical and practical dilemma of profit maximization offers an opportunity for enterprises to achieve the target of laudable and harmonious development while pursuing comprehensive profit. The realization of the comprehensive profit target is based on the expansion of assumptions of self-regarding and stable preference in the mainstream analysis paradigm and the integration of these preferences. Thus, the integrated individual preferences are the unity of self-regarding and other-regarding preferences, which are scenario-dependent, endogenous, evolutionary, and rooted in social systems. Analysis of the dynamic evolution of the integration of individual preferences shows that the comprehensive profit target is the necessary claim of the enterprise to maximize its profit, and it is an endogenous variable in the operation of enterprise. This proves that it has far-reaching significances in economic theory and policy analysis of the harmonious development of enterprises in the context of financial crisis.

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Author and article information

Journal

Journal ID (jstor): worlrevipoliecon

Journal ID (doi): 10.2307/j50005553

Title: World Review of Political Economy

Publisher: Pluto Journals

ISSN (Print): 2042891X

Publication date (Print): 1 December 2010

Volume: 1

Issue: 4

Pages: 652-674

Article

DOI: 10.2307/41931895

SO-VID: 9e245be9-a9bc-4f94-975f-b18c04f9a811

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All content is freely available without charge to users or their institutions. Users are allowed to read, download, copy, distribute, print, search, or link to the full texts of the articles in this journal without asking prior permission of the publisher or the author. Articles published in the journal are distributed under a http://creativecommons.org/licenses/by/4.0/.

History

ScienceOpen disciplines: Political economics

References

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--- (1953) "Biological Analogies in the Theory of the Firm: Comment," The American Economic Review 43, 4.
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Becker, G. S. (1962) "Irrational Behavior and Economic Theory," Journal of Political Economy 70, 1.
Bernhard, H., E. Fehr, and U. Fischbacher (2006) "Group Affiliation and Altruistic Norm Enforcement," The American Economic Review 96, 2.
Bolton, G., and A. Ockenfels (2000) "ERC—A Theory of Equity, Reciprocity and Competition," The American Economic Review 90, 1.
Bowles, S. (1998) "Endogenous Preference: The Cultural Consequences of Markets and Other Economic Institutions," Journal of Economic Literature 36, 1.
--- (2006) Microeconomics: Behavior, Institutions and Evolution. Beijing: China Renmin University Press.
Bowles, S., and H. Gintis (2004) "The Evolution of Strong Reciprocity: Cooperation in Heterogeneous Populations," The American Economic Review 65, 1.
Bowles, S., J. Choi, and A. Hopfensitz (2003) 'The Co-evolution of Individual Behaviors and Social Institutions," Journal of Theoretical Biology 223, 2.
Camerer, C., and E. Fehr (2001) "Measuring Social Norms and Preferences Using Experimental Games: A Guide for Social Scientists," Working Paper Series, ISSN 1424-0459, No. 97.
Cameron, L. (1998) "Raising the Stakes in the Ultimatum Game: Experimental Evidence from Indonesia," Economic Inquiry 37, 1.
Charness, G., and M. Rabin (2002) "Understanding Social Preferences with Simple Tests," Quarterly Journal of Economics 117, 3.
Dufwenberg, M., and G. Kirchsteiger (2004) "A Theory of Sequential Reciprocity," Games and Economic Behavior 47, 2.
Falk, A., and U. Fischbacher (2006) "A Theory of Reciprocity," Games and Economic Behavior 54, 2.
Fehr, E., and K. Schmidt (1999) "A Theory of Fairness, Competition, and Cooperation," Quarterly Journal of Economics 114, 3.
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Harsanyi, J. (1997) "Utilities, Preferences, and Substantive Goods," Soc. Choice Welfare 14, 1.
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--- (1947) "Rejoinder to an Antimarginalist," The American Economic Review 37, 4.
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Ng, Y. K. (1996) "Happiness Surveys: Some Comparability Issues and an Exploratory Survey Based on Just Perceivable Increments," Social Indicators Research 38, 1.
--- (2005a) Social Welfare and Economic Policy (Bei Jing: Peking University Press).
--- (2005b) "Fundamental Problems of Social Choice and the Paradox of Inter-Personally Comparable Cardinal Utility," Journal of Peking University (Humanities and Social Sciences) 42, 5.
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Samuelson, P. A. (1993) "Altruism as a Problem Involving Group versus Individual Selection in Economics and Biology," The American Economic Review 83, 2.
Sanchez, A., and J. A. Cuesta (2005) "Altruism May Arise from Individual Selection," Journal of Theoretical Biology 235, 2.
Sen, A. (1995) Moral Codes and Economic Success. Aldershot: Edward Elgar Press.
Simon, H. A. (1957) Models of Man: Social and Rational. New York: Wiley.
Stuphorn, V. (2006) "Neuroeconomics: Cardinal Utility in the Orbitofrontal Cortex?" Current Biology 16, 15.
Survey System of China's Enterprisers (2007) "Enterprisers' Recognition of Enterprises' Social Respon- sibilities and the Evaluation Thereof -Our Report on the Investigation of the Special Subject of the Growth of China's Enterprise Managers in 2007," Management World 6.
Taylor, P., L. and Jonker (1978) "Evolutionary Stable Strategies and Game Dynamics," Mathematical Biosciences 40, 1/2.
Turban D., and D. Greening (1996) "Corporate Social Performance and Organizational Attractiveness to Prospective Employees," Academy of Management Journal 40, 3.
Vromen, J. J. (1995) Economic Evolution: An Enquiry into the Foundations of New Institutional Economics. London: Routledge.
Ye, H. (2003) "The Logic Defects of Utility Paradigm in Western Economics," Economist, 1.
Ye, H., D. D. Wang, and Y. M. Jia (2007) "Science and Positivism—A Review on Neuroeconomics," Economic Research Journal 1.
Ye, H., D. D. Wang, and W. D. Luo (2005) "On Endogenetic Preference for Altruism Behaviors and Its Implications to Economics," Economic Research Journal 8.
Zhou, X. L., and X. L. Da (2009a) "Utility, Preference and System—The Reflection and Discussion on the Preferences Stability Assumption of the Theory of Consumer's Choice," Academic Monthly 41,1.
--- (2009b) "The Theoretical and Practical Dilemma of Profit Maximization: The Practical and Theoretical Hypothesis of the Target of Harmonious Development in Enterprises," Research of Institutional Economics 24, 2.
--- (2009c) "The Dispute, Expansion and Integration of Preference: A Theoretical Hypothesis and Preliminary Discussion," Economic Review 6.
Zucker L. G. (1986) "Production of Trust: Institutional Sources of Economic Structure 1840-1920," Research in Organizational Behavior 8.

Comments

Comment on this article

[1] Alcian, A. A. (1950) "Uncertainty, Evolution, and Economic Theory," Journal of Political Economy 58, 3.

[2] --- (1953) "Biological Analogies in the Theory of the Firm: Comment," The American Economic Review 43, 4.

[3] Arrow, K. J. (1982) "Risk Perception in Psychology and Economics," Economic Inquiry 20.

[4] Becker, G. S. (1962) "Irrational Behavior and Economic Theory," Journal of Political Economy 70, 1.

[5] Bernhard, H., E. Fehr, and U. Fischbacher (2006) "Group Affiliation and Altruistic Norm Enforcement," The American Economic Review 96, 2.

[6] Bolton, G., and A. Ockenfels (2000) "ERC—A Theory of Equity, Reciprocity and Competition," The American Economic Review 90, 1.

[7] Bowles, S. (1998) "Endogenous Preference: The Cultural Consequences of Markets and Other Economic Institutions," Journal of Economic Literature 36, 1.

[8] --- (2006) Microeconomics: Behavior, Institutions and Evolution. Beijing: China Renmin University Press.

[9] Bowles, S., and H. Gintis (2004) "The Evolution of Strong Reciprocity: Cooperation in Heterogeneous Populations," The American Economic Review 65, 1.

[10] Bowles, S., J. Choi, and A. Hopfensitz (2003) 'The Co-evolution of Individual Behaviors and Social Institutions," Journal of Theoretical Biology 223, 2.

[11] Camerer, C., and E. Fehr (2001) "Measuring Social Norms and Preferences Using Experimental Games: A Guide for Social Scientists," Working Paper Series, ISSN 1424-0459, No. 97.

[12] Cameron, L. (1998) "Raising the Stakes in the Ultimatum Game: Experimental Evidence from Indonesia," Economic Inquiry 37, 1.

[13] Charness, G., and M. Rabin (2002) "Understanding Social Preferences with Simple Tests," Quarterly Journal of Economics 117, 3.

[14] Dufwenberg, M., and G. Kirchsteiger (2004) "A Theory of Sequential Reciprocity," Games and Economic Behavior 47, 2.

[15] Falk, A., and U. Fischbacher (2006) "A Theory of Reciprocity," Games and Economic Behavior 54, 2.

[16] Fehr, E., and K. Schmidt (1999) "A Theory of Fairness, Competition, and Cooperation," Quarterly Journal of Economics 114, 3.

[17] Friedman, M. (1953) "The Methodology of Positive Economics," in Essays in Positive Economics. Chicago: University of Chicago Press.

[18] Fombrun, C., and M. Shanley (1990) "What's in a Name? Reputation Building and Corporate Strategy," Academy of Management Journal 33, 2.

[19] Friedman, M. (2007) Price Theory. New Brunswick, NJ: Aldine Transaction Publishers.

[20] Gintis, H., S. Bowles, R. Boyd, and E. Fehr (2003) "Explaining Altruistic Behavior in Humans," Evolution and Human Behavior 24, 3.

[21] Glaeser, E., D. Laibson, J. Scheinkman, and C. Soutter (1999) "What is Social Capital: The Determinants of Trust and Trustworthiness," NBER Working Paper No. 7216.

[22] Gordon, R. A. (1948) "Short-Period Price Determination in Theory and Practice," The American Economic Review 38, 3.

[23] Hall, R. L., and C. J. Hitch (1939) "Price Theory and Business Behavior," Oxford Economic Papers 2, in T. Wilson and P. W. S. Andrews, eds., (1951), Oxford Studies in the Price Mechanism. Oxford: Clarendon Press.

[24] Harrod, R. F. (1939) "Price and Cost in Entrepreneurs' Policy," Oxford Economic Papers 2, in T. Wilson and P. W. S. Andrews, eds., (1951), Oxford Studies in the Price Mechanism. Oxford: Clarendon Press.

[25] Harsanyi, J. (1997) "Utilities, Preferences, and Substantive Goods," Soc. Choice Welfare 14, 1.

[26] Henrich, J., R. Boyd, and S. Bowles (2001) "In Search of Homo Economicus: Behavioral Experiments in 15 Small-Scale Societies," The American Economic Review 91, 2.

[27] Hirshleifer, J. (1977) "Shakespeare vs. Becker on Altruism: The Importance of Having the Last Words," Journal of Economic Literature 15, 2.

[28] Hoffman, E., K. McCabe, and V. Smith (1996) "On Expectations and Monetary Stakes in Ultimatum Games," International Journal of Game Theory 25, 3.

[29] Holland, J. H. (1995) Hidden Order: How Adaptation Builds Complexity. Cambridge, MA: Perseus.

[30] Hodgson, G. M. (2007) Evolution and Institutions—On Evolutionary Economics and the Evolution of Economics. Beijing: China Renmin University Press.

[31] Huang, K. N., and Z. Y. Cheng (2008) "Cognitive Rationality and the Development of Methodological Individualism," Economic Research Journal, 7.

[32] Jin, L. Y. (2006) "An Empirical Study on Corporate Social Responsibility Evaluating Scale System— Consumers' Viewpoint," China Industrial Economy, 6.

[33] Kohler, S. (2003) "Difference Aversion and Surplus Concern—An Integrated Approach." Florence: mimeo, European University Institute.

[34] Lester, R. A. (1946) "Shortcomings of Marginal Analysis for Wage-Employment Problem," The American Economic Review 36, 1.

[35] Li, L. Q. (2006) "Appraisal for Firm's Society Responsibility: Case Study," South China Journal of Economics 1.

[36] Lindbeck, A., and J. Weibull (1988) "Strategic Interaction with Altruism: The Economics of Fait Accompli," Journal of Political Economy 96, 6.

[37] Machlup, F. (1946) "Marginal Analysis and Empirical Research," The American Economic Review 36, 4.

[38] --- (1947) "Rejoinder to an Antimarginalist," The American Economic Review 37, 4.

[39] Marshall, A. (1961) Principles of Economics, 8th ed. New York: Macmillan Co.

[40] Mas-Colell, A., M. D. Whinston, and J. R. Green (2005) Microeconomic Theory. Shanghai: Shanghai University of Finance and Economics Press.

[41] Nakayama, M. (1980) "Nash Equilibria and Pareto Optimal Income Redistribution," Econometrica 48, 5.

[42] Ng, Y. K. (1996) "Happiness Surveys: Some Comparability Issues and an Exploratory Survey Based on Just Perceivable Increments," Social Indicators Research 38, 1.

[43] --- (2005a) Social Welfare and Economic Policy (Bei Jing: Peking University Press).

[44] --- (2005b) "Fundamental Problems of Social Choice and the Paradox of Inter-Personally Comparable Cardinal Utility," Journal of Peking University (Humanities and Social Sciences) 42, 5.

[45] Padoa-Schioppa, C., and J. A. Assad (2006) "Neurons in the Orbitofrontal Cortex Encode Economic Value," Nature 441.

[46] Quervain, D., U. Fischbacher, V. Treyer, M. Schellhammer, U. Schnyder, A. Buck, and E. Fehr (2004) "The Neural Basis of Altruistic Punishment," Science 305, 5688.

[47] Rabin, M. (1993) "Incorporating Fairness into Game Theory and Economics," The American Economic Review 83, 5.

[48] Samuelson, P. A. (1993) "Altruism as a Problem Involving Group versus Individual Selection in Economics and Biology," The American Economic Review 83, 2.

[49] Sanchez, A., and J. A. Cuesta (2005) "Altruism May Arise from Individual Selection," Journal of Theoretical Biology 235, 2.

[50] Sen, A. (1995) Moral Codes and Economic Success. Aldershot: Edward Elgar Press.

[51] Simon, H. A. (1957) Models of Man: Social and Rational. New York: Wiley.

[52] Stuphorn, V. (2006) "Neuroeconomics: Cardinal Utility in the Orbitofrontal Cortex?" Current Biology 16, 15.

[53] Survey System of China's Enterprisers (2007) "Enterprisers' Recognition of Enterprises' Social Respon- sibilities and the Evaluation Thereof -Our Report on the Investigation of the Special Subject of the Growth of China's Enterprise Managers in 2007," Management World 6.

[54] Taylor, P., L. and Jonker (1978) "Evolutionary Stable Strategies and Game Dynamics," Mathematical Biosciences 40, 1/2.

[55] Turban D., and D. Greening (1996) "Corporate Social Performance and Organizational Attractiveness to Prospective Employees," Academy of Management Journal 40, 3.

[56] Vromen, J. J. (1995) Economic Evolution: An Enquiry into the Foundations of New Institutional Economics. London: Routledge.

[57] Ye, H. (2003) "The Logic Defects of Utility Paradigm in Western Economics," Economist, 1.

[58] Ye, H., D. D. Wang, and Y. M. Jia (2007) "Science and Positivism—A Review on Neuroeconomics," Economic Research Journal 1.

[59] Ye, H., D. D. Wang, and W. D. Luo (2005) "On Endogenetic Preference for Altruism Behaviors and Its Implications to Economics," Economic Research Journal 8.

[60] Zhou, X. L., and X. L. Da (2009a) "Utility, Preference and System—The Reflection and Discussion on the Preferences Stability Assumption of the Theory of Consumer's Choice," Academic Monthly 41,1.

[61] --- (2009b) "The Theoretical and Practical Dilemma of Profit Maximization: The Practical and Theoretical Hypothesis of the Target of Harmonious Development in Enterprises," Research of Institutional Economics 24, 2.

[62] --- (2009c) "The Dispute, Expansion and Integration of Preference: A Theoretical Hypothesis and Preliminary Discussion," Economic Review 6.

[63] Zucker L. G. (1986) "Production of Trust: Institutional Sources of Economic Structure 1840-1920," Research in Organizational Behavior 8.

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