Management, Marketing, Innovation and Internationalisation
Edited by John R. Bryson and Peter W. Daniels
Chapter 17: Business and professional service firms and the management and control of talent and reputations: retaining expert employees and client relationship management
Economies are founded upon the simple premise that a given quantity of raw material is required to produce a product and that the cost of the product will be greater than the combined cost of all raw materials (Bryson, 2008b). This is the basis of the capitalist economic system in which production systems are expected to generate profit or surplus value. Profit is invested in innovation and in improvements to existing production processes and some profit is distributed to the owners of the production process or to investors or shareholders. The distribution of profits compensates the owners or investors for the risks associated with investment. This simple mechanism of profit generation, investment and redistribution to owners or investors differentiates the current economic system from other ways of organizing the production of goods and services. Profit is essential for the continued functioning of production and importantly for providing investment to enable innovation to occur.
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