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Showing posts with the label operational expenditure

Decision Making as Output and Bounded Rationality

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  The classical economics theories proceed on the assumption of rational agents. Rationality implies the economic agents undertake actions or exercise choices based on the cost-benefit analysis they undertake. The assumption further posits that there exists no information asymmetry and thus the agent is aware of all the costs and benefits associated with the choice he or she has exercised. The behavioral school contested the decision stating the decisions in practice are often irrational. Implied there is a continuous departure from rationality. Rationality in the views of the behavioral school is more an exception to the norm rather a rule. The past posts have discussed the limitations of this view by the behavioral school. Economics has often posited rationality in the context in which the choices are exercised rather than theoretical abstract view of rational action. Rational action in theory seems to be grounded in zero restraint situation yet in practice, there are numerous restra
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The Hand of Finance in the Digital Business Models

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  The business landscape keeps changing. The only constant perhaps in business would be change. Therefore, there would be a pressing need to re-haul the business models to accommodate the changing environment. As the brick and mortar economy gives way to the digital economy, the firms have to constantly innovate. The firms are configured for a certain topography and when faced with an unfamiliar configuration of assets and resources, they struggle. This perhaps could be a critical point in understanding why very few firms survive for more than half a century. There would be hardly a handful of firms which might record double digit year on year growth over let us say five consecutive years.   The landscape that has been predominating over the last couple of decades is something interesting. There is an increase in research and development costs. It is a different story that the returns continue to sub-par with respect to the expenditure on research and development. Yet in the absenc
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