Business economics is a field in
applied economics
Applied economics is the study as regards the application of economic theory and econometrics in specific settings. As one of the two sets of fields of economics (the other set being the ''core''), it is typically characterized by the application ...
which uses
economic theory
Economics () is the social science that studies the production, distribution, and consumption of goods and services.
Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyzes ...
and quantitative methods to analyze
business enterprises and the factors contributing to the diversity of organizational structures and the relationships of firms with labour,
capital
Capital may refer to:
Common uses
* Capital city, a municipality of primary status
** List of national capital cities
* Capital letter, an upper-case letter Economics and social sciences
* Capital (economics), the durable produced goods used f ...
and product markets.
[Moschandreas, Maria (2000). ''Business Economics'', 2nd Edition, Thompson Learning,]
Description
and chapter-previe
links
A professional focus of the journal ''
Business Economics
Business economics is a field in applied economics which uses economic theory and quantitative methods to analyze business enterprises and the factors contributing to the diversity of organizational structures and the relationships of firms with ...
'' has been expressed as providing "practical information for people who apply economics in their jobs."
Business economics is an integral part of traditional economics and is an extension of economic concepts to the real business situations. It is an applied science in the sense of a tool of managerial decision-making and forward planning by management. In other words, business economics is concerned with the application of economic theory to business management. Business economics is based on microeconomics in two categories: positive and negative.
Business economics focuses on the economic issues and problems related to business organization, management, and strategy. Issues and problems include: an explanation of why ''corporate'' firms emerge and exist; why they expand: horizontally, vertically and spacially; the role of entrepreneurs and entrepreneurship; the significance of organizational structure; the relationship of firms with employees, providers of capital, customers, and government; and interactions between firms and the business environment.
Ambiguity in the use of term
The term 'business economics' is used in a variety of ways. Sometimes it is used as synonymously with industrial economics/
industrial organisation
In economics, industrial organization is a field that builds on the theory of the firm by examining the structure of (and, therefore, the boundaries between) firms and markets. Industrial organization adds real-world complications to the perfe ...
,
managerial economics
Managerial economics is a branch of economics involving the application of economic methods in the managerial decision-making process.• Trefor Jones (2004). ''Business Economics and Managerial Decision Making'', WileyDescriptionand chapter-pre ...
, and economics for business. Still, there may be substantial differences in the usage of 'economics for business' and 'managerial economics' with the latter used more narrowly.
One view of the distinctions between these would be that business economics is wider in its scope than industrial economics in that it would be concerned not only with "industry" but also businesses in the service sector. Economics for business looks at the major principles of economics but focuses on applying these economic principles to the real world of business. Managerial economics is the application of economic methods in the managerial decision-making process.
Business economics is actually the part of economics which can be simply regarded as the combination of economic theories and the relevant theories related to
business management
Business administration, also known as business management, is the administration of a commercial enterprise. It includes all aspects of overseeing and supervising the business operations of an organization. From the point of view of management ...
. Business economics is the study to focus on how economic theories will be affected the performance of business or business activities in practice. There are many practical case studies that have used the economic theories into the corporate development. For example, the product life cycle theory has discussed the entire product life cycle based on the economic perspective, which can be categorized by introduction, growth, maturity and decline.
Apple Inc.
Apple Inc. is an American multinational technology company headquartered in Cupertino, California, United States. Apple is the largest technology company by revenue (totaling in 2021) and, as of June 2022, is the world's biggest company b ...
is a multinational technological company that focuses on the electronic products’ designs and development as well as software development.
IPhone is the company’s one of the competitive advantages that generate massive profit for the company. However, since smartphone product has moved to stages between maturity and decline,
Apple Inc.
Apple Inc. is an American multinational technology company headquartered in Cupertino, California, United States. Apple is the largest technology company by revenue (totaling in 2021) and, as of June 2022, is the world's biggest company b ...
has also considered the new product research development such as electric vehicles as the competitive environment in smartphone market becomes fierce and profit margin has declined. The example has well explained the scenario where economic theories do help to support the decision-making in the practical business organisation.
However, Andrei alludes to the fact that although economic theories could provide the theoretical perception to explain the business context, it could be still hard for managers to make an accurate business decision in the organisational management as the economic theories are built on some certain assumptions in the modelling environment, but in the practical business environment is much complex and hard to predict. The economic theory consideration does not mean the business decision will be always accurate. Hence, in the practical business environment, managers should not only consider the application of economic theories but also concern internal and external factors in the organisations before the decision making.
Interpretations from various universities
Many universities offer courses in business economics and offer a range of interpretations as to the meaning of the word. The Bachelor of Business Economics (BBE) Program at
University of Delhi
Delhi University (DU), formally the University of Delhi, is a collegiate central university located in New Delhi, India. It was founded in 1922 by an Act of the Central Legislative Assembly and is recognized as an Institute of Eminence (IoE) ...
is designed to meet the growing need for an analytical and quantitative approach to problem solving in the changing corporate world by the application of the latest techniques evolved in the fields of economics and business. The
Autonomous University of Barcelona
The Autonomous University of Barcelona ( ca, Universitat Autònoma de Barcelona; , es, Universidad Autónoma de Barcelona; UAB), is a public university mostly located in Cerdanyola del Vallès, near the city of Barcelona in Catalonia, Spain.
...
(UAB), the
Universidad Pública de Navarra
The Public University of Navarre ( eu, Nafarroako Unibertsitate Publikoa; es, Universidad Pública de Navarra) is a public university created in 1987 by the government of the Spanish autonomous region of Navarre ( es, Navarra, Basque: ''Nafarro ...
(UPNa) and the
University of the Balearic Islands
The University of the Balearic Islands ( ca, Universitat de les Illes Balears, UIB; es, Universidad de las Islas Baleares ) is a Balearic Spanish university, founded in 1978 and located in Palma on the island of Majorca. The university is funde ...
(UIB) developed an official Master of Science in Management, Organization and Business Economics focused on management and business topics to train professionals in the study of organizations, on a conceptual and quantitative basis. To achieve this, advanced analysis tools are used from the fields of
Neoclassical economics
Neoclassical economics is an approach to economics in which the production, consumption and valuation (pricing) of goods and services are observed as driven by the supply and demand model. According to this line of thought, the value of a good ...
,
New institutional economics
New Institutional Economics (NIE) is an economic perspective that attempts to extend economics by focusing on the institutions (that is to say the sociology, social and legal Norm (sociology), norms and rules) that underlie economic activity and ...
,
Statistics
Statistics (from German language, German: ''wikt:Statistik#German, Statistik'', "description of a State (polity), state, a country") is the discipline that concerns the collection, organization, analysis, interpretation, and presentation of ...
,
Econometrics
Econometrics is the application of Statistics, statistical methods to economic data in order to give Empirical evidence, empirical content to economic relationships.M. Hashem Pesaran (1987). "Econometrics," ''The New Palgrave: A Dictionary of ...
and
Operations research
Operations research ( en-GB, operational research) (U.S. Air Force Specialty Code: Operations Analysis), often shortened to the initialism OR, is a discipline that deals with the development and application of analytical methods to improve deci ...
. This focus is complemented with contributing ideas and theories to develop the necessary instruments to facilitate the management of sophisticated and complex organizations.
The program at
Harvard University
Harvard University is a private Ivy League research university in Cambridge, Massachusetts. Founded in 1636 as Harvard College and named for its first benefactor, the Puritan clergyman John Harvard, it is the oldest institution of higher le ...
uses economic methods to analyze practical aspects of business, including
business administration
Business administration, also known as business management, is the administration of a commercial enterprise. It includes all aspects of overseeing and supervising the business operations of an organization. From the point of view of management ...
, management, and related fields of business economics. The
Universidad del Desarrollo
Universidad del Desarrollo (Spanish for "University for development") is a Chilean private university, one of the most expensive universities in the region. Its main campus is in Santiago de Chile, with a secondary campus in Concepción.
Histor ...
, in Chile follows on Harvard University definition, adding entrepreurnship as a field of business. The
University of Miami
The University of Miami (UM, UMiami, Miami, U of M, and The U) is a private research university in Coral Gables, Florida. , the university enrolled 19,096 students in 12 colleges and schools across nearly 350 academic majors and programs, incl ...
defines business economics as involving the study of how we use our resources for the production, distribution, and consumption of goods and services. This requires business economists to analyze social institutions, banks, the stock market, the government and their relationships with labor negotiations, taxes, international trade, and urban and environmental issues.
Courses at the
University of Manchester
, mottoeng = Knowledge, Wisdom, Humanity
, established = 2004 – University of Manchester Predecessor institutions: 1956 – UMIST (as university college; university 1994) 1904 – Victoria University of Manchester 1880 – Victoria Univer ...
interpret business economics to be concerned with the economic analysis of how businesses contribute to welfare of society rather than on the welfare of an individual or a business. This is done via an examination of the relationship between ownership, control and firm objectives; theories of the growth of the firm; the behavioural
theory of the firm
The theory of the firm consists of a number of economic theories that explain and predict the nature of the firm, company, or corporation, including its existence, behaviour, structure, and relationship to the market. Firms are key drivers in econ ...
; theories of entrepreneurship; the factors that influence the
structure, conduct and performance of business at the industry level.
Italian universities borrow their concept of business economics from the tradition of
Gino Zappa
Gino Zappa (Milan, 1879 - Venice, 1960) was an Italian economist.
Biography
He was a professor at Bocconi University in Milan and University Ca'Foscari of Venice, where he was also Rector. Zappa dedicated his life to the study of business economi ...
, for example a standard course
at the
Politecnico di Milano
The Polytechnic University of Milan () is the largest technical university in Italy, with about 42,000 students.
The university offers undergraduate, graduate and higher education courses in engineering, architecture and design.
Founded in 186 ...
involves studying
corporate governance
Corporate governance is defined, described or delineated in diverse ways, depending on the writer's purpose. Writers focused on a disciplinary interest or context (such as accounting, finance, law, or management) often adopt narrow definitions th ...
,
accounting
Accounting, also known as accountancy, is the measurement, processing, and communication of financial and non financial information about economic entities such as businesses and corporations. Accounting, which has been called the "languag ...
,
investment analysis
In finance, valuation is the process of determining the present value (PV) of an asset. In a business context, it is often the hypothetical price that a third party would pay for a given asset. Valuations can be done on assets (for example, inve ...
,
budgeting
A budget is a calculation play, usually but not always financial, for a defined period, often one year or a month. A budget may include anticipated sales volumes and revenues, resource quantities including time, costs and expenses, environmen ...
and
business strategy
In the field of management, strategic management involves the formulation and implementation of the major goals and initiatives taken by an organization's managers on behalf of stakeholders, based on consideration of resources and an assessmen ...
.
La Trobe University
La Trobe University is a public research university based in Melbourne, Victoria, Australia. Its main campus is located in the suburb of Bundoora. The university was established in 1964, becoming the third university in the state of Victoria an ...
of Melbourne, Australia associates business economics with the process of demand, supply and equilibrium coordinating the behaviour of individuals and businesses in the market. Also, business economics extends to government policy, economic variables and international factors which influence business and competition.
See also
*
Hawley's risk theory of profit (1893)
*
Industrial organisation
In economics, industrial organization is a field that builds on the theory of the firm by examining the structure of (and, therefore, the boundaries between) firms and markets. Industrial organization adds real-world complications to the perfe ...
*
Business studies
Business studies, often simply called business, is a field of study that deals with the principles of business, management, and economics. It combines elements of accountancy, finance, marketing, organizational studies, human resource management, a ...
Note
External links
*
National Association for Business Economics
The National Association for Business Economics (NABE) is the largest international association of applied economists, strategists, academics, and policy-makers committed to the application of economics. Founded in 1959, it is one of the member o ...
(NABE, United States)
Homepage
Canadian Association for Business Economics (CABE)Australian Business Economists
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Business education