What motivates a firm?

The motives of a firm depend on the type of firm you are talking about, for instance the BBC's mission statement is "to inform. educate and entertain"; in constrast to this the objective of many firms in the private sector is often seen to be to maximise profits.

However this is not always the case, on alternative objective is sales revenue maximisation, this is due to the fact managers salaries are more often linked to a growth in sales than to profit performance. Expanding sales can also help to increase economies of scale. To maximise sales revenue, a firm would continue producing more as long as extra output would increase revenue. In theory producing where marginal revenue is 0. However, this is often subject to a minimum profit constraint, based on the level needed to keep shareholders happy.

Another motive is that of growth maximisation. Managers want to increase the size of their firms because a manager of a bigger firm is likely to earn more than the manager of a smaller firm. Being the manager of a larger firm is also likely to come with an increased level of job security; as with sales revenue objectives, it thought that growth is subject to a minimum profit constraint.

Profit satisficing can allow firms to pursue a number of objectives. It is important  to remember firms consist of different groups of stakeholders, such as owners, managers, workers and creditors. While the owner may want high profits, accountants may want to cut firms costs. Being prepared to sacrifice some profit may enable a firm to achieve a satisfactory performance in more areas.