Business and economics are highly interrelated. At the end of the day one would not exist without the other. The success of any business depends on a variety of economic aspects and at the same time businesses essentially make up the economy.
However despite this unquestionable connection, we often only hear about business or economics. In particular, many people fail to notice that in order to be successful in business it is essential to have at least a basic level of economic understanding. Therefore we will look at how business and economics can be connected.
Business economics
Business economics is a branch of economics that specifically deals with the challenges faced by corporations. In that sense it is similar to microeconomics with the exception that it has a strict focus on corporations. Business economics may include topics like financing, business organization, strategy, or basically anything a corporation would have to deal with.
Like most other economic branches, business economics emphasizes the use of quantitative methods to analyze issues and takes a positive approach. That means it deliberately restricts itself to describing the world without any judgmental component. In that sense business economics may help us to assess the effects of a certain decision but it does not tell us whether these effects are actually desirable for stakeholders or not.
Hence, in order to enable people to take the right decisions and benefit all stakeholders we have to shift our focus more towards the business side. The economic consequences of any decision should not only be analyzed and described in hindsight, but should actively influence the decision itself. Therefore we have to move one step further and include such considerations into a more comprehensive framework.
Econ-founded business studies
A good way for business executives and entrepreneurs to connect business and economics in order to take better decisions is what we call econ-founded business studies. The basic idea behind this is pretty similar to business economics, since we also look at the challenges faced by corporations (and entrepreneurs). However, the major difference is that we shift our focus from the economics side more towards the business side. Which has some significant effects.
In particular, by looking at the issues from a business perspective we take more of an inside-out view. Business economics on the other hand takes a descriptive outside-in view. Rather than just analyzing and describing the relevant decision making processes from outside, we want to contribute and actively influence the process by taking into account various economic (and non-economic) aspects in advance to provide a more well-founded basis for the decision.
As a result, econ-founded business studies go beyond the scope of business economics, because other branches of economics (e.g. macroeconomics, microeconomics) have to be taken into account as well. To take well-informed decisions it is important for executives and entrepreneurs to have a comprehensive understanding of basic economic principles and processes. Focusing on one branch does not provide enough information in that regard, since it does not take systemic interdependencies into consideration.
Ultimately, the goal of econ-founded business studies is to provide a comprehensive framework of economic and business knowledge that enables executives and entrepreneurs and guides decision-making processes in any business-related environment for the benefit of all stakeholders. By the way, that is also our guiding principle for selecting the topics of our posts (in case you wondered).
In a Nutshell
Business and economics are highly interrelated. At the end of the day one would not exist without the other. Therefore it is important to connect the two from an academic point of view. A possible approach to do this is business economics, a branch of economics that analyzes and describes the challenges faced by corporations. A more comprehensive way that originates from the business side, is the concept of econ-founded business studies. The idea behind this is to provide a comprehensive framework of economic and business knowledge that enables executives and entrepreneurs and guides decision-making processes in any business-related environment for the benefit of all stakeholders.
Labels: Business, Business Economics, Econ-founded Business Studies, Economics