BUSINESS THEORY OF THE FIRM: DEVELOPMENT CRITERIA AND BASIC CATEGORIES
Abstract
The theoretical foundations of business have been developed for a long time by many scientists. Some of them try to reveal the socio-economic nature, essence and purpose of business in the context of the economic theory of the firm. Others use the approaches of management theories of the firm. However, many scientists argue for the need to develop a business theory of the firm as such. Among them: P. F. Drucker, M. Best, T. Zenger, T. Donaldson, J. P. Walsh. This study investigates the main methodological approaches to the development of modern business theory of the firm, and seeks to substantiate its main "building blocks". Grounded in a synthesis of strategic management theories and case-based evidence, the paper explores the nature of business. It integrates perspectives from systems theory, strategic management paradigms, and business management literature to provide a framework for using the firm's business theory in practice. This study identifies a system of basic categories of the business theory of the firm, which includes: the purpose and values of the business; the value proposition of the firm; resources and competencies required for business development; the economic logic of the firm's activities in accordance with the chosen business model; the business environment of the business, which contains the opportunities and constraints of the organization's activities and forms a network of value creation. It underscores the importance of concept of "value proposition" (firm value), which can go beyond the boundaries of business - if the firm seeks to solve social and environmental problems of society, takes responsibility for its development. It is no coincidence that the concepts of "innovation value", "investment value", "social value", "environmental value" of the firm have recently become relevant. All these categories reveal the features of the firm's business and its competitive advantages. This paper contributes to the literature on the management of the firm's development and strategic management. It bridges classical management theories with contemporary scientific approaches to solving applied problems. The theory of the firm's business should be used in the process of business strategizing, as a source of creativity and innovation in the activities of practitioners and researchers.
References
Drucker P. F. The Theory of the Business. Harvard Business Review. 1994. September – October. URL: https://hbr.org/1994/09/the-theory-of-the-business (дата звернення: 18.10.2025).
Best M. H. The New Competition. Institutions of Industrial restructuring. Cambridge, MA : Harvard University Press, 1990. 296 p.
Zenger T. Start with a Theory, Not a Strategy. Harvard Business Review. 2014. June 03. URL: https://hbr.org/2014/06/start-with-a-theory-not-a-strategy (дата звернення: 18.10.2025).
Donaldson T., Walsh J. P. Toward a theory of business. Research in Organizational Behavior. 2015. Vol. 35. Pp. 181-207.
Mourkogiannis N. Purpose: The Starting Point of Great Companies. St. Martin's Press, 2006. 272 p.
Gulati R. Deep Purpose: The Heart and Soul of High-Performance Companies Hardcover. Harper Business, 2022. 304 p.
Osiyevskyy O. A Meaningful Strategic Goal: The Main Litmus Test. LinkedIn. URL: https://www.linkedin.com/feed/update/urn:li:activity:7123889152223281152/ (дата звернення: 18.10.2025).
Drucker P. F. The Practice of Management. Harper Business, 2006. 416 p.
Future Ready Organization: 11 Tips to Building One Capable of Adapting to Industry Trends. ITD World. URL: https://itdworld.com/blog/leadership/future-ready-organization/ (дата звернення: 18.10.2025).
Принципи та цінності компанії, організації. CleverStaff. 2022. 24 липня. URL: https://cleverstaff.net/blog/uk/pryntsypy-ta-tsinnosti-kompaniyi-orhanizatsiyi/ (дата звернення: 18.10.2025).
Поляков С. Цінності компанії стануть у пригоді для розвитку бізнесу. Люди мають бути в пріоритеті. Mind. 2023. 23 травня. URL: https://mind.ua/openmind/20257635-cinnosti-kompaniyi-stanut-u-prigodi-dlya-rozvitku-biznesu (дата звернення: 18.10.2025).
Pope S., Wᴂraas A. How to Create Company Values That Actually Resonate. Harvard Business Review. 2023. October 31. URL: https://hbr.org/2023/10/how-to-create-company-values-that-actually-resonate (дата звернення: 18.10.2025).
Value proposition. Wikipedia. URL: https://en.wikipedia.org/wiki/Value_proposition (дата звернення: 18.10.2025).
Лейнванд П. Стратегія, що працює / Пол Лейнванд, Чезаре Мейнарді у співавторстві з Артом Кляйнером ; пер. з англ. Я. Машико. Харків : Вид-во «Ранок» : Фабула, 2019. 256 с.
Value proposition: the key to winning customers and driving business growth. Strategyzer. 2025. February 05. URL: https://www.strategyzer.com/value-proposition (дата звернення: 18.10.2025).
Osterwalder A., Pigneur Y. Modeling Value Propositions in e-business. ICEC '03 Proceedings of the 5th international conference on Electronic Commerce. 2003. Pp. 429-436.
Прахалад К. К., Рамасвамі В. Майбутнє конкуренції. Творення унікальної цінності спільно з клієнтами / Пер. з англ. Михайла Ставицького. Київ : Видавництво Олексія Капусти (підрозділ «Агенція «Стандарт»»), 2005. 258 с.
Dieffenbacher S. F. Business Purpose Definition, Examples and 12-Step Guide. Digital Leadership. URL: https://digitalleadership.com/unite-articles/business-purpose/ (дата звернення: 18.10.2025).
Christensen C. M., Raynor M. E. The innovator’s solution: creating and sustaining successful growth. Boston : Harvard Business School Press, 2003. 304 р.
Christensen C. M. The Innovator՚s Dilemma. HarperBusiness, 2000. 256 р.
Лефлі А., Мартін Р. Безпрограшна стратегія. Як уникнути промахів у бізнесі / пер. з англ. Ірина Гнатковська. Київ : Наш формат, 2018. 256 с.
Prahalad C. K., Hamel G. The Core Competence of the Corporation. Harvard Business Review. 1990. May–June. URL: https://hbr.org/1990/05/the-core-competence-of-the-corporation (дата звернення: 18.10.2025).
Hamel G., Prahalad C. K. Competing for the Future. Harvard Business Review. 1994. July – August. URL: https://hbr.org/1994/07/competing-for-the-future (дата звернення: 18.10.2025).
Шевченко Л. С. Стратегування в новій реальності : монографія. Харків : Право, 2025. 326 с.
Shevshenko L., Osiyevskyy O., Umantsiv Y., Marchenko O. A firm in strategic reality: leveraging constraints as opportunities. Strategy & Leadership, 2025. DOI: https://doi.org/10.1108/SL-11-2024-0125.
Drucker P. F. Management Challenges for the 21st Century. HarperBusiness, 2001. 224 p.
Drucker, P. F. (1994). The Theory of the Business. Harvard Business Review. September – October. https://hbr.org/1994/09/the-theory-of-the-business
Best, M. H. (1990). The New Competition. Institutions of Industrial restructuring. Harvard University Press.
Zenger, T. (2014, June 03). Start with a Theory, Not a Strategy. Harvard Business Review. https://hbr.org/2014/06/start-with-a-theory-not-a-strategy
Donaldson, T., & Walsh, J. P. (2015). Toward a theory of business. Research in Organizational Behavior, 35, 181-207.
Mourkogiannis, N. (2006). Purpose: The Starting Point of Great Companies. St. Martin's Press.
Gulati, R. (2022). Deep Purpose: The Heart and Soul of High-Performance Companies Hardcover. Harper Business.
Osiyevskyy, O. A Meaningful Strategic Goal: The Main Litmus Test. LinkedIn. https://www.linkedin.com/feed/update/urn:li:activity:7123889152223281152/
Drucker, P. F. (2006). The Practice of Management. Harper Business.
Future Ready Organization: 11 Tips to Building One Capable of Adapting to Industry Trends. ITD World. https://itdworld.com/blog/leadership/future-ready-organization/
Pryntsypy ta tsinnosti kompanii, orhanizatsii [Principles and values of the company, organization]. (2022, July 24). CleverStaff. https://cleverstaff.net/blog/uk/pryntsypy-ta-tsinnosti-kompaniyi-orhanizatsiyi/ [in Ukrainian].
Poliakov, S. (2023, May 23). Tsinnosti kompanii stanut u pryhodi dlia rozvytku biznesu. Liudy maiut buty v prioryteti [Company values will be useful for business development. People should be a priority]. Mind. https://mind.ua/openmind/20257635-cinnosti-kompaniyi-stanut-u-prigodi-dlya-rozvitku-biznesu [in Ukrainian].
Pope, S., & Wᴂraas, A. (2023, October 31). How to Create Company Values That Actually Resonate. Harvard Business Review. https://hbr.org/2023/10/how-to-create-company-values-that-actually-resonate
Value proposition. Wikipedia. https://en.wikipedia.org/wiki/Value_proposition
Leinwand, P., & Mainardi, C. (2019). Stratehiia, shcho pratsiuie [Strategy that works: How winning companies close the strategy-to-execution gap]. Ya. Mashyko (Translator from English). Ranok; Fabula [in Ukrainian]. (Original work published 2016).
Value proposition: the key to winning customers and driving business growth. (2025. February 05). Strategyzer. https://www.strategyzer.com/value-proposition
Osterwalder, A., & Pigneur, Y. (2003). Modeling Value Propositions in e-business. ICEC '03 Proceedings of the 5th international conference on Electronic Commerce. Pp. 429-436.
Prahalad, C. K., & Ramaswamy, V. (2005). Maibutnie konkurentsii. Tvorennia unikalnoi tsinnosti spilno z kliientamy [The Future of Competition. Co-Creating Unique Value wity Customers]. M. Stavytskyi (Translator from English). Oleksiy Kapusta Publishing House (division of "Standart Agency") [in Ukrainian]. (Original work published 2004).
Dieffenbacher, S. F. Business Purpose Definition, Examples and 12-Step Guide. Digital Leadership. URL: https://digitalleadership.com/unite-articles/business-purpose/.
Christensen, C. M., & Raynor, M. E. (2003). The innovator’s solution: creating and sustaining successful growth. Harvard Business School Press.
Christensen, C. M. (2000). The Innovator՚s Dilemma. HarperBusiness.
Lafley, A. G., & Martin, R. L. (2018). Bezprohrashna stratehiia. Yak unyknuty promakhiv u biznesi [Playing to win. How strategy really works]. I. Hnatkovska (Translator from English). Nash format [in Ukrainian]. (Original work published 2013).
Prahalad, C. K., & Hamel, G. (1990). The Core Competence of the Corporation. Harvard Business Review. May–June. https://hbr.org/1990/05/the-core-competence-of-the-corporation
Hamel, G., & Prahalad, C. K. (1994). Competing for the Future. Harvard Business Review. July – August. https://hbr.org/1994/07/competing-for-the-future
Shevchenko, L. S. (2025). Stratehuvannia v novii realnosti [Strategizing in the new reality]. Pravo [in Ukrainian].
Shevshenko, L., Osiyevskyy, O., Umantsiv, Y., & Marchenko, O. (2025). A firm in strategic reality: leveraging constraints as opportunities. Strategy & Leadership. https://doi.org/10.1108/SL-11-2024-0125
Drucker, P. F. (2001). Management Challenges for the 21st Century. HarperBusiness.
This work is licensed under a Creative Commons Attribution 4.0 International License.
