ABSTRACT
The theory of production/the theory of the firm was ignored for a long time in economics. Five, interrelated, explanations for this fact have been put forward. First, the (large/integrated) firm was until very recently just not that important to the economy and thus was ignored by early economic writers. Second, many economists did not see economic theory as being relevant to business or saw the internal workings of the firm to be outside the competence of economists. Thirdly, the development of a theory of the firm was limited by the lack of tools to deal with the task. Fourthly, for much of the development of economic analysis there was a normative/macro origination to economics which could result in a lack of interest in the theory of micro–level production and the firm. Lastly, the rise of formalism within economics resulted in the firm being deemphasised.
