Economics of Business

Today I attended the opening lecture of the Master in Economics and Business Administration at the Autonomous University of Barcelona, my university. It was given by Vicente Salas, a professor now at University of Zaragoza and in the past in our University that I admire, that was the chairman of my thesis committee in Florence back in December 2000. The topic of his presentation was Entrepreneurship and Development, where he presented a summary of the literature and a summary of his research on the topic. He left the most inspiring part for the end of his lecture, where he presented his thoughts on the relationship between economics and business, a topic to which he has devoted his academic career. He said that there were three ways to approach this relationship:
1) Economics AND Business. This is providing business people with a basic knowledge of economics, so that they can have a vocabulary and some basic ideas about the economic context, in a similar way as they should know something about sociology.
2) Economics FOR Business. This is about managerial economics, thus providing business people with some managerial tools inspired in economic rationality, such as incentive or game theory.
3) Economics OF Business. This should be about asking questions such as why firms and entrepreneurs exist. It should also be about the role of entrepreneurs as organizers and the economic role that organizations play in society and the input they contribute to productivity. It should be about continuing the agenda of Roland Coase, who recently passed away, and others who are concerned about some fundamental questions about how our society is organized.
Professor Salas argued that unfortunately most undergraduate teaching focuses on the first way of approaching the topic, perhaps a little bit on the second, but the third approach is almost absent and much more emphasis should be given to it.