This text is concerned with the nature, the scope and the functioning of business enterprises. The book synthesises traditional and modern economic concepts and tools of analysis (such as transactions cost economics and agency theory) to built a coherent analytical framework capable of dealing with questions of direct relevance to business. Its exposition is illustrated by a plethora of real world examples and case studies drawn from firms and industries located in various countries. The edition has been revised and updated to present a user-friendly format and to incorporate the developments in this rapidly evolving field.