Managerial objectives
Definition. Managerial objectives are the goals pursued by the managers who run a firm when ownership is separated from control, which may differ from the owners aim of maximising profit. Managers may instead seek to maximise sales revenue, growth, or their own salaries and perks.
This divergence arises from the principal agent problem, since shareholders cannot perfectly monitor managers. Such objectives, like revenue maximisation, can lead the firm to produce a higher output and charge a lower price than profit maximisation would.
This term belongs to The Objectives of Firms in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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