firm

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Related to firmness: firmness of purpose

Firm

Refers to an order to buy or sell that can be executed without confirmation for some fixed period. Also, a synonym for company.

Firm

1. A company or any other for-profit business.

2. Describing an order to buy or sell a security that may be executed without confirming the order with the person or company making it. Most firm orders have a time limit.

firm

see BUSINESS.

firm

or

company

or

supplier

or

enterprise

A transformation unit concerned with converting FACTOR INPUTS into higher-valued intermediate and final GOODS or SERVICES. The firm or BUSINESS is the basic producing/supplying unit and is a vital building block in constructing a theory of the market to explain how firms interact and how their pricing and output decisions influence market supply and price (see THEORY OF THE FIRM, THEORY OF MARKETS). The legal form of a firm consists of:
  1. a sole proprietorship: a firm owned and controlled (managed) by a single person, i.e. the type of firm that most closely approximates to that of the ‘firm’ in economic theory.
  2. a partnership: a firm owned and controlled by two or more persons who are parties to a partnership agreement.
  3. a JOINT-STOCK COMPANY: a firm that is owned by a group of ordinary shareholders and the capital of which is divided up into a number of SHARES. See COOPERATIVE.

The economic form of a firm consists of:

  1. a horizontal firm: a firm that is engaged in a single productive activity, e.g. motor-car assembly.
  2. a vertical firm: a firm that undertakes two or more vertically linked productive activities, e.g. the production of car components (clutches, steel body shells) and car assembly.
  3. a diversified or conglomerate firm: a firm that is engaged in a number of unrelated productive activities, e.g. car assembly and the production of bread.

For purposes of COMPANY LAW and the application of many company taxes and allowances (e.g. CORPORATION TAX and CAPITAL ALLOWANCES), a distinction is made between ‘small and medium-sized’ companies and ‘large’ companies. Small and medium-sized companies are defined as follows (Companies Act, 1995):

  1. annual turnover of less than £11.2 million;
  2. gross assets of under £5.6 million;
  3. not more than 250 employees.

In 2004 there were some 3,800,000 firms in the UK, of which 70% were run by the self-employed. Most businesses were small, with around 3,766,000 firms employing fewer than 50 people, 27,200 firms employing between 50 and 249 people, while only 6,900 firms employed more than 250 people. In terms of their contribution to GROSS DOMESTIC PRODUCT (GDP), however, firms employing more than 50 people contributed in excess of 75% of total output.

The total stock of firms fluctuates from year to year, depending on the net balance of new start-up businesses and those businesses ceasing trading (see INSOLVENCY). Generally, the total stock of firms increases when the economy is expanding (or as a result of some ‘special’ factor, e.g. the surge in newly established INTERNET businesses) and falls in a recession.

A final point to note is that with the increasing globalization of the world economy, MULTINATIONAL COMPANIES are becoming more prevalent in economies such as the UK's (see FOREIGN INVESTMENT for further details). See HORIZONTAL INTEGRATION, VERTICAL INTEGRATION, DIVERSIFICATION, BUSINESS CYCLE.

References in classic literature ?
Miss Marrable and I are both remarkable for the firmness of our characters.
She might be firm, and must be; but only in bearing their firmness, and firmly believing there was no other firmness upon earth.
But Elizabeth had now recollected herself, and making a strong effort for it, was able to assure with tolerable firmness that the prospect of their relationship was highly grateful to her, and that she wished her all imaginable happiness.
I looked up in amazement; the voice was a voice of Albion; the accent was pure and silvery ; it only wanted firmness, and assurance, to be the counterpart of what any well-educated lady in Essex or Middlesex might have enounced, yet the speaker or reader was no other than Mdlle.
He has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.
Then he clasped her with a renewed firmness of hold, and descended the staircase.
A government may be changed either into an oligarchy, democracy, or a free state; when the magistrates, or any part of the city acquire great credit, or are increased in power, as the court of Areopagus at Athens, having procured great credit during the Median war, added firmness to their administration; and, on the other hand, the maritime force, composed of the commonalty, having gained the victory at Salamis, by their power at sea, got the lead in the state, and strengthened the popular party: and at Argos, the nobles, having gained great credit by the battle of Mantinea against the Lacedaemonians, endeavoured to dissolve the democracy.
It needed a good deal of firmness and still more patience to induce him to come, but he was really too ill to offer any effective resistance to Stroeve's entreaties and to my determination.
I should never dare to say that I know the truth," said the Mason, whose words struck Pierre more and more by their precision and firmness.
And this she attributed to a want of sufficient firmness, and diligent, persevering care on my part.
I hope I see you well, miss," she said--with hardly a vestige left of her former firmness of voice and manner.
But the firmness of it-- without anger, without a word of reproach, with heartfelt wishes even for his happiness--the firmness of it, I say, left him no hope.