The theory of sales (revenue) maximization subject to some predetermined amount of profit was advanced by __________.
William J. Baumol
This question is about the managerial (non-profit-maximising) theories of the firm, which ask what objective managers actually pursue in large corporations where owners and managers are different people.
The sales (revenue) maximization hypothesis was advanced by William J. Baumol. His central argument is that once ownership is divorced from control, managers have their own goals. Their salaries, bonuses, prestige, power and career prospects tend to rise with the size and turnover of the firm far more than with its profit, so managers push to maximise total sales revenue rather than profit.
Crucially, this maximisation is not unconstrained. The firm must still earn a minimum acceptable level of profit - enough to keep shareholders content, pay dividends and finance growth. So Baumol's model is 'sales revenue maximization subject to a minimum profit constraint', which typically leads a firm to produce more (and price lower) than a pure profit-maximiser would.
The other names belong to different ideas: Herbert Simon proposed satisficing and bounded rationality (managers seek satisfactory, not optimal, outcomes); O.E. Williamson developed the managerial-discretion or expense-preference model; and K.W. Rothschild wrote on oligopoly and the security-of-profit motive. None of them authored the sales-maximization-with-profit-constraint theory.
Hence the theory was advanced by William J. Baumol.
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