GOULDSBORO — Phil Grant’s “ah ha” moment — which rewrites a long-held theory in microeconomics — came after many seasons of observing the blueberry, lobster and pulpwood cutting industries in Maine.
Grant is a resident of the village of Birch Harbor and professor of management at Husson University in Bangor. He has taught graduate and undergraduate courses in organizational behavior, managerial economics, operations management and human resources for 40 years and says he has been developing his theory over that time period.
He said his theory recognizes that employee behavior is as important as consumer behavior in generating company volume.
In a nutshell, it is a given in microeconomics that profits peak when marginal revenue equals marginal cost, or MR=MC. After that point, costs exceed revenue.
The proof he presented at the Conference of the National Business and Economic Society refutes the traditional view because it takes into account the effect of incentives on employee motivation and production.
In labor-intensive industries such as blueberry raking and lobster fishing, workers are more motivated to produce when the price per box of berries or pound of lobster, or for ea, increases, Grant said.
His equation shows that the optimal profit level is at the point where marginal revenue exceeds marginal costs.
Grant acknowledges it may take time for the economic community to buy into his proof because it synthesizes organizational behavior with microeconomic issues, something rarely seen in the social sciences.