Entrepreneurship and the Economic Theory of the Firm

OPEN ARCHIVE

Union Jack
Dannebrog

Entrepreneurship and the Economic Theory of the Firm

Show full item record

Title: Entrepreneurship and the Economic Theory of the Firm
Any Gains from Trade?
Author: Foss, Nicolai J.; Klein, Peter G.
Abstract: Though they developed in isolation, the theory of entrepreneurship and the economic theory of the firm can be usefully integrated. In particular, the concept of entrepreneurship as judgment associated with Knight (1921) and some Austrian school economists aligns naturally with the theory of the firm. Because judgment cannot be purchased on the market, the entrepreneur needs a firm — a set of alienable assets he controls — to carry out his function. We show how this notion of judgment illuminates key themes in the modern theory of the firm (existence, boundaries, and internal organization). In our approach, resource uses are not data, but are created as entrepreneurs envision new ways of using assets to produce final goods. The entrepreneur’s problem is aggravated by the fact that capital assets are heterogeneous. Asset ownership allows the entrepreneur to experiment with novel combinations of heterogeneous assets. The boundaries of the firm, as well as aspects of internal organization, may also be understood as responses to entrepreneurial processes of experimentation.
URI: http://hdl.handle.net/10398/7309
Date: 2005-05-02

Creative Commons License This work is licensed under a Creative Commons License.

Files Size Format View
ckg-wp 2004-11.pdf 195.8Kb PDF View/Open

This item appears in the following Collection(s)

Show full item record