Original and Derived Judgment

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Original and Derived Judgment

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dc.contributor.author Klein, Peter G. en_US
dc.contributor.author Foss, Nicolai J. en_US
dc.contributor.author Foss, Kirsten en_US
dc.date.accessioned 2009-02-04T10:27:22Z
dc.date.available 2009-02-04T10:27:22Z
dc.date.issued 2006-07-17T00:00:00Z en_US
dc.identifier.isbn 8791815258 en_US
dc.identifier.uri http://hdl.handle.net/10398/7452
dc.description.abstract Recent work links entrepreneurship to the economic theory of firm using the Knightian concept of entrepreneurship as judgment. When judgment is complementary to other as-sets, and these assets or their services are traded in well-functioning markets, it makes sense for entrepreneurs to hire labor and own assets. The entrepreneur’s role, then, is to arrange or organize the human and capital assets under his control. We extend this Knightian concept of the firm by developing a theory of delegation under Knightian uncertainty. What we call original judgment belongs exclusively to owners, but owners may delegate a wide range of decision rights to subordinates, who exercise derived judgment. We call these employees "proxy-entrepreneurs," and ask how the firm’s or-ganizational structure — its formal and informal systems of rewards and punishments, rules for settling disputes and renegotiating agreements, means of evaluating perform-ance, and so on — can be designed to encourage forms of proxy-entrepreneurship that increase firm value while discouraging actions that destroy value. Building on key ideas from the entrepreneurship literature, Austrian economics, and the economic theory of the firm we develop a framework for analyzing the tradeoff between productive and de-structive proxy-entrepreneurship. We link this analysis to the employment relation and ownership structure, providing new insights into these and related issues in the eco-nomic theory of the firm. Keywords: Judgment, entrepreneur, delegation, employment relation, ownership. JEL Codes: B53, D23, L2 en_US
dc.format.extent 35 s. en_US
dc.language eng en_US
dc.relation.ispartofseries SMG Working paper;2006-008 en_US
dc.subject.other delegation en_US
dc.subject.other entrepreneur en_US
dc.subject.other ownership en_US
dc.subject.other employment relation en_US
dc.subject.other judgment en_US
dc.title Original and Derived Judgment en_US
dc.type wp en_US
dc.accessionstatus modt06jul17 mielmo en_US
dc.contributor.corporation Copenhagen Business School. CBS en_US
dc.contributor.department Center for Strategi og Globalisering en_US
dc.contributor.departmentshort SMG en_US
dc.contributor.departmentuk Center for Strategic Management and Globalization en_US
dc.contributor.departmentukshort SMG en_US
dc.idnumber 8791815258 en_US
dc.publisher.city København en_US
dc.publisher.year 2006 en_US
dc.title.subtitle An Entrepreneurial Theory of Economic Organization en_US


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