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| Author: | Jacobides, M. G. Winter, S. G. |
| Title: | Entrepreneurship and firm boundaries: the theory of a firm |
| Journal: | Journal of Management Studies
2007 : NOV, VOL. 44:7, p. 1213-1241 |
| Index terms: | business incubators cash management entrepreneurship new enterprise profit |
| Language: | eng |
| Abstract: | The purpose of this article is to study how understanding entrepreneurial activities better can help explain the ways in which firm and industry boundaries change over time. The paper also aims to find out how a more comprehensive understanding of boundary setting may explain where entrepreneurial activities are directed. The article starts from the assumption that entrepreneurs eager to put their superior ideas to use in various parts of the value chain usually lack cash or means to obtain it from others. A model is suggested in which the entrepreneur not only has value-adding sets of ideas for the value chain but also means to make the value chain work well under unitary control. The results of the analysis indicate that firms earn from their operating profits and also from the appreciation of the assests accumulated by each firm. This notion affects the optimal choice of firms' boundaries: entrepreneurs should be able to choose a segment that not only benefits them in terms of profit but also in terms of asset appreciation. |
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