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| Author: | Auerswald, P. E. |
| Title: | Entrepreneurship in the theory of the firm |
| Journal: | Small business economics
2008 : FEB, VOL. 30:2, p. 111-126 |
| Index terms: | entrepreneurship growth innovation production functions theory of the firm transaction costs |
| Language: | eng |
| Abstract: | This article formulates micro-economic foundations for a theory of entrepreneurship and growth by concentrating on innovation and opportunity, and specifically their role between the two concepts. Drawing from Schumpeter and Coase, transaction costs are argued to be responsible for holding together entrepreneurial "new combinations". Technologiacl/organizational complexity of production is interpreted as the the extent to which a technical decision by one part of the organization impacts the productive efficiency of other parts. Incubent firms tend to be held together by production practices that are difficult to duplicate, whereas decreasing transactions costs have the opposite effect. When incumbent companies terminate their functioning, new opportunities arise for entrepreneurs, and the incentive to realize those opportunities comes in form of potential Schumpeterian rents. |
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