A Human Capital Approach to Entrepreneurial Capacity
AbstractEntrepreneurial capacity is said to determine the long-run size of the firm. However, it is either a black box or a gift, an exogenous parameter which is beyond economic explanation. This paper formulates the concept as a kind of human capital on the basis of the classical works of Hayek (1945) and Coase (1937, 1960). It then shows that the firm neither expands infinitely, nor shrinks into a negligible entity. Further, the concept is shown to predict that accumulation of physical capital in the economy promotes growth in the average size of firms, as usually observed. Lucas (1978) derives the same prediction, but his reason for it is different. Copyright 1996 by The London School of Economics and Political Science.
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Bibliographic InfoArticle provided by London School of Economics and Political Science in its journal Economica.
Volume (Year): 63 (1996)
Issue (Month): 250 (May)
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- Deniz Ucbasaran & Paul Westhead & Mike Wright, 2008. "Opportunity Identification and Pursuit: Does an Entrepreneur’s Human Capital Matter?," Small Business Economics, Springer, vol. 30(2), pages 153-173, February.
- Edward P. Lazear, 2002.
NBER Working Papers
9109, National Bureau of Economic Research, Inc.
- Minniti, Maria, 2004. "Entrepreneurial alertness and asymmetric information in a spin-glass model," Journal of Business Venturing, Elsevier, vol. 19(5), pages 637-658, September.
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- Philipp Köllinger & Maria Minniti & Christian Schade, 2005. "Entrepreneurial Overconfidence: Evidence from a C.A.R.T. Approach," Discussion Papers of DIW Berlin 465, DIW Berlin, German Institute for Economic Research.
- Levesque, Moren & Minniti, Maria, 2006. "The effect of aging on entrepreneurial behavior," Journal of Business Venturing, Elsevier, vol. 21(2), pages 177-194, March.
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