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Economic Returns to Entrepreneurial Behavior

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  • Ross, R. Brent
  • Westgren, Randall E.

Abstract

Highly turbulent environments require firms to act entrepreneurially. The returns to entrepreneurial activities are known as entrepreneurial rents. Following the payments perspective, these rents are allocated to the entrepreneurial resources of the firm as factor payments. However, unlike other factor payments, little is known about how to value these types of rents. An analysis of the economics and management literature reveals that entrepreneurial rents are a return to alertness, subjective judgment, asset control, and uncertainty bearing. Furthermore, entrepreneurial rents are noncontractible and temporary. This paper introduces two complementary valuation models that capture these characteristics and that explicitly impute value to various entrepreneurial activities.

Suggested Citation

  • Ross, R. Brent & Westgren, Randall E., 2006. "Economic Returns to Entrepreneurial Behavior," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 38(2), pages 403-419, August.
    • Handle: RePEc:cup:jagaec:v:38:y:2006:i:02:p:403-419_02
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    References listed on IDEAS

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    1. Nicolai J. Foss & Peter G. Klein, 2004. "Entrepreneurshoip and the Economic Theory of the Firm Any Gains from Trade?," DRUID Working Papers 04-12, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    2. Kathleen M. Eisenhardt & Claudia Bird Schoonhoven, 1996. "Resource-based View of Strategic Alliance Formation: Strategic and Social Effects in Entrepreneurial Firms," Organization Science, INFORMS, vol. 7(2), pages 136-150, April.
    3. Loasby, Brian J, 1982. "The Entrepreneur in Economic Theory," Scottish Journal of Political Economy, Scottish Economic Society, vol. 29(3), pages 0223-0223, November.
    4. Scott Shane, 2000. "Prior Knowledge and the Discovery of Entrepreneurial Opportunities," Organization Science, INFORMS, vol. 11(4), pages 448-469, August.
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    Cited by:

    1. Tilley, Marcia L. & Tilley, Daniel S. & Yiannaka, Amalia & Holcomb, Rodney B. & Howard, Wayne H. & Weckler, Paul & Cavaletto, Richard & Zohns, Mark & Sitton, Shelly & Blackwell, Cindy & Delahoussaye, , 2008. "Teaching Innovation as Part of an Agribusiness Curriculum," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6153, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Micheels, Eric T. & Gow, Hamish R., 2008. "Market Orientation and Profitability: Evidence from Homogeneous Markets," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6484, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Rich, Karl M. & Baker, Derek & Negassa, Asfaw & Ross, R. Brent, 2009. "Concepts, applications, and extensions of value chain analysis to livestock systems in developing countries," 2009 Conference, August 16-22, 2009, Beijing, China 51922, International Association of Agricultural Economists.
    4. Mohammad Keyhani & Moren Lévesque & Anoop Madhok, 2015. "Toward a theory of entrepreneurial rents: A simulation of the market process," Strategic Management Journal, Wiley Blackwell, vol. 36(1), pages 76-96, January.
    5. R. Brent Ross & Randall E. Westgren, 2009. "An Agent‐Based Model of Entrepreneurial Behavior in Agri‐Food Markets," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 57(4), pages 459-480, December.
    6. Rich, Karl M. & Ross, R. Brent & Baker, A. Derek & Negassa, Asfaw, 2011. "Quantifying value chain analysis in the context of livestock systems in developing countries," Food Policy, Elsevier, vol. 36(2), pages 214-222, April.
    7. Sara Carter, 2011. "The Rewards of Entrepreneurship: Exploring the Incomes, Wealth, and Economic Well–Being of Entrepreneurial Households," Entrepreneurship Theory and Practice, , vol. 35(1), pages 39-55, January.

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