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A Human Capital Approach to Entrepreneurial Capacity

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  • Otani, Kiyoshi

Abstract

Entrepreneurial 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.

Suggested Citation

  • Otani, Kiyoshi, 1996. "A Human Capital Approach to Entrepreneurial Capacity," Economica, London School of Economics and Political Science, vol. 63(250), pages 273-289, May.
  • Handle: RePEc:bla:econom:v:63:y:1996:i:250:p:273-89
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    Cited by:

    1. Edward P. Lazear, 2005. "Entrepreneurship," Journal of Labor Economics, University of Chicago Press, vol. 23(4), pages 649-680, October.
    2. Szilard Benk & Tamas Csabafi & Jing Dang & Max Gillman & Michal Kejak, 2016. "Tuning in RBC Growth Spectra," IMF Working Papers 16/215, International Monetary Fund.
    3. Nathalie Greenan & Emmanuelle Walkowiak, 2005. "Informatique, organisation du travail et interactions sociales," Économie et Statistique, Programme National Persée, vol. 387(1), pages 35-63.
    4. 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.
    5. Ferrante, Francesco & Sabatini, Fabio, 2007. "Education, social capital and entrepreneurial selection in Italy," MPRA Paper 2451, University Library of Munich, Germany.
    6. 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.
    7. 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.
    8. repec:crs:ecosta:es387b is not listed on IDEAS
    9. Ferrante, Francesco & Federici, Daniela & Parisi, Valentino, 2017. "University Students and Entrepreneurship. Some insights from a population-based survey," MPRA Paper 76980, University Library of Munich, Germany.
    10. 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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