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The Entrepreneurial Organization of Heterogeneous Capital


  • Kirsten Foss
  • Nicolai J. Foss
  • Peter G. Klein
  • Sandra K. Klein


Transaction cost, property rights, and resource-based approaches to the firm assume that assets, both tangible and intangible, are heterogeneous. Arranging these assets to minimize contractual hazards, to provide efficient investment incentives, or to exploit competitive advantage is conceived as the prime task of economic organization. None of these approaches, however, is based on a systematic theory of capital heterogeneity. In this paper we outline the approach to capital developed by the Austrian school of economics and show how Austrian capital theory provides a natural bridge between theory of entrepreneurship and the theory of the firm. We refine Austrian capital theory by defining capital heterogeneity in terms of subjectively perceived attributes, the functions, characteristics, and uses of capital assets. Such attributes are not given, but have to be created or discovered by means of entrepreneurial action. Conceiving entrepreneurship as the organization of heterogeneous capital provides new insights into the emergence, boundaries, and internal organization of the firm, and suggests testable implications about how entrepreneurship is manifested. Copyright Blackwell Publishing Ltd 2007.

Suggested Citation

  • Kirsten Foss & Nicolai J. Foss & Peter G. Klein & Sandra K. Klein, 2007. "The Entrepreneurial Organization of Heterogeneous Capital," Journal of Management Studies, Wiley Blackwell, vol. 44(7), pages 1165-1186, November.
  • Handle: RePEc:bla:jomstd:v:44:y:2007:i:7:p:1165-1186

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    References listed on IDEAS

    1. Barzel,Yoram, 1997. "Economic Analysis of Property Rights," Cambridge Books, Cambridge University Press, number 9780521597135, March.
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    Cited by:

    1. repec:kap:revaec:v:30:y:2017:i:3:d:10.1007_s11138-016-0346-z is not listed on IDEAS
    2. Jürgen Wandel, 2011. "Business groups and competition in post-Soviet transition economies: The case of Russian “agroholdings”," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 24(4), pages 403-450, December.
    3. Minniti, Maria & Lévesque, Moren, 2008. "Recent developments in the economics of entrepreneurship," Journal of Business Venturing, Elsevier, vol. 23(6), pages 603-612, November.
    4. Cumming, Douglas & Li, Dan, 2013. "Public policy, entrepreneurship, and venture capital in the United States," Journal of Corporate Finance, Elsevier, vol. 23(C), pages 345-367.
    5. Peter Klein & Per Bylund, 2014. "The place of Austrian economics in contemporary entrepreneurship research," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 27(3), pages 259-279, September.
    6. Ehret, Michael, 2014. "Financial socialism: The role of financial economics in economic disorganization," Journal of Business Research, Elsevier, vol. 67(1), pages 2686-2692.
    7. David Emanuel Andersson, 2014. "Cities and planning: the role of system constraints," Chapters,in: Cities and Private Planning, chapter 2, pages 19-37 Edward Elgar Publishing.
    8. J. Michael Haynie & Dean A. Shepherd & Jeffery S. McMullen, 2009. "An Opportunity for Me? The Role of Resources in Opportunity Evaluation Decisions," Journal of Management Studies, Wiley Blackwell, vol. 46(3), pages 337-361, May.
    9. Lin, Hai-Fen & Su, Jing-Qin & Higgins, Angela, 2016. "How dynamic capabilities affect adoption of management innovations," Journal of Business Research, Elsevier, vol. 69(2), pages 862-876.
    10. Truls Erikson & Nicolai S Løvdal & Arild Aspelund, 2015. "Entrepreneurial Judgment and Value Capture, the Case of the Nascent Offshore Renewable Industry," Sustainability, MDPI, Open Access Journal, vol. 7(11), pages 1-14, November.
    11. Anthony M. Endres & David A. Harper, 2012. "The kinetics of capital formation and economic organisation," Cambridge Journal of Economics, Oxford University Press, vol. 36(4), pages 963-980.
    12. Mario Kafouros & Murod Aliyev, 2016. "Institutions and Foreign Subsidiary Growth in Transition Economies: The Role of Intangible Assets and Capabilities," Journal of Management Studies, Wiley Blackwell, vol. 53(4), pages 580-607, June.
    13. Peter Lewin & Howard Baetjer, 2011. "The capital-based view of the firm," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 24(4), pages 335-354, December.
    14. repec:spr:jorgde:v:7:y:2018:i:1:d:10.1186_s41469-017-0025-y is not listed on IDEAS
    15. David Emanuel Andersson, 2011. "Creative Cities Need Less Government," Chapters,in: Handbook of Creative Cities, chapter 16 Edward Elgar Publishing.
    16. Foss, Nicolai J. & Klein, Peter G. & Kor, Yasemin Y. & Mahoney, Joseph T., 2006. "Entrepreneurship, Subjectivism, and the Resource-Based View: Towards a New Synthesis," Working Papers 06-0121, University of Illinois at Urbana-Champaign, College of Business.
    17. Harper, David A. & Endres, Anthony M., 2010. "Capital as a layer cake: A systems approach to capital and its multi-level structure," Journal of Economic Behavior & Organization, Elsevier, vol. 74(1-2), pages 30-41, May.
    18. Nicolai J. Foss & Peter G. Klein, 2013. "Entrepreneurship, entrepreneurial governance and economic organization," Chapters,in: Handbook of Economic Organization, chapter 22 Edward Elgar Publishing.
    19. Wood, Matthew S. & Williams, David W. & Drover, Will, 2017. "Past as prologue: Entrepreneurial inaction decisions and subsequent action judgments," Journal of Business Venturing, Elsevier, vol. 32(1), pages 107-127.
    20. Kraaijenbrink, Jeroen & Spender, JC & Groen, Aard, 2009. "The resource-based view: A review and assessment of its critiques," MPRA Paper 21442, University Library of Munich, Germany.

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