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Heterogeneous Capital, Entrepreneurship, and Economic Organization

Author

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

Abstract

We outline an Austrian approach to economic organization based on the entrepreneur and the Austrian idea of capital as heterogeneous and time-dimensioned, tow themes associated with Israel Kirzner's contributions. We provide a novel interpretation of capital heterogeneity based on the notion of attributes, argue that attributes are costly to measure and that this links directly to the theory of economic organization. In particular, we develop insights in economic organization based on the notion that entrepreneurs will often have to experiment with capital assets to gauge the value of these assets when deployed in production.

Suggested Citation

  • Kirsten Foss & Nicolai J. Foss & Peter G. Klein & Sandra K. Klein, 2002. "Heterogeneous Capital, Entrepreneurship, and Economic Organization," DRUID Working Papers 02-01, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    • Handle: RePEc:aal:abbswp:02-01
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    References listed on IDEAS

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    1. Barzel, Yoram, 1994. "The capture of wealth by monopolists and the protection of property rights," International Review of Law and Economics, Elsevier, vol. 14(4), pages 393-409, December.
    2. Hart, Oliver & Moore, John, 1990. "Property Rights and the Nature of the Firm," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1119-1158, December.
    3. Barzel, Y., 1994. "The Capture of Wealth by monopolists and the Protection of Property Rights," Discussion Papers in Economics at the University of Washington 94-3, Department of Economics at the University of Washington.
    4. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-795, December.
    5. Hart, Oliver, 1995. "Firms, Contracts, and Financial Structure," OUP Catalogue, Oxford University Press, number 9780198288817.
    6. Israel M. Kirzner, 1997. "Entrepreneurial Discovery and the Competitive Market Process: An Austrian Approach," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 60-85, March.
    7. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
    8. Langlois, Richard N & Foss, Nicolai J, 1999. "Capabilities and Governance: The Rebirth of Production in the Theory of Economic Organization," Kyklos, Wiley Blackwell, vol. 52(2), pages 201-218.
    9. Matsusaka, John G, 2001. "Corporate Diversification, Value Maximization, and Organizational Capabilities," The Journal of Business, University of Chicago Press, vol. 74(3), pages 409-431, July.
    10. Nicolai J. Foss, 1996. "Firms, Incomplete Contracts and Organizational Learning," DRUID Working Papers 96-2, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    11. Ulrich Witt, 1999. "Do Entrepreneurs Need Firms? A Contribution to a Missing Chapter in Austrian Economics," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 11(1), pages 99-109, January.
    12. Barzel,Yoram, 1997. "Economic Analysis of Property Rights," Cambridge Books, Cambridge University Press, number 9780521597135.
    13. H. B. Malmgren, 1961. "Information, Expectations and the Theory of the Firm," The Quarterly Journal of Economics, Oxford University Press, vol. 75(3), pages 399-421.
    14. Laurence Moss, 1991. "The Chicago Intellectual Property Rights Tradition and the Reconciliation of Coase and Hayek," Eastern Economic Journal, Eastern Economic Association, vol. 17(2), pages 145-156, Apr-Jun.
    15. Jarrell, Gregg A & Brickley, James A & Netter, Jeffry M, 1988. "The Market for Corporate Control: The Empirical Evidence Since 1980," Journal of Economic Perspectives, American Economic Association, vol. 2(1), pages 49-68, Winter.
    16. Barzel, Y., 1994. "The Capture of Wealth by monopolists and the Protection of Property Rights," Working Papers 94-3, University of Washington, Department of Economics.
    17. Kirsten Foss & Nicolai Foss, 2001. "Assets, Attributes and Ownership," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 8(1), pages 19-37.
    18. Minkler, Alanson P, 1993. "The Problem with Dispersed Knowledge: Firms in Theory and Practice," Kyklos, Wiley Blackwell, vol. 46(4), pages 569-587.
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    21. Foss, Nicolai Juul, 1994. "The Theory of the Firm: The Austrians as Precursors and Critics of Contemporary Theory," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 7(1), pages 31-65.
    22. Klein, Peter G, 1996. "Economic Calculation and the Limits of Organization," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 9(2), pages 3-28.
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    Cited by:

    1. Stefan W. Schmitz, 2004. "Uncertainty in the Austrian Theory of Capital," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 17(1), pages 67-85, March.
    2. 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.

    More about this item

    Keywords

    Austrian Economics; capital; knowledge;

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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