The Entrepreneurial Organization of Heterogeneous Capital

22 Pages Posted: 9 Nov 2007

See all articles by Kirsten Foss

Kirsten Foss

Copenhagen Business School - Department of Industrial Economics & Strategy (IVS)

Nicolai J. Foss

Copenhagen Business School - Department of Strategy and Innovation

Abstract

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.

Suggested Citation

Foss, Kirsten and Foss, Nicolai J., The Entrepreneurial Organization of Heterogeneous Capital. Journal of Management Studies, Vol. 44, Issue 7, pp. 1165-1186, November 2007, Available at SSRN: https://ssrn.com/abstract=1028403 or http://dx.doi.org/10.1111/j.1467-6486.2007.00724.x

Kirsten Foss (Contact Author)

Copenhagen Business School - Department of Industrial Economics & Strategy (IVS) ( email )

Howitzvej 60, 6
Frederiksberg, DK-2000
Denmark

Nicolai J. Foss

Copenhagen Business School - Department of Strategy and Innovation ( email )

Kilen
Frederiksberg, 2000
Denmark

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
20
Abstract Views
1,507
PlumX Metrics