Heterogeneous Capital, Entrepreneurship, and Economic Organization

Posted: 1 Dec 2009

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

Peter G. Klein

Baylor University - Hankamer School of Business; Norwegian School of Economics (NHH) - Department of Strategy and Management; Ludwig von Mises Institute

Sandra Klein

Independent

Date Written: 2001

Abstract

Explores the concept of economic organization usingan Austrian approach based on the entrepreneur and the idea that capital isheterogeneous and time-dimensioned.Austrian economists havemovedfrom a capital theory that was based on aggregate concepts to onethat is more disaggregate. Israel Kirzner's work, which emphasized the role of an entrepreneur, definescapital assets based on subjective, individual production plans.Thistheory supports the idea that capital assets for an entrepreneur areheterogeneous as a result of the particular role they play in theentrepreneur's overall production plan. Two important implications on economic organization result from capitalheterogeneity.First, asset ownership, which allows firms to exploit assetattributes that are not known at the time ownership is assumed, explains theboundaries of a firm.Second, the shifting of firm boundaries results fromthe experimentation by entrepreneurs with different combinations of the assetattributes.This approach to capabilities provides that the knowledgeneeded for production will be costly and, consequently, all firms do notpossess the same capabilities. (SRD)

Keywords: Austrian economics, Attributes, Kirzner, Israel, Capital assets, Economies, Theories, Uncertainty, Organizational structures, Capital structure, Organizational change

Suggested Citation

Foss, Kirsten and Foss, Nicolai J. and Klein, Peter G. and Klein, Sandra, Heterogeneous Capital, Entrepreneurship, and Economic Organization (2001). University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship, Available at SSRN: https://ssrn.com/abstract=1513813

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

Peter G. Klein

Baylor University - Hankamer School of Business ( email )

Waco, TX 76798
United States
254-710-4903 (Phone)

Norwegian School of Economics (NHH) - Department of Strategy and Management ( email )

Breiviksveien 40
N-5045 Bergen
Norway

Ludwig von Mises Institute ( email )

Auburn, AL
United States

Sandra Klein

Independent

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