A Theory of Entrepreneurial and Managerial Services: Revisiting Penrose from an Agency Perspective

31 Pages Posted: 24 Aug 2011

Date Written: April 1, 2010

Abstract

Using a parsimonious principal-agent model, this paper builds a theory of how responsibility for entrepreneurial and managerial services should be allocated among managers within a firm. The paper offers an alternative explanation for the Penrose effect, whereby firm growth is said to be retarded by the time required to assimilate new managers. The paper shows a combination of moral hazard and causal ambiguity can similarly retard firm growth.

Suggested Citation

Ross, David Gaddis, A Theory of Entrepreneurial and Managerial Services: Revisiting Penrose from an Agency Perspective (April 1, 2010). Available at SSRN: https://ssrn.com/abstract=1916137 or http://dx.doi.org/10.2139/ssrn.1916137

David Gaddis Ross (Contact Author)

University of Florida ( email )

PO Box 117165, 201 Stuzin Hall
Gainesville, FL 32610-0496
United States

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