Where Do New Market Factors Come From?
37 Pages Posted: 22 Apr 2014 Last revised: 21 Apr 2020
Date Written: April 20, 2014
This paper offers an account of entrepreneurial factor markets where entrepreneurial action and the new firm perform an important function as a precondition to—and a creator of—new factors. Drawing from factor markets theory and the resource-based view, we argue that entrepreneurs can use the acquisition of new resources under conditions of uncertainty to generate economic profits, but in a way that does not depend entirely on alertness or luck. In this view, the entrepreneurial firm is a structure that provides the means through which new factors of production that would otherwise not be possible are brought into being. This perspective emphasizes that the advantage of the firm for entrepreneurs operating under conditions of uncertainty have more to do with the creation of a new production process than minimizing transactions costs, accelerating the discovery process, or assigning residual rights of control. Our paper contributes to a growing literature at the intersection of strategy and entrepreneurship extending factor market logic and applying it to foundational questions in entrepreneurship.
Keywords: Entrepreneurship, Austrian Economics, Resource-Based View, Strategic Factor Markets
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