Opportunities and New Business Models: Transaction Cost and Property Rights Perspectives on Entrepreneurship

Nils Stieglitz, Nicolai Juul Foss

    Research output: Working paperResearch

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    Abstract

    Entrepreneurs in a competitive economy face three fundamental problems. They need to search for and discover a business opportunity (Kirzner, 1973), evaluate it (Knight, 1921), and then seize the opportunity to reap entrepreneurial profits (Schumpeter, 1911) (Langlois, 2007). The problem that we address is how the ability to exploit business opportunities is influenced by entrepreneurial search and the economic organization of entrepreneurship (Arrow, 1962; Lippman & Rumelt, 2003; Aghion et al., 2005; Foss et al., 2007). In many cases, the discovery for a new business opportunity needs to be motivated by expected gains, since the search and evaluation of business opportunities is a costly, resource-consuming process (Denrell, Fang & Winter, 2003; Nickerson & Zenger, 2004; Foss & Klein, 2005; Teece, 2007; Foss & Foss, 2008).1 We show the critical role of expectations for understanding of the economic organization of entrepreneurship, and argue that transaction cost economics, with its insistence on bounded rationality, but far-sighted contracting offers useful insights and presents rich opportunities for further theoretical and empirical research (cf. also Furubotn, 2002).
    Original languageEnglish
    Place of PublicationFrederiksberg
    PublisherCenter for Strategic Management and Globalization
    Number of pages30
    ISBN (Print)9788791815454
    Publication statusPublished - 2009
    SeriesSMG Working Paper
    Number4/2009

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