Heterogeneous Capital, Entrepreneurship, and Economic Organization
Posted: 1 Dec 2009
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: Suggested Citation