The Entrepreneur

The Entrepreneur

An Economic Theory, Second Edition

Mark Casson

This thoroughly revised and updated new edition of Mark Casson’s modern classic The Entrepreneur presents a novel synthesis of the ideas of Joseph Schumpeter, Frank Knight and Friedrich Hayek, according to which the defining characteristic of the entrepreneur is the exercise of judgement in business decisions.

Chapter 12: The Market for Entrepreneurs

Mark Casson

Subjects: business and management, entrepreneurship, economics and finance, economics of entrepreneurship

Extract

12.1 INTRODUCTION The market for entrepreneurs allocates judgmental decisions to entrepreneurs. It has, in fact, four main functions: 1. 2. 3. 4. to identify decisions which are judgmental, to identify entrepreneurs whose judgment is likely to be correct, to match entrepreneurs to judgmental decisions so that wherever possible the right decision is made, and to distribute rewards to the entrepreneurs. It is sometimes denied that a market for entrepreneurs can exist. This is incorrect. It must be admitted, however, that the market for entrepreneurs has some unusual features which mean that it operates in a different way from most other markets. 12.2 IDENTIFYING JUDGMENTAL DECISIONS One of the idiosyncrasies of the market for entrepreneurs is indicated by the first of the functions identified above. It is extremely difficult to determine precisely which decisions are judgmental. As a result it is difficult for anyone to identify a precise source of demand for an entrepreneur. Consider the demand for entrepreneurs within the economy as a whole, and consider too a single period, prior to which the economy has been in operation for some considerable time. A system of property rights has been evolved; decision-making power is conferred by ownership of general rights – typically rights to determine the use of multi-purpose goods (see Chapter 7). Many of these rights are vested in institutions such as firms. Each institution has an organization comprising a set of posts filled by delegate decision makers. Delegate decision makers within the same organization coordinate their...

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