World Encyclopedia of Entrepreneurship
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World Encyclopedia of Entrepreneurship

Edited by Léo-Paul Dana

This comprehensive reference work, written by some of the most eminent academics in the field, contains entries on numerous aspects of entrepreneurship.
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Chapter 8: Entrepreneurial Decision-making

Jean Bonnet, Pascal Cussy and Thomas Brau


Jean Bonnet, Pascal Cussy and Thomas Brau In economic theory, decision-making is supposed to result from an optimization calculation that any economic agent performs under the essential hypotheses of rationality. It means that agents seek to maximize their utility function (if households) or to maximize their profit (if businesses) using efficiently the available resources to achieve these objectives within the constraints they face (budget constraint for households, costs constraints for businesses1). There is therefore no waste of resources. Tastes and preferences are the first elements of choice in economics. In daily life it enables us to understand the specialization of some economies since in their research of the maximal satisfaction, consumers adapt their budget to their hierarchy of taste. For instance, the history and culture of French emphasis on the quality of life have developed a taste for ‘eating well’ and ‘good drinking’ in the French population. French consumers then have a share of spending on food which remains higher than the American share (also due to the fact that the standard of living is higher in the USA). Nevertheless the smaller share of the American is more devoted to eating out (Jany-Catrice, 2004)2 and includes mainly franchisees restaurants. Because of the French culinary tradition, one finds that catering activity in France is more than in the USA, the result of individual independent small entrepreneurs. However, the choice of becoming an entrepreneur in the catering sector is not a simple choice. We can identify the steps that will constitute...

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