Firms as Realizations of Entrepreneurial Visions

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. In the debate on why firms exist, the question of who chooses between firms and markets and on what basis is rarely addressed. This paper argues that the choice is a core element of the entrepreneurial pursuit of visions or conceptions of business opportunities. To successfully organize resources into the envisioned businesses -be it via firms or markets -resource owners must be coordinated on the entrepreneur's conception of the business and be motivated to perform properly. To solve the dual problem, the organizational form of the firm offers the entrepreneur unique advantages not feasible under the organizational form of markets. Terms of use: Documents in #0510Entrepreneurial services differ from managerial ones. Again following Penrose (ibid., 1 32), managerial services can be defined as being related to the execution of entrepreneurial ideas and proposals and to the supervision of existing operations. Note that the same individuals may provide both types of services at the same time, and that entrepreneurship, as defined, neither presupposes a specific occupational status nor the specific proprietary status of the residual claimant.

A corporation’s culture as an impetus for spinoffs and a driving force of industry evolution

“…Such an uncertain environment necessitates employees that do not restrict their contributions exclusively to what is specified in their employment contracts and formal reward schemes, as these future contingencies cannot be fully anticipated (Deckop et al, 1999). The organization must draw on cooperative agents that put the interest of the work unit ahead of their self-interests (Akerlof and Kranton, 2005;Witt, 2007) and that enjoy a high degree of autonomy and discretion to adapt to a dynamic business environment (Barney, 1986;Rob and Zemsky, 2002). 1 The higher level of responsibility for firm success left to the employees, however, also entails high potential costs of opportunistic behavior.…”

“…Thus, one organizational strategy to avoid cooperative collapse is the implementation of an intraorganizational subdivision of entrepreneurship to keep parts below the critical cognitive size, while allowing for growth of the organization as a whole. Sub-leaders assigned to these subdivisions would then be capable of maintaining cooperative cultures in their groups (Witt, 2007;Cordes et al, 2010).…”

A naturalistic approach to the theory of the firm: The role of cooperation and cultural evolution

“…Cultural variants compete for this scarce cognitive resource of the social learner and for control of behavior (Richerson and Boyd, 2005, p. 73). If employees adopt the entrepreneurial business conception as their own cognitive frame for their firm-related activities, a firm's organization can attain a higher degree of cognitive coherence among its members, which affects the interpretation of information, the coordination of dispersed knowledge, and individual endeavor, as well as the motivation to contribute to a common goal instead of private interests (Witt, 2007). 12 A business conception building on humans' social predispositions including their inclination toward group-beneficial and cooperative behavior can be considered to be especially attractive as a shared cognitive frame and plays an important role in coining a business culture.…”

“…Other members also influence the agenda of communication and introduce rival cognitive frames and social models (see Witt, 2007;Salancik and Pfeffer, 1978). We assume that an agent entering the firm is influenced by the entrepreneur and n peers she is interacting with.…”

“…We argue that what successful firms do better than markets, besides economizing on transaction costs, is establish a cooperative regime among its employees that "crowds in" desirable behavior based on humans' unique evolved group-regarding social predispositions. The paper tackles the task of understanding how entrepreneurs and other business leaders can actively shape human behavior within a firm, given these predispositions, and how this affects firm performance and size, a cognitive dimension that is usually neglected in both transaction cost economics and the theory of the firm more generally (Witt, 2007). A transaction cost based analysis, it is argued, is an insufficient vehicle with which to examine such organizational capabilities and challenges.…”