Article

Human Capital, Entrepreneurship, and the Theory of the Firm

Brian J. Loasby

in The Oxford Handbook of Human Capital

Published in print January 2011 | ISBN: 9780199532162
Published online May 2011 | | DOI: http://dx.doi.org/10.1093/oxfordhb/9780199532162.003.0010

Series: Oxford Handbooks in Business and Management

Human Capital, Entrepreneurship, and the Theory of the Firm

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This article focuses on the entrepreneurship literature – which implies rather than offers an articulate theory of the firm. It suggests that entrepreneurship, the firm, and human capital form a natural grouping because they have a common foundation. The article lays down several radical points. Neoclassical theory has neither a place nor a need for an entrepreneurial theory of the firm – or a theory of the entrepreneurial firm. It defines the firm as determined by external (market) forces – so is often labelled a theory of markets rather than of firms. Economic theory is not overly interested in firms, their internal arrangements, or even why they exist. Insofar as individuals are present in the analysis, standard explanations ‘all rely on a reallocation of decision rights to resolve some conflict of incentives, and when this has been achieved everyone acts independently’.

Keywords: entrepreneurship; firm; human capital; neoclassical theories; economic theory

Article.  10697 words. 

Subjects: Business and Management ; Organizational Theory and Behaviour ; Knowledge Management

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