The Theory of Entrepreneurial Rent
-
Chandra S. Mishra
Abstract
The theory of entrepreneurial rent posits that powerful incentives for managerial learning are provided by giving managers the opportunity to share the firm surplus, which further enhances the management cognition and situation awareness. These incentives enable management to seek cognitively distant opportunities that provide the firm entrepreneurial rent. Further, the greater the firm-specific risk, the greater the entrepreneurial rent. The source of entrepreneurial rent is the uncertainty associated with the firm’s value opportunities. Further, since managerial attentional resource is shared between the firm’s current operations and the exploitation of the value opportunities, the managerial attentional resources are greater when the firm has greater value opportunities.
References
Barney, J. 1991. “Firm Resources and Sustained Competitive Advantage.” Journal of Management 17: 99–120.10.1016/S0742-3322(00)17018-4Search in Google Scholar
Bowman, E. H., and D. Hurry. 1993. “Strategy through the Option Lens: An Integrated View of Resource Investments and the Incremental Choice Process.” Academy of Management Review 18: 760–782.10.5465/amr.1993.9402210157Search in Google Scholar
Cyert, R. M., and J. G. March. 1963. A Behavioral Theory of the Firm. Englewood Cliffs, NJ: Prentice Hall.Search in Google Scholar
Gavetti, G. 2012. “Toward a Behavioral Theory of Strategy.” Organization Science 23: 267–285.10.1287/orsc.1110.0644Search in Google Scholar
Gavetti, G., and D. Levinthal. 2000. “Looking Forward and Looking Backward: Cognitive and Experiential Search.” Administrative Science Quarterly 45: 113–137.10.2307/2666981Search in Google Scholar
Mishra, C. 2017a. Creating and Sustaining Competitive Advantage: Management Logics, Business Models, and Entrepreneurial Rent. New York: Palgrave Macmillan.10.1007/978-3-319-54540-0Search in Google Scholar
Mishra, C. 2017b. “Entrepreneurial Orientation.” Entrepreneurship Research Journal 7: 1–20.10.1007/978-3-319-54540-0_3Search in Google Scholar
Porter, M. E. 1985. Competitive Advantage: Creating and Sustaining Superior Performance. New York: Free Press.Search in Google Scholar
Rumelt, R. P. 1984. “Towards a Strategic Theory of the Firm.” Competitive Strategic Management 26: 556–570.Search in Google Scholar
Schumpeter, J. A. 1934. The Theory of Economic Development. Cambridge: Harvard University Press.Search in Google Scholar
© 2019 Walter de Gruyter GmbH, Berlin/Boston
Articles in the same Issue
- The Egocentrism of Entrepreneurs: Bias in Comparative Judgments
- Educational Attainment, Financial Support and Job Creation across Lebanese Social Entrepreneurships
- The Effect of Interlocking Director Network on Corporate Risk Taking: Lessons from China
- Analysis of the Potential of Entrepreneurship Education in Young Children
- The Theory of Entrepreneurial Rent
Articles in the same Issue
- The Egocentrism of Entrepreneurs: Bias in Comparative Judgments
- Educational Attainment, Financial Support and Job Creation across Lebanese Social Entrepreneurships
- The Effect of Interlocking Director Network on Corporate Risk Taking: Lessons from China
- Analysis of the Potential of Entrepreneurship Education in Young Children
- The Theory of Entrepreneurial Rent
