Entrepreneurial Effort in the Theory of the Firm

Abstract

This article develops a link between the theory of the firm and entrepreneurship theory to enable the study of employee entrepreneurial behaviour. First, we describe how incomplete contracts permit employee entrepreneurial effort in the theory of the firm. Next, we argue that emancipation offers an explanation for entrepreneurial effort that is not motivated by financial gain. Finally, we show how new technology creates conditions where the boundary of the firm may change and where entrepreneurial effort by employees may occur.

Keywords

• emancipation
• employee
• entrepreneurship
• technology
• theory of the firm