Entrepreneurial Efficiency

Katsuya Takii

Macroeconomics from EconWPA

Abstract: This paper examines a particular aspect of entrepreneurship, namely firms' ability to respond appropriately to unexpected changes in the environment (i.e., their adaptability). An increase in firms' adaptability improves allocative efficiency in a competitive economy, but can reduce it when opportunities are distorted. It is shown that adaptability can aggravate distortions in the presence of political risk. Because efficiency affects the total factor productivity (TFP) of an economy, the model can explain how entrepreneurship influences TFP. The quantitative effect of firms' adaptability on TFP is investigated using the Census of Manufacturing in Japan.

JEL-codes: E13 O40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ent
Date: Written
Note: Type of Document - pdf
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpma:0406007

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