2019

The Context of Entrepreneurial Judgment: Organizations, Markets, and Institutions

Reprint No. 2019:33

Author(s): Nicolai J. Foss, Peter G. Klein and Christian BjørnskovYear: 2019 Title: Journal of Management Studies Volume (No.): 56 (6) Pages: 1167–1213
Online article (restrictions may apply)

The Context of Entrepreneurial Judgment: Organizations, Markets, and Institutions Nicolai J. Foss, Peter G. Klein and Christian Bjørnskov


The economics and management literatures pay increasing attention to the technological, competitive, and institutional environment for entrepreneurship. However, less is known about how context influences the judgment of entrepreneurs. Focusing on the emerging judgment‐based approach to entrepreneurship, we argue that economics can say much about how the organizational, market, and institutional context shapes entrepreneurial judgment. We describe entrepreneurs as individuals who deploy scarce, heterogeneous resources to service customer preferences at a profit. Because of uncertainty, this process is essentially experimental, and context influences the experimental process. Thus, entrepreneurs will seek to design the internal organization of the firm so that it facilitates internal experimentation. Moreover, the market or task environment determines the need for experimentation (e.g., how fast do consumer preferences change, how does technology evolve, which assets are available at which terms, etc.). Finally, the institutional environment influences, for example, the transaction costs of acquiring and divesting assets as firms adjust their boundaries through ongoing commercial experimentation.


Reference:
Foss, Nicolai J., Peter G. Klein and Christian Bjørnskov (2019), "The Context of Entrepreneurial Judgment: Organizations, Markets, and Institutions". Journal of Management Studies 56(6), 1167–1213.

Christian Bjørnskov

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Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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