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

Nicolai J. Foss; Peter G. Klein; Christian Bjørnskov

doi:10.1111/joms.12428

journal article Jan 09, 2019

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

Nicolai J. Foss Peter G. Klein

Christian Bjørnskov

Journal of Management Studies Vol. 56 No. 6 pp. 1197-1213 · Wiley

View at Publisher Save 10.1111/joms.12428

Abstract

AbstractThe 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.

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158

Citations

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References

Details

Published: Jan 09, 2019
Vol/Issue: 56(6)
Pages: 1197-1213
License: View

Authors

Bocconi University

Baylor University

Aarhus University

Cite This Article

Nicolai J. Foss, Peter G. Klein, Christian Bjørnskov (2019). The Context of Entrepreneurial Judgment: Organizations, Markets, and Institutions. Journal of Management Studies, 56(6), 1197-1213. https://doi.org/10.1111/joms.12428

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

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