Entrepreneur or manager: who runs the firm?

Article Abstract:

The differences between an entrepreneurial and a managerial firm are examined using a simplified model of ownership structure. In this model, an individual with exclusive rights to a valuable business project is faced with the choice of running and owning the project or selling the rights to outside investors while retaining management control. Results show that both choices can be preferred depending on the circumstances. As a rule, however, it is shown that entrepeneurs exert more effort in bad times than in good times while managers do the opposite.

Management, Executives, Businessmen

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Multi-period competition with switching costs: an overlapping generations formulation

Article Abstract:

A duopoly market characterized by overlapping generations and positive costs is examined in an infinite-period context. Results shows that the two firms in the market can alternate dominance from one period to another when the time-horizon of consumers is finite, with prices fluctuating accordingly. These findings do not conform with the 1992 results of Beggs and Klemperer when a model that assumed imperfect substitutability and an infinite consumer horizon was used.

International competition (Commerce), International competition (Economics), Duopolies

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Sunk costs, firm size and firm growth

Article Abstract:

An explanation for the empirical finding about the negative correlation existing between firm growth and firm size is presented. This finding contradicts the traditional assumption that growth does not rely on corporate size. The finding depends on the concept of sunken costs that firms have to incur in capacity buildup. The concept involves investment that loses its value upon exit of the firm from the market.

Corporate growth, Cost (Economics), Costs (Economics)

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