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Economic Returns to Entrepreneurial Behavior

Published online by Cambridge University Press:  09 September 2016

R. Brent Ross  and
Randall E. Westgren
R. Brent Ross
Affiliation:
Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, Urbana, IL
Randall E. Westgren
Affiliation:
Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, Urbana, IL
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Abstract

Highly turbulent environments require firms to act entrepreneurially. The returns to entrepreneurial activities are known as entrepreneurial rents. Following the payments perspective, these rents are allocated to the entrepreneurial resources of the firm as factor payments. However, unlike other factor payments, little is known about how to value these types of rents. An analysis of the economics and management literature reveals that entrepreneurial rents are a return to alertness, subjective judgment, asset control, and uncertainty bearing. Furthermore, entrepreneurial rents are noncontractible and temporary. This paper introduces two complementary valuation models that capture these characteristics and that explicitly impute value to various entrepreneurial activities.

Keywords

entrepreneurshipfactor paymentssubjective judgmentuncertaintyM13B12B25P23Q13
Type
Invited Paper Sessions
Information
Journal of Agricultural and Applied Economics , Volume 38 , Issue 2 , August 2006 , pp. 403 - 419
Copyright
Copyright © Southern Agricultural Economics Association 2006

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