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Economic Theories

Casson argues that, due to some assumptions made by classical economic theory,
there is no established economic theory for such entrepreneurs. The theory of
entrepreneurship is needed to explain the success or failure of firms, the creation and
growth of firms, economic growth and development, and the distribution of income. The
entrepreneur is significant because, although he is not prominent, he has changed the
course of history. The essence of entrepreneur theory must be to rationalize success and
to explain failure. The theory of entrepreneurial function will play an important role in
the theory of economic dynamics, competitive processes, and the trading cycle. Based on
these two reconstructions of economic theory individuals differ in taste and access to
information. The entrepreneur continues based on the unique information available to
him. Further, there is the inherent difficulty of transaction costs in organizing the market
so entrepreneurs often have to create market institutions.
Casson's theory focuses on the functional and indicative definition of entrepreneurs.
He defines an entrepreneur as "someone who specializes in making decisions about
limited resource coordination." The skills needed for entrepreneurs are identified. The
most important concept for Casson's theory is coordination, as problems and processes,
personal or social. It is a dynamic partner for the provision of two mechanisms namely
contract and guesswork. Bargaining must gather towards balance. An entrepreneurial
evaluation of the role of the judiciary in the situation and its role as an intermediary is
important to influence where, when, and how coordination occurs.
Coordination reduces entrepreneurs' exposure to uncertainty through insurance and
speculation. Coordination is difficult in the field of public goods, which is common
property. Entrepreneurial coordination is always partial, as it involves only a small sector
of the economy. Partial coordination is continuous, and overall consistency cannot be
The entrepreneur theory is related to the theory of a market-making firm in which the
entrepreneur operates in a market economy through a firm, in which the entrepreneur is
the founder or owner of the manager. To overcome barriers to trading, market-making
activities are required, which involves information and costs. Transaction costs can be
reduced through internationalization of the market. Entrepreneurs can legitimize the
exploitation of commercial information based on their judgment.
When re-contracting is difficult, market makers respond by building inventory.
Market making services to buyers and sellers are usually wrapped by intermediaries. The
entrepreneurial function of manufacturers and retailers is "unholy." Centralized control
economies, which can be delegated and implemented in various forms, can be linked to
market internalization. Entrepreneurs use hard bargaining strategies because they believe
they have better market knowledge.
The economic factors that control the firm's growth rate are analyzed using the
concepts developed earlier in this book. The creation of a new firm arising from the
recognition of opportunities by entrepreneurs and the belief that they are best exploited
by themselves, the family is a major source of capital, labor, and information. The market
for entrepreneurs operates uniquely because it provides judgment to entrepreneurs. The
number of entrepreneurs and their rewards are analyzed. Because of the major social and
economic barriers, entrepreneurship is a myth. However, entrepreneurship is important
for social mobility, although the absolute level is quite limited.