Entrepreneurship and Corporate Governance
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In this article, I focus on the financial-market entrepreneur—what Rothbard (1962, 1985) calls the capitalist-entrepreneur— to outline some features of an Austrian theory of corporate governance. I begin by reviewing the traditional, production-function theory of the firm and suggesting two alternative perspectives: that of the entrepreneur and that of the capitalist. I next discuss the Coasian, or “contractual” approach to the firm and argue that it provides a useful organizing framework for Austrian research on the firm. The subsequent section proposes entrepreneurship and economic calculation as building blocks for an Austrian theory of the firm. Finally, after a brief review of capital-market behavior and the disciplinary role of takeovers, I outline four areas for Austrian research in corporate governance: firms as investments, internal capital markets, comparative corporate governance, and financiers as entrepreneurs.
Quarterly Journal of Austrian Economics vol. 2, no. 2 (Summer 1999): 19-42.