Entrepreneurial Action and Entrepreneurial Rents

This dissertation is comprised of three independently standing research papers (chapters 2, 3 and 4) that come together in the common theme of investigating the relationship between entrepreneurial action and performance. The introduction chapter argues that this theme is the main agenda of an entrepreneurial approach to strategy, and provides some background and context for the core chapters. The entrepreneurial approach to strategy falls in line with an array of action-based theories of strategy that trace their economic foundations to the Austrian school of economics. Chapters 2 and 3 take a game theoretical modeling and computer simulation approach and represent one of the first attempts at formal analysis of the Austrian economic foundations of action-based strategy theory. These chapters attempt to demonstrate ways in which formal analysis can begin to approach compatibility with the central tenets of Austrian economics (i.e., subjectivism, dynamism, and methodological individualism). The simulation results shed light on our understanding of the relationship between opportunity creation and discovery, and economic rents in the process of moving towards and away from equilibrium. Chapter 4 operationalizes creation and discovery as exploration and exploitation in an empirical study using data from the Kauffman Firm Survey and highlights the trade-offs faced by start-ups in linking action to different dimensions of performance (i.e., survival, profitability, and getting acquired). Using multinomial logistic regression for competing risks analysis and random effects panel data regression, we find that high technology start-ups face a trade-off between acquisition likelihood and profitability-given-survival while low and medium technology start-ups face a trade-off between survival and profitability-given-survival. Chapter 5 concludes the dissertation by highlighting some of the overall contributions and suggesting avenues for future research.