The entrepreneurial rent: The value of and compensation for entrepreneurship

Arbeitspapier

The surplus that is created in a successful entrepreneurial venture is much higher than the profit corresponding to the risk-adjusted market rate of return. The part of the surplus that exceeds this level may be denoted "entrepreneurial rent." Such rents normally disappear in the long run but so-called isolating mechanisms ensure that these rents persist in the short or medium run. Entrepreneurial rents arise when successful entrepreneurship is exercised and entrepreneurial firms create and successfully commercialize something new and unique. The presence of and search for entrepreneurial rents is a prerequisite for the innovations and structural change required to generate economic growth. High ex post compensation for successful entrepreneurship cannot be taxed harshly without affecting entrepreneurs' willingness to supply effort.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IFN Working Paper ; No. 1128

Classification and Topics

• Classification: Wirtschaft ; Exchange and Production Economies ; Wages, Compensation, and Labor Costs: General ; Entrepreneurship ; Innovation and Invention: Processes and Incentives
• Subject: Entrepreneurship ; Economic rent ; Entrepreneurial rent ; Innovation ; Imitation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Henrekson, Magnus ; Stenkula, Mikael
• Event: Veröffentlichung
• (who): Research Institute of Industrial Economics (IFN)
• (where): Stockholm
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/175065
• Last update: 10.03.2025, 11:44 AM CET