ABSTRACT
The model of the entrepreneurial firm developed in Chapter 2 contained a restrictive assumption: input owners (labor) would surrender their alertness to the promoter (this is the “simple firm”). This is only a heuristic that has no counterpart in reality, but it is helpful in showing the entrepreneurial origin of the business firm. Chapter 2 also showed that the firm is a locus of exploitation of a profit opportunity (this is the firm’s function). The firm is also a nonprice planned coordination over time between complementary inputs in which market errors due to the ignorance of other individuals’ plans do not exist (this is the firm’s form).
